What is market segmentation?

Market segmentation involves dividing a broad target market into subsets of consumers who have common needs, interests, and priorities. This process allows businesses to tailor their products, services, and marketing strategies to meet the unique preferences of different groups. By understanding these distinct segments, companies can effectively allocate their resources, enhance customer satisfaction, and ultimately drive sales.

For instance, a company may segment its market based on demographics, such as age or income, psychographics, such as lifestyle and values, or geographic regions. This tailored approach enables firms to create more focused marketing campaigns and product offerings that resonate with specific segments, leading to better engagement and conversion rates.

The other choices do not accurately describe market segmentation. Creating a monopolistic environment does not involve understanding or addressing consumer needs, while decreasing product prices or increasing advertisement frequency are tactics that can be utilized within segments, but they do not define how markets are divided or understood.