Market Segmentation

Market segmentation is the process of dividing a broad target market into smaller groups of consumers who have similar needs, preferences, or characteristics. This allows companies to tailor their products, marketing strategies, and communications to meet the specific needs of each segment. Common segmentation criteria include demographics, geography, psychographics, and behavior. Market segmentation helps businesses focus their efforts on the most profitable customer groups.

Example

A car manufacturer segments its market into luxury buyers, environmentally conscious consumers, and budget-conscious families, tailoring different car models and marketing strategies to each group.