What is market segmentation?

Market segmentation is a vital concept in marketing that refers to the process of dividing a broader market into smaller, more defined categories. This approach enables businesses to target specific groups of consumers, allowing for more tailored marketing strategies that can meet the distinct needs, preferences, and behaviors of those segments. By understanding and identifying different segments within a market, companies can create more effective marketing campaigns and product offerings, ultimately leading to greater customer satisfaction and increased sales.

For instance, a company may segment its market based on demographics, psychographics, geographic locations, or buying behaviors. This targeted approach means that marketing messages can resonate more strongly with particular consumer groups, improving engagement and boosting conversion rates.

The other options focus on different aspects of market analysis that do not directly relate to the concept of market segmentation. The total number of customers gives an overview of market size but lacks the specificity that segmentation provides. The ratio of market share pertains to a company's position relative to competitors, while assessing competition deals with understanding how a company fits within the broader market landscape rather than dividing the market itself.