What does market segmentation involve?

Market segmentation involves dividing the broader market into identifiable consumer groups based on shared characteristics or attributes. This process allows businesses to better understand their target audience, tailor their marketing strategies, and create more effective promotional messages that resonate with specific segments. By recognizing the unique needs, preferences, and behaviors of different consumer groups, companies can allocate their resources more efficiently and develop products and services that specifically meet the demands of each segment.

For instance, a company could segment its market by demographic factors such as age, gender, income level, or geographical location. This information helps in crafting personalized marketing strategies for each group, thereby increasing the likelihood of customer engagement and sales. As such, understanding and applying market segmentation can significantly enhance a firm's market positioning and competitive advantage.