What process involves dividing a market into distinct groups with different needs and characteristics?

The process of dividing a market into distinct groups with different needs and characteristics is referred to as market segmentation. This approach allows businesses to identify and understand the varying preferences of different customer segments, enabling them to tailor their marketing strategies and product offerings accordingly. By using factors such as demographics, psychographics, geography, and behavioral characteristics, companies can effectively group consumers who have similar needs and desires, resulting in more effective marketing campaigns and improved customer satisfaction.

Market segmentation is essential because it helps businesses allocate their resources more efficiently, target their messaging accurately, and create products that better meet the specific needs of different consumer groups. This ultimately leads to a more engaged customer base and can enhance competitive advantage in the marketplace.