What does market segmentation refer to?

Market segmentation is the process of dividing a broad consumer or business market into smaller, more defined sub-groups of consumers who share similar characteristics. This practice is essential because different segments of the market may have diverse needs, preferences, and behaviors, which allows for more targeted and effective marketing strategies. By segmenting the market, businesses can tailor their products, advertising, and services to meet the specific demands of each group, leading to better customer satisfaction and higher sales.

Market segmentation includes various criteria such as demographic factors (age, gender, income), geographic factors (location), psychographic factors (lifestyle and values), and behavioral factors (purchase behavior). Each segment can then be approached with customized marketing strategies that resonate with their unique traits.

The other options relate to different aspects of marketing and product strategy. Identifying the target market for a new product is a part of market segmentation but does not encompass the entire process. Creating a unified marketing strategy for global markets addresses how to approach varied international audiences, while developing a single product line for all consumers shows a lack of consideration for diverse market needs, which is contrary to the principle of segmentation itself.