What is market segmentation?

Market segmentation involves dividing a broader market into smaller, more manageable groups based on shared characteristics and behaviors. This approach allows marketers to tailor their strategies to meet the specific needs and preferences of different consumer segments more effectively. By understanding the unique attributes of each segment—such as demographics, psychographics, geographic location, or buying behaviors—companies can create targeted marketing campaigns that resonate with each group, leading to better engagement, higher conversion rates, and increased customer satisfaction.

In contrast, creating a single marketing strategy for all consumers does not consider the diversity of consumer preferences and needs, which can lead to ineffective marketing efforts. Merely analyzing consumer income levels provides limited insights, as it does not encompass other critical factors that drive purchase decisions. Additionally, the process of buying bulk products at lower prices refers to procurement and supply chain strategies rather than market segmentation, which is focused on dividing the market for more informed marketing and product development strategies.