What is the goal of market segmentation?

The goal of market segmentation is to group customers according to shared traits. This approach allows businesses to identify distinct groups within a larger market, which can be defined by various characteristics such as demographics, psychographics, geography, or behavior. By understanding these segments, companies can tailor their marketing efforts, products, and services to meet the specific needs and preferences of different customer groups. This targeted marketing strategy often leads to increased customer satisfaction and loyalty, as well as more efficient use of marketing resources.

In contrast, while increasing prices or expanding product lines might seem relevant to overall business strategy, they are not the primary objectives of market segmentation itself. Similarly, the concept of decreasing market competition might result from effective segmentation and targeting, but it does not inherently define the purpose of segmenting the market. Rather, creating a deeper understanding of customer segments and how best to serve them is at the heart of successful market segmentation strategies.