Which term refers to dividing a market into smaller groups based on similar characteristics and needs?Responses

The term that refers to dividing a market into smaller groups based on similar characteristics and needs is called "Market Segmentation".

Here are the steps to understand it:

1. Identification: The first step in market segmentation is identifying the overall market that the company wants to target. This could be a broad market like "automobile owners" or a more specific market like "luxury car owners."

2. Categorization: The next step is to categorize this market based on various factors. These factors could be demographic (like age, gender, income level), geographic (like location, urban/rural), psychographic (like lifestyle, personality, values), or behavioral (like usage rate, loyalty).

3. Analysis: After categorizing, the company analyzes each segment to understand its potential. This includes understanding the size of the segment, its growth potential, its profitability, and how well it aligns with the company's own strengths and weaknesses.

4. Targeting: Based on this analysis, the company then decides which segments it wants to target. It may choose to target only one segment (niche marketing), several segments (differentiated marketing), or all segments (mass marketing).

5. Positioning: Finally, the company positions its product or service in a way that appeals to the targeted segments. This includes deciding on the right marketing mix (product, price, place, promotion) for each segment.

So, in summary, market segmentation is a strategic approach that involves dividing a broad market into smaller, more manageable segments, and then designing and implementing strategies to target these segments.