Which statement best defines market segmentation?

• A. Market segmentation is achieved by lowering prices to all customers.
• B. Markets can be divided into different sections or market segments, which is part of a whole market where a particular customer group has similar characteristics.
• C. Market segmentation ignores geographic differences.
• D. Market segmentation is the same as product development.

Answer: (B)

Market segmentation means dividing a broad market into smaller groups of customers who share similar characteristics or needs, so a business can tailor its marketing to each group. The statement that markets can be divided into different sections or market segments, which is part of a whole market where a particular customer group has similar characteristics, describes this idea most accurately. It shows how the whole market is made up of segments, each with its own traits that can be targeted more effectively.

Lowering prices to everyone doesn’t create groups; it’s a general pricing move that treats all customers the same. Segmentation often uses geographic differences as one of the usual variables to define segments, not ignore them. And segmentation isn’t the same as product development, which is about creating or improving a product rather than dividing the market.