Which process involves dividing a market into distinct groups based on characteristics such as demographics and geography?

The correct answer is market segmentation, which is the process of dividing a broader market into smaller, more defined categories. This is accomplished by identifying specific characteristics within the market, such as demographics (age, gender, income) and geography (location, climate). By segmenting the market, businesses can better understand the unique needs and preferences of different groups, allowing them to tailor their marketing strategies effectively to meet those specific needs.

This specialization is key in ensuring that marketing efforts resonate with the intended audience, improving the chances of successful product launches and customer satisfaction. For instance, a company may choose to target young adults in urban areas with certain products, while offering different products for families in suburban settings based on their unique preferences and requirements. This strategic approach maximizes the efficiency of marketing resources.

In contrast, market targeting refers to the process of selecting which specific market segments to focus on, while market positioning involves defining how a product is perceived in relation to competitors within those segments. Market analysis, on the other hand, is a broader evaluation of the market dynamics, competition, and overall potential of a market, rather than the segmentation of it. This highlights why market segmentation is distinct and crucial in creating effective marketing strategies.