Market segmentation is defined as

• A. When a business divides its target market into groups based on a common characteristic
• B. When a business lowers prices to attract customers
• C. When a business expands its product range
• D. When a business targets the entire population

Answer: (A)

Market segmentation means dividing a broad market into smaller groups of customers who share similar needs or characteristics so a business can tailor its products and marketing to each group. By grouping customers, a company can design offerings and messages that resonate more strongly, allocate resources efficiently, and identify distinct opportunities within the market.

The best option describes dividing the target market into groups based on a common characteristic, which is precisely what segmentation is. It captures the idea of treating different groups differently rather than treating everyone the same.

Other options mix in strategies that aren’t segmentation: lowering prices is a pricing tactic aimed at increasing demand; expanding the product range is about widening the offering; targeting the entire population ignores differences among customers and undermines the purpose of segmentation.