Companies know that they cannot profitably serve all consumers in a given market – at least not all consumers in the same way.
Thus, every company must divide up the total market, choose the best segments, and design strategies for profitably serving chosen segments.
This process involves market segmentation, market targeting, differentiation, and positioning.
Market Segmentation: is the process of dividing a market into distinct groups of buyers who have distinct needs, characteristics, or behaviour and who might require separate products or marketing mixes.
A market segment consists of consumers who respond in a similar way to a given set of marketing efforts.