What is the process of dividing the market into groups with similar characteristics called?

The process of dividing the market into groups with similar characteristics is known as segmentation. This approach allows businesses to better understand the different needs and preferences of various consumer groups, leading to more effective marketing strategies. By grouping consumers based on factors such as demographics, psychographics, geography, or behavior, companies can tailor their products and marketing efforts to meet the specific desires of each segment.

Segmentation is fundamental in marketing as it helps businesses identify target customers, optimize their marketing communications, and enhance overall customer satisfaction by delivering more personalized experiences. This targeted approach ultimately increases the likelihood of converting potential customers into actual sales, driving growth and profitability for the business.

Other concepts listed, such as market reach, market analysis, and target marketing, serve different purposes within the broader marketing strategy. While market reach focuses on the extent to which a business's product can be promoted or sold, market analysis involves assessing the overall market environment and competitive landscape. Target marketing, although related to segmentation, refers to choosing specific segments to direct marketing efforts toward rather than the initial division of the market itself.