How does the concept of market segmentation relate to businesses?
Market segmentation relates to businesses because it is something that businesses can do to make their marketing efforts more effective.
Market segmentation involves breaking the overall market down into smaller segments that share some important trait. For example, a market might be broken down between people who really enjoy shopping and spending and those who are frugal. The business would then try to craft different marketing strategies for the two groups. It would be very difficult to create one advertisement or one strategy that would appeal equally to such different groups. But with market segmentation, this is not necessary. The firm can create a different way of trying to appeal to the members of each group.
When done correctly, market segmentation allows businesses to attract customers more effectively and to spend their marketing dollars more efficiently.