What does product segmentation involve?

Product segmentation involves grouping products based on various factors, such as pricing, features, and specifications. This practice allows businesses to target specific market segments more effectively, tailoring their marketing strategies and product offerings to meet the distinct needs and preferences of different consumer groups. For instance, a company might segment its products to differentiate between budget-friendly options and premium offerings, helping consumers make informed choices based on their purchasing power and desired features. This targeted approach not only enhances customer satisfaction but also boosts sales by ensuring that the right products are matched with the right audience.

The other options focus on different aspects of market analysis. Dividing customers based on shopping habits pertains to customer segmentation. Classifying sales data by geographical areas relates to geographic segmentation, which focuses on understanding how location influences buying behaviors. Distinguishing competitors in the market deals with competitive analysis rather than product characteristics. Each of these themes is important in their respective contexts, but they do not encapsulate the concept of product segmentation as effectively as grouping products based on pricing and features does.