Which of the following is a criterion commonly used in forming market segments in competitive markets?

• A. Uniform pricing across all consumers
• B. Ignoring consumer income differences
• C. Homogeneity of preferences within segments
• D. Random allocation of consumers to segments

Answer: (C)

Verified step by step guidance

1. Understand that market segmentation involves dividing a broad consumer or business market into sub-groups of consumers based on shared characteristics.
2. Recognize that a key criterion for effective market segmentation is that consumers within each segment should have similar or homogeneous preferences, meaning they respond similarly to marketing strategies.
3. Note that uniform pricing across all consumers is not a segmentation criterion but rather a pricing strategy that ignores differences between segments.
4. Understand that ignoring consumer income differences contradicts the purpose of segmentation, which aims to tailor marketing efforts to different consumer groups, including income levels.
5. Realize that random allocation of consumers to segments defeats the purpose of segmentation, which is to group consumers based on meaningful and relevant criteria such as preferences, behaviors, or demographics.