Why would companies use a market segmentation strategy?

• A. To increase the overall size of the market without changing their products
• B. To reduce competition by merging with other firms
• C. To avoid advertising and rely solely on word-of-mouth
• D. To better target specific groups of consumers with tailored products and marketing

Answer: (D)

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 such as demographics, preferences, or behaviors.
2. Recognize that companies use market segmentation to identify specific groups of consumers who have similar needs or desires, allowing the company to tailor products and marketing efforts to those groups more effectively.
3. Consider how tailoring products and marketing to specific segments can increase customer satisfaction and loyalty, as the offerings better meet the unique needs of each segment.
4. Note that this strategy helps companies allocate their resources more efficiently by focusing on the most profitable or promising segments rather than using a one-size-fits-all approach.
5. Conclude that the primary goal of market segmentation is to improve the effectiveness of marketing and product development, leading to increased sales and competitive advantage.