In marketing, which of the following statements correctly describes market segmentation?

Introduction / Context:
Market segmentation, target marketing, and positioning are three closely related but distinct concepts in marketing strategy. Many exam questions test whether candidates can differentiate between these stages. This question focuses specifically on market segmentation and asks you to select the statement that best defines it, as opposed to targeting or positioning.

Given Data / Assumptions:

• We are dealing with standard marketing theory often summarised as segmenting, targeting, and positioning.
• Segmentation involves dividing the market; targeting involves choosing segments; positioning involves shaping product perception.
• The statements provided describe related but different activities.
• We must identify which one matches segmentation itself.

Concept / Approach:
Market segmentation is the process of dividing a broad market into smaller, relatively homogeneous groups of consumers who have similar needs, characteristics, or behaviours and who might require different marketing mixes. It focuses on identifying and profiling these distinct groups. Targeting is about evaluating the attractiveness of these segments and deciding which ones to serve. Positioning is about designing the offer and image to occupy a distinct place in the minds of the target market. Repositioning involves changing that image.

Step-by-Step Solution:
Step 1: Recall that segmentation answers the question: "How can we divide the market into meaningful buyer groups?" Step 2: Targeting answers: "Which segments should we enter?" and is therefore about evaluation and selection. Step 3: Positioning answers: "How should we position our product in the minds of target customers?" focusing on image and differentiation. Step 4: Compare each option: the statement about identifying and profiling distinct groups matches segmentation; evaluation and selecting segments describes targeting; creating an image describes positioning; changing identity relative to competitors describes repositioning. Step 5: Choose the option that clearly describes identifying and profiling distinct groups of buyers with different needs and wants.

Verification / Alternative check:
Standard marketing textbooks define segmentation as the process of dividing a market into distinct groups of buyers with different needs, characteristics, or behaviour. They then explain targeting and positioning as subsequent steps. The wording in the correct option mirrors this classic definition, confirming that it is the appropriate choice for segmentation.

Why Other Options Are Wrong:
Creating an image or identity in the minds of the target market is the definition of positioning, not segmentation. Evaluating segment attractiveness and choosing one or more segments to serve describes targeting. Changing the identity of a product relative to competitors in the collective mind of the market refers to repositioning, which is a later strategic step.

Common Pitfalls:
A common error is to treat segmentation, targeting, and positioning as interchangeable buzzwords. Candidates may also be tempted to pick the statement that sounds most action oriented, even if it does not exactly match the definition. To avoid confusion, remember the sequence: first segment (divide), then target (choose), then position (differentiate). Keeping this simple framework in mind helps to correctly classify each description.

Final Answer:
Market segmentation is a process of identifying and profiling distinct groups of buyers who differ in their needs and wants.