What does the term 'market segmentation' refer to in marketing?

Market segmentation refers to the process of dividing a broad consumer or business market into sub-groups of consumers based on shared characteristics, needs, or preferences. This approach allows businesses to target their marketing efforts more effectively, as different segments may respond differently to various marketing strategies.

By grouping consumers based on similar needs, companies can tailor their products, messages, and promotions to specific audiences, enhancing the relevance and effectiveness of their marketing efforts. For example, a company that identifies a segment of environmentally-conscious consumers can focus on promoting sustainable practices in their products to resonate with that group.

The other options relate to aspects of marketing but do not define market segmentation specifically. Creating new product lines, setting promotional strategies, and analyzing pricing trends are all important marketing activities, but they are broader concepts that do not involve the fundamental idea of segmenting a market based on consumer characteristics and needs.