Market segmentation is the process of separating a market into district subsets of consumers with similar requirements or characteristics and deciding which segment(s) to target with a district marketing mix. Prior to the broad acceptance of market segmentation, the most common method of doing business with consumers was through mass marketing, which is providing all customers with the same product and marketing mix.
Segmentation helps companies to avoid direct rivalry in the market by differentiating their offers not just on the basis of price, but also on the basis of packaging design, promotional appeal, distribution technique, and superior customer service. Consumer segmentation research, shorter production runs, and specialized promotional strategies are usually more than offset by improved sales, according to marketers. In most cases, consumers are willing to pay a higher price for a product that better meets their specific needs.