Which term defines the process of dividing a market into distinct groups of buyers with different needs or behaviors?

The process of dividing a market into distinct groups of buyers with different needs or behaviors is defined as market segmentation. This concept is fundamental in marketing as it allows businesses to understand various consumer preferences and tailor their products or services to meet those specific needs.

By identifying distinct segments within a larger market, companies can create targeted marketing strategies that resonate more effectively with each group, enhancing customer satisfaction and increasing the likelihood of sales. For example, a company might segment the market based on demographic factors such as age or income, behavioral factors like purchasing habits, or psychographic factors including lifestyle or personality traits.

Market positioning refers to how a product is perceived in relation to competitors, which is a separate concept focused on the marketing strategies to distinguish a product from others in the market. Target marketing involves selecting which segments to focus on, while market research is the process of gathering information to understand market dynamics and consumer behavior, not the act of segmenting itself. Thus, market segmentation is the foundational step that enables effective marketing strategies to be developed and executed.