Peregrine MBA Practice Exam 2026 – Your All-in-One Guide to Mastering Business Administration!

The purpose of market segmentation is to divide a market into smaller sub-groups, allowing businesses to tailor their marketing strategies to specific audiences. By identifying distinct segments within a broader market based on characteristics such as demographics, behavior, or preferences, companies can understand the unique needs and desires of each group. This targeted approach enables more effective communication, better product offerings, and specialized marketing campaigns that resonate with specific segments of consumers, thereby increasing the overall effectiveness of marketing efforts. As a result, it can lead to higher customer satisfaction and loyalty, improved sales performance, and a competitive edge in the market.

The other options do not accurately capture the main purpose of market segmentation. Increasing product prices is a pricing strategy rather than a segmentation tactic. Identifying competitors is related to competitive analysis but not directly a function of segmentation. Measuring customer satisfaction, while essential for business success, does not align with the core concept of segmenting a market to cater to specific consumer groups.