Association of Chartered Certified Accountants (ACCA) Certification Practice Test

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What is the process of dividing a market into distinct groups of buyers called?

  1. Market targeting

  2. Market segmentation

  3. Market consolidation

  4. Market analysis

The correct answer is: Market segmentation

The process of dividing a market into distinct groups of buyers is referred to as market segmentation. This concept is fundamental in marketing as it allows businesses to identify and target specific groups of consumers who have similar needs, behaviors, or characteristics. By segmenting the market, companies can tailor their products, services, and marketing strategies to meet the unique demands of each segment, ultimately enhancing customer satisfaction and loyalty. Market segmentation typically involves analyzing various factors such as demographics, psychographics, geographic boundaries, and behavioral patterns. This helps organizations understand the different preferences and purchasing behaviors of their potential customers, leading to more effective marketing campaigns and better resource allocation. The other concepts, although related to marketing, serve different purposes. Market targeting comes after segmentation and involves choosing which segments to focus on. Market consolidation refers to the process of merging or acquiring businesses to reduce competition in a market. Market analysis involves investigating various aspects of a market, including its dynamics and trends, but does not inherently involve dividing it into segments.