Final answer:
Market division based on geographic location is called segmentation, which organizes potential customers with common needs into groups for targeted marketing efforts.
Step-by-step explanation:
Dividing the market into smaller groups based on where consumers live is known as segmentation. Market segmentation involves organizing potential consumers into groups or segments that have common needs and will respond similarly to a marketing action. By understanding the market structures and how competition impacts consumer choices, companies can better tailor their products and marketing strategies. When conducting market research, methods can range from random sampling, such as every tenth person entering a store or using computer-generated random numbers, to cross-sectional research comparing different groups simultaneously. This approach helps identify economic changes and preferences within a population, useful for companies planning to introduce new products or explore different market segments.