Final answer:
The claim that increased market segmentation leads to less precise understanding is false; it actually results in a more precise grasp of consumer needs, which is essential for efficient market functioning despite the prevalence of imperfect information.
Step-by-step explanation:
The statement 'The more marketers segment the market, the less precise is their understanding of it' is false. Market segmentation is a strategy used by businesses to divide a broad target market into subsets of consumers with common needs, preferences, and priorities, and then design and implement strategies to target them. Incremental segmentation usually leads to a more precise understanding of the market because marketers can address specific needs and preferences, which could be unclear when viewing the market as a homogeneous whole.
Many economic transactions occur with imperfect information about product quality, making it challenging for markets to exist. However, when marketers segment markets effectively, they acquire more precise information about consumer needs, improving the overall market functionality. Globalization and new information technologies could lead to broader market definitions as they allow antitrust authorities to consider wider geographic areas and multiple platforms where competition occurs.