Final answer:
The primary goal of market segmentation is to tailor products or services to the specific needs of different consumer subgroups, thus enhancing marketing effectiveness and efficiency.
Step-by-step explanation:
The primary purpose of market segmentation is to enable a company to better tailor its products or services to the specific needs, desires, and demands of a particular group of consumers. Through segmentation, a company can identify and target subgroups within a market, often resulting in more efficient and effective marketing strategies. For instance, a market could be segmented based on age, location, buying habits, or income level, allowing specialized product offerings or marketing approaches that resonate more with each particular segment.
In the context of a market-oriented economy, critics suggest that the plethora of differentiated products may not necessarily meet a social need for variety and that associated marketing costs may be wasteful. However, those in favor argue that product differentiation and the competition it engenders benefits consumers by providing choices tailored to their specific needs and preferences. This level of product differentiation is a direct result of segmentation and can lead to monopolistic competition, where diversity of products fuels the competitive dynamics.