Final answer:
A segmentation variable is a characteristic or trait used to divide a market into smaller segments based on factors such as demographics, psychographics, behavior, or geographic location. It is not used to group smaller markets into one larger market.
Step-by-step explanation:
A segmentation variable is a characteristic or trait that is used to divide a market into smaller segments. These segments can be based on factors such as demographics, psychographics, behavior, or geographic location. By dividing a larger market into smaller segments, businesses can better understand their customers' needs and preferences and tailor their marketing strategies accordingly.
For example, a company selling skincare products may use a segmentation variable like age to group its target market into segments such as teenagers, young adults, and older adults. Each segment may have different skincare needs and preferences, so the company can customize its products and marketing messages to effectively reach each segment.
Therefore, the statement 'A segmentation variable is used to group smaller markets into one larger market' is false. Rather, it is used to divide a larger market into smaller, more targeted segments.