Which of the following defines market segmentation?

Market segmentation is defined as dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors. This is crucial for businesses as it allows them to tailor their marketing strategies and product offerings to specific segments, increasing the effectiveness of their efforts and better meeting customer needs.

By focusing on distinct groups, companies can identify specific target audiences, understand their preferences, and develop targeted marketing messages that resonate with those consumers. This tailored approach can lead to increased customer satisfaction and loyalty, as well as improved sales and market share.

The other options address different business concepts that, while important, do not accurately capture the essence of market segmentation. Analyzing all market trends pertains to understanding general market dynamics rather than focusing on specific groups. Creating new products for existing customers focuses on innovation and development, while determining the overall market size relates to estimating potential sales volume rather than categorizing buyers.