The breaking of market into smaller units consisting of people with similar tastes and behaviour is called:

Market segmentation is one of the most tested concepts in CBSE Class 10 and 12 marketing chapters because it underpins all marketing strategy decisions. The core idea is that no single product or message can satisfy all consumers equally, so businesses divide the total market into segments where each group has similar needs and will respond similarly to a given marketing mix. The answer to this question is simply 'segment', referring to the result of the segmentation process. A common student error is confusing segmentation (the process) with a segment (the resulting group) — the question asks for the term that describes the smaller unit, which is a segment. Another trap is listing segmentation types when the question asks only for the definition or the term. In practice, poor segmentation leads to wasted marketing spend: a company selling luxury watches that targets all income groups will find its message diluted. Effective segmentation allows precise targeting — the second step after segmentation in the STP process (Segmentation, Targeting, Positioning). CBSE exams frequently present scenarios and ask students to identify which basis of segmentation is being used, so understanding each basis with examples is essential for scoring full marks.