Customer segmentation is the process of dividing a customer base into distinct groups that share similar characteristics. This allows businesses to tailor their marketing strategies and product offerings to meet the specific needs of each segment, ultimately enhancing customer satisfaction and loyalty. By analyzing data such as demographics, purchasing behavior, and preferences, companies can identify key segments within their audience. This targeted approach not only improves marketing efficiency but also helps in developing personalized experiences that resonate with customers, leading to increased engagement and sales.