Customer segmentation is the process of dividing a customer base into distinct groups based on shared characteristics. These characteristics can include demographics, purchasing behavior, interests, or needs. By understanding these segments, businesses can tailor their marketing strategies and product offerings to better meet the specific preferences of each group, ultimately enhancing customer satisfaction and loyalty. This approach allows companies to allocate resources more effectively and improve their overall marketing efficiency. For example, a clothing retailer might segment customers by age and style preferences, enabling them to create targeted promotions for teenagers versus adults. This targeted strategy can lead to increased sales and a stronger connection with customers.