Market segmentation involves dividing the total market into distinct subgroups that have similar needs and will respond similarly to marketing efforts. There are five requirements for effective segmentation, including that the market must be heterogeneous, segments must be distinct and internally homogeneous, differences between segments should be large than within segments, segments must be profitable, and segments can be effectively targeted. Market segmentation can be done based on geographic, demographic, psychographic, and behavioral variables. For example, geographic segmentation divides the market based on location, while demographic segmentation considers factors like age, gender, and income. Psychographic segmentation examines personality and lifestyle characteristics.