MARKET SEGMENTATION

David Holdford, RPh, MS, PhDProfessor, School of PharmacyVirginia Commonwealth University

Trying to please everyone pleases no one

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Slides to Accompany Chapter 12 of “Marketing for Pharmacists”

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LEARNING OBJECTIVESDefine market segmentation, targeting, and positioning

Discuss the purpose of market segmentation

List characteristics of desirable market segments

Describe ways in which pharmacists can segment their markets, and give examples of each

Suggest several ways in which practicing pharmacists can conduct market research

Discuss the steps involved in segmenting markets

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SEGMENTING= Diabetes

Dividing populations up based upon differences and forming smaller subgroups which are most attractive and able to be served most effectively.

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TARGETING

You then target those segments….

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POSITIONING

…with a unique marketing mix that establishes a clear image of your positioning strategy in the minds of patients.

SEGMENTATION IS ONLY USEFUL IF IT HELPS OFFER SOME COMPETITIVE ADVANTAGE

THE CHALLENGE IS TO DETERMINE WHICH CUSTOMER SEGMENTS ARE USEFUL AND DESIRABLE

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1. Identifiable

2. Accessible

to your product & messaging

3. Sizable enough to be worth your efforts

4. Responsive to your targeted

marketing mix

DESIRABLE MARKET SEGMENTS

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SELECTING SEGMENTATION VARIABLES

Through experience and intuition

By adopting the ideas of others

By analyzing customer data

EMPIRICAL V. HYPOTHESIS DRIVEN APPROACHES

Experience versus Experimentation

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Empirical: Segmenting customers guided by practical experience & observation

Pharmacist: “I noticed that women are willing to spend more time talking with me about their medications as men.”

Pharmacist: “I read that patients can be divided into the following groups, Disciples, Medical Buffs, Naturalists, Immortals, & Fatalists. That make sense to me. I am going to see if I can identify which of my customers fall into these categories.”

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Hypothesis Driven: Segmenting customers guided by collecting & analyzing data

Pharmacist: “I analyzed my patient medication refill records and classified them all into 3 categories: (1) never adherent, (2) sometime adherent, and (3) always adherent. I am going to target my motivational interviewing efforts on the sometime adherent group and see if I can improve their rates.”

Pharmacist: “I conducted a focus group on reasons that patients might use MTM services. I identified a patient segment to target: those who were unaware of MTM but willing and able to learn about it.”

COMMON MARKET SEGMENTS IN PHARMACY

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1. DEMO/GEOGRAPHIC SEGMENTATION

Age

Gender

Race

Income

Social Class

Education

Health Insurance

Job

Residence

Place of birth

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2. PSYCHOGRAPHIC SEGMENTATION

Personality (e.g., conservative, control freak)

Lifestyle (e.g., soccer moms, cocooners)

Values (e.g., self respect)

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Psychographic Example: VALS

3. BEHAVIORAL SEGMENTS

Groups according to actions & behaviors

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Behavioral Segmentation

Usage (e.g., heavy, medium, light)

Occasion (e.g., major/minor illnesses, home or vacation, self or family member)

User status and loyalty (e.g., first time, repeat)

Potential behavior (e.g., readiness-to-act)

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Willingness to Adopt Innovations

EarlyAdopters Laggards

EarlyMajority

LateMajority

AverageRate of Adoption

Early Rate of Adoption

Late Rate of Adoption

OpinionLeaders

Innovators

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Special Cases of Behavioral Segmentation in Health Care

Case Management –

TARGETING HEAVY USERS OF SERVICES

Disease Management –

TARGETING PEOPLE WITH COSTLY DISEASES

4. BENEFITS SEGMENTATION

Behavior is linked to benefits sought

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A Benefits Segmentation Method

Price

QualityValue

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Benefits SegmentationQuality Buyers – best w/o regard to cost

Service Buyers – personal caring & service

Value Buyers – best value for the money. Quality should match price.

Economy Buyers – cheapest alternative which will minimize cost.

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Hypothesis Driven: Segmenting customers based upon an application of the scientific method

Express Scripts segmented patients into the groups based on data analysis

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Usefulness of Segmentation Methods for Average PharmacistSegmentation Method

Empirical Driven

Hypothesis Driven

Demographic X XGeographic X XPsychographic XBehavioral X XBenefits X X

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USING SEGMENTATION IN PRACTICE1. Identify key market segments within your practice.

2. Learn as much as you can about the segments in which you are interested.

3. Describe a typical person (i.e., persona) in a market segment.

4. Determine the desirability of each segment.

5. Select those segments on which you wish to focus and create a written plan for each segment.

6. Establish a budget for each segment.

7. Develop measures for the success of targeting efforts (e.g., sales volume, number of repeat visits).

8. Choose a future date when you will reassess your marketing efforts.

 

 

RESEARCHING THE MARKET

Talk with patients Invite a group of patients to chat Conduct surveysReadUse the Internet Mine patient data files Observe how customers shop Test market ideas

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ConclusionSegmentation is fundamental to the marketing

process but…

People do not always fall into neat segments.

Those that do, often act differently from others in their segment.

Segmentation is only a tool. Never stop observing, questioning.

SEE ‘MARKETING FOR

PHARMACISTS FOR

MORE DETAILS

D HOLDFORD