MARKET SEGMENTATION

Alduheza, Shynne B.Bugais, Lislyn Megann D.

Flores, Chiena Mae S.Espana, Lorebeth L.

Lo, Manuel Timothy Jude C.Manzo, Marie Angeli F.

Tan, Marie Charmaine B.

Marketers

• identify individuals in the market who can be served most effectively and profitably

• use segmentation to identify similarities within groups of consumers and benefit from these similarities

Marketers

• Identify opportunities in the market.• Tailor a unique marketing mix.• Charge and receive higher prices.• Serve customers more efficiently.• Gain a competitive advantage.

Mass Marketing

• attempts to serve the entire market with the same marketing mix

• no longer useful due to too much competition for consumer demand

Definition of Terms

• Market Segmentation- dividing a market on the basis of

differences and forming subgroups based on common characteristics

- goes hand in hand with targeting and positioning

• Segmentation- identifies variables that can be used to

target desirable groups of individuals

Identifying Desirable Market Segments

• identifiable• accessible• of sufficient size• responsive to the targeted marketing mix

Selecting Segmentation Variables

• through experience and intuition• adopting the ideas of others• analyzing customer data

Segmentation Approaches

Empirical Hypothesis-Drivenbased on professional experience or information colleccted from literature

tests hypotheses about the relationships between market segmentation variables and outcomes

resembles empirical treatment by physicians and pharmacists

gain insights about actual and potential customers that can be used to secure a competitive advantagebuilds on information used in empirical segmentationrely on market research techniques to identify patterns of consumer behavior

Empirical Segmentation

Advantages Disadvantagesrelies on marketer's experience and ability to understand which variables are useful

complex

expensive as the amount of time devoted to it and the cost of the subcriptions to the publication

bombarded with tremendous amounts of information about customer behavior and actions of competitors

time-testedbusiness owners rely on their intuition and knowledge to serve customers

Hypothesis-Driven Segmentation

Advantages Disadvantages

uses methods from a variety of fields to gain greater understanding of consumer behaviors and markets

the more rigorous the methods used, the higher the costs

Marketing Strategies Associated with Segmentation• Differentiation Strategies- selects two or more segments for targeting- attempt to select a portfolio of products

and services to meet the needs of multiple customer groups

• Focus StrategiesNiche: small, narrowly defined marketa. Niche / Microniche Strategies- select a single, profitable segment that

offers the best opportunity for success

Characteristics of a Niche

• large enough to be profitable• underserved or ignored by competitors• able to be exploited by the unique skills

and capabilities of marketers

Common Ways of Segmenting Markets

• Demographic• Geographic• Psychographic• Behavioral• Benefits

Demographic Segmentation

• most easily segmented• most common bases of segmentation• useful in developing targeting strategies• variables: age, sex, income,

ethnicity,family size, ccupation, education, family life cycle, religious affiliation, nationality

Sources of geographic/demographic data• U.S. Bureau of Labor Statistics• U.S. Census Bureau• U.S. Department of Commerce• U.S. Internal Revenue Service• U.S. Social Security Administration• National Center for Health Statistics• Individual state and local government sources• Small Business Administration• Professional and trade associations and journals • American Demographics; Prevention magazine

• Local chambers of commerce and libraries

Senior Market

• users of prescription medications and other forms of health care

• fastest growing segment• with highest discretionary income• five variables for segmentation:- discretionary income- general level of health- general activity level- amount of discretionary time not taken up

with family, job, and social activities- degree of social interaction with others

Cohort Segmentation

• dividing consumers by age into a cohortCohort: a group of people of the same

generation ; the same historical events during formative periods

-Great Depression: thrifty-Vietnam War: challenge authority-Others: Depression Babies, Silent

Generation, Swing Generation, Greatest Generaion, Baby Boomers, Generation X, Generation Y, Millennials

Geographic Segmentation

• permits pharmacists to target patients on the basis of location

• used to locate lucrative market segments and target those segments with promotional communications

• variables: country, region, metropolitan statistical area, city, county, state, neighborhood, rural

Psychographic Segmentation

• based on the premise that consumers are influenced by personality, lifestyle, and values

• useful for shaping promotional strategies, product development, and communication decisions

• uses psychological and socioogical research methods

- identify consumer values, beliefs, and attitudes

Methods of Psychographic Segmentation

• Personality Segment-based on behavioral traits or personality

characteristicsa. compulsiveb. controllingc. conservatived. socializere. extrovertf. need to achieve

Methods of Psychographic Segmentation

• Lifestyle SegmentLifestyle: relates to the activities, interests,

and consumers' opinions- reflects a group's priorities and beliefs

about various issues- used to classify senior populations

Segment Characteristics Barriers to Treatment

How to Reach Message

Disciplesobedient, trusting, highly compliant with therapies

sometimes forgetful

pharmacists, advertising, popular press

remind, reinforce benefits of treatment

Medical Buffs

engaged, adherent, trust physicians but feel in control of own health

have string brands of ideas, first to switch brands

internet, medical publications, brand-specific ads

position treatment as patient-physician relationship, stress brand superiority

Naturalists

shun pharmaceuticals in favor of holistic remedies

distrust traditional treatments, anxious about side effects

guerrilla marketing, condition-specific website, nonbranded ads, point-of-purchase displays

position treatment as part of healthy lifestyle, emphasize the natural

Immortalsdevi-may-care types, disregard physician's recommendations

ill-informed, often in denial

family members, peers, telephone reminders

deliver wake-up call, clarify necessity for treatment

Fatalistsfeel health is out of control. often noncompliant

feel hopeless and helpless

family members, peers, telephone reminders

with help, you can overcome symptoms

Methods of Psychographic Segmentation

• Segmentation by Values- identify values upon which people base

their lives and day- includes: self-respect, security, excitement,

sense of fun and enjoyment of life, having warm relationships, self-fulfillment, sense of beloging, accomplishment, being well- respected

Psychographic Research and Drug Use

• Realists

• Authority Seekers

• Skeptics

• Hypochondriacs

According to Piepho:

• Dissatisfied

• Energetic

• Sedentary

Combining Psychographic and Demographic Variables

• Ambivalent learners• Uncertain patients• Risk avoiders• Assertively reliants

Behavioral Segmentation• uses information about consumer actions and

choices to group customers• deals with utilization of health care services and

products• criteria include:- type of health insurance or plan choices - frequency of visits to health care providers- self-care habits- prescription drug use- nonprescription and heral medication use- preventive care behaviors- level of participation in pharmaceutical care

activities

Pareto Principle

• a relatively small number of people use a disproportionate amount of health care services and products

• approximately 80% of most problems can be attributed to roughyly 20 of their potential causes

• pharmacists should target 20% of the market associated with drug misuse, health care spending, and other behaviors

Types of Behavioral Segmentation

• based on actual behaviora. usage- heavy, moderate, or light users- disease management- case management b. occasion- treating major and minor illness- at home and on vacation- for the respondents or for treating family

members

c. user status and loyalty- user status: previous use- first-time, former, repeat, or potential usersd. willingness to adopt innovations

Individuals Descriptions

Innovators

first to adopt new ideas and productsventuresome, eager to try new things, willing to take riskshave a broader viewpoint, greater education, and financial capability to absorb failures

Early Adopters(Opinion or Thought Leaders)

socially connected ad influenced by innovatorssought out for advice, respected by others, and willing to share new idease through word-of-mouth discussions

Individuals Descriptions

Early Majority

influenced by early adopterscareful, deliberate, willing to take more time in making decisionswell integrated socially

Late Majority cautious and skeptical wth regards to innovationtend to wait to adopt innovations

Laggardstraditional in outlook and look to the past in decision-makingsocially isolated and resist innovations

• based on potential behavior- according to the readiness to buy or act in

some desirable manner- unaware, aware, interest, evaluation, trial,

usage, repeat usage

• based on a mix of actual and potential behavior

- variables: at risk for drug-related problems

Benefits Segmentation

• according to the specific benefits the customers seek

• consistent with the total product concept

Customers Descriptions

Quality buyers seek the best product and service without regard to cost

Service buyers look for personal and caring service

Value buyershunt for the best value for the money and expect service to match the price

Economy buyers

favor cheapest alternative

Consumers of preventive health services

Descriptions

Hypochondriac

need and actively seek reassurance that they are healthytend to overuse health servicesgood customers of vitains, self-diagnostic kits, and prevenetive therapies

Health seeker

strive for a long, healthy life and use preventive care as means to that endactively participate in health behaviorsactively seek information about healthy practices and preventive sevicesrespond to the marketing of healthy foods

Band-Aider

like to brag how healthy they aretake great pride in how little the have needed to use health care servicespreventive health care is undesirableseek care only when they are very ill or injured

Consumers of preventive health services

Descriptions

Do not bug me.

use negative health behavior to cope up with the daily stresses of lifeavoid preventive health care

Follower

seek the guidance of others for preventive practicesseek advice from friends, family, other health professionalstend to do what others recommend but are skeptical that preventive health care will bring about the promised improvements in healthmore likely to put off health care until they get sickunlikely to use vitamins, preventive remedies, or attend health screenings

Self-sufficient

independent, self-relianttend to be skeptical of traditional health care and prefer self-treatment with nonprescription medications and home remedies

Segmentation for the Practising Pharmacist

• Goal: help identify and predict consumer tendencies to act in specific ways

• Pharmacists need to conduct research into their needs and wants.

- Talk with Patients.- Invite a group of patients to chat about

pharmacy services.- Conduct surveys.- Read the pharmacy and health care literature.

- Use the internet.- Mine patient files.- Observe how customers shop.- Test-market ideas.

• Pharmacists can use segmentation to target specific customer groups.

- Identify key market segments within your practice.

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

- Describe a typical person in a market segment.

- Determine the desirability of each segment.- Select those segments on which you wish to

focus and create a written plan for each segment.

- Establish a budget for each segment.- Develop measures for the success of targeting

efforts.- Choose a future date when you will reassess

your marketing efforts.