Divide and rule:

segmenting the healthcare market

How can marketing and sales teams share the challenge of making market segmentation work? Baba Awopetu and Akin Sawyerr take a look at the potential rewards of this strategy.

It’s time for the healthcare industry to prove it cares. In business, the objectives are always the same: sales growth and profit growth. We all appreciate that the secret of achieving these objectives is satisfying our customers. This article looks at the benefits that market segmentation offers to marketers and sales executives alike. Segmentation has lost its true meaning amidst a series of watered-down explanations of segments. The concept of segmentation dates back to the 1960s. Essentially, it is about grouping customers into clusters with the same attitude or behaviour – but more importantly, the same need. Organisations can then focus their efforts on targeting those segments where they can change perception or meet unmet needs. The idea of treating all customers equally contradicts modern business principles such as ‘customer intimacy’ and ‘customer orientation’. Fundamentally, customers are not a homogeneous mass.
Practices in other industries give us some insight. The product range of the toothpaste industry demonstrates how segmentation has helped it to deliver on the promise of customer orientation. The toothpaste market segments readily into whitening, protection, children and sensitivity, among others. These segments represent customers with specific needs.
Targeting these customers based on usage pattern or demographics could prove disastrous unless those characteristics correlate with their needs.

Not just about the product
How does this transfer to useful guidance within the healthcare markets? The application of segmentation in the healthcare arena needs to be carefully tailored and adapted. Effectively meeting customer needs requires different marketing mix elements: differentiated messages, meetings, support and promotions.
The products may not be easy to vary, but giving customers what they need and want remains paramount. Customer decisions about organisations or products are rarely based on the core product alone.
This principle is increasingly being adopted by healthcare marketing executives as the mature market impacts, with gains from the ageing demographic countered by increasing pressures from payers and consumers.
Reluctance to trust segmentation in healthcare is usually attributed to market peculiarities and the challenges of implementation. However, our research shows that some experienced representatives regularly segment their market. For example, one experienced sales representative segmented her customers for more effective service delivery as follows:

Science-focused – bases decisions on an in-depth look at published clinical information. Responds to arguments focused on clinical benefits and hard facts. Gadget-focused – early adopter with a strong social network; considers information thoroughly, but will adopt quickly and influence others if convinced. Appreciates a balanced outlook and support for their credibility-building activity. Patient-focused – views decisions primarily from the patient’s perspective. Responds well when patient benefits (clinical or emotional) are emphasised. Self-focused – interested in personal advantage, so clinical benefits are only relevant if resulting in a gain for them (such as more free time).

This representative used different tactics (supported by the marketing team) in the field depending on which segment she felt the customer was in. The appreciation of these underlying factors enhanced relationshipbuilding and allowed resources to be deployed appropriately.
Most representatives and marketers recognise the customer segments described above or similar ones – so where does the friction come from where implementation is concerned? Can marketers and field representatives work together to achieve effective segmentation? The representative may argue that each customer interaction is unique, so there is no need for grouping. But in most markets there are key attitudes that prevail. Capturing and categorising these enables the marketing team to design its offering and programmes to meet segment-level need. Customer insights derived from market segmentation will accelerate changes in sales behaviour, leading to greater success.

Two teams, one goal
The knowledge that goes into identifying market segments must come from the field as well as from the marketers in head office – so teamwork is vital. The approach needed will vary depending on product type, customer culture and other market peculiarities. Segmentation gives a definite handle on clusters, not on individuals. It is a scientific art rather than a pure science. So it is important that imperfect data do not lead to the whole approach being abandoned.
Insight into the traits of each target segment leads to innovative and differentiated activities to engage the customers. The field force can enhance relationships with customers through the delivery of bespoke engagement plans based on the needs of each segment. Research by Agnito demonstrated a dramatic improvement in time spent with customers when a segmented approach is used rather than a generic one. Accurate segmentation is thus a key source of competitive advantage.
The problem is: how can we bridge the gap between field and head office? As one senior marketer said: “Good attitudinal-based customer segmentation holds the key to effective communication of key messages and ultimately ensuring the most appropriate use of resources to impact uptake and ultimately maximise ROI. Segmentation lives in the minds of everyone touching the brand, and forms the basis of all decisions from channel selection to message communication. It has been an extremely worthwhile exercise and has helped us become a lot smarter in what we are doing.” Effective segmentation is helping this team to win in its market.

Our research shows that effective segmentation depends on the ‘STRIKER’ principles:

Simplicity – the strategy need not be overly complicated. It should be built around the resources and capabilities of the field force. Training – programmes must ensure that all involved are clear on the actions required and the benefits, and are comfortable with the approach. Rationale – mature markets, decreasing access and customer dissatisfaction are some of the issues that make segmentation vital for the healthcare market. The field force need to understand why and how the strategy is being developed. Involvement – this is vital for commitment. Representatives must be involved in data collection, testing and research to ensure that their concerns are accommodated. Key successes – early successes at segment level should be communicated to reassure doubters and encourage early adopters. Evidence base – the robustness of the evidence supporting this approach must be communicated. There are numerous case studies of how segmentation has changed the fortunes of major corporations. Reinforcement – naming the segments and using them in communications will reinforce the message and inject fun into the process.

Beating the odds
When applied properly, segmentation benefits everyone. Sales teams achieve an improvement in their interaction and time spent with customers, while marketers can deploy strategies to complement the efforts in the field. When the two forces are aligned, the impact on performance should not be underestimated. Given ongoing issues with access, time with customers and pricing pressures in the healthcare market, the case for adopting segmentation is compelling.
The path to a segmented and successful future is tough, but the rewards are huge. The current environment is unforgiving, and we all need to adapt our practices in order to remain effective. The success of customer segmentation depends on the field force and the head office sharing their experience and insights.

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Baba Awopetu
(btawopetu@yahoo.co.uk) is Senior Lecturer at The Marketer’s Forum and a freelance healthcare writer. Akin Sawyerr (sawyerrs@yahoo.co.uk) is Sales Manager at Recordati Pharmaceuticals.