Market Segments

Market segmentation is the process of dividing up the market into sub-groups according to characteristics that are likely to effect buying behaviour. Rather than use one marketing approach for everyone, marketing practitioners often divide the market into segments and treat each segment differently. For example, the market can be divided into the rich vs the poor. Then a company might produce a basic product at a low price for the poor and a better product at a higher price for the rich. Companies may alter one or more of the product, place, price and/or promotion to maximise gain from each market segment. Sometimes the product is the same but differences in place or promotion are used to achieve a higher price. Often only the promotion is altered according to the segment.

Lidstone (1987) uses the example of two GPs, one a user and one non-user of a particular drug to explain the reasons for market segmentation as follows:

"A user GP is currently satisfied by the benefits of your product. He requires ongoing reassurance that the satisfaction he experiences is real and that selecting to use your product was the right decision. A non-user GP does not believe that your product can provide the satisfaction he is seeking. He requires informing and convincing. … One can see that creating a promotional message which will satisfy both of them is an impossible task. The risk is that the promotion will satisfy neither and be totally wasted."

In our experience, health professionals may use a drug without being "satisfied" if they believe that all the alternatives are worse. However Lidstone's main point stands. That is: the optimal "message" for maintaining ongoing use may be different from the optimal "message" for converting a non-user to a user. Consequently promotion is often modified to match the customer's behaviour change stage.

Markets may be segmented according to the following, alone or in combination:

• Wealth
• Position on Maslow's hierarchy
• Demography (age, sex)
• Geography (rural vs urban)
• Behaviour change stage

Patients/consumers can be segmented according to the following, alone or in combination:

• Any of the above.
• Health status (diagnosis, acute, chronic, mild, severe, high risk, low risk)
• Beliefs and preferences related to pharmaceutical use.

Health professionals can be segmented according to the following, alone or in combination:

• Any of the above.
• Occupation (GPs, specialists, retail pharmacists, hospital pharmacists, nurses)
• Special interests
• Frequency of the target indication in their practice.
• Use of the drug being promoted (non-user, user, past user)
• Behaviour change stage
• Psychological factors

Representatives may adapt their approach to the individual customer.