Essentials of Health Care Marketing 2nd Ed. Eric Berkowitz Chapter 6 Market Segmentation

Chapter 6 Objectives Understand alternative market segmentation strategies Recognize relevant criteria for selecting market segments Identify alternative bases for industrial segmentation Appreciate the hierarchy of segmentation alternatives

Learning Objective 1 Mass marketing Develop marketing mix to appeal to the broadest group Everyone in the market wants the same product delivered priced and promoted the same way. Cost advantage Disadvantage – people have different demands, needs, habits; genericism of strategy Discuss each step with the student – see pp. 102-109. Elaborate.

Learning Objective 1 Market segmentation Grouping into clusters consumers who have similar wants or needs to which an organization can respond by tailoring one or more elements of the marketing mix Can be accomplished with any element of the marketing mix Concentration strategies Multisegment strategies

Learning Objective 1 Market segmentation Concentration strategies Targeting one segment Tailor strategy Majority fallacy Niche strategy – very narrow segment Have students discuss majority fallacy

Learning Objective 1 Market segmentation Multisegment Strategy Pursue several market segments with varying mixes Product differentiation – positioning strategy Have students discuss majority fallicy

Learning Objective 1 Market segmentation Selecting Market Segments – criteria Identifiable Accessibility (promotion or distribution) Members are inclined to buy product/service Able to buy Profitable to serve Desirability – image of organization Consistency (with message) Availability (brand loyal elsewhere?) Have students discuss in more detail – pp 170-171

Learning Objective 2 Bases for segmentation Sociodemographic Age, gender, ethnicity Geographic Psychographic Lifestyles, social class Discuss segmentation criteria, pp. 171-188

Learning Objective 2 Bases for segmentation continued Usage Usage rates heavy half consumer – 80/20 Type of usage How it is used Brand loyalty Hard core loyal, split loyalist, switchers Benefit segmentation Discuss segmentation criteria

Learning Objective 2 Bases for segmentation continued Cohort Segmentation Group of people bound together in history by a set of events Depression WWII Post-War Boomers I and II Generation X N-Gen Millenials Discuss segmentation criteria pp 183-185

Learning Objective 3 Segmenting Business Markets Demographics Size of company, Industry type (SIC code), customer location Operating variables Technology, product use, customer capabilities Purchasing approaches Purchasing procedures, purchasing criteria Usage segmentation Discuss each, pp. 185-192

Learning Objective 4 The Heuristics of Segmentation Health care marketers are attempting to determine if segmenting and tailoring offerings to a segment is worth the time. Marketers want to affect the actual purchase, which is the most accurate level of market segmentation See figure 6-2, p. 189

Conclusions Health care is acting more like traditional businesses vis-à-vis market segmentation strategies. See figure 6-2, p. 189

Summary In a mass marketing strategy, the marketing mix is designed to appeal to the broadest market, while in a market segmentation approach, the marketing mix is designed to appeal to subgroups of consumers. In following a concentration strategy of targeting only one segment, an organization should not focus only on the largest segment, because competitive intensity can render this segment the least profitable.

Summary continued In selecting from multiple market segments, there are several criteria to consider: Segments should be identifiable, accessible, inclined to buy, able to buy, profitable, desirable, consistent, and available. Markets can be segmented sociodemographically, geographically, and psychographically by usage, and recently by cohorts.

Summary continued In selecting from multiple market segments, there are several criteria to consider: Segments should be identifiable, accessible, inclined to buy, able to buy, profitable, desirable, consistent, and available. Markets can be segmented sociodemographically, geographically, and psychographically by usage, and recently by cohorts.

Summary continued In usage segmentation, it is important to identify the heavy half consumer who purchases a disproportionate share of a product, or cho accounts for a disproportionate amount of a service’s volume. The important aspect of cohort segmentation is to realize that cohorts’ attitudes and value systems stay with them even as they age. Thus a health care organization must develop a strategy to respond to the market.

Summary continued Business markets can also be segmented by several criteria. The federal government has developed the SIC coding system, which is a common basis for industrial segmentation. As corporations play an increasingly important role in health care purchases, health care organizations may need to segment them by purchase procedures or purchase criteria.

Summary continued There is a heuristic method to segmentation that moves from purely descriptive measures (demographics) to actual purchase (usage) The ultimate purpose of segmentation is to tailor an organization’s marketing mix with the intent of positively affecting consumer behavior. If segmentation does not differentially affect this purpose, there is little value to segmenting the market on that particular criterion.