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

2. 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

3. 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 Elaborate.

4. 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

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

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

7. 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

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

9. 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

10. 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

11. 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

12. 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

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

14. 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.

15. 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.

16. 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.

17. 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.

18. 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.

19. 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.