What Are IDEAs Made Of: Segmentation

Mike Rea

IDEA Pharma

Most of us understand segmentation at a gut level. We’re Coke people or Pepsi people, Huggies or Pampers, supermarket own-brand or branded, never-a-BMW driver, Heineken drinker, into U2 but not REM, Starbucks lover/ Starbucks hater because of their coffee/ Starbucks hater because of what they represent.

Then, unfortunately, we go to work and forget what segmentation means. Segmentation is the process of splitting (segmenting) the entire market into smaller groups that share similar traits. Traits like age, gender, income, etc. traditionally, but also geographic, attitudinal/ psychographic and behavioural. (Here we’re focusing on strategic segmentation, rather than sales targeting, which is similar but different…)

In pharma, segmentation is often heard negatively – as ‘niche’ (as if ‘niche’ was bad – a ‘recess or hole in the wall’ that only your brand’s statue stands in sounds absolutely perfect, so long as it is not a tiny one…). It is heard as ‘why would our great product not be the best thing to promote to everyone?’

“In pharma, segmentation is often heard negatively – as ‘niche’…”

A wise man once pointed out to me how careful one needs to be with segmentation. He said ‘what’s your favourite beer?’ Hearing my carefully thought-through response, he then said ‘and if you were at a barbecue, where that brand wasn’t available, would you throw your hands up in horror? If you were in a bar, would your preference change? If it was a cool nightclub and you were looking to impress? If you were buying cases in a supermarket?’ His point is that the kinds of segmentation that beer marketers get to use are contextual – the context changes the drivers of behaviour and preference, from being robustly pro one brand, to taking anything on offer.

Segmentation in pharma should operate on the same basic principles. Recognizing a delineation between segments doesn’t tell you whether that segmentation is true and useful or true and useless. It certainly doesn’t tell you which is the most useful segment to target. Pharma segmentation needs to take account of the way that customers segment, the clinical segmentation of patients, segmentation of patients in terms of goals of therapy (perceived by patients, physicians and payers) – so many layers (by the way, no one said it would be easy!). You’re trying to assess the judgments physicians make when they prescribe.

One question we always ask (another one of the ‘cheats’) is ‘do some physicians use a lot of the competitor, or do all use some?’ Such a simple question, but unfortunately most often we get a ‘hmm, we’re not sure’ answer. The answer to that question could inform wholly different strategies.

Here’s the thing – your audience is probably of the same view as I was when asked the beer question: they haven’t a clue why they choose the products they use for different patients – it is probably the first time they have been asked ‘why’. So, follow-on point: what’s the point in asking them and relying wholly on their first answer? Unfortunately, a lot of segmentation processes take their first answer and build it into a big pile of first answers (or a big pile of…).

“Your goal in segmentation…is to define spaces where your product gets to win.”

Your goal in segmentation (as an outcome, rather than a process) is to define spaces where your product gets to win. Unfortunately, too often we see lazy segmentations that, for example, segment cancer patients into such true but useless spaces as fit and fighting, to sad and resigned, and then try to fit their brand into those spaces like a size 12 into a glass slipper (acknowledging that defining a narrow ‘glass slipper segment’ rather troubled the Prince for a while, and that the original ‘glass slipper’ was not glass but fur…). But remember – if your brand is only one of several brands that people might choose in that segment, you’re not done (which is inconvenient if your ‘segmentation agency’ has banked the cheque…). It is as big a problem as not segmenting (which we also see too often – one recent example being a product outsold 4 to 1 by an inferior competitor, but still refusing to ‘segment’ the market because ‘everyone should be getting it’).

Like so many components of strategy, segmentation happens whether you like it or not. When you do it badly, or don’t do it at all, the chances of you not liking it increase exponentially.

About the author:

Mike Rea is a Principal with IDEA Pharma, who enjoys taking a look outside the industry to learn how it can think differently. For direct enquiries he can be contacted on mike.rea@ideapharma.com and for more information on IDEA Pharma please see http://www.ideapharma.com/what/default.htm.

The next WAIMO piece will be in a couple of weeks.

Is pharma segmentation too simplistic?