Finding the Moment of Truth
pharmafile | November 12, 2007 | Feature | Sales and Marketing |Â Â customers, marketing, segmentationÂ
The pharma industry is undergoing a number of fundamental changes that significantly challenge the way in which many companies have traditionally marketed their products. There are few large markets that remain untapped. Big therapy areas are increasingly dominated by generics or major prescription drugs about to come off patent. And the industry faces increasingly fragmented markets with multiple customers and influencers. In addition, more regulation, greater use of the internet by customers and less sales rep time with doctors reduces the ability to control communications.
This changing landscape means that simply increasing the traditional vehicle for driving growth (the number of sales reps) is unlikely to be a sustainable or profitable strategy. Marketers will need to be much smarter in the way they allocate their increasingly scarce resources. Ensuring they focus their activity on the customers most likely to drive prescriptions will be a critical success factor in driving profitable growth. The often misunderstood, misused tool of segmentation should have a central role in helping pharma marketers address this challenge.
Why segment?
In order to develop a smarter approach to segmentation, we need to start with a thorough understanding of why we segment the market in the first place. There are various key areas where segmentation can play a role. For example, it can identify the largest and most profitable opportunities and identify the growth strategy over time (i.e. which parts of the market to focus on first and which additional market segments to expand into over time). It can also ensure the different brands in a portfolio are focused on the most appropriate opportunities and don't cannibalise each other's sales, it also enables sales and marketing activity to be tailored to different sub-groups to maximise effectiveness.
However, different marketers often have different goals for their brands based on a range of influencing factors, such as the company's overall business objectives, the stage in the lifecycle of a brand or the level of competition in the market. Having clarity about what the segmentation process is trying to achieve is critical and the approach needs to be based on the specific company objectives. A one size fits all model is rarely appropriate, and while some fundamental principles underpin many approaches, these principles may need to be applied in slightly different ways depending on how the outputs are going to be used.
The problem with traditional segmentation approaches
Does the word 'segmentation' conjure up a picture of the 300-page report gathering dust on the shelf? There are many examples of pharma companies spending millions of pounds on huge global market research studies that produce some interesting information, but which are not really that useful in terms of day-to-day operations.
The reason for this often lies in the way the studies were conducted. Traditionally, segmentation studies have been the domain of the market research department, which commissions huge quantitative data-gathering exercises from external agencies, using a variety of complex statistical analysis methods to develop the 'answer' usually a 'black box', computer-generated solution on how your market works.
This 'answer' is often developed in isolation of the real needs of the end users of the outputs, such as the organisation's sales and marketing teams. It's no wonder that many of these studies are criticised for not leading to practical activities and get quickly confined to the shelves as very expensive book-ends.
Segmentation in action
For segmentation to be truly effective, it must be actionable. If key operational people in sales and marketing teams don't understand it and use it to do things differently, it has failed. We must identify segments that can be accessed and influenced in real life. To achieve this, we believe an effective approach should 'use the right lens'.
This means ensuring that the right market is being segmented at the right level of detail. For example, in the triptan migraine market, growth is driven by new patients and not by switching between brands (see below). So, a detailed segmentation of the entire migraine market would be less useful than focusing efforts on patients who have not yet taken a triptan.
The place to start is what you know or believe about the market and your customers. Most companies already know a lot about their markets and customers. Building on this knowledge and using it to create hypotheses to be explored and validated or refined with customers is a crucial foundation. Not only does this help build a focused research programme designed to address only the most important questions, it also involves key marketing and sales stakeholders in designing the approach, which engenders buy-in among the ultimate end users a key part of making it actionable.
While large quantitative studies, by definition, will provide the most statistically valid segmentation models, spending huge sums on quantitative data collection is not the only option, so consider 'horses for courses' methodology. Insightful qualitative studies using the same broad principles that underpin a quantitative-led approach can be used to build robust, but relatively inexpensive, segmentation frameworks. Although they may not deliver the level of 'proof' some clients need, they will, nonetheless, provide valuable information to guide the decision-making process.
Multi-dimensional models
Finally, when you come to build your segments, use a range of dimensions. In reality, a complex combination of attitudes, needs and knowledge, as well as demographic, geographic and social variables, explain differences in behaviour. A physician's place of education, professional networks and past prescribing record, or a patient's needs, beliefs and disease state can all have an impact on a prescribing decision. Effective segmentation can and should reflect all these dimensions to produce target markets that reflect the real world. Smart segmentation must move beyond one-dimensional models based on a single prescriptive variable.
Ensure you include both physicians and patients in your models and how they interact. While some approaches do focus on segmenting patients, most segmentation approaches focus on the main influencer on the prescription decision the physician.
Regardless of whether companies segment one or both these key audiences, developing discrete segmentation models misses the point. Any prescription decision is a function of two influences: the patient and their symptoms, profile and needs, and then the physician, their diagnostic process, and their knowledge and attitudes towards the available treatment options.
This interaction can be called the 'moment of truth', and an approach designed to understand what happens when a specific type of patient meets a specific type of physician is the best way to develop an actionable model that will really help us positively impact on prescription decisions.
Finding that 'moment of truth'
So what might a segmentation aimed at capturing this 'moment of truth' look like? If we applied the principles described above to the migraine market, for example, we might end up with a range of patient types, each with their own characteristics.
These could be categorised as:
* Optimistic and in control
* Constant worriers
* Drug avoiders
* Resigned passives
* Treatment resistors
Optimistic and in control patients, for example, would be characterised by the fact that they actively manage their migraine. They would be receptive to physician advice, but will visit specialists if not satisfied with their GP to seek other treatment options.
Similarly, a range of physician types could be identified and profiled as:
* Migraine specialists
* Sympathetic, active managers
* Cautious and lacking knowledge
* Migraine dismissors
Sympathetic active managers (see previous page), for example would be GPs with a strong interest in, and commitment to, treating migraine patients. They would be knowledgeable about the treatment options and very receptive to using new treatments that became available.
There is nothing new in this, perhaps. However, the true benefit comes from understanding what happens when each of these groups interact. By understanding what a physician prescribes now, what factors drive this prescription and what the triggers and barriers to using a new treatment might be, we can develop a framework that will significantly help guide strategic and tactical development of the new brand.
A series of matrices could be developed that would influence a range of key decisions from target audience definition, to positioning and communication development right through to sales strategy.
Segmentation in this format is not simply a stage within the strategic planning process to identify where to focus, but a customer insight-led framework that informs brand activity on an ongoing basis.
Delivering more with less
Many of the more progressive pharma companies are beginning to embrace the trend towards customer insight as a critical foundation for business decision-making. Unfortunately, many still fall short of effectively integrating this as a central component of their marketing and business planning processes. This is where a genuinely customer-led market framework or segmentation has a crucial role to play.
Segmentation that is theoretically robust, understandable and useable on a day-to-day basis by the marketing and sales teams will be a hugely valuable tool for 21st century pharma marketers who are tasked to deliver more with less and this is a challenge that is likely to become ever more common.
This article was written by Steve Padgett and Stephen Small of ConsultComplete. For more information, please contact Steve Padgett on tel: 01625 624000 or by e-mail at: steve.padgett@consultcomplete.com.
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