Market Segmentation

What is market segmentation?

Market segmentation is a way to divide up a market into various subgroups with some similar characteristic. It is often deployed in order to better understand heterogeneity in the market as well as how to tailor strategy to specific segments and in order to best deploy limited company resources in growing the brand.

There are often various segmentation approaches deployed for a given drug product including provider segmentation, patient segmentation, and payer segmentation.

Provider segmentation may divide potential prescribers of a drug into various groups based on any number of characteristics including potentially specialty type, past prescribing behaviors, number of patients or type of healthcare entity they practice at, and geography. Provider segmentation is often used in determining who targets should be for sales teams to call on.

Patient segmentation may divide the indicated patient population into subgroups based on characteristics including potentially treatment or procedural history, disease subtype or details, comorbidities, age, sex, or type of insurance. Patient segmentation can be used to determine who the right patient is for a drug or those who will benefit the most or be of greatest value in treating. This can be an important part of the story to physicians and payers, particularly in therapeutic areas with many options or very large populations.

Payer segmentation may divide potential payers by type of entity (PBM, health plan, IDN, ACO, etc.), size, geography, etc.

At an operational level, these three types of segmentation may be overlaid in various ways in order to identify the greatest opportunity and to define a cohesive and strategic tactical plan.