Needs-Based Segmentation: Principles and Practice

Abstract

While the principles of needs or benefit-based market segmentation have been long established, its potential value as a route to a stronger market understanding and ultimately competitive advantage has been largely untapped in pharmaceutical marketing research, with internal process rather than market focus driving market understanding. Many of the tensions around the use of geodemographics for market segmentation in the consumer work are mirrored in the use of classification systems and diagnosis in the pharmaceutical environment. This paper presents the application of needs-based segmentation - market segmentation based on understanding how physicians use perceptions of patient needs to group patients and then use this understanding to make appropriate treatment decisions specific to each patient group. The need to include patient needs in market segmentation is taken into account by considering the consequences of not segmenting the market strategically. The approach is illustrated to show how valuable outputs are generated and how direction may be provided across the brand development process. The potential impact and application of this novel thinking within pharmaceutical companies is reviewed. This paper shows how a benefit-based or needs-based segmentation of the market provides a more potent view of the market, and argue that market segmentation should therefore be fashioned to reflect this.