pharmexec.com | Gary Lyon*
NASCAR followers will likely
recognize the famous red oval logo of STP, originally an acronym for
“scientifically treated petroleum”. As a gasoline additive, STP is designed to
prolong engine life and improve performance. Could “STP” also be a proven boost
to healthcare marketing effectiveness? This article briefly explores the role
and impact of three elements — I would argue the most important elements
— of marketing planning that drive business success: Segmentation, Targeting
and Positioning.
Segmentation
Segmentation is the process of
dividing large, diverse markets into smaller, more homogenous sub-groups on the
basis of one or more differentiating criteria. Traditionally, these criteria
have included demographic or psychographic (lifestyle) factors but attitudinal
and behavioural factors are equally important.
I recall working on an OTC
heartburn remedy where a clear “Pareto” (80:20) effect existed: almost 70% of
total market consumption was generated by less than a third of all users. These
“heavy users” had their own unique profile and characteristics that would have
been difficult to understand, let alone apply if we had tried to target all
users. More importantly, heavy users were uniquely appreciative of the features
and benefits of this product and willing to pay a premium price which casual
users were unwilling to do so. How far can the segmentation process go? A
four-step segmentation “test” that Dr. Brian Smith of Pragmedic once shared with my students at Regents Business School in London can
be summarized as:
- Homogeneity – does the segment, as a whole, share meaningful characteristics?
- Distinctiveness – is the segment distinctly different from other segments?
- Accessible – can we target consumers within the segment effectively and efficiently?
- Valuable – can we build a sustainable, profitable business by targeting this
segment? Macro/micro-economic factors like the regulatory climate, underlying
market growth, and competitive factors would also come into play.
Segmentation usually involves
the “painful’ decision of saying “no” to a majority of possible customers in
favour of the few, highest-potential ones. Is it possible for the same brand to
target different segments? The answer is, yes, but there are limitations.
Staying with the heartburn market, Tums® (GSK) directly attempted to target the
female calcium supplementation market before medical experts and regulators
questioned the usefulness of the form of calcium in Tums as well as the ill
effects of long-term, heavy use (typical of most Tums users).
On the
positive side, Minute Maid® (Coca-Cola Co.) offers an orange juice variant that
contains low concentrations of calcium plus Vitamin D to aid absorption as part
of a normal, one-glass-a-day routine. Arguably, both brands had an
opportunity but Minute Maid, in this case, had the right product formulation
and usage profile to make it work. There are a few examples of umbrella or
“master’ brands that have been spectacularly successful in crossing over to
unrelated segments such as Virgin Atlantic, Virgin Mobile, etc. but most people
forget there were Virgin failures too like Virgin Cola, Virgin Vodka and Virgin
Cars. Clearly, other success factors are involved which is why we need to
understand where targeting and positioning fit in.
Targeting
If segmentation considers the
aggregate of homogenous consumers, then targeting considers the detailed
profile of individual consumers within the segment and how best to reach them.
In my experience, there are few marketing investments with a higher ROI than
efforts aimed at understanding the customer. It’s true that many successful
start-ups were inspired by solving the founder’s problem or need but few have
grown without considering the needs and preferences of someone else!
Drilling
down on that “someone” rather than “anyone” usually involves talking to users
and non-users about a range of issues including purchasing habits, buying
influences, usage habits and attitudes. Competitive advantage can be created at
this stage through superior customer knowledge and applied insights. While
Steve Jobs famously said it wasn’t the customer’s job to know what they want,
it is certainly the marketer’s job. The second part of targeting is reaching
these target customers via communication as well as supply channels.
Traditional media metrics like reach, frequency and CPM (cost per thousand
impressions) have been augmented by various attempts to measure engagement and
response. With digital communication tools and cheap point-to-point
distribution options, truly differentiated products and services now can reach
customer targets more effectively and efficiently than ever which, in turn, has
profoundly influenced segmentation strategies. This differentiation requirement
is the focus of our third factor, Positioning.
Positioning
Positioning and its cousins go
by many names, including USP, value proposition, brand promise, etc. The common
denominator in most of these concepts is the objective of occupying a clear,
meaningful, competitively advantaged perception in the mind of a specific
target customer. The additional burden is to actually deliver on the perception
and to do it profitably (or at least consistent with the organization’s goals).
It is not usually the marketer’s role to come up with the specific word,
phrase, image, scent or sound that communicates this positioning. That’s often
the role of a creative agency. Marketing’s role is to confirm the target
segment, including likely competitors (Step 1), understand that customer in
depth (Step 2) then describe in plain language the basis by which we will
attract and retain these targeted consumers (Step 3). In my Procter &
Gamble days, we called this the marketing strategy and it was the anchor or
umbrella strategy that guided all sub-strategies such as pricing, advertising,
distribution, etc.
A good marketing strategy only
changes when a disruptive competitor appears or a strategy shift is warranted.
Staying with my heartburn example, I learned how dramatically perception can
change with just a few choice words. We tested customer response to a concept
that focused on “preventing heartburn” (by taking a pill before eating the
foods known to cause heartburn). The consumer interest – even among frequent
sufferers – was negligible. However, when the idea was rephrased as“eat the
foods you love”, the concept interest shot to the top. The word I love to use
to describe this optimal positioning is “delight”: moving beyond mere
satisfaction to deliver more than what the customer expected. In my example,
the only way this latter concept came to light was through an understanding of
how frequent sufferers viewed their “fate” as never being able to eat the
foods that triggered their heartburn.
In summary, great marketing
must be powered by a deep understanding and artful application of segmentation,
targeting, and positioning. Perhaps most importantly, these three strategies
are not developed independently but must be integrated with clear linkages evident
between each strategy.
Start your engines!
*Gary Lyon is Principal
Consultant at Portage Solutions and a “graduate”of the FMCG and consumer healthcare industries.
