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Healthcare Market Segmentation

Free «Healthcare Market Segmentation» Essay Sample

Introduction

The healthcare industry is one of the significant service delivery industries for any developed or underdeveloped country. The UK healthcare sector has been growing constantly over the last few decades. Consequently, healthcare organizations have to adopt strategic measures in order to acquire a market share. The ever-increasing healthcare sector has prompted aggressive marketing of these organizations. Healthcare marketing refers to the creation, communication, and delivery of health information and interventions with the use of consumer-oriented and science-oriented strategies in order to safeguard and promote health of a market segment. Similar to business ventures, healthcare organizations have to conduct market segmentation. In addition, similar to other service industries, behavioural and social variables influence the way the market segment consumes the health services. In regard to this background, the current paper describes a healthcare market segment by considering its various characteristics such as age, income, and interests among others. In addition, the paper also uses eight marketing segmentation criteria specified in Essentials of Health Care Marketing by Eric Berkowitz.

Selection of Market Segment

Any firm following the segmentation strategy must identify the market segment to target. Conceptually, the market segment must be as uniform as possible. Currently, according to Moschis & Friend (2008), there are about six healthcare market segments: casual and cautious, content compliant, online and on-board, sick and well-informed, out and about (mobile), and shop and save. The market segmentation conducted by Berkowitz (2010) considered the socio-demographic factors of the healthcare consumers. The market segment selected by this paper is the sick and well-informed healthcare consumers. It was chosen based on the criteria specified by Berkowitz (2010), which are described below.

Characteristics of Sick and Well-Informed Market Segment

This segment comprises individuals who consider their health as the main priority. They use several healthcare products and services in making informed decisions with a doctor (DeLorme, Huh, & Reid, 2007). Since health is the priority to them, they conform to treatment plans. The socio-demographic characteristics of this market segment include age, income, and gender.

Age has relevance in healthcare segmentation. According to Dey (2013), age segmentation occurs in terms of product. For instance, geriatric medicine is the health intervention aimed at the health needs of the elderly. Research shows that the average age of the sick and well-informed is about 49 years (Dey, 2013). Based on these characteristics, it is evident that this segment comprises mostly seniors.

The income of an individual determines whether he or she will consume a product (Kotler, Shalowitz, & Stevens, 2011). Studies indicate that higher income earners also have insurance coverage. For persons with same health needs, the likelihood of high-income earners to consume a health product is higher than that of low-income earners. The sick and well-informed marketsegment mostly comprises individuals with high income. A study by Kotler, Shalowitz, & Stevens (2011) indicates that about 92% of this segment is insured because their health is the priority to them.

Gender segmentation is evident in healthcare industry. The healthcare needs of males and females differ. The research in Canada has indicated that females aged between 20 and 49 years are 12% more likely to see a healthcare practitioner than males within the same age group (Moschis & Friend, 2008). The selected market segment comprises more females than males. This can be attributed to the longer lifespan of women compared to that of men.

Segmentation Criteria

The first criterion pointed by Berkowitz (2010) is the distinctiveness of the segment. According to Willcocks (2008), this implies that a segment should be easily profiled. The sick and well-informed market segment can be easily identified based on the care preferences. According to White, Draves, Soong, & Moore (2004), the more recognizable the market segment, the more effectively the healthcare organizations can modify the marketing mix: product, place, price, and promotion. For instance, in terms of promotion and with regard to the sick and well-informed market, the organization can modify advertisement that appeals to adults. According to Sudbury & Simcock (2009), the average age of consumers in this market segment is 46 years nationally.

The second criterion is the accessibility. This criterion is mainly concerned with the manner in which the market segment can be reached (Sudbury & Simcock, 2009). Some of the proposed ways of accessing the market include promotion or distribution. It is crucial to determine the place mix with regard to this criterion. It can be easier to target the sick and well-informed market segments through health television programs, health magazines, health journals, or even health documentaries (Rooney, 2008). This is because such individuals are constantly seeking for health information from such places. Targeting through entertainment magazines might not be effective for this segment.

The third significant criterion is the degree of inclination of the market segment. This is concerned with the likelihood of the segment to consume a health product or service (Moschis, 2003). It can be extremely easy to target high-income earners living in a specific zip code area only if they are inclined to consume the service. For instance, targeting the elderly with paediatric programs might not be effective because they are more inclined towards geriatric programs. Despite the majority of sick and well-informed patients being employed, they prefer making their own treatment decisions based on the information they gather online. This makes it hard for a healthcare organization to determine their inclination towards a certain healthcare service or product.

The fourth criterion deals with the capability of a target market to purchase a product or service. Different consumers have different economic resources. This criterion is crucial in determining the price mix. For healthcare organizations, the healthcare plan should be customer-foocused (Moschis & Friend, 2008). The high cost of healthcare plans is likely to scare consumers. As for the sick and well-informed market segment, most of them have health insurance plans. In addition, most of the consumers in this market segment are very concerned about their health; therefore, they are more willing to enrol in health programs that can assist them in predicting the chances of developing illnesses regardless of the price.

The fifth criterion for segmenting a market is its profitability. For non-profit organizations, profitability should not be an issue, although the segment should be assessed in terms of its capability to contribute to depreciation or fund balance of the organization. For profit organizations, profitability is an issue because healthcare organizations like business entities must pay for expenses and earn revenues (Rooney, 2008). The costs associated with delivering a service should be less than the revenues earned. The selected market segment is profitable in the sense that the majority of them are employed.

The sixth criterion is the desirability of the market segment. Certain market segments might not be appropriate to serve because they might spoil the reputation of the organization. For instance, providing healthcare services to terrorists is not a desirable activity unless an organization is a terrorist group. The well-informed and sick are a desirable group because they are less likely to use a health service or product to cause damage to the reputation of the organization (DeLorme, Huh, & Reid, 2007).

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The seventh criterion is the consistency, and it is only relevant when the healthcare organization appeals to several segments. According to Berkowitz (2010), targeting different market segments can be hard since one segment might purchase or use a health product that the other regards as irrelevant. The well-informed and sick group comprises individuals with the same characteristics; hence, consistency is not an applicable criterion (Rooney, 2008).

The eighth criterion is the availability of the customer segment. It concerns the likelihood that competitors have not exploited the segment yet. An available segment is one that is unique and has not been seized by competitors (Kotler, Shalowitz, & Stevens, 2011). The sick and well-informed is a segment that has not been targeted. Most healthcare organizations target the sick who are not informed of the treatment decisions in order to take advantage.

Conclusions

This paper has discussed the sick and well-informed market segment using various criteria. The market segment constitutes individuals considering their health as the priority. Moreover, it comprises mostly seniors, high-income earners, and mostly women in terms of the socio-demographic factors. The various selection criteria considered in selecting this market segment included the distinctiveness, accessibility, degree of inclination, purchasing ability, profitability, desirability, consistency, and availability of the market segment. The sick and well-informed market share fulfils all these criteria, and it is a unique segment that has not been fully exploited.

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