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"A successful segmentation plan lets you get the return you expect. You have to do your homework, you have to prepare carefully, know what you're aiming at, who your customer base is, what your strategy is, what your goal is."

By Zuzanna Fimińska on May 23, 2013

Helena Bargiel, Head of Engagement Excellence at LEO Pharma, said in an interview about how to prepare a market segmentation strategies even when you don't have all the information.

Market segmentation requires a project management approach that considers geographical, demographic, and behavioral aspects. For example, size of a country and associated logistics are factors to be considered – where should you be based? How many branches you need? Can you reach remote areas? But to successfully divide your market into manageable chunks you need an in-depth understanding of the where, as well as the what, and the who.

"First of all, you have to know what kind of product you have. Is it the first one on the market? If not, you'll have to be satisfied with the share of the market that you can take."

Once you've decided what part of the market you want to conquer, you need to find out what kind of customers would benefit from your product, and whether they can afford it. If you know that what you want to sell will meet with demand, and will be affordable, you can think of how to make your product stand out. Price can be what sets you apart from the competition, but if the price difference is small, you need to look beyond that and consider factors specific to a given area. "It will be an educated guess, but you'll get more and more experience, and with experience you'll get a more precise plan."

Creating an effective strategy requires research into your target population – e.g. males and females 30-45 years old – but also involvement of internal customers, i.e. people who work across different departments within your company, and who are involved in the launch of the product. "It's important to make use of the broader and deeper understanding of internal knowledge. For example, if you know that sales are going to execute it, involve them early in the plan. You have to get as a complete a picture as possible."

Getting all the information

As you develop your strategy, you need to have clearly defined milestones that you have to reach, but you must be flexible along the way, tweaking your strategy to increase accuracy. To start with, you need to test your strategy with a pilot to verify whether your message is being carried across, and whether your product is as good as you claim it is. "Listen to your internal and external customers, and ensure that you listen to what they are telling you, and not what you want them to say. As a pharma company, you have sales reps that are communicating your message, and can come back saying that this doesn't work, people don't understand what we're saying."

Your consumers will often feed that information right back to you, especially when something goes wrong, less so when things are going fine, but no news isn't never good news, as it might mean that the message doesn't reach anyone. The use of social media allows to follow-up on a large number of customers who, from the moment of the product launch, continuously evaluate it, sharing information on their individual experiences. "It's tricky when you work with pharma because in most countries you're not allowed to have direct consumer marketing. But that's how the pharma has worked for years. They talk to the doctors and they feedback that information about uptake."

Sometimes all the information isn't available. "People go in without information all the time, there's always factors that you can't get in some way. Some people say that in the US, where you have prescription data, devising sales strategies should be easy, but it's not true, because then you need information from insurers and ask yourself about affordability. That's usually information you don't have and you need to estimate. Another question is whether the data is robust, trustworthy or relevant, something you can only assess with a clear strategy in mind."

The ones who got it right

Coca-Cola and IKEA excel at market segmentation. "Imagine having an old product, its brown – drink something brown! – it's sticky, it's not something you want to drink. Yet, Coca-Cola are not only maintaining old customers, they're getting new ones. They listen to their customers. They have identified their needs and drivers: Why should I drink Coca-Cola when it's warm, when it's cold, in the morning, in the evening. They have done their homework very, very well."

Similarly, IKEA is pulling off something just as unlikely. "You are buying very simple furniture in a box that you need to drag home by yourself and put together by yourself. The lines are not sophisticated, they're plain and simple, but you can find Ikea furniture in the US in Japan, in all different cultures with different perceptions of what's beautiful."

Those success stories can translate to pharmaceuticals. "We need to think what our customers desire from the pharmaceuticals, and before going into any lab testing, try to identify what the customers would really like to have and what they're prepared to pay for."

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Helena Bargiel will be discussing market segmentation at this year's Sales & Marketing Latin America Summit. For more information on her presentation and to find who else will be speaking visit the official website.