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Next generation segmentation for medical device OEMs – Part 2

The Challenge for Medical Device OEMs: Building Robust B2C Segmentation Skills

Regardless of the specific diagnostic or therapeutic function of the medical device, these seven trends have created the urgent need for skills development and capital investment in B2C marketing strategies and tactics. For many medical device manufacturers, this will mean a material increase in the percent of revenue (or percent of capital in pre-revenue companies) allocated to their marketing budgets. In fact, the marketing budget may begin to resemble – or even exceed – the research and development budget.

But wait! Why is segmentation the most important place to start? Aren’t there several other implications of these trends? Technical considerations? Regulatory concerns? Yes, of course. But without a clear understanding of the patient (now consumer) those other questions lack relevance and context. Medical device manufacturers must start with Marketing 101. The most basic (and vexing) of all marketing questions: Know your customer. Of course, that means direct consumer research. But how do you guide those efforts? How do you know where to start looking? How do you know you’re asking the right questions?

In order to do that, you must become an expert in audience segmentation. Let’s get grounded on how to do that. First, we need to clear up a common misconception: There is no one right answer or one best method to segment your audience.  Instead, as you begin the process, keep these six questions in mind:

  1. Is each segment clearly distinct in some meaningful way?
  2. Can you target and reach each segment efficiently with marketing efforts?
  3. Can you accurately size the potential market?
  4. Does segmentation drive prioritization decisions internally?
  5. Can you give each segment a “name” that helps align all efforts and keep them focused throughout the process?
  6. Is there growth potential for this segment?

In other words, rather than choosing a specific segmentation method, think instead about how each method could help you get the best answer to those six questions. Think of these five segmentation methods as tools in your toolbox – skills you will need to develop inside your organization in order to set the stage for success in a B2C medical device world.

Segmentation Method 1: Demographics & Psychographics

There’s an old rule of thumb in the marketing business: If you know age and gender, you’re 80% of the way there. That’s why we talk about basic demographics and psychographics first. Simply understanding the “descriptive statistics” of your target audience can yield valuable insights. As a tool in the segmentation toolbox, some understanding of age and gender is almost always part of the answer.

Medical Device Example: LifeAlert®

LifeAlert defines its target demographic as “independent living seniors”. With its iconic “I’ve fallen and I can’t get up™” infomercials, the company pioneered B2C marketing for medical monitoring services nearly three decades ago. If we unpack the segment description, we see elements of both demographics and psychographics. “Seniors” is clearly defined by the US Census and shows a skew towards senior women as the population ages (women tend to outlive men statistically). “Independent Living” is a lifestyle choice. It means this is the type of person who desires to live on her own for as long as possible. It is a core value. It is something she will pay to protect. And LifeAlert is there to help.

Segmentation Method 2: Seasonality

Does your patient only think about your device in the winter? Do they only use it at a certain time of day? If so, seasonality could be an effective segmentation strategy. Consumer product marketers often see marked variation in sales data based on seasonal variation. For example, in northern climates most brats are sold on Friday afternoons between 4-6 pm from May 1 to August 31. Many medical devices may follow similar patterns.

Medical Device Example: Nebulizers

Seasonal allergies impact millions of people each year – but not all at once. Depending on the time of year, time of day and the geographic region, allergy suffering varies considerably from “not at all” to “debilitating”. Nebulizer sales (as well as the sales of prescription medications they deliver) spike during these times. For manufacturers of these devices, audience segments often include “Summer hay fever”, “Autumn mold” and “Big-City smog”.

Segmentation Method 3: Competitive Frame

Sometimes your audience will define you more by who you are not versus who you are. For years, upstart auto manufacturer Hyundai employed this strategy to bully its way into the American auto market. By hammering home its message that it was “not Honda”, it not only addressed the elephant in the room (Hyundai and Honda seemed very similar when the former entered the market) but also provided a platform to explain the company’s key points of difference from its well-known competitor.

Medical Device Example: Stents versus Statins

The stent may be an unlikely candidate for “home use”, but the lesson in competitive segmentation is worth exploring. In the long-running debate between the two approaches to treating heart blood vessel blockage, manufacturers of the stents and manufacturers of the drugs profiled physicians based on their belief in one approach versus the other. Yes, the decisions from physicians are evidence-based, but evidence isn’t always clear: The physician often has the last word. In this case, they are behaving much like the average consumer.

Segmentation Method 4: Channels to Market

Is there something unique about your brand’s logistics? Could there be something unique about your path to market? Often overlooked, channels can define audience segments in profitable ways, allowing you to tap a part of the audience inaccessible by other means. When you think of channel-based segmentation, remember Avon. Even most marketers don’t spend a lot of time thinking about this strategy unless they’re reaching middle-aged women. But you need to.  Think beyond the “home party”. Can your device be sold in electronic vending machines at the airport? How about sharing services such as Uber or AirBNB?

Medical Device Example: Healthcare Kiosks

You’ve probably walked by the blood pressure kiosk at your local pharmacy dozens of times. Ten years ago, these were the worst combination of unsophisticated, clumsy and inaccurate. Nevertheless, those machines (literally) touch about 70 million people per year. But today, kiosks can perform all manner of diagnostic services. Go to China. You’ll see them everywhere. Accessibility allows the manufacturers to reach segments of the market no one else can.

Medical Device Example: Non-Invasive Colon Screening

Another example worth mentioning here is the non-invasive colon cancer-screening test developed by the Mayo Clinic in Minnesota. The test can accurately measure microscopic amounts of fecal blood in stool with a swab-style test.  While not exactly a medical “device” in the strict sense of the word, this diagnostic tool defines its segment as the fully 1/3 of people who should be getting screened for colon cancer by are not because of the difficultly and the cost of the test.

Segmentation Method 5: Behavioral

Behavioral segmentation is either the “gold standard” or the “sparkle pony” of audience design depending on which marketing professional you talk to. The reality is that behavioral segmentation is simply another tool to help you understand your audience. It is neither superior nor inferior to the other methods described – it is simply a matter of appropriateness. Is there something unique about how your patient/customer will interact with your product? Does your device alter their behavior in an interesting way?

For medical device manufacturers reaching a consumer market without the physician filter, segments may include “those who actually have the condition treated by your device” as well as “those who believe they have the condition and have self-diagnosed and are ready to self-treat”.

(Before you are tempted to say that patients will still need a doctor’s permission to purchase your device, pharma companies have already learned that people will find a way.)

Medical Device Example: Blood Glucose Monitors

These devices don’t have the same rates of discontinued use that a fitness tracker might have (almost 20% of all fitness devices never make it out of their packaging!), but you might be surprised at the actual numbers. This is not only a failure of product design, but also indicative of a lack of understanding of the diabetic audience. Most monitors are designed for the “diabetes market” with no segmentation beyond that based on the usage patterns of the device. Better understanding of distinct audience segments based on their ability and willingness to use the device will help you design and market superior products that actually get used.

Wrapping Up: Pharma is your guide

Only thirty years ago, the average consumer could name only a handful of medications – most of which were antibiotics. Fast-forward a few decades and dozens of brands are part of the common lexicon. Zoloft. Ambien. Lipitor. To put it in perspective, Viagra is nearly as recognizable as a brand name as Coca-Cola!

The pharmaceutical industry has become remarkably skilled at B2C marketing in general – and audience segmentation in particular. They use all of the methods we’ve highlighted to understand distinct audience segments and tailor their development efforts to meet those needs. Love it or hate it, the largest of these companies dwarf their medical device counterparts.

The patient is becoming the consumer. You might understand the first. You don’t know the second. And you had better start now.

 

Previous: In Part 1, we discuss the seven trends driving the transition from B2B to B2C for medical device manufacturers.

 

Jason Voiovich
Chief Customer Officer

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