Individual vs. Account-based Segmentation
Published in Quirk’s Marketing Research Review October 2018 (pages 50-53)
When conducting segmentation market research, we tend to generalize the experience to one with a focus on understanding prototypes of individuals within the marketplace. This generalization is useful because companies are often concerned with developing a marketing mix that can apply to groups of individuals to encourage sales-force optimization. However, depending on the strategic applications of the research, this kind of approach may not always be appropriate. For instance, when thinking about multi-faceted purchasing chains, a segmentation model centered on individuals is decidedly less useful. One alternative to the standard individual-based approach is an account-based segmentation model where the objective focus is to discover heterogenous groups of accounts in the market.
Account-based segmentation utilizes macro, institutional-level perspectives as a means of categorizing and simplifying a market with respect to a common theme. In healthcare, this theme is often one of outcomes – the larger strategic goals an institution wants to achieve to optimize performance under increasing utilization of value-based reimbursement models. A common marketing concern given this theme is the need to understand where any given account is in their transformational journey. Is the account a naïve adopter of new standards? An innovator in the space? Somewhere in between? The account’s placement along this continuum has significant implications for marketing communication. For instance, an innovator won’t respond to messaging that is focused on core outcome systems – they’ve already worked through these. These kinds of considerations are principal for developing products in evolving markets and dove-tail into purchase chain considerations that would commonly be part of an account-based marketing strategy – once an institution’s predominant operating concerns are identified, a deeper understanding of how to sell into these accounts can be developed. This application is similar, at a high level, to individual-based segmentation, but differs greatly in the details.
While account-based segmentation involves the same general procedural steps and applications as individual-based segmentation, there are significant differences when we consider the concerns, barriers, and focus an institution may have as compared with an individual. Primarily, institutions will be more concerned with strategic development while individuals will be more focused on tactical outcomes of their day-to-day work. For example, in the healthcare industry an individual physician’s decision framework will be a function of their attitudes and behaviors while an institution’s framework is an aggregate function of everything that enables that decision and is a consequence of it. The implication for business objectives is that it is insufficient to segment individuals when we’re concerned with the market landscape and it is inappropriate to segment accounts when the initiative is towards discrete decision-time points.
Market segmentation is a critical piece of any marketing mix; however, it can create more barriers than it removes if the way it’s conducted precludes an implementation that supports strategic business goals. Individual vs. account-based segmentation presents one example of factors that need to be taken into consideration to ensure success when conducting this kind of market research. At KJT Group, we place a strong emphasis on the implementation of the research while it’s being designed to ensure valuable applications and thoughtful insights. Contact us today to learn more about our segmentation capabilities and design thinking approach to market research.