Deck 4: External Environmental Assessment: Market and Customers

Question 1

Pick a health care organization with which you are familiar. It may be a health plan you belong to, a physician practice you visit, or a biotechnology business you have read about. Define its overall market - that is, the entire universe of customers who might be interested in purchasing its goods or services. Then, define at least seven meaningful segments into which that market could be divided.

Answer 1

Market assessment for a physician practice that specializes in orthopedics.
Its market includes those people who:
$\bullet$ are or believe they are suffering from diseases associated with their bones, joints, muscles or tendons.
$\bullet$ live or within 30 minutes traveling time of the practice office (beyond that distance, there are other similar competing practices available)
$\bullet$ live or work at a greater distance but are referred by another physician or satisfied patient
$\bullet$ live or work at a greater distance but are attracted by quality and cost data about the practice available publicly
$\bullet$ are insured by any one of several commercial payers or Medicaid, or are willing to pay out-of-pocket (the practice is not a Medicare participant)
Segments of that overall market include:
$\bullet$ individuals suffering from specific identifiable diseases within the practice's specialty (arthritis, osteoporosis)
$\bullet$ particular age or comorbidity groups more likely to suffer from those diseases (elderly, obese)
$\bullet$ one sex or the other, depending on whether there are different incidences of or attitudes toward the diseases
$\bullet$ patients with orthopedic problems associated with a certain part of the body (foot/ankle, hand/wrist, spine/neck, hip)
$\bullet$ orthopedic problems resulting from trauma
$\bullet$ sports-related orthopedic problems
$\bullet$ patients belonging to particular ethnic groups
$\bullet$ Medicaid and low-income patients who may have trouble finding good orthopedic care
$\bullet$ higher-income patients willing to pay extra for certain amenities

Question 2

Define the term "market segment" and explain their significance in formulating an organization's strategies.

Answer 2

$\bullet$ A market segment is a subgroup of actual and potential customers within the overall market whose needs are similar to each other and also significantly different from the needs of customers in other subgroups.
$\bullet$ One purpose of strategies is to best position the organization's products and services to meet the needs of its customers. The larger the body of customers that the organization tries to serve, the more diverse their needs are likely to be and the more difficult it will be for the organization to meet them. One of the keys to strategic success is developing a set of resources and competencies that are the best possible fit with the needs of the targeted customers. It is easier to assemble such a set and apply it efficiently to a smaller group of customers with more homogenous needs. The process of "market segmentation" divides the overall market into numerous more manageable pieces. The strategists' task is to identify those segments that best match the organization's strategic assets, satisfy its key stakeholders, and move it toward achievement of its vision.

Question 3

List ten variables or characteristics by which a medium-size physician group practice could divide its overall market into segments.

Answer 3

$\bullet$ Income
$\bullet$ Age
$\bullet$ Sex
$\bullet$ Culture/ethic background
$\bullet$ Language
$\bullet$ Education
$\bullet$ Payer
$\bullet$ Geographic location of residence or work
$\bullet$ Lifestyle
$\bullet$ Family size
$\bullet$ Disease category
$\bullet$ Customer purchase/usage behavior

Question 4

Describe five criteria that a medium-size physician group practice might use to choose which market segments on which to focus its strategies.

Question 5

Identify five possible categories of "customer" that a medical device vendor might think about in planning strategies to increase sales of its products.

Question 6

What is the difference between "threshold" attributes that customers value and attributes that constitute "critical success factors"?

Question 7

Describe some techniques that a pharmaceutical company might use in learning about the qualities or attributes that customers value in its products.

Question 8

What can an organization do with the information it acquires about customer value preferences? Describe some strategic initiatives for taking advantage of that knowledge.

Question 9

Think about the last time you visited a physician or imagine what it would be like if you have never seen one before. On what features or aspects of the entire experience would you place the greatest value? Which elements of a visit to a doctor's office are less important to you?

Question 10

If the movement toward "consumer-driven health care" continues to advance, speculate on how a health plan may want to improve the way that it assesses and interacts with its market and customers.