Marketing and Segmentation Problem, Research Paper Example

In my current neighborhood, located in a typical urban university community, there are two different districts surrounding the university: 1) a university district where the predominant number of college and graduate students live; 2) a professional district, adjacent to the university, where the residents are primarily middle- to upper-class professionals who commute downtown to work.  For this paper, I will be assuming the role of an executive of the university’s academic health center hospital- a hospital that is located on the university campus and draws patients from both the student and professional district. The hospital, also sponsored  by a preeminent health services firm, works with the university to devise marketing plans that leverage the university’s name and access to quality doctors – both professors and students.  The hospital has one basic clinic for primary care and has specializations in certain areas such as oncology and pediatrics. This paper will look at potentially offering different services for different populations that would not only increase brand recognition in future consumers, but also increase profits over the long-term.

The use of primary and secondary data is important in creating an accurate demographic profile (Berkowitz, 2006).  Luckily, the area around the university is broken down into two different census areas so a basic breakdown of the district’s racial groups, income, marital status, and health coverage is easy to achieve via looking at census results. The first district, located near the university and primarily of students, is extremely diverse.  While Caucasians account for a majority of the residents living closest to the school (roughly 60%), there are also a number of African-Americans (20%), Asians (10%), and Hispanics (10%) (US Census Bureau, 2010).  Regarding the marital status of the individuals in the district, because they are mostly college students, the percentage of single individuals is 75%, while the percentage of married individuals, which also includes graduate students, is 25%.  Finally, I used statistics of IRS tax returns in the area to understand basic income dynamics. A majority of the individuals, roughly 80%, make less than $30,000; roughly 10% of individuals make from $30,000-$40,000; 10% of individuals make in excess of $40,000.  Regarding age, the majority of individuals are below the age of 24.

The second district, located adjacent to the university and primarily composed of professionals is less diverse in all examined categories.  In this part of the district, Caucasians account for nearly 80% of the total district, while African Americans compose 10%, as do Hispanics.  Regarding the marital status of the individuals in the district, roughly 70% of the individuals in the professional district are married; while only 30% of the individuals are single. Finally, perhaps the greatest differentiation between the two districts lies in the income and health insurance status: I looked at IRS statistics for income in the area: All individuals make above $30,000: 30% make between $30,000-$50.000; 50% make between $50,00-80,000; the remaining 20% makes above $80,000.    In addition, a majority have health care: roughly 80% of the individuals have some type of private insurance, while only 10% of individuals have some of public insurance, with the last 10% not having any type of public insurance.  A majority of individuals in the district are above 30 years old (90%); with most individuals older than 40 years old (60%).

Based on the current outlay of the market, there are two clear ways to segment the market: First, thinking as an executive of the academic health center, I would think of a way to provide rather low-end physicals and basic check-ups for students.  Indeed, the number of individuals that live near the university (25,000) would suggest that the hospital could fund a fairly robust business based on check-ups, immunizations, and other basic medical services. While the margins of this business would not be high, the mere volume of students that needed service would allow for substantial turnover in sales.

Second, there would seem to be market opportunities for higher-level specializations and premium services for professionals that could also be offered through the hospital.  Indeed, the number of professionals living in a near-by census area (10,000) a majority with private insurance, leaves open a substantial opportunity for premium clinical services, screening for diseases, as well as further improvement in the services used for pediatrics.

There will always be a highly relevant question regarding whether data found accurately represents the population.  In the case of census data, one may be more sanguine about the sample size, because most individuals participate in the census.  However, regarding the actual data collected by the census, one may question the veracity of answers given- particularly those given in the areas of income.  Besides that data, I also took a look at some private consumer databases such as NCR  Health Care and Urban Decision Systems.  Although they didn’t necessarily have public searching capabilities, through looking at the data methodology and other methods, they provide fairly robust survey data regarding potential clients close to a clinic.

Indeed, if one were to look at these data sources in a more holistic fashion, one could probably use census data as a means to understand the basic demographics of the area and potential success of developing services in a certain area.  Once the census provides a baseline estimate, one could follow up with research on commercial databases that rely on a mixture of census and survey data in order to have a more granular idea of what expansion of potential services may be relevant in a certain area.  Overall, based on the research of the paper, I would recommend the hospital to segment the clinic’s services into two different directions rather than its current business model.  A low-margin, high volume for students would allow the hospital to gain brand recognition among future consumers, while also providing necessary health services.  An expansion of higher-margin, lower volume clinic services and an expansion of existing specialties (particularly in pediatrics) would likely serve the hospital well over the long-term.

References

Berkowith, E.N. (2006). Essentials of Health Care Marketing: Boston: Jones & Bartlett Publishing.

U.S. Census Bureau (2010). State & County Quickfacts.: Hennepin County, M.N. Retrieved July 05, 2011 from http://quickfacts.census.gov.