Market Segmentation Analysis Fact Sheet

8/3/2019 Market Segmentation Analysis Fact Sheet

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Market Segmentation Analysis

What is Market Segmentation Analysis?

Market segmentation analysis provides a comprehensive examination of the contraceptive

market, identifies current roles of various sectors with respect to consumer groups, and helps

determine how roles need to change to achieve contraceptive security. Specifically, market

segmentation analysis helps to do the following:

Identify consumer groups and the characteristics that define them, such as age, education,

residence, socioeconomic status, parity, work status, and health insurance coverage;

Define provider groups (e.g., the public sector, the commercial sector, nongovernmental

organizations (NGOs), and social marketing programs); and

Understand consumer-provider interaction by addressing the following questions:

- What is the socioeconomic and demographic profile of those who depend on the

public versus the private sector for their family planning (FP) needs? Who supplies

contraceptives to whom? Do the nonpoor benefit from free public sector services?Does use of the two sectors vary by age (i.e., are youth more likely to use private

sector services)?

- What are the methods used by those who obtain contraceptives from the private versus

public sector? For example, is the public sector the primary provider of re-supply

methods?

Why Is Contraceptive Market Segmentation Analysis Important?

In many countries, contraceptive usersregardless of their ability to payrely heavily on free or

subsidized products made available by the public sector. In particular, significant proportions of better-off clients obtain subsidized contraceptives from Ministry of Health (MOH) facilities

rather than pay out of pocket in the commercial or NGO sector. The reliance of able-to-payconsumers on subsidized products poses a severe challenge to achieving contraceptive security,

especially in the face of declining contraceptive donations and scarce public sector resources.

Reducing better-off consumers dependence on the public

sector and ensuring that the needs of vulnerable and priority

populations are met in the absence of donor assistance

requires targeted public sector services and greater

involvement of the commercial sector in the contraceptive

market. A market segmentation analysis is a necessary first

step toward this endit provides a complete analysis of the

contraceptive market, identifies current roles of different

sectors, and helps determine how those roles need to change

to achieve contraceptive security.

Why Is Contraceptive Market Segmentation Important

in Advocating for Contraceptive Security?

A market segmentation analysis yields clear and concrete

information and data about problems and deficiencies in the

contraceptive market. It highlights, with user-friendly graphs

and tables, key issues that a country needs to address to

Figure 1: Socioeconomic Profileof MOH Family Planning Clients

in Nicaragua


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move toward contraceptive security. Such issues and supporting data may include the following:

Public sector resources benefit those who can afford to pay. Able-to-pay clients should be

redirected to the private sector. For example, as Figure 1 from a recent market segmentationanalysis shows, 45 percent of those who receive contraceptives from the MOH in Nicaragua

belong to the fourth and fifth socioeconomic quintiles; by contrast, only 30 percent of MOH

clients belong to the two lowest quintiles.

The public sector needs to target its scarce resources to the most vulnerable groups, such

as populations in remote rural areas and the indigent and poor. In Nicaragua, for example,

only 30 percent of its clients are poor. The MOH should focus its efforts on increasing the

proportion of poor clients that it serves.

It is essential to mobilize the private sector to serve current and potential users. In

Nicaragua, at least 45 percent of MOH clients are in the top two income quintiles and should

therefore be redirected to the NGO and commercial sectors to free up MOH resources to

serve the poor and needy.

Social security institutes need to play a more

significant role in the provision of contraceptives; familyplanning users with social security coverage currently rely

disproportionately on the MOH. As Figure 2 from the

Peru market segmentation analysis shows, 45 percent of

social security beneficiaries receive their contraceptives

from the MOH. However, as contraceptive donations

decline, the MOH needs to consider ways to shift the

responsibility for serving eligible clients back to social

security health providers. Using market segmentation data

to make the case to both the MOH and social security

institutes can be effective for advocacy purposes.

How is a Contraceptive Market Segmentation Analysis

Conducted?

The market for FP services includes contraceptive methods,

consumers, and providers. Contraceptive methods include bothmodern and traditional methods. Consumers are defined as

women of reproductive age (15 to 44 years), including thoseusing a modern contraceptive method and those with an unmet

need for family planning.Providers are defined as government and private for-profit (commercialsector) and not-for-profit (NGO) entities. The way in which the various components of the FP

market fit together is referred to as the FP market structure.

An important element of the analysis calls for establishing households ability to pay for family

planning services, which requires creation of a standard of living index (SLI) that allows

households to be ranked from poorest to richest. The SLI is defined in terms of whether or not a

household possesses certain assets and household amenities, such as electricity, roof material,

wall material, refrigerator, television, automobile, radio, and other amenities. Factor analysis is

the quantitative method used to create the SLI.

Household data are then used to divide the population into five SLI quintiles, with the poorest

Figure 2: Sources ofContraceptives for Social

Security Beneficiaries: Peru


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group consisting of women from households with the fewest assets and the richest group

comprising women from households with the most assets. These groups provide the basis for (1)

tabulating socioeconomic and demographic characteristics such as age, education, parity, and

place of residence across the five SLI quintiles; (2) comparing method use and provider sources

across the SLI quintiles to determine the extent of differences across groups; and (3) creatingmarket segments based on socioeconomic characteristics, method use, and provider sources

across quintiles by urban and rural areas.

What Countries Have Conducted Market Segmentation Analyses?

Many countries, including Bangladesh, Bolivia, Egypt, Ethiopia, Honduras, Jordan, Kenya,

Madagascar, Morocco, Nicaragua, Paraguay, Peru, Philippines, Romania, Turkey, and

Ukraine,have conducted market segmentation analyses.

For example, Turkey conducted a market segmentation analysis with support from the MOH, the

U.S. Agency for International Development (USAID), and partners. The analysis identified

current and potential market niches for the private sector. A workshop on public-private

partnerships helped integrate the private sector into a policy dialogue about the contraceptive

financing challenge and encouraged pharmaceutical companies to view the public sectors supplyneeds as a new market. The information from the market segmentation analysis also helped the

MOH advocate successfully with the Ministry of Finance to increase contraceptive financing

such that the MOH budget for contraceptives saw a substantial increase in 2002.

Kenya recently completed a contraceptive market segmentation analysis (POLICY/Kenya

presentation, 2005). Findings showed that only about 12 percent of urban and rural clients fromthe lowest income group use modern contraceptives as compared with over 40 percent among the

wealthiest clients. The majority of the poorest relied on the public sector for contraceptive

services and supplies. The analysis also identified significant leakage of benefits, with two out of

every five among the wealthiest obtaining their contraceptives from the public sector. The Kenya

analysis will be used in policy dialogue among key partners and stakeholders, including members

of the new government, to build commitment to reform and to implement the countrys existingwaiver and exemption policies for more effective targeting to the neediest sectors of the

population.

References

Alano, B., E. Almario, A. Perez, and O. de Guzman. 2002. Contraceptive Self Reliance through

Financial Sustainability: A Market Segmentation Approach. Washington, DC: POLICY Project,

Futures Group.

(www.policyproject.com/pubs/countryreports/PHIL_CSR_ES.pdf)

Commercial Market Strategies (CMS) Project. Assessment Manual: A Handbook for Conducting

Private Sector Country Assessments. Washington, DC: CMS Project.

(www.cmsproject.com/resources/PDF/Assessment%20Manual.pdf)

U.S. Agency for International Development (USAID). 2004. Contraceptive Security: Ready

Lessons: Take a Whole Market Approach. Washington, DC: USAID. Accessed online through

www.dec.organd www.maqweb.org.

POLICY/Kenya. 2005. Improving Access to Family Planning Services in the Public Sector in

Kenya. A PowerPoint presentation. Washington, DC: POLICY Project, Futures Group.
http://www.policyproject.com/pubs/countryreports/PHIL_CSR_ES.pdfhttp://www.cmsproject.com/resources/PDF/Assessment%20Manual.pdfhttp://www.dec.org/http://www.dec.org/http://www.maqweb.org/http://www.policyproject.com/pubs/countryreports/PHIL_CSR_ES.pdfhttp://www.cmsproject.com/resources/PDF/Assessment%20Manual.pdfhttp://www.dec.org/http://www.maqweb.org/


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Tatar, F. and J. Sine. 2001. Client Donations for Contraceptives: An Innovative Approach to

Sustainable Financing in Turkey. Washington, DC: POLICY Project, Futures Group.

(www.policyproject.com/pubs/countryreports/TURclidon.PDF)

Winfrey, William, and Laura Heaton. 1996. Market Segmentation Analysis of the Indonesian

Family Planning Market: Consumer, Provider and Product Market. Washington, DC: Options Project,

Futures Group.
http://www.policyproject.com/pubs/countryreports/TURclidon.PDFhttp://www.policyproject.com/pubs/countryreports/TURclidon.PDF

Market Segmentation Analysis Fact Sheet

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