Pharmaceutical Market Segmentation: How to Segment, Target and Position for Rx, OTC and Consumer Health

FreeScore your brand plan before management does. Send me the scorecard

In more than twenty years of marketing medicines and consumer health brands in Egypt, Saudi Arabia and the GCC, I have seen the same pattern many times. A brand team writes a strong positioning, builds good materials, and then sends the field force to call on everyone who might possibly use the product. Effort is spread evenly across customers who are not even. The high-potential prescriber who is ready to try the brand gets the same single visit as the one who sees two relevant patients a year. The result looks like activity and feels like hard work, but it does not move the numbers.

Segmentation is the fix. It is one of the oldest ideas in marketing, and it matters more in pharma than in most industries, because the customers are so different from each other and the most expensive resource (the field force) is so limited. This guide explains segmentation, targeting and positioning briefly, then spends most of its length on how each works for prescribers, pharmacies, patients and payers, with the Saudi and GCC differences made explicit. If you are new to the field, the guide to Pharma marketing 101 gives the wider picture first.

What Is STP, and Why Does Pharma Need It?

The idea of market segmentation was set out by Wendell R. Smith in his 1956 article in the Journal of Marketing, “Product Differentiation and Market Segmentation as Alternative Marketing Strategies.” Smith argued that a market is made of groups with different wants, and that a company can do better by adjusting its offer to those groups rather than pushing one offer at the whole market. Philip Kotler later made segmentation, targeting and positioning the standard sequence in his textbook Marketing Management, and that is how most marketers learn it today.

The three steps in plain terms:

• Segmentation divides the market into groups whose members are similar to each other and different from other groups in ways that matter for the brand: what they need, how much value they represent, and how they decide.
• Targeting chooses which segments to serve, in what order and with how much effort. It is a choice to say no to some customers, or at least to serve them more cheaply.
• Positioning decides what the brand should mean to each chosen target, compared with the alternatives they consider.

Pharma needs this discipline for three reasons.

• Customers are extremely uneven. A specialist in a large referral hospital and a general practitioner in a small clinic may both be “prescribers,” but they see very different numbers and types of patients.
• The decision is shared. For many products the prescriber chooses, the pharmacist may substitute or recommend, the patient uses, and a payer or the patient pays. Each of those is a market that can be segmented.
• Resources are fixed and regulated. A field force can only make so many calls, promotion to the public is closed for prescription medicines, and every material needs review. Effort has to go where it will make a difference.

This guide focuses on segmentation and targeting. Positioning has its own guide, on pharma brand positioning, so I will only show where it connects. For where STP sits in the overall planning sequence, see the cornerstone guide to pharma marketing strategy.

What Makes a Segment Useful in Pharma?

Marketing textbooks list several tests for a good segment, and Kotler summarises them as measurable, substantial, accessible, differentiable and actionable. In pharma, I find it helps to put them as four practical questions:

1. Can I find the members? If a segment exists only in a research report and cannot be matched to names in the CRM, the field force cannot act on it.
2. Is it worth the effort? A segment needs enough patients, prescriptions or sales to justify its own plan.
3. Will it respond differently? The point of a segment is that a different action produces a different result. “Doctors over 50” is easy to measure but usually says little about how a doctor chooses treatment.
4. Can we reach it within the rules? A segment of patients you cannot legally promote to is still useful for understanding, but the action will go through the prescriber or the pharmacist, not directly to the patient.

Daniel Yankelovich made a related point in his 1964 Harvard Business Review article “New Criteria for Market Segmentation”: demographic splits are convenient, but the segments that matter are often based on values, attitudes and how people use a product. That warning applies directly to pharma, where many teams still segment prescribers only by specialty and city.

How Do You Segment Prescribers (HCP Segmentation)?

HCP segmentation is where most pharma segmentation work happens, because it drives the most expensive decision a brand makes: where the field force spends its time. I recommend building it in layers.

Layer 1: potential and adoption

Potential is how much relevant business a prescriber could generate in your category, whatever brand they choose. It is often expressed as deciles: rank all prescribers by their estimated category volume and split them into ten equal groups, decile 10 being the highest. Where you have no market data, potential can be estimated from proxies such as specialty, the size of the clinic or hospital department, and the representative’s structured assessment of patient numbers.

Adoption is how much the prescriber already uses your brand or the treatment approach it belongs to. Everett Rogers’ Diffusion of Innovations (first published in 1962) is a useful reminder that people adopt new practices at different speeds and for different reasons, from innovators and early adopters to laggards. In practice I use three or four stages: not aware or not using, trialist (has used it with a few patients), adopter (uses it routinely in the right patients), and sometimes advocate (shares their experience with peers in legitimate scientific settings).

Put the two together and you get a grid that tells you what each call is for. Grouping deciles into high, medium and low keeps it manageable:

The value of this grid is that it stops the most common targeting error: calling on high-volume prescribers who will not change while ignoring high-potential prescribers who are ready to try. Decile segmentation on its own ranks volume, not willingness, so it always needs the adoption axis next to it.

Layer 2: specialty and practice setting

Specialty decides which patients a prescriber sees and which evidence will persuade them. A cardiologist, an internist and a general practitioner may all treat the same condition at different stages, and each needs a different conversation. Mapping where each specialty sits on the patient pathway is easier once you have a patient journey map, because it shows who initiates treatment, who continues it, and who refers.

Practice setting matters just as much in Saudi Arabia. A prescriber working in a government hospital usually chooses from a formulary supplied through centralised procurement, so their freedom to choose your brand depends on whether it is listed and available. The same doctor may also work in a private clinic in the evening, where the patient’s insurance policy or ability to pay shapes the choice. I have found it worth recording setting per prescriber, and per prescriber-setting pair when the same doctor practises in both, because the call objective is different in each.

Layer 3: attitudinal segments

Two prescribers with the same potential and adoption can still want different things. One may decide mainly on clinical evidence and guidelines, another on practical experience with patients, a third on cost to the patient, and a fourth on what senior colleagues in their department do. These attitudinal segments are powerful for message design, because they tell you which part of the evidence to lead with.

They are also the easiest segments to invent. An attitudinal segment needs evidence: structured questions recorded by representatives after real conversations, or properly designed market research. A segment label assigned by guesswork from the office is worse than no label, because it sends the wrong message with confidence. If you do not have the evidence, run with potential, adoption, specialty and setting, and add attitudes later.

How Do You Segment Pharmacies?

For OTC and consumer health brands, the pharmacy is often the most important customer after the shopper, because the pharmacist’s recommendation and the shelf decide much of the sale. Even for prescription brands, the pharmacy matters for availability and, where substitution happens, for which product the patient leaves with. The main dimensions are:

• Format: chain or independent. In a chain, listing, shelf space and promotions are usually agreed at head office, and the branches execute. In an independent, the owner or the pharmacist in charge decides. That changes who you sell to, what you offer and how you measure execution. The structure of the Saudi pharmacy landscape is covered in Saudi pharmacy market statistics.
• Footfall and sales potential. A pharmacy next to a busy polyclinic or inside a mall sees a different volume and mix of shoppers from a small neighbourhood pharmacy. Your own sell-in by account and any sell-out data you receive are the starting points.
• Location and catchment. Pharmacies near hospitals and specialist clinics fill more prescriptions for those specialties; pharmacies in residential areas serve more family and self-care needs.
• Category fit. A pharmacy with a strong dermo-cosmetic section and a beauty advisor is a different opportunity for a skincare brand from one with a small shelf and no specialist staff. Fit is about the pharmacy’s shoppers, staff and space, not only its size.

A simple way to combine these is a pharmacy tier: for example tier A (high potential, strong fit), tier B (good potential or good fit) and tier C (the rest), each with its own visit frequency, merchandising standard and staff education plan. Keep chains as separate key accounts above the tiers. The trade terms you offer each tier should be checked against the margins they earn, which the pharmacy trade margin calculator helps with.

How Do You Segment Patients and Consumers?

Patient and consumer segmentation answers a different question from HCP segmentation. It is less about where to spend field time and more about what the brand must do and say. Three dimensions do most of the work:

• Need-state. What the person wants at that moment. For a cough remedy, a parent looking for something suitable for a young child is in a different need-state from an adult who wants to get through a working day. For a chronic medicine, a newly diagnosed patient who fears side effects is in a different need-state from a long-term patient who struggles to remember doses.
• Severity or stage. Many conditions are treated differently at different stages, and guidelines often define those stages. A brand that fits moderate disease should know how large that group is and who manages it. The patient-based market sizing calculator is a simple way to estimate the size of each stage from prevalence, diagnosis and treatment rates you can source.
• Journey stage. Undiagnosed, diagnosed and untreated, newly treated, established, or lapsed. Each stage loses patients for different reasons, and each points to a different action, often with a different customer. The method is set out in the guide to patient journey mapping in pharma.

For prescription medicines in Saudi Arabia and the GCC, promotion to the public is not allowed, so patient segments are used to sharpen the conversation with prescribers (“which of your patients is this treatment for?”), to design approved patient support where it exists, and to plan disease awareness that does not promote a product, checked carefully with the regulatory team.

For OTC and consumer health, patient segments become consumer and shopper segments, and the brand can speak to them directly within approved claims. Here it helps to add shopper behaviour: who asks the pharmacist for advice, who goes straight to the shelf, who buys online, and who switches on price. The guide to an OTC product launch in Saudi Arabia shows how those segments shape a launch.

How Do You Segment Payers and Institutions in Saudi Arabia and the GCC?

In many textbooks, the payer is an afterthought. In Saudi Arabia it can decide the whole plan, because the same molecule can reach patients through routes that behave like different markets.

• Government. Ministry of Health facilities and other government health sectors treat a large share of patients, and their medicines are bought largely through centralised procurement run by NUPCO, alongside institutional formularies. In this segment, the decisive customers are often formulary and procurement committees rather than the individual prescriber. A brand that is not listed has little to gain from detailing government prescribers heavily.
• Private insurance. Many working residents and their families are covered by employer health insurance and treated in private hospitals and clinics. Whether a medicine is covered, and on what terms, depends on the insurer and the policy. Private hospital groups also run their own formularies, so they behave like key accounts.
• Cash. Out-of-pocket purchases, which include most OTC medicines and consumer health products and some prescription purchases outside insurance cover. Here the patient or shopper is also the payer, so price visibility and value for money matter more.

Medicine prices in Saudi Arabia are set and published by the SFDA, so payer segmentation is not about choosing a price for each segment. It is about choosing where to invest in access (tenders, formulary submissions, insurer discussions) and where to invest in demand. For how regulated prices are set, see this guide to Saudi drug pricing, and for the commercial side of price decisions, the guide to pharmaceutical pricing strategy.

The other GCC markets have their own mix of public provision, private insurance and cash, and their own procurement systems. The three-way split still works as a starting frame, but the size of each route and the gatekeepers differ by country, so build the segment map for each market separately rather than copying the Saudi one.

FreeScore your brand plan before management does. Send me the scorecard

How Do You Choose Target Segments?

Targeting is where segmentation becomes a decision. The classic tool is a two-axis matrix of market attractiveness against business strength, the idea behind the nine-box matrix that General Electric and McKinsey developed in the 1970s, which Malcolm McDonald and Ian Dunbar adapt for segments in Market Segmentation: How to Do It, How to Profit from It. In pharma I keep the scoring simple enough that a brand team can do it in a workshop and defend it to sales leadership.

The example below is fictional. “Brand A” and its segments are invented to show the method, and the weights and scores are illustrations, not benchmarks.

The situation. Brand A is a fictional prescription medicine for a chronic condition, registered and priced in Saudi Arabia, listed in many private hospital formularies but not yet in the main government formulary. The team scores four prescriber segments from 1 (low) to 5 (high).

Attractiveness = patient potential × 50% + access to the brand × 30% + growth × 20%. Ability to win = fit with Brand A’s evidence × 40% + reach by the team × 35% + competitive openness × 25%.

Reading the table, the decisions are not simply “pick the highest total”:

• S1 is the primary target (highest total, strong on both axes). It gets the highest call frequency and the evidence-led message.
• S4 is a maintain segment. Its ability-to-win score is high only because Brand A already wins there; its attractiveness is the lowest. Keep it at low cost, mostly remote.
• S3 is a secondary target, reached at a lower frequency and through non-personal channels, because its scores are balanced but moderate.
• S2 is not a field force target this year. Its patient potential is high, but access is blocked. The right action is a formulary and tender plan run by market access, with the field force returning once the brand is listed.

The weights are a judgement call, so write them down and agree them before scoring. If the team changes the weights after seeing the results, the exercise becomes a way to justify the plan it already had.

Targeting also changes over a brand’s life. At launch, the early adopters among high-potential prescribers matter most; at maturity, keeping adopters and widening use matter more; near loss of exclusivity, the question becomes which segments will stay loyal when cheaper alternatives arrive. The guide to the pharmaceutical product life cycle covers how the priorities shift by stage.

How Do Segments Become Call Plans, Messages and Channels?

A segmentation that does not change what happens on Monday morning has failed. The bridge from segments to action has three parts.

Call plans

Set a call frequency per segment, multiply by the number of customers in it, and compare the total with the capacity of the team. Here is the arithmetic for the fictional Brand A, using invented numbers.

If one representative can make 8 face-to-face calls a day over 20 field days a month (an assumption for this example, not a norm), the capacity is 8 × 20 = 160 calls per month. The plan needs 260 ÷ 160 = 1.625 representatives. The team can either staff two representatives, or keep one and move S3 to remote and digital contact so that face-to-face demand falls to 120 + 20 = 140 calls, which fits inside 160. That is the kind of trade-off segmentation is meant to make visible. You can run the same arithmetic with your own numbers in the rep call plan calculator.

Messages

The message follows the segment’s adoption stage and, where you have them, its attitudes. A high-potential non-user needs a reason to try: which patients, what evidence, what to expect. A trialist needs confidence: how to choose the right patients and handle the questions that come up. An adopter needs continued value: new data, service and support. All of it must stay inside the approved claims, and the brand’s overall position should stay the same across segments while the emphasis changes. How to write that position is covered in pharma brand positioning.

Channels

Not every segment justifies a face-to-face call. High-value targets usually get personal visits plus medical education. Medium-value segments can be served by a mix of fewer visits, remote detailing and approved digital content for healthcare professionals, where the professional has agreed to receive it. Low-value segments may only receive group activity or non-personal channels. For pharmacies, the same logic decides which tier gets a merchandiser, which gets a representative visit and which is served through the distributor.

Finally, measure by segment. Coverage and frequency against plan, movement between adoption stages, and sales or prescription trends in each segment tell you whether the targeting works. The guide to pharma marketing KPIs lists measures that can be sourced, and all of these decisions belong in the pharma brand plan, where they get owners and a budget.

What Data Can You Use for Segmentation in Saudi Arabia?

Segmentation is only as good as its data, and in many GCC markets the data is thinner than in Europe or the United States. That is not a reason to skip segmentation. It is a reason to be clear about what each source can tell you.

For registration counts by class and over time, see Saudi drug registration statistics. Whatever sources you use, write the date and the source next to every number in the segmentation file. A segment built on an undated export from three years ago will steer the field force with confidence in the wrong direction.

Where Does Compliance Draw the Line on HCP Segmentation?

Segmentation is a planning tool, and the same tool can be misused. The principles I apply, and which you should confirm with your own compliance team against the current SFDA rules and any industry code your company follows, such as the IFPMA Code of Practice:

• No inducements. Nothing of value may be offered to a healthcare professional to influence prescribing. A segment can decide how often a representative visits and what evidence is discussed. It must never decide who gets a benefit because of how much they prescribe.
• Speaker and adviser selection on expertise. When healthcare professionals are engaged for legitimate services, such as speaking at an educational meeting, the choice should rest on expertise and the genuine need for the service, not on their prescribing segment.
• Approved messages only. Tailoring the emphasis by segment is fine; creating claims outside the approved material for one segment is not.
• Personal data. HCP records, call notes and any sell-out data that identifies individuals are personal or commercially sensitive data. Handle them under Saudi Arabia’s Personal Data Protection Law and your company’s policies, and get consent where a digital channel requires it.
• No promotion to patients for prescription medicines. Patient segments for Rx brands inform the conversation with prescribers and approved support programmes, not direct promotion.

For the practical approval steps by channel, see the SFDA marketing compliance checklist.

How Does Segmentation Differ for Rx, OTC and Consumer Health?

Companies that run all three types often reuse the Rx segmentation model everywhere, for example deciling dermatologists for a consumer skincare brand while ignoring the pharmacies and shoppers who make most of the decisions. The pharmaceutical marketing mix guide shows the same split from the angle of the 7Ps, and the guide to go-to-market strategy shows where segmentation sits in a launch plan.

What Are the Most Common Segmentation Mistakes in Pharma?

• Volume only. Deciles without adoption send the field force to high-volume prescribers who will not change.
• Too many segments. Twelve segments with three frequencies and one message are really three segments with extra paperwork. Keep only segments that get a different plan.
• Invented attitudes. Labels such as “evidence seeker” are useful only when they come from recorded evidence.
• Ignoring access. Detailing prescribers who cannot use the brand because it is not on their formulary wastes the most expensive resource you have.
• One segmentation for every product type. Rx, OTC and consumer health brands are chosen by different people, so the segments must differ too.
• Set once, never refreshed. Prescribers move, formularies change and adoption grows. Review segments at least once a year and after any major access change.
• Segments that do not reach the field. If the call plan, the CRM and the representatives’ targets do not reflect the segments, nothing changes.
• Crossing the compliance line. Any link between a prescriber’s segment and a benefit they receive is a serious risk. Keep segmentation for planning effort and information only.

Key Takeaways

• STP means segmentation, targeting and positioning; pharma needs it because customers are uneven and resources are fixed
• Pharma has four customers to segment: prescribers, pharmacies, patients and payers
• Segment prescribers on potential and adoption together, then add specialty, setting and evidence-based attitudes
• Segment pharmacies by format, footfall, location and category fit, and plan chains separately from independents
• In Saudi Arabia, the government, private insurance and cash routes behave like different markets
• Choose targets on attractiveness and ability to win, with weights agreed before scoring
• Turn each target into a call frequency, a message and a channel mix that fits the team you have
• Segment to plan effort and information, never to decide benefits for prescribers

Frequently Asked Questions

What to Do Next

Take the prescriber list for one brand and add two columns: a potential group (high, medium, low) and an adoption stage (not using, trialist, adopter). Fill them from the CRM and a short structured form for each representative. Count how many prescribers sit in each cell of the grid, then compare that with where last quarter’s calls actually went. The gap between the two is your first targeting decision.

Then score your candidate segments on attractiveness and ability to win, set a frequency for each target, and check the total against your team’s capacity in the rep call plan calculator. For what the brand should say to the targets you choose, continue with pharma brand positioning.