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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/8/3/2019 Market Segmentation Analysis Fact Sheet
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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