Market segmentation and veterinary medicine

Veterinarians are trained as applied scientists and are very good in that role. Running a business can be a distraction from what we really want to do. Sometimes we can be almost as bad at business management as we are good at practicing medicine. Furthermore, some in our profession are averse to marketing, assuming that our service will sell itself and that we can count on word of mouth to bring the clients to the services we happen to provide. Like it or not we are marketers if we are in private practice.

Market segmentation and veterinary medicineVeterinarians are educated to provide a wide array of services to multiple species. The opportunities to serve are far greater than any one person could possibly fill. We all have a wide variety of abilities and interests. One goal is to match our goals and interests with some segment of the veterinary service market.

A marketer can rarely satisfy everyone in a market. Not everyone likes the same automobile, restaurant, soft drink or movie. Likewise not every cattle owner wants the same vaccination program, has the same goals in getting his cattle bred, or even wants the same input in the same format from his veterinarian. As marketers we have a tool available, market segmentation, to help bring order to our marketing effort.

Market segmentation, correctly applied, is about understanding the needs of customers and, therefore, how they decide between one offer and another. This insight is used to define groups of customers who share the same or very similar value set. A marketer is then able to determine which groups of customers it is best suited to serve and which product and service offers will both meet the needs of its selected segments and outperform the competition.

Market segments can be identified by examining the demographic, behavioral, and value differences among clients. Market segments may vary by needs and wants, scope, business strategies, locations, focus, and goals.

Requirements for market segments are that they must be identifiable, substantial, have unique needs, and are durable.

• Identifiable: the differentiating traits of the segment must be measureable so they can be identified.

• Substantial: the segments must be significantly large to justify the resources required to service them.

• Unique needs: to justify separate services, the segment must have unique needs.

• Durable: to justify the effort to meet the needs of a segment, the segment must be relatively stable.

We employ market segmentation to a degree when we decide on what species we will service. Subconsciously we may lump all South American camelid owners into one segment and may or may not decide that we can meet the needs of that segment.

Four dairy market segments

In addition to market limitations, every practice has a unique set of opportunities in deciding what it will offer to its market. Following are four market segments and differentiating traits for a dairy practice in the Midwest or Northeast:

1. Show-ring Sam
• Smaller herds
• Individual animal has great value
• Emphasis on breeding efficiency (individual animal emphasis)
• Marketing of breeding stock is major profit center

2. Commercial Carl
• Larger herds
• Herd dynamics important (internal herd growth, income over feed cost, death rate)
• Emphasis on breeding efficiency (herd emphasis)
• Business (financial ratio) driven
• Mega versus micro economics driven

3. Traditional Tom
• Jack of all trades (dairyman, mechanic, crop manager)
• Very efficient
• Needs to keep individual animals healthy
• Crops drive profit
• Family operated, family oriented

4. Genetic Greg
• Brood cows may have exceptional value, but value may be short lived
• Biosecurity (BLV, IBR) is an important issue
• Newborn calf values can be extremely high

Each segment is identifiable, may be substantial, has unique needs, and is somewhat durable.

Show-ring Sam realizes that cattle show better if they are well grown. Thus he will be a candidate to monitor calf growth and health. Show-ring Sam, like Genetic Greg, will be interested in using embryo transfer (ET) and in vitro fertilization (IVF) services. Sam attempts to cull a large number of cattle for dairy purposes, and will keep an occasional high SCC cow that does well in the show ring.

Commercial Carl does not value the individual cow, but emphasizes herd performance. The herdsman does all dehorning. The herdsman will follow treatment protocols that may originate at the local veterinary clinic or may come from other sources. Cows are more of a commodity, and must be productive to stay around. Carl may value and be willing to pay for consulting inputs as business analysis, budgeting, partial budgeting, protocol development, and protocol success evaluation.

Market segmentation and veterinary medicineCarl is a shopper, and often purchases from sources other than the veterinary clinic. However he is more likely to pay for technical information from his veterinarian. Major management decisions are dollar driven rather than tradition driven. Somatic cell count is important to Carl, and he is more likely to cull than treat. Culling is done to maintain the barn full of cattle producing at the maximum level. Carl may consider genomic testing, but will only do so after a partial budget demonstrates a profit associated with the technology.

Traditional Tom values individual animals, is more likely to find an animal sick and intervene earlier. These farms derive most of their income from the sale of milk, but often have crop and/or other incomes (milk, bred heifers, produce, etc). Tom may appreciate a cursory review of his DHIA records, but will not be able to afford extensive consulting efforts. Tom will likely purchase all vaccines and pharmaceuticals from the farm veterinarian, and relies on the farm veterinarian for advice on issues such as vaccinating.

Because of the scope of the farm, Tom may rely on the veterinary clinic to have technicians dehorn, and assist with treatments. Tom is often doing a balancing act, between the dairy herd and hitting the windows of opportunity with his cropping enterprises.

Genetic Greg will have technicians draw blood from potential recipients to test for BLV. Like Show-ring Sam, Greg will utilize ET and IVF services. If any of the high valued calves become ill, Greg is willing to use more high tech services such as radiography, blood cell counts or blood enzyme testing. Because of the high potential value of individual calves, Greg appreciates the presence of calf resuscitation equipment being available at assisted calvings. As a biosecurity issue, Greg concentrates on acquiring and administering BLV-free colostrum. Greg is likely to use genomic testing in a high portion of his herd, and utilize that to guide the ET and IVF programs.

After doing the market segmentation, a veterinary clinic should assess the abilities and interests of the staff. We can’t be all things to all people, but if we understand what market segments want, we can make decisions about hiring, continuing education and the allocation of resources to meet the needs of a market segment. Providing services that clients want will be more rewarding to you and them, than providing services just because “that’s what we do”.

This report was generated from the Veterinary Practice Sustainability Committee of the American Association of Bovine Practitioners.