Customer Segmentation Does Not Work – What's Wrong With It? July 2017

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OSG’s Real Time Analytics OSG Offers End-To-End Analytics Capabilities To Drive Innovation & Growth for Your Business Outstanding Customer Engagement OSG’s Products Marketing OSG Segment OSG Innovate OSG Communicate OSG Equitymap OSG Price Customer Experience & Engagement OSG Value OSG Engage OSG Ascend Operations OSG Risk OSG Margin OSG Salesforce OSG Forecast OSG Optimize Infrastructure Insights Intelligence Interventions Cognitive Analytics Descriptive Analytics Predictive Analytics Prescriptive Analytics ASEMAPTM OSG’s Stanford Developed Proprietary Behavioral Analytics Engine Real Time Data Ingestion | Real Time Analytics | Real Time Insights Generation | Real Time Visualization and Interventions CAVIITM

OSG’s Products At a Glance Marketing Customer Experience and Engagement Operations OSG-SEGMENT OSG-VALUE OSG-RISK Behavioral & Cognitive Analytics to Develop Actionable Segmentation Delivering Growth through Customer Lifetime Value Risk and Fraud Analysis to Reduce Cost OSG-INNOVATE OSG-ENGAGE OSG-MARGIN Behavioral Analytics to Guide Innovations Designing Loyalty Programs and Retention Strategies using Behavioral Analytics Behavioral Analytics for Pricing and Margin Analysis OSG-COMMUNICATE OSG-ASCEND OSG-SALESFORCE Optimizing Messages to Obtain the Highest Customer Responses Cross-Sell and Up-Sell Analytics for Faster Revenue Growth Salesforce Design and Management to Drive Efficiency OSG-EQUITYMAP OSG-FORECAST Understanding Brand Equity and its Importance Demand Forecasting using Behavioral Analytics OSG-PRICE OSG-OPTIMIZE Pricing Strategies for Easy Adoption and Repeat Purchases Powerful Analytics to Optimize your Marketing Spend and Channel Mix

What is Segmentation? The fundamental premise of segmentation is that different customers have different “characteristics” Segmentation is the process of dividing customers into groups that have similar characteristics (e.g. attitudes and behaviours) and are expected to respond similarly to promotional and product development tactics

Challenges with Current Healthcare Segmentations Current behavioral segmentation in healthcare is primarily based on deciles There is very little understanding of what attributes uniquely drive those segments that results in their classification into deciles This lack of understanding of underlying attributes results in messaging that don’t uniquely appeal to segments resulting in potential lost sales

OSG’s Segmentation is Based on ‘What Matters To Each Customer OSG’s Segmentation is Based on ‘What Matters To Each Customer?’ Rather than only on ‘Who They Are?’ DEMOGRAPHIC SEGMENTATION LOCATION VOLUME AGE Easy to target but provides little insight about what customers value ATTITUDINAL SEGMENTATION TRADITIONALISTS OVER ACHIEVERS EARLY ADOPTERS Difficult to target or track performance as attitudes may change over time OSG-SEGMENTTM (Needs and Outcomes Based) Provides powerful guidance on how to change behavior and guide strategy/tactics ENDURANCE SEEKERS SIMPLICITY SEEKERS SAFETY SEEKERS RAPID TREATERS

Pharma Example – Competitive Psoriasis Market Situation New biologic (Product X) for moderate-to-severe plaque psoriasis Very crowded therapeutic area with many biologics already established As part of their go-to-market strategy, client (Company X) was seeking to differentiate their product in this crowded market OSG’s Solution: OSG-Segment™ OSG recommended using its proprietary ASEMAPTM methodology to develop actionable needs-based segments that can be targeted with unique messages

REACHING SEGMENTS & MESSAGING Segmentation Was the First Step in a Fact-Based and Differentiating Go-To-Market Strategy REACHING SEGMENTS & MESSAGING How must Company X convey its value to win in a segment? TARGETING Which customers should Company X focus and align the business around? SEGMENTATION Are there distinct segments of customers that value certain drivers uniquely over other customers?

ASEMAPTM – Attributes/Endpoints trade-off exercise Research Approach 30 minute online survey across 7 countries Screener (2 mins) Usage/Prescription Behavior & TPP Receptivity (5 mins) ASEMAPTM – Attributes/Endpoints trade-off exercise (15 mins) ~40 ATTRIBUTES/ENDPOINTS THAT ENCOMPASSED EFFICACY, SAFETY, DOSING, MOA ETC. Attitudes (5 mins) Firmographics (3 mins)

ASEMAP™ – Steps in Prioritizing Attributes/Endpoints A. CATEGORIZE ATTRIBUTES B. RANK ATTRIBUTES C. TRADE OFF ATTRIBUTES

ASEMAPTM – Attributes/Endpoints trade-off exercise Segmentation Inputs Usage/Prescription Behavior & TPP Receptivity ASEMAPTM – Attributes/Endpoints trade-off exercise PRIMARY DRIVER OF SEGMENTATION INPUTS INTO THE SEGMENTATION Attitudes Firmographics

An ASEMAP™ Segmentation Is Based on Key Attributes That Drive Choice DERMATOLOGISTS SEGMENTATION EXAMPLE SEGMENT 1 SEGMENT 2 SEGMENT 3 SEGMENT 4 Availability of long-term safety data Percent of patients who achieved PASI 100 at week 12 Percent of patients reporting PASI 75 at week 12 who achieved PASI 90 at week 52 Incidence of malignancies Percent of patients who achieved PASI 90 at week 12 Percent of patients who achieved PASI 75 at week 12 Incidence of serious infections Incidence of nausea Incidence of vomiting Ability of patients to return to work EMPHASIS ON SERIOUS SAFETY ISSUES EMPHASIS ON ENDURANCE EMPHASIS ON RAPID OR SHORT-TERM EFFICACY EMPHASIS ON SIDE-EFFECTS AND PRACTICAL PATIENT OUTCOMES

Combining Attributes Importance with Attitudes & Behavior for Holistic Segmentation DERMATOLOGISTS SEGMENTATION EXAMPLE Points of differentiation Segment 1 Segment 2 Segment 3 Segment 4 Differentiating Attribute Categories Serious safety issues Endurance Rapid Efficacy Side-effects & Patient outcomes Key Attitudes Try out new treatments only after they have been in the market for a long period Top priority is to improve clinical outcomes Keep up with breaking developments in the field Priority is to improve profitability, physician and employee satisfaction First to try new treatments Treat patients aggressively Fear of side-effects limits their prescription of biologics Burdened by administrative paperwork More likely to discuss patient support programs Prescribing Behavior Lowest biologic prescribers High biologic prescribers Have a wider prescription pattern (biologics, topicals, systemics, light therapy, orals) Firmographics Primarily a medical practice Primarily a cosmetic practice Mix of medical and cosmetic practice SAFETY SEEKER ENDURANCE SEEKER RAPID TREATER SIMPLICITY SEEKER

Develop Actionable Segment Personalities

A Fact-Based Approach Must be Taken for Identifying Target Segments REACHING SEGMENTS & MESSAGING How must Company X convey its value to win in a segment? TARGETING Which customers should Company X focus and align the business around? SEGMENTATION Are there distinct segments of customers that value certain drivers uniquely over other customers?

The Highest Priority Segments Were identified Through An Exhaustive Fact-Based Process ENDURANCE SEEKER SAFETY SEEKER SAFETY SEEKER PRIMARY TARGETS ENDURANCE SEEKER SIMPLICITY SEEKER RAPID TREATER SIMPLICITY SEEKER RAPID TREATER SECONDARY TARGET Mapping segment profiles against customer accounts to develop specific plans for serving customers based upon the factors that will influence them the most By evaluating current programs and services to its customers against drivers of choice, BD was able to identify 10 offerings to reduce or discontinue, thus increasing the profitability and reducing cost to serve. They further took the results and mapped it to specific accounts to reframe pricing for cost-driven clients and offer a streamlined product with reduced support that was more profitable for the business. Can Product X demonstrate superiority vs. competition on attributes that uniquely matter to this segment? Is this segment sizeable enough for it to be worth the effort? How much effort would it take for Company X to acquire customers in this segment (switching or acquisition)?

Communication Must be Tailored Towards Segments for Greater Impact REACHING SEGMENTS & MESSAGING How must Company X convey its value to win in a segment? TARGETING Which customers should Company X focus and align the business around? SEGMENTATION Are there distinct segments of customers that value certain drivers uniquely over other customers?

Empowered Sales Team With A Targeted Product Selling Toolkit ENDURANCE SEEKER OSG worked with Company X and an agency to develop and prioritize the right messages, visual aids and other marketing collateral Segment Tool Kits (Segment Profiles and Insights, Messaging Platforms, E-detailing, Visual aids and Enablers to Selling) SAFETY SEEKER SIMPLICITY SEEKER

Developed an ‘easy-to-use’ tablet/mobile based typing tool that Integrated with Company’s IT System for Classification and Identification SALES REP ADMINISTERING THE TYPING TOOL TYPING TOOL CLASSIFICATION BROAD DIRECTIONS TO SALES REP ON COMMUNICATING THE PRODUCT’S VALUE PROPOSITION “Hello Dr. John, can you please review these 8 statements and rank them for me? It will take 15 seconds. I am just trying to understand what is important to you in choosing a treatment for plaque psoriasis.”

Other OSG Segmentation Capabilities & Impact OSG’s Impact - Lifesciences Product Uptake 12-20% improvement in market share in crowded categories Faster uptake of new products Organizational Impact Sales Aligned sales organizations on one CRM and an unified sales process Streamlined sales activities to target key segments and improved sales calls and prospects Quickly screen and identify the validity of sales opportunities by knowing the likelihood of the segment moving the opportunity forward Improved the velocity of opportunities Decreased cost to serve   Marketing Elevated the relevance of the marketing as a key enabler of success to the business R&D Entire R&D portfolio was aligned to the needs of key customer segments Implemented as a first screen to understand how to assess the potential of new technology Other Capabilities SECONDARY DATA CAPTURES PAST BEHAVIORS (i.e. IMS, Sales Data, Rx Data, Deciles etc.) OSG’s ASEMAP™ EVALUATES ATTRIBUTES SOUGHT + HOLISTIC SEGMENTATION THAT COMBINES PRIMARY AND SECONDARY RESEARCH DATA

OSG Advantage: Why OSG for segmentation? Unique Segmentation Approach – OSG uses a combination of needs (ASEMAPTM), attitudes, behaviors and demographics to develop a holistic segmentation Long-term Applicability – Since OSG’s segmentation is primarily based on ‘what customers desire’, the segments hold long-term relevance without the need for a refresh every few years Proven Across Verticals – OSG has successfully executed segmentations across multiple verticals (Pharma (multiple therapeutic areas), Medical devices, CPG etc.) Experience with Global Engagements – OSG has helped clients successfully activate segments globally Access To OSG’s Top Executives for Segment Activation - Strategic partnership led by senior executives at OSG to help clients with a global roll-out of segmentation across various stakeholders Experienced Project, Advanced Analytics & Technology Teams – OSG is a one-stop-shop for developing and activating segments. OSG’s teams combine analytical rigor (various approaches to develop segments such as K-means, Latent class, Hierarchical clustering etc.) with practical know- how to ensure actionable and targetable segments are developed and activated Developing Segmentation Toolkits – OSG’s project and graphics teams have combined to develop segment toolkits for clients for company-wide socialization (i.e. segment booklets, segment pocketbooks etc.)

Contacts Mani Vannan, PhD Sanjeev R Sridharan E. Mani.Vannan@optimalstrategix.com M. +1 917 428 4396 O. +1 212 897 9960 Sanjeev R Sridharan E. Sanjeev.sridharan@optimalstrategix.com M. +1 215 867 1924 O. +1 469 258 6949