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SEGMENTATION, TARGETING AND POSITIONING STRATEGY OF NIKE & BUYING DECISION ANALYSIS Preprint · December 2017 DOI: 10.13140/RG.2.2.36550.63044

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SEGMENTATION, TARGETING AND POSITIONING STRATEGY OF NIKE & BYING DECISION ANALYSIS Master in Business Administration (MBA) Module: MBA 61 | Marketing

Panagiotopoulou Vasiliki [email protected] University ID: 000100001411 Coordinator: Nektarios Tzempelikos Academic Director: Christina Christou Words: 2226

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SEGMENTATION, TARGETING AND POSITIONING STRATEGY OF NIKE & BYING DECISION ANALYSIS

Table of Contents Introduction .................................................................................................... 2 A. Segmentation, Targeting and Positioning ............................................. 2 Segmentation ...................................................................................................... 2 Demographic ........................................................................................................................3 Psychographic .......................................................................................................................4 Behavioral ...............................................................................................................................4 Geographic ...........................................................................................................................4 Socioeconomic .....................................................................................................................5 Benefits ....................................................................................................................................5

Targeting .............................................................................................................. 5 Positioning ............................................................................................................ 6

B. Main factors that can affect the buying decisions of the target customers for Nike’s products ...................................................................... 6 Psychological factors.......................................................................................... 6 Social factors ....................................................................................................... 6 Cultural factors .................................................................................................... 7 Personal factors ................................................................................................... 7

Conclusion ..................................................................................................... 7 References ..................................................................................................... 8

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Introduction Marketing choices are crucial components of a strategic marketing process. At this stage of planning, decisions are made in order to indicate the direction of the marketing mix not to mention the way products are going to be perceived in the market place. These marketing choises group consumers together based on common needs with the ultimate goal to affect the buying decisions of the target customers for these products, which stands for segmenting, targeting and positioning strategy. In other words, STP is a marketing signification that associates the way to evaluate and choose a target market for specific product or service. Considering the factors related to this topic, the question of what specific consequences arise when addressing this topic must be elaborated. This research is particularly outstanding for the reader because it will analyze the STP strategy of a well-known company that produces sports equipment, which is Nike.

A. Segmentation, Targeting and Positioning The perception of mass marketing and behave all customers the same way, has led to the comprehension of the unique needs of consumer groups, that has to be segmented for greatest sales opportunities. In particular, all sports fans differentiate. For instance, a sports company, such Nike, could not market the extreme sports equipment to elder people. As Michael Porter (1998) mentions, “You can’t be all things to all people”, explaining that firms, which specialize in meeting needs of consumers, tends to be more effective. However, if the first marketing choice is market segmentation, how does Nike group consumers based on common needs?

Segmentation In the customary way, there are six interactive bases for market segmentation, which are demographic variables, psychographic profile, behavioral style, geographic variables, socioeconomic variables and benefits sought. While Nike has a general targeted segment “all athletes”, nevertheless precisely defines various market segments (Shank and Lyberger, 2014). Demographic  Age  Gender  Ethnic Background  Family life cycle Psychographic  Lifestyle  Personality  Activities  Interests  Opinions Behavioral  Frequency of purchase  Loyalty of consumers

Geographic  World region  Country  Country region  City  Physical Climate Socioeconomic  Income  Education  Occupation Benefits  Consumer needs  Product features desired

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Demographic Demographic segmentation is the most widely used technique from Nike because the characteristics are easy to identify and measured, are available from many sources, such as the government population count and are associated to sport attitudes such as attending a game or watching sports. Based on the demographic segmentation, Nike targets individuals according to their gender, age and life cycle stage. First and most important to be told is that Nike targets customers between 11-45 years old, with greater weight to teens in order to build long-term loyal consumers. For instance, in 2014 before the world Cup, Nike created a promotional campaign that glorified great football athletes playing football with teenagers inspiring them to become like their idols.

Age

Children 1-5y

Tweens 5-10y

Teens 11-18y

Adults 18-45

Furthermore, gender is another significant factor that Nike uses to attract its audience. Despite the fact that its male purchasing audience is higher, recently Nike has invested heavily in females. Specifically, Nike has developed a strategic approach to targeting Women by launching a variety of female sports lines where revenues are expected to grow significantly in the next years.

GENDER

Female; 45% Male; 55%

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It must be stressed that Nike does not segment the marketplace based on ethnic background including nationality, race and religion in order to group the consumers. Respectively, does not take into account the life cycle to segment the market (Statista, 2017).

Psychographic Nike utilizes psychographic segmentation to target customers based on lifestyle, personality, activities and interests. Specifically, Nike aims to active individuals who take pleasure in sports, gym regularly, are athletes and passionate with sports, which tend to be part of their life. Nike does something exceptional. Associates individuals’ lifestyle with their activi ties, interests and behavior creating the unique “feeling” and as a result they buy similar products. Nike applies sports-centric strategy motivating, inspiring and connecting emotionally all athletes with its products. Nike’s statement “To bring inspiration and innovation to every athlete in the world” not to mention “Run with me” encourages all kind of athletes to follow with loyalty the firm with the sense that they belong to the same family. Apart from the sports consumers, Nike approaches a crowd that loves fashion. There are categories of people who are passionate about the brands and buy company’s products just to follow fashion trends. These individuals are convinced that Nike’s products are not ordinary athletic shoes but a fashion lifestyle (Deng, 2009).

Behavioral On the one hand, Nike focuses on the way its products make consumers feel. Clearly, the company follows the direction “If you have a body you are an athlete” and “If you are an athlete, Nike’s products make you feel athletic”. On the other hand, Nike builds customers’ engagement by providing them unique quality as well as various and innovative products to choose in order them to purchase more frequently company’s products. Furthermore, Nike gives its consumers the opportunity to share their experiences with their friends and family including the review products on the internet, which spread to social networks having a huge effect to purchasing behavior of the customers (Bilotti, 2011).

Geographic Geographic is simple, yet powerful segmentation basis. Nike segments market based on world and country region, city and popularity density in different way. In particular, Nike promotes different campaigns in the United States of America, in Europe, in Asia, in Australia as well as in Africa because sports differentiate by region, even cities. For instance, all the commercials in the United States are around football and baseball, while in Europe, advertisements refer to soccer. Concerning cities segmentation and their fans in New Delhi, the capital of India, Nike promotes equipment for cricket while in England and Sidney for rugby. Based on Nike’s statistics, largest market places are North America as well as Western Europe and China where the company segments more the market focusing on urban areas with purchase densities. Finally yet importantly,

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Nike does not segment the market based on climatic conditions even though the company is ecologically conscious (Shank and Lyberger, 2014).

Socioeconomic Commonly, income, education and occupation are interrelated due to the fact that people with higher educational level enjoy higher income as well as most respective status. Thus, Nike segments market in lower, upper middle and upper class, where in the last group, the company provides sports equipment in limited editions, which could be bought only from individuals with high income (Bilotti, 2011).

Benefits Benefits segmentation is considered the underlying factor where every purchase satisfies a need. Nike focuses on “benefits sought” to segment market place. Company’s products strive to meet elite athletes’ as well as professional and casual performers’ needs. These needs that consumers looking forward to fulfill through Nike’s products purchases are the quality, the duration, the comfort, the style, the innovation, the price and the brand awareness. Thus, Nike segments the market in three core bases concerning benefits, which are the Utility in order consumers to accomplish high performance, the Style where individuals follow the fashion brand statement and the Technology bases, which gives customers the opportunity to own innovative shoes such as Air Max. Although each type of segment defines groups of customers with similar needs, it is ordinary implementation in marketing to combine segmentation variables, such as geodemographic segmentation, for more effective approach in certain circumstances (Ali Mahdi et al, 2015).

Targeting Target marketing is the next step of segmentation process where the company systematically chooses the segments that will allow to most effective and efficiently achieve its goals. Nike evaluates its target market based on size, reachability, measurability and behavioral variables. In particular, Nike has niche market to serve. The company targets professional athletes and sporty individuals providing them specialized and innovative products. Furthermore, all products are reachable, even online, with the unique opportunity Nike’s consumers to create their own custom designed shoes, which makes the brand more identifiable and remarkable in differentiation to other footwear companies. It should be noted that Nike also targets the marketplace through psychological tactics by sponsoring great athletes with tremendous achievements and victories. This tactic intimately links company’s products with triumph (Shank and Lyberger, 2014). It is for granted that sustainable innovation is the trigger for revolutionizing the way the company does business and manufactures its sports equipment. For that reason, Nike applies aggressive marketing strategies in parallel with the marketing mix the company develops in order to make further known its target

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consumers company’s products, enchasing its uniqueness and exclusivity (About Nike, 2018).

Positioning The final step of STP concerning the market decisions is the positioning. Nike has positioned its brand as the market leader of sports equipment widely, providing high quality and innovative technology. Furthermore, Nike has convinced its consumers that is an ambitious and victorious company through the swoosh together with the slogan "Just Do It" as well as through the promotional activities that connect Nike’s brand with magnificent achievements of prominent athletes. It must be stressed that Nike over the years has shifted from product focus to attitude. Nike “speaks” in athletes hearts through unique & momentous feelings, which makes the company exceptional compared to others. Above all, Nike has established its place in fashion, where company's products define certain groups' lifestyle (Chang, 2014). As it seems, positioning is based on the perception or image that Nike expands and maintains concerning its sports equipment. With this in mind, the company develops perceptual maps through marketing research techniques in order to interpret its products position in relation to competition.

B. Main factors that can affect the buying decisions of the target customers for Nike’s products Consumer’s buying behavior goes through various stages before the individual takes the final decision to purchase the product. Several factors can affect the buying decisions of the target customers for Nike’s products, which are classified in the following categories such as psychological, social, cultural and personal factors and will be elaborated below.

Psychological factors Nike gives its consumers the belief that when they wear its sports equipment, they can achieve everything without limitations; they can be unbeatable. The company's advertising campaigns and headlines give a sense of freedom and victory not to mention that the brand itself gives the motivation, “Just do it”. Nike affects not only beliefs but also attitudes. It could be said with certainty that Nike invests on customers perception by the incentive “If anybody can do it, you can do it”. Consumers are persuaded to purchase company’s products and take the change to become healthy and good looking like Nike’s top athletes (Vainikka, 2015).

Social factors It is for granted that all Nike’s commercials promote exceptional athletes like Michael Jordan, Cristiano Ronaldo, Carl Lewis and more using company’s products. In terms of sociology, all consumers tend to choose products that their idols use and are highly influenced by their status and lifestyle. Therefore, Nike’s customers are influenced by reference groups, opinion leaders and family concerning their buying decisions due to their need to fit in based either on the role they represent or through the social status. For instance, an

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individual who wears Nike’s limited edition indicated that he/she belongs to the upper class (Otnes & Zayer 2012).

Cultural factors Culture is an important factor in consumers’ buying decision but at the same time, it is also a very delicate issue for companies that use it with the aim of influence. Nike segments the marketplace by location, and then, having researched consumer interests based on cultural attributes, affects the buying audience through commercials. An illustration of the above written is India’s official sport. Due to India’s culture, there are more cricket fans than any other sport. Therefore, Nike through cricket idols affects fans to buy the sports equipment that provides.

Personal factors Many personal factors affect the buying decision of the consumers, which are the age, the economic condition, the occupation, the lifestyle, the personality, the quality of the product, the availability, even the price. Nike influences its consumers through the one of a kind fashion styles and trendy sports equipment that address to different ages, the comfort that athletes feel wearing company’s products, the innovation and quality that is proved by product duration as well as the price escalation where every athlete could buy, wear and feel unique. Finally yet importantly, Nike’s products are available almost everywhere, even online, where consumers’ could purchase company’s products instantly (Vainikka, 2015).

Conclusion In conclusion, it would be wise for business world to consider these factors when addressing this issue. In my opinion, Nike is the leader in sports equipment creating a fortress in the sports market that is difficult to conquer. The company excels because is the first that brought innovation to sports shoes through the R & D department. At the same time, Nike constantly attracts the best athletes from all sports and signs contracts that bring enormous profitability to the business by associating the products with triumph and victory, creating the consumers’ the need to acquire the product. Clearly, the company has applied the STP strategy correctly, as well as having understood the needs of consumers affects their buying decisions with a tremendous success. I feel very strongly that this topic will be discussed and researched further in order to help marketing plans be more productive as well as innovative.

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References [1]. Porter, M., E. 1998. The Competitive Advantage: Creating and Sustaining Superior Performance. NY: Free Press. [2]. Shank, M., D., Lyberger, M., R. 2014. Sports Marketing: A Strategic Perspective. 5th ed. London & New York: Routledge. [3]. Statista: The statistical portal. 2017. Statista dossier about Nike. [ONLINE] Available at: https://www.statista.com/study/12870/nike-statistadossier/. [Accessed 3 January 2018]. [4]. Deng, Τ., 2009. “Just Done It”--- Nike’s New Advertising Plan Facing Global Economic Crisis. International Journal of Business and Management, 4/3, 102-105. [5]. Bilotti, K. 2011. Emotional Brand Attachment: Marketing Strategies for Successful Generation. [ONLINE] Available at: http://scholarship.claremont.edu/cgi/viewcontent.cgi?article=1257 &context=cmc_theses. [Accessed 6 J...