Market Segmentation of the Nike Company

Demographic Segmentation

Demography segmentation they include age, race, family income, and education level, among others. Besides, it was observed that the majority of the respondents consist of professional from various fields like engineers, software professionals, working executive etc. who effective form 38% of our database. While 36% were students from various fields. Others constitute designers and athletes etc. the further study is carried on the buying behavior of the above mentioned categories of consumer, which shows that our consumer is well educated and is very well informed about the product. (http://www.scribd.com/doc/34735893/A-Summer-Training-Report-on-Nike)

Furthermore, in the survey conducted a direct relation between the income level and the spending capacity was observed. Also it was found that students were spending in the range of $1000 -$ 3000 as compared to the working class professionals who were ready to spend between $ 3000 – $ 6000, since they have higher spending power because of higher income levels. (http://www.scribd.com/doc/34735893/A-Summer-Training-Report-on-Nike)

Geodemographic Segmentation

The second segmentation are focuses on geodemographics and proximity. The premise behind geodemographics is that people who are similar in income, culture, and perspectives naturally gravitate toward one another. Once these people move to their neighborhoods, they become even more alike and share similar consumer behaviors. When a store asks for your zip code when you make a purchase, it’s using geodemographics as a segmentation technique.

Furthermore, the characteristic if the consumer is depends on their income. For example, the Nike Shoes has been done an analysis the respondent of buying for the Nike shoes is RMB597 for average of the total.(App.1)

Personality Traits

Personality traits are people often do not identify these traits because they are guarded or not consciously recognize. For example, some of the consumer can accept new thing and some perceive less risk in trying new thing.

Lifestyle

A third base of segmentation is psychographics. Psychographics are lifestyle and personality descriptors. There is a relationship between lifestyle and consumer behavior, so people with similar lifestyles buy similar products. Lifestyle descriptors are often categorized as activities, interests, and opinions.

The brand is fiercely defended by its owners whom truly believe that Nike is not a fashion brand but a shoes for sport lifestyle consumer that mean mostly people who active in sport such as football player or basketball player would purchase it. Meanwhile there was also consumers that wear Nike just want to build confident or make other feel they wearing a branded shoes but not ordinary shoes but not for sport purpose. For youth, they think Nike shoes is a fashion lifestyle and they wear it just to follow fashion trend. For example, since Michael Jordan wear Nike shoes, consumer will follow him step as a fashion trend.(App.3)

Benefits segmentation

Benefits sought represent consumer needs and important for positioning.(App.4)

Critiral for Effective Targeting

Identifiable

Nike have been divide the market into separate segments on the basis of series that relevant to the characteristic such as demographics have age, gender, family life cycle and others.(App.2)

Besides, they target in different identifiable such as men sports running shoes and women sport running shoes. Nike target on different type of segment that to fulfill customers need. (App.6)

Sufficiency

Nike is a worthwhile target, they target on the needs and they undertake probability survey to whose finding project to the total market. They will have clearance stock or promotion through on or sell on shops. (App.7)

Stability

Nike marketers prefer to target consumer segment that are relatively stable in demographic factors are likely growth larger time.(App.2)

Besides, consumer can buy through online or any shopping complex. That was easy for consumer to purchase anywhere. (App.8)

Accessibility

Nike has been accessibility in any market segmentation through advertisement.(App.9)

Profitability segmentation

Overall the past two years (App.5)

Sales

Group sales decreased by 8% and amounted to $572.5 million in 2009, compared to $622.8 million in 2008. The decrease in sales matched the Company’s expectations and was due to the recession of all sales markets as realized as part of the financial and economic crisis which started at the end of 2008. The recession mentioned lead to conservative inventory policy adopted by most Company’s customers which also contributed to the decrease in sales.

 Gross profit

 The gross profit in 2009 amounted to $103.7 million (18.1% from sales), compared to $105.7 million in 2008 (17.0% of sales). The improvement in gross margin in 2009 compared to 2008 was due to efficiency steps taken by the Company and the implementation of the restructuring plan which was declared by the Company at the end of 2008 and was achieved despite the decrease in sales.

A global slowdown in retail sales and consumption, has hit Nike hard. In fiscal 2009 (ending May 31, 2009), Nike’s revenue grew only 3% to $19.2 billion, with net income falling 21% to $1.5 billion, and the company expects lower revenues in the first half of 2010. Despite the overall struggles in 2009, Nike posted two straight quarters from Q3 2010 to Q1 2011. In Q2 2011, the company posted a profit of $457 million, up 22% from the same quarter of the previous year. Revenues hit $4.8 billion, up 10 percent over the same period last year. Analysts point to the trend of four straight strong quarters as a sign that the company – and perhaps the financial world – is finally beginning to rebound from the recession. However, company analysts believe that Nike will struggle against the challenges of a larger economy for the rest of the fiscal year, which it plans to combat through a selective rise of prices.

Consumer Environment

As consumer can see, Nike have been promise to improve their shoes in newspaper in long time. When 2009, Nike haven been improve in their shoes that’s call Newton Running. Its developed a whole range of shoes that encourages running on your midfoot/forefoot, a technique and position that helps keep you running more efficiently, injury-free and faster. According to Nike, cushioning and support are needed in order to avoid injuries but, at the same time, all the cushioning and support that modern running shoes provide are making our foot’s muscles lazy. Therefore the Free is created as a training shoe, with which to run a limited number of miles amid your normal running schedule in order to specially train the muscles that are not activated while running with normal running shoes. Furthermore