1. Market segmentation is the selection of groups of people who will be most receptive to a product. The most frequent methods of segmenting include:
Demographic variables such as: age, sex, race, income, occupation, education and household status.
Psychographic variables such as: lifestyle, activities, personality and social class.
Behavioural variables such as: product benefits and product use patterns.
Geographic variables such as: climate, country or region and the size of the area in terms of people that live in it.
Much segmentation involves a combination of these methods.
Nike as a company used to be a very production focused company, that is, it focused on having a competitive advantage through inexpensive production and technologically superior product design. Most recently however Nike has opted to become a customer oriented company and that is to create products that Nike’s customers truly value. To do so it has had to do extensive research on all of its target segments in order to find out what each segment wanted out of the product.
As Nike is a global company it has really focused on the demographic, psychographic and behavioural segmentation.
At the top of Nike’s customer list are professional athletes. They are usually fairly young people with very high incomes who are single or in the early stages of marriage. These athletes who are the best at their respective sports such as running, tennis or basketball demand the highest quality shoe with specific characteristics to suit their sport and they use the shoe virtually everyday.
Such athletes also have absolute brand loyalty as they are often sponsored by the company and given all the shoes for free. The very best athletes such as Michael Jordan and Tiger Woods have even had their own signature models designed with everything from sole to colour and pattern chosen by them.
Next on Nike’s list are the so called ‘weekend warriors’ – people who are very active and fit and use the shoes frequently but are not professional athletes. They come from all different backgrounds, vary in age and occupation but demand high quality and product performance and are often prepared to pay a higher price. These people have a fairly good idea of what they want in a shoe and do a fair amount of research when buying a new pair. Some of them will buy the above-mentioned signature models because they perceive them to be of the highest quality and often look up to those athletes.
All of Nike’s other customers fall into the third category but they form numerous niches. A niche is a sub-segment with distinctive characteristics that seeks a special combination of benefits. (Kotler & Armstrong 2001)
Such niches might include:
Lower to middle class sports people. They seek a low price athletic shoe that gives high performance and looks the part. They live in the suburbs, usually have established families and have low to moderate incomes and could be described as ‘strugglers’.
Bargain hunters. They are status seeking, lower class people who will often buy Nike just to look good and to be seen wearing their shoes. They may or may not play sport, have little education, low income and will often go to sales or buy defect shoes.
Fashion followers. Usually young people that are well educated, have little or no brand loyalty because they only wear what’s cool. Appearance of the shoe is most important and performance comes second.
The segments and niches outlined above use a combination of segmentation variables, however Nike also manufactures shoes for people with specific characteristics.
Nike produces both male and female shoes to suit gender as well as kids’ shoes.
Baseball and gridiron shoes are produced and marketed mainly in the USA where both are national sports.
2. Over the next ten years as more and more people take up sport there are a few new segments that might emerge for Nike in the sports shoe market. Perhaps we might see the emergence of a new superstar in a sport that has previously been neglected by Nike and other big shoe companies. That would first result in a war to sign that someone up to a particular label (Nike, Reebok, etc). There would then be a heavy marketing push towards that sport using its new superstar and would lead to more people taking up the sport and buying the footwear designed for it. Also a new feature designed and successfully marketed by Nike would result in a new market segment (past example – the Air cushion).
Such features could be a new lace system or a new space age material that “enhances performance”. Such products would be ground breaking but they would also command a high price and therefore only elite athletes and the rich would be able to afford them. Another example of a new segment would be if for example a country’s economy rapidly improved and its citizens became increasingly able to afford Nike shoes. Although highly unlikely, this would create a whole new market for Nike to enter into.
3. Organizations in the footwear market aim to segment consumer groups to enable them to identify different types of consumer groups they are involved with. The main segment variables according to Kotler and Armstrong, 2001, are the geography, demography, psychography and behaviour of the customer. By establishing these variables and the finer details of these, Organizations, such as Nike, can manufacture goods to the consumer’s taste.
Initially, the geography is taken into account- this particular variable covers what kind of country a customer is in, the country’s region, whether the customer lives in a rural or suburban town or city, how big is the town/city, and what is it’s climate. By dividing people into separate groups such as this, using only geographic variables, a company can quickly establish the needs of a customer. For one thing, customers living in an arid or temperate region would have little use for sportswear designed for snow skiing.
Further information about the customer is found by breaking up the demography, which takes into account the age and gender of the customer – this probably being the most important aspect of the segmenting. The occupation and income of the customers then determines the quality and price of product suitable for them. Less important factors such as education, race and religion are acknowledged, but in the industry of sports shoes, little can be derived from this information.
Following on from the occupation and income, the social class and lifestyle of the individual is determined through psychography- once again proving the economic standing of the customer plays a big part in what a company provides.
Finally the behaviour of the customer (which can be unpredictable) further segments the customer groups in those who are heavy users of the product, and those who are moderate/light users of the product. Usually in the industry of sport, the former would apply to the professional athletes, and from this, they can also gauge a loyalty level to the product’s company. Ultimately, sponsorship plays a big part in this, regarding professionals.
The four approaches to segmentation provides companies with a simple way of turning a seemingly large, diverse customer population, into several smaller groups that have specific wants and needs. It enables companies to provide the customers with what they want in the right stage of their lives, and this can often prove the difference between a customer’s loyalties to big brand names.
4. Using the identified segments of Geographic, Demographic, Psychographic and Behavioural variables, we can determine the characteristics of each customer group and the likely requirements of customers. Effectively, we break down the groups of customers using aspects of behavioural variables such as whether the customer is a light user (first time), a regular user (amateur), or a heavy user (professional). Through this, Nike can decide what it needs to offer in terms of footwear, taking into account as many other relevant variables in the process.
Light user of Nike athletics equipment, are able to enjoy athletics regardless of their geographic situation. Athletics is played everywhere as the climate or location doesn’t affect the sport, although dry conditions are preferred. Demographically, all ages participate in athletics and are enjoyed by both males and females. They can compete regardless of occupation, income, nationality and (like all sports listed in this paper) education, race and religion
Psychographically, all social classes compete, are energetic and motivated. They are targeted by companies such as Nike as people who will use a running shoe also for casual use (not just athletics), and will have no loyalty to brands. They simply desire a cheap, reliable product.
Amateur competitors in athletics tend to be inside the 15-35 age group, and while they may compete in athletics more regularly, and be looking for slightly better equipment to assist them in their sport, they are still a relatively similar customer group to first time participants.
Professional athletes compete on a global scale, and their age group is often narrowed to 20-35 years of age. Their income relies on their athletics performance and as a result, they place a high level of loyalty to sponsors, while seeking the very best equipment in their field. Psychographically, they are self-motivated and serious about their sport and there is no class orientation.
Geographically, basketball is very much a global sport, though its foundation lies in North America (in particular the United States). Like athletics, the local climate for the sport is preferably dry and warm though it can be played in winter months, as indoor basketball is very common. First time players and amateurs usually have access to such facilities.
Basketballers starting for the first time can range from ages between 10 years over, though it is viewed as predominantly a younger person’s game. Both Males and Females excel in the sport and while there may be stereotypes about the participants of basketball, it is not only blacks who dominate the sport.
Psychographically, social classes do not affect the popularity of the game. Like in most sports, first time players and amateurs show no loyalty to brand names and will often go for what they feel looks or feels good, or what is in fashion at the time.
Professionals however, are playing in a multi-billion dollar industry and it is in their best interests to wear a sponsored product. Like with athletics, the best players are in their 20’s or thirties, are heavy users of products such as specialized footwear, and are extremely motivated in their sport.
Cricket is comparatively a smaller sport compared to Basketball, Soccer and Athletics, and playing is virtually restricted to the “Test Playing Nations” of Australia, New Zealand, England, The Caribbean, South Africa, Sri Lanka, India, Pakistan, and Bangladesh. In most other places outside of these countries, it is expected that the facilities and playing standards will be of a lower quality. Cricket is one of a handful of frustratingly unique sports in that bad weather will disrupt it almost immediately.
Demographically for first timers and amateurs, cricket caters for all ages, but because of the expense to purchase specialist cricket equipment, an individual’s income may affect his capacity to purchase these items, let alone play the game. Psychographically, cricket is considered to be more of a middle class or higher sport due to the expense of equipment- thus a person’s occupation does make a difference.
To play cricket on a regular basis, amateurs need to have a positive personality to maintain their interest, as fielding on an oval for a full day takes its toll on a cricketer’s interest. But Nike’s disadvantage in this sport is that many cricketer’s attitudes towards it’s products may be a little negative when comparing it to reputable, long-standing cricket companies such as Grey Nicholls and Kookaburra.
Professionals once again in this sport are aged in the 20-35 year bracket and are tempted to switch and change their sponsors more than other professional athletes. Notable examples include Test Bowler Shane Warne ending a longstanding contract with Nike last year, Wicketkeeper Adam Gilchrist changing to Puma from Kookaburra 2 years ago, and Test Batsman Damien Martyn ending a 12 year association with Slazenger this year to adopt the new ‘Kahuna’ batting range from Kookaburra.
Football (Soccer, Rugby, Gridiron and AFL):
Of the four main codes of football, only 2 of them are recognized as international sports. Soccer and Rugby both extend to most countries of the world (soccer in particular) and both hold a world cup event whereby dozens of nations come to compete. As a result, first timers, amateurs and Professionals can compete in both soccer and football without worry of their geographical location. Gridiron and AFL are, obviously, restricted to their home countries. As a result, the market for soccer and Rugby is substantially larger than the domestic codes.
Demographically, (apart from Soccer) football is a physical sport and wouldn’t be played often by amateurs/first times over the age of 50 years to prevent injury. Professionals age between 18-35 usually for obvious physical reasons. An amateur/professional midfielder playing AFL is often required to run between 10- 20km during a single match depending on the standard of the game, which must be maintained for a further 21 consecutive games after (not including finals).
Generally speaking, football is a sport for all social classes, and in cases where the players compete on a regular basis, it is expected that the footwear can be worn out very quickly.
First time tennis players will find that geographically, tennis is best played in its countries such as Australia, North America, and Europe. While it is a relatively global sport, facilities and playing standards outside of these areas are poor, and no doubt focussing its efforts on customers in these regions would better place Nike. Tennis, like cricket, is affected by rain, which often causes problems in countries such as England where the grass courts can be left wet and slippery. From first timers to professionals, Nike must ensure that its footwear can cater for these conditions.
Demographically, first timers can range from under 10 years and above. Tennis can be a physically draining game, but when played socially, it becomes an enjoyable sport for all ages.
Psychographically, tennis (like cricket) is a working/middle class sport. Access to tennis courts can be expensive, along with the equipment needed. Professionals are usually aged between 20-35, and are often loyal to their sponsors.
5. As Nike offers many different products, to many different customer groups, each group is going to get different benefits from the products they buy. The different customer groups have been identified. And following is how some of these groups benefit from the products offered by Nike.
Athletics: The shoes offered by Nike for athletics are very specialised, and can only be used for specific events. The athletics shoes will generally be very light in weight. This can help lead to faster times and overall better performance in the athletes chosen discipline. They also have spikes on the bottom, which enables better grip leading to more confidence. There are different spikes to suit different surfaces and weather conditions, however these are mainly for the professionals, not the amateurs. They must also have cushioning for better protection of the athletes feet, ankles and knees. This is important, as athletics is very high impact on the legs and feet.
Basketball: Ankle support is very important in Basketball shoes. Basketball involves a lot of running and jumping, and the better the ankle support, the less chance there is of twisting and ankle. It is also very important to have cushioning and air pockets. This helps support the player’s feet, ankles and knees from twisting or jarring involved in the hard landings from when they jump. They are also light in weight and have springiness to help with running and jumping. All of this will help basketball players to play better, and be more comfortable both during and after the game. Basketball shoes also come in much larger sizes than shoes from other groups. This is because basketball players tend to be much taller than the general public.
Tennis: Tennis players like to have comfortable, lightweight shoes with good grip. Nike offers different tennis shoes for different surfaces, i.e. clay, grass and hard court. Basically the different courts require different types and amount of grip. This Leads to the player being faster around the court and more confident on the surface. A good amount of cushioning is also part of the shoes as it leads to less jarring from the harder surfaces.
Football (Soccer and Australian Rules): Both Australian Rules players and soccer players use boots that are very similar. This is because they play on the same surfaces, and both sports require a lot of running and jumping. Therefore Nike offers lightweight boots with a lot of cushioning to support the player’s feet and ankles. This all helps to decrease the pressure from non-stop running and jumping. The quality of the boots also aids with better kicking.
Cross training: Cross training shoes are multi purpose shoes that can be used for many different sports, and over a wide range of surfaces. They must be durable and lightweight, with cushioning. As there is a wide range of needs for these shoes, they must cater for all these needs. Cross training shoes are one of the most highly sold shoes on the market as they cater for many needs, and are not used only for a specific purpose.
It is important to note that Nike is very willing to ensure particular people in each customer group get every bit of satisfaction out of the products they offer. These people are the world class, famous athletes who Nike sponsors. Nike gives them all the free products they want and even pays them thousands or millions of dollars just to wear their products. The products are always tailor made to the athletes specifications, so they get the maximum amount of benefits from the Nike product that they can.
The idea behind this is that these athletes get international attention, and people from all around the world see these athletes wearing the products. The audience believes that if they purchase the same products as the athletes, they may become as good as them. Sadly in most cases this is not the truth, however Nike receives millions of dollars each year in revenue from this form of advertising.
6. Nike has many competitors in the marketplace. Some are much the same size as itself, such as Adidas, with others being much smaller, i.e. FILA and New Balance. However they all offer many of the same products in the athletic shoe industry. Four major competitors are outlined below, along with three core products from their range of shoes.
Reebok: Reebok is a United Kingdom based athletics company. It was founded in the 1890’s for the reason that athletes wanted to run faster. The actual name Reebok came about in 1958, and it entered the US market in 1979. It sold the most expensive shoes on the market then, at $60 a pair. It continues to sell well in many countries around the world. Here are some core products from this years product range.
Reebok Toast men’s cross training shoe: features an aggressive, multi-grip outsole for lightweight traction on multiple surfaces. Forefoot and rear foot outriggers helps provide lateral stability and support, while the full-grenade construction offers a low-profile look and low-to-the-ground feel. (reebok.com)
The Reebok Powerwalk DMX walking shoes for women: features technology to help provide you with moving cushioning, while the bevelled heel design provides an enhanced walking stride. The mesh and synthetic upper offers cushioning and breathability to help keep you comfortable with each step you take. (reebok.com)
X Beam men’s basketball shoes from Reebok: features X Beam technology for a low-to-the-ground look and feel for working out or stepping out. The V-shape collar height helps provide extra ankle support. (reebok.com)
Reekok Toast Reebok Powerwalk DMX Reebok X Beam Basketball Shoe
Adidas: Adolf “Adi” Dassler founded Adidas in 1925 in Germany. Adi created Adidas after realizing the need for performance athletic shoes in Germany. The company started small, only producing soccer and running shoes. Now Adidas is recognised worldwide especially by its 3 stripes used on all of its products. Some of Adidas’ core products include:
Adidas Men’s Climacool Basketball Shoes: The ClimaCool Basketball shoe gives 360-degree ventilation. Open mesh and open-cell foam padding in the upper offers unprecedented breathability without compromising protection. The mid foot rib chassis and vented sock liner channel airflow. The design is low to the ground and sleek for quick slashing and cutting. (thestore.adidas.com)
Women’s Supernova Cushion: Five years of careful refinement and improvement have gone into the new Supernova. Full-length adiPRENE and adiPRENE+ cushioning, an extended midfoot Torsion System, the Engineered Forefoot Ride forefoot concept and a supportive medial second density have also gone into this shoe to keep it the ultimate, all-around training shoe. (thestore.adidas.com)
Men’s Barricade II: The Barricade II is even more durable than before. A lightweight, breathable metal mesh upper with venting midfoot to keep you cool. You get ultra-cushioned shock-absorbing comfort. And you can grind it hard with the adiWEAR outsole. So durable it comes with a six-month guarantee. (thestore.adidas.com)
Men’s Climacool Basketball Women’s Supernova Cushion Men’s Barricade II
New Balance: In 1934, William J. Riley, a 33-year-old English immigrant, committed himself to helping people with problem feet by making arch supports and prescription footwear to improve shoe fit. In alter years he created a partnership and began to produce a range of athletics shoes. At present New Balance is an industry leader in athletics shoes. (newbalance.com)
New Balance MX1004W, WX662WB: Both shoes provide midfoot support and torsional stability while reducing weight. They also provide maximum shock absorption in the heel and forefoot along with lightweight comfort and support. The only difference between the two is colour and one is designed for women, and the other for men. (newbalance.com)
Men’s BB1000BW: This basketball shoe provides lightweight cushioning and flexibility. They are also durable and offer excellent shock proofing in the forefoot. This helps with the impact from heavy landings. (newbalance.com)
New Balance MX1004W Women’s WX662WB Mens BB1000BW
Puma: Rupert Dassler founded Puma in 1948 in direct competition to his brother, Adolf, the founder of Adidas. Puma has journeyed through some of the greatest sporting achievements of the last fifty years, including accompanying Pelé through World Cup finals, Boris Becker to the grass courts of Wimbledon and Linford Christie to an Olympic gold. All this and there’s still more to come. (Puma.com)
Men’s Complete Abound: The Complete Abound is the top of the line running shoe. It is made of a breathable single layer mesh with two-sided flow molding TPU support, microfiber and suede leatherette. (puma.com)
Men’s Sky ST 002: Puma’s latest basketball shoe has a soft full grain upper with a Velcro power strap ankle closure. It also contains a full length CM EVA frame and a forefoot with ArchTech support system (puma.com)
Women’s Appeal: This women’s cross training shoe is made of full grain leather and has a solid rubber outsole. It comes in a wide range of colours and sizes to suit all tastes. (puma.com)
Men’s Complete Abound Men’s Sky ST 002 Women’s Appeal
7. and 8. An organisation is for obvious reasons unable to target its product to the entire population, it is therefore essential to adopt an approach which enables the organisation to identify potential buyers and consequently attempt to cater to their respective needs and preferences. In what is now a much more complex and educated marketplace, this is the marketing method that has phased out the archaic and altogether ineffective practice of mass marketing. It is known as target marketing; the identification of segments within a market, the selection of appropriate segments and adopting a marketing mix that appeals to them. The marketing mix is referred to as “the set of controllable tactical marketing tools – product, price, place, and promotion – that the firm blends to produce the response it wants in the target market (Kotler & Armstrong 1999).
The first step of target marketing is market segmentation. This is a marketing term describing the aggregating of prospective buyers into groups (segments) that have common needs and will respond similarly to a marketing action.
A simplified example would be; a shoe company might have defined market segments for basketball players and long distance runners. Basketball players will respond to much different advertisements than long distance runners will.
There are many varying methods one can use to segment a consumer market. There are certain recognised and major variables that are often used in segmenting markets, as established previoulsy these are; geographic, demographic, psychographic, and behavioural variables.
An organisation will use a variety of differing methods in a way which is consistent with their current overall market position in their attempt to isolate a well defined target group(s). Nike is generally regarded as the market leader in athletic footwear and although it enjoys such a large market share, Reebok and Adidas are usually considered to be leaders in this general market as well – each organisation enjoying dominance of various segments within the overall market. All such companies employ similar strategies when segmenting the market.
Retail markets for athletic shoes are highly segmented according to consumer age groups. Teenagers are generally considered to be the most important consumers of athletic shoes. A study sponsored by the Athletic Footwear Association in the U.S. found that the average American over twelve years of age owns at least two pairs of athletic shoes, worn for both athletic and casual purposes (Fairchild Fact File, 1989). Throughout the 1980’s and until the present day, athletic footwear has been constructed and often promoted among teenagers as an important symbol of fashion, status and identity. Teenagers are also the most susceptible to sponsorship advertising, in an attempt to realise their sporting dreams and imitate their sporting idols they will buy the advertised chosen footwear of professional athletes.
Reebok Shoes (Shaquille O’Neal, Venus Williams, Pat Rafter, Emmit Smith)
One of the best examples of product segmentation is Reebok shoes. Upon visiting their website http://store.reebok.com/home/index.jsp it is noticed that they have divided their market into three main demographic groups that is; the male, female (both gender based) and children’s (gender is less of a concern at young ages, therefore this is age-based) market. Within each of these categories is a whole series of shoe products tailored to customers with a particular sports focus. Market research has provided them with a basis for providing each of the headings, for example both men’s and women’s golf shoes are available due to the established transgender popularity of the sport, however a children’s golf shoe is not available as younger ages are generally less interested in golf.
Again if you click on the link to your desired sport there are many varying sub-segments, for example under the heading of men’s football (grid iron) there are a variety of shoe colours, sizes and style with the price ranging from US$159.99 to US$44.99 thus catering for lower and higher income consumers. A similar situation can be observed for women’s fitness/aerobic shoes, a market segment of which they enjoy a majority share and initially enabled Reebok to expand from a smaller niche targeting company (only running shoes) to the giants of the industry they are today.
Obviously the internet site cannot provide any examples of geographic segmentation as the internet is effectively borderless, however an example of it can be seen in Reebok’s heavy promotion of Michael Chang in Asia; the popular Chinese-American Tennis player is a clean-cut, humble, family oriented (seen as typically Asian qualities) athlete who appeals to the Asian market. Reebok have used this as a medium to aid their entrance to the Asian market – where demographic variables are often quite different. Also, NFL running-back Emmit Smith is highly marketable in the state of Texas; his legendary status with the Dallas Cowboys makes him appealing to the Texan state of mind. Likewise, loyal Philadelphia Seventy Sixer fans respond to advertising involving hometown hero Allen Iverson.
Reebok positions its products as ground breaking often referring in their advertising to its innovative ideas (eg. Reebok Pump and DMX) and historical success (inventing running spikes). It therefore promotes these attributes of their products as its comparative advantage over competitors. Reebok often promotes its ethical business/production practices, which is an indirect attack on Nike which has come under fire in recent times for its production practices in developing countries.
Adidas Shoes (Kobe Bryant, David Beckham, Jonah Lomu, Martina Hingis)
Adidas generally segment their consumer market primarily through function (type of sport/activity) and will then segment further. This organisation will then segment geographically in order to determine what is viable where, the market is divided into geographic units the size of which depends on the scale of the operation; on a large international scale individual units maybe countries, whereas a more localised approach may divide regions into states or smaller regions, then demographic, psychographic and behavioural factors are considered.
Again using the website (http://www.adidas.com) as a tool to examine the strategies of the corporation we can observe that the global Adidas page does have an option to re-direct you to your country’s homepage, they are all relatively similar but have various differences in both advertising and content, this is evidence of geographical segmentation. Adidas has four major segments of the athletics footwear market that it consistently targets and enjoys a healthy market share of. These are basketball, running, soccer/football and tennis. Choosing any of these sections will bring you to a products section in which the varying styles are presented. For example, Adidas has cleverly sub-segmented the football segment into the varying degree of hardness of playing surface as well as incorporating other categories such as the indoor version of the sport. Again, there is a wide price range to attempt to target as many consumers as possible.
Adidas has long been a huge dominator of the world football (soccer) market. In many ways this has defined their position in the overall footwear industry and is one of the main reasons why they have expanded to the worldwide organisation that exists today. In recent times their dominance has come under fire by Nike. Adidas who have for a long time rested on their reputation in football were no longer able to do as such when Nike also started to claim the superiority of their product. The nature of football boots makes it quite hard to identify large differences other than appearance so in recent times the market positioning of Adidas and Nike in this area has become somewhat of a sponsorship race. With Nike establishing a 10 year US$250 million sponsorship deal with world champions Brazil, and Adidas signing such huge names as David Beckham and 1998 World Cup winners Zinedine Zidane and Fabien Barthez.
Because of the similarities in the products, Nike and Adidas have very much positioned themselves away from each other in their advertising as comparative product advantages are few. The importance of this particular aspect of the market is that in recent months the world has been consumed with ‘football fever’ due to the World Cup and the footballing side very much became the face of the involved corporations – at least for a short time anyway.
Adidas attempts always to position themselves as achievers striving for success and consumers with similar qualities are attracted to this and are therefore compelled to buy products seen to have such positive connections with winning athletes such as Kobe Bryant (LA Lakers – NBA Champions) and David Beckham (Manchester United Football Club – Winners of Premier League, Champions League and FA Cup). Adidas look to protect their existing dominant market share in the best way possible; attack – attempting to gain an even greater share.
It can be seen that the large corporations have many varying and detailed approaches to segmenting and sub-segmenting. Adidas, Reebok and Nike and other companies to a lesser extent attempt to achieve the nearest possible thing to micromarketing (complete segmentation). This is how they effectively strive to gain market share. A recent example of just how important market segmenting is to these companies is Nike’s recent promotion of Nike ID. This shows Nike’s attempt to achieve an even higher level than their currently complex segmentation. It is a system whereby (although currently to a limited capacity) consumers can design their own shoe before they buy it.
Fila Shoes (Grant Hill, Jennifer Capriati, Barry Bonds)
After many obstacles and difficulties, Fila are trying to get back in to the ‘big-time’. Once a fleet – footed star of the athletic footwear market, Fila has dropped far behind Nike, Adidas and Reebok. Fila like some of its bigger competitors is highly active throughout the world and has many similar targeting practices. A major difference would be their attempts to identify new segments to help them gain a foothold once again in the market and expand their overall market share. Fila have been trying in recent times to identify market segments that are as yet ‘un-tapped’. They may well have done this successfully with the recent introduction of their Ferrari Formula One products. Who would have thought Michael Schumacher would be advertising the shoes he wears on the track to F1 fans? The Answer is – Fila! Their innovative new product is aimed at middle to upper class ‘petrol-heads’ with a high disposable income and heavy motorsport interest.
Geographical segments for this product would be determined by researching those countries with high motorsport interest – which are typically countries with thriving economies: consistent with the suggested disposable income. Fila positions this particular product using the specific revolutionary attributes of the product and also targets a certain class of user. Advertising the product will be easy, with the phenomenal success of the Ferrari racing team.
Fila in general position themselves as being more fashion-oriented within the athletic footwear market; this has been established due to their background in the Italian textiles industry and relationship with more prestigious and wealthy events such as yachting and F1. Their high standard of style and design gives them in many cases a high product differentiation which is hard to achieve in this particular market. This advantage is consistently used in their advertising.
New Balance and And1 Shoes (Latrell Sprewell, Kevin Garnett)
Most industries contain organisations that specialize in catering for market niches as opposed to serving the entire market. The athletic footwear industry is no exception; containing such companies as And1 Basketball. And1 Basketball originally and primarily targeted the ‘urban customer’ – a term ubiquitously used within the industry to describe young African-American, Hispanic and white consumers who dominate athletic and sports-casual consumption.
Many companies spend a lot of time and money on this market segment. Due to it’s humble beginnings, so familiar to many of its consumers, And 1 developed a good reputation on the ‘street-ball’ circuit and expanded from there – now sponsoring such huge NBA stars as Latrell Sprewell and Kevin Garnett. And1 is now operating throughout the world and its consumers are much more varied but the company has kept it’s original urban/street feel and uses it as one of it’s major marketing ploys. And1 has cleverly marketed their product in this way and now enjoy strong brand-loyalty from it’s customers. It positions itself as a definite leader in it’s field with little competitive advantages other than the powerful sub-culture it has created, it markets this effectively by steering clear of the corporate image.
New Balance have a wider variety of shoes than do And1 however New Balance also exhibit niche-serving strategies. They recently decided to enter the overcrowded Basketball Shoe market – seen as somewhat suicidal right now. However, they developed a shoe and complementary advertising to target primarily white (although they would never admit that as it may be perceived as racist and unethical), middle class basketball players thirty years and over. The shoe provides functionality and value for money. This caters to the specific traits of this segment; limited brand loyalty, value-seeking weekend players. The product is positioned amongst its competitors as one of if not the least expensive whilst still providing all the necessities. For this consumer group, the price does most of the advertising, they are attracted to the low cost and association with a high profile sports manufacturer.
9. The main approaches a company uses to positioning products are on its products:
Occasion of Use
Class of User
At some stage or another, Nike and its competitors will use all of or a combination of these strategies, so it is likely this will continue for some time in the future. Therefore currently we believe that there are no alternate approaches to positioning that Nike or its competitors could or should use. The way they segment the market at the moment is according to the current needs, characteristics and behaviours of the consumers within the targeted sports and or regions.
So if a new customer group arises, through the development of a new product, then Nike might have a new way of positioning that product to the new customer group. Say for example a product was developed for a new sport in which none of the previous ways to position the product were applicable, then it may be a good time to develop a new way of positioning that product.
Also any new or radical performance enhancing technological innovations from either Nike or one of its competitors may cause a great amount of product differentiation. They will therefore need to develop new ways of positioning their product so that they can promote their specific product difference and their consequent competitive edge over the other companies. Within the shoe market, direct comparisons to competitors are rarely used due to limited product differentiation (other than appearance).
If a significant change was to be made in the near future, we believe that it will arise from changes in fashion. If there is a drastic change in fashion (outside of the athletics market), then Nike and its competitors may approach positioning using the new established images. This means that they will try and tell the customers they will look more stylish, or superior wearing certain products, instead of promoting better performance and so forth.
However, it really will depend on where the athletic shoe market heads in the future, and only then will the companies involved be able to change the way they position their products. As the market becomes more diverse, so do trendsetters and, therefore, so must advertising and marketing.
Binole, G. 1999, ‘Can Nike connect the dots?’, The Business Journal, 22 Jan.
Cravens, D.W. 1997, Strategic Marketing, McGraw Hill Companies Inc, Boston
Kotler, P. & Armstrong, G. 1996, Principles of Marketing: Eighth Edition, Prentice-Hall Inc, New Jersey.
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