Behavioral segmentation is a process in which a business groups its customers into small clusters with similar attributes, purchase patterns, and needs. Some businesses segment their customers based on identifying characteristics or behavioral traits such as their psychographic profile, geographic location, or they’re demographic. It is a marketing strategy that assumes that customers in the same segment have similar buying behaviors and preferences. Nike is a company that has fully integrated this marketing strategy into its operations with the main objective of building customer loyalty. Customers who develop loyal behaviors towards a firm help it to increase market share and sales. Nike is a firm that participates in a competitive market that requires a lot of customer loyalty to survive. In this respect, it employs segmentation in its product lines to achieve a competitive advantage.
Nike was founded by two former distance runners in the field of athletics. They developed the system of segmentation by first identifying the needs of distance runners as a niche segment in the running shoe market. Their understanding of the needs of distance runners made them develop running shoes that were long-lasting and prevented sports injuries. At the time, these features were absent in the market. Even though they had a small percentage of the market share, the two were specialists in this market segment and were able to respond quickly to the needs of their customers. The firm became the first choice of many distance runners because it fulfilled their needs. The athletes needed durable shoes that did not expose them to sports injuries like others.
The management of the firm saw it best to re-align its corporate structure to six customer segments that could result in the highest growth for the company. It formed teams that concentrated on acquiring customer insights that were appropriate to each segment. Consequently, the company drove a comprehensive product offering for each segment. One of the segments was the women running shoe market. The firm employed a psychographic and gender segmentation that created a new market that led to a 24% growth in revenue (Ng, 2018). The company also discovered that women spent more money than men on sports apparel, with a special preference for stylish ones found in the field of walking and aerobics. This realization made Nike offer unique sports apparels that were specifically tailored for the women’s market.
The second segmentation that Nike developed was one that targeted soccer athletes, especially during the 2002 World Cup. The company came up with this segmentation by focusing on the needs of footballers in Japan and Korea. It was a type of behavioral and geographical segmentation that put into account factors such as weather and humidity. It made the company create and develop new materials which aimed at reducing wetness in athletes to enable better performance during the competition. The firm created a new line of apparel relevant to markets with similar climate conditions.
Nike combined segmentation with research to know how to reach its customers with an appropriate message. The company adopted the slogan “Just Do It” to inspire athletes to strive for the best. The firm wanted to develop an emotional message that could appeal to women athletes (Ng, 2018). The slogan had good traction with women, which made the company create a connection with its target customers. It used segmentation by first surveying the market that it desired to enter to get a cluster of customers and to generate a list of segments in the market. The firm studied each market segment to know how they bought or used products, including their unmet needs and preferences.
The company has always had an interest in helping professional athletes to improve their performance through its apparel and footwear. It created a basketball segment when it got involved with the National Basketball Association, which is a professional national league for male athletes. Basketball is a sport that is enjoyed by Americans and the whole world by fans from different age groups. Nike chose basketball as a market segment by identifying similarities between running and the sport. The company concluded that both sports involved running, which required shoes that could help sportspeople to improve their performance. The firm, therefore, utilized air cushion technology to innovate shoes for basketballers. In this market segment, Nike chose to concentrate on young and upcoming athletes as the target market. The company sponsored Mike Jordan, a basketball legend, at the age of 21. However, the firm had no interest in selling its products to professional basketballers but to young fans who aspired to wear the same shoes as their basketball idols. It used Jordan as a brand to target the 13-30 age group who liked Air Jordan shoes or loved basketball.
In conclusion, Nike is a company that employs different types of segmentation to ensure that it gains high revenues by leveraging customer behaviors and traits. The firm employs six different market segmentation in its operations to fulfill the needs of each. Some of its most important customer segments in the sports industry include women athletes, basketball fans, soccer players, and long-distance runners. The company has successfully employed segmentation to increase its sales and profitability.
Ng, C. (2018). Market Segmentation – Nike Case Study. Retrieved from: (30) Market Segmentation – Nike Case Study | LinkedIn.