Professional Documents
Culture Documents
Consumer Behaviour Analysis of Product A
Consumer Behaviour Analysis of Product A
MKT 410
Tutor: Jenny Bratherton
Paper Type: Report
By
Melis Yurtbay
S00603718
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1.Introduction
Company Nike Inc. was founded in 1965 with the name of Blue Ribbon Sports. In the
1971, the company was renamed in Nike, under the lead of Jeff Robinson first employee
and indispensable member of the company (Nike Inc., 2014). Today, Nike is one of the
world’s leading manufacturers of athletic products with about 44 hundred employees and
almost 25 billion USD global revenue (Statista, 2014). It has a wide range of products from
shoes, clothing and other accessories. The aim of this report is to evaluate the Nike’s
product called NIKEiD, the shoes fully customized by the individual customers. In the first
part, the segmentation analysis for the NIKEiD will be conducted on the basis of
demographic, geographic, behavioural and psychographic characteristics of the potential
consumers. Also, VALS segmentation would be given. In the second part, the reference
groups and socio-cultural influences would be evaluated. After that, the buying process
with respect to NIKEiD would be explained, as well as marketing the mix of this product.
As last, the report will be briefly concluded and offered recommendations for further
development.
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2. Segmentation analysis
2.1. Demographics
The typical customers of NIKEiD are the young male of female athletes, in age brackets
between 15 and 35 years old. Their products are categorized into male, female and kids
group; hence they can fit to all demographic segments. They don’t need to be professional
athletes, and usually have at least middle income due to higher prices of NIKEiD
compared to the competitions and to the Nike shoes that are in mass production.
2.2. Geographic
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markets, such as China and Eastern Europe. Moreover, through the Internet, customers
from all over the world are able to shop and browse the company offerings.
2.3. Behavioural
Customers of NIKEiD are the professional or amateur athletes. Moreover, they are men,
women or kids that are enjoying long walks, and for that, they need comfortable shoes.
However, they are not price sensitive, which allows the company to price its products
higher than the competition does. Also, they are usually returning customers that are
highly loyal to the brand, because of the past experience, reputation that Nike shoes enjoy
in the public and marketing activities Nike is engaged in. Whether they are running,
playing football, basketball or some other sport, or walk through the park, they are
choosing Nike for the comfort, value, but also the status they are enjoying.
2.4. Psychographic
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3. VALS segmentation
VALS segmentation is one of the most popular segmentation tools used in marketing
analysis (Ferrel & Hartline, 2012, p.178). It originated from the Maslow’s hierarchy of
needs, dividing the potential customers into four major groups: need driven, outer driven,
inner driven and integrated (Kamakura & Wedel, 1999, p.266). VALS segmentation,
acronym for values and life styles, characterize consumers by characteristics that
correlate with purchase behaviour (Boone & Kurtz, 2013, p.238). The consumers are
divided into eight basic groups: innovators, thinkers, achievers, experiencers, believers,
strivers, makers and survivors. The most appropriate segment for NIKEiD is innovators,
strivers and experiencers.
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According to Strategic Business Insights (2014), innovators are change leaders and most
keen on new technologies, ideas and designs. Although image is important for them, they
are primarily expressing their personality, independence and taste. Strivers are active
consumers, trendy and fun loving. They are impulsive but also concerned about the
opinion of others. Experiencers like having ‘cool’ stuff, and they are motivated by self-
expression. They spend high portion of their income on fashion, entertainment and
socializing, while having hobbies such as sports, outdoor activities and exercise (Strategic
Business Insights, 2014).
The perspective customer of NIKEiD is influenced by many internal and external factors,
while reaching a decision of buying. In this segment, the reference groups and socio-
cultural influences that may be relevant are going to be evaluated and examined.
4.1.Reference groups
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4.1.1.Direct reference groups
Two basic direct reference groups may influence the buying decision of an individual for
NIKEiD products. Those are primarily friends and teammates. The word of mouth, as a
powerful marketing tool for any company, may significantly affect the success of the
NIKEiD brand. Friends and teammates may, largely influence the customers that are
relying mostly on the references from the closest peers. Also the influence of the family
should not be neglected, as parents would like to indulge their children and to buy them
specially customized shoes.
In their advertising efforts, Nike for the overall company and for NIKEiD products uses
many celebrities to effectively promote and present their products. The customers often
like to be identified with celebrities and their lifestyle. They want to do things the same
way, the celebrities do, having in mind that would enhance their performance, health or
physical ability. Also, indirect reference groups may influence people that share their
stories and pictures of NIKEiD products on blogs, websites and social media.
4.2.Socio-Cultural Influences
As there is always a need to show the social status and perception of oneself in a group,
the potential customers of NIKEiD have significant social and cultural influences while
reaching the decisions of purchasing the product. There is also a major cultural impact for
usage of this brand, as all people are associating it with a healthy lifestyle.
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5.Buying Process
Process of buying the product or service is a problem solving tasks for the consumer. In
such effort, he moves through the series of stages to reach the outcome they desire. The
stages of buying, therefore, starts way before the actual purchase and also has
consequences long after (Kotler & Keller, 2012, p.166). It is possible that in some
purchases, especially small value purchases, consumers skip some of these stages,
however, in theory there are five basic stages of decision making process, problem
recognition, information search, evaluation of alternatives, purchase decision and post
purchase behaviour (Ferrel & Hartline, 2011, p.154). The stages of buying process with
respect to NIKEiD product will be presented in the text further.
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5.1.Problem Recognition
The buying process starts with the problem recognition, when a desired and an actual
situation of a consumer differs significantly and is big enough to trigger a 2. It can be
triggered both internally and externally. Internal stimuli are hunger, thirst or some other
need while external could be the marketing endeavours of the company that inspires one
to think about the possibility of making the purchase, or admiring the friend’s new car
(Bruner & Pomazal, 1988). The purchase for NIKEiD can be triggered by both internal and
external stimuli. One can have need for the shoes to be used for running, football,
basketball, walks or, etc. or can he inspire by Nike advert or friend’s new look.
5.2.Information Search
Arguably, customers are seeking for a limited amount of information. Information search
begins when a customer perceives a need that might be satisfied by the purchase and
consumption of product (Schiffman & Kanuk, 2010, p 485.). However, when some
products or services are in question, majority of customers are looking at just one brand or
store (Kotler & Keller, 2012, p.167). Customers can seek information internally, i.e. their
prestige memory for identifying alternatives. With respect to NIKEiD, this type of
information search is applicable returning for customers. If the customers have a first time
experience with NIKEiD, the evaluation of external information sources is more important.
Such are sources from family and friends, company’s information, blogs and consumer
reports (Schmidt & Spreng, 1996). Kotler and Keller (2012, p.167) divided the information
sources on personal, commercial, public and experiential. As image is important for
NIKEiD customers, personal channel, such as word of mouth from friends and teammates,
seems to have the highest degree of importance.
5.3.Evaluation of Alternatives
Each product or service has a different congregation of attributes that are aimed to satisfy
the needs of customers. Customers will evaluate those products on different bases
important for them, such as style, ease of use, prestige quality (Freimer & Simon, 1967).
When evaluation potential alternatives, consumer tends to use two types of information
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including, a list of brands from which they plan to make their selection, and the criteria
they will use to evaluate each brand to make a decision. According to this, beliefs and
attitudes play a significant role in such evaluation, and customers that are seeking for
higher image, quality and the specific look of the shoes that can be acquired by
customizing them, have a higher probability of choosing the NIKEiD compared to the
competitors form list of brands.
5.4.Purchase Decision
Purchase decision is the core stage in the buyer’s decision-making process. In this stage,
customer has to decide on three main points, from whom to buy, when to buy and
ultimately, whether to buy or not (Sheth, Mittal & Newman, 1999). This stage is associated
with the number of risks such as functional, physical, social, financial, psychological and
time risk (Kotler & Keller, 2012, p. 171). However, Consumers make three types of
purchase; trial purchases, repeat purchases, and long term commitment purchase
(Schiffman, & Kanuk, 2010, p 497.). Guided by these possibilities, NIKEiD customers are
inclined to make a purchase on the basis of previous experience and referrals from their
peers. For that reasons, they are neutralizing some of the risks above. Other risks are
reduced by the company, as they offer the possibility of return for any reason.
After the purchase, the customer interacts with the company in the post purchase
behaviour. The tone of the interaction is largely characterized by the satisfaction level of a
consumer, which can be defined as a degree of closeness between the expectations and
the actual performance of the product or service (Ralph, 1984). A satisfied customer is
one who feels that he or she has received ”value” (Schiffman, & Kanuk, 2010, p 498.) with
the purchase, with positive experience, is more likely to spread the word of mouth to
others. Customers that didn’t have positive experience probably won’t buy the product
again and are likely to complain and take legal actions against the company. According to
Anderson’s (1998) research, dissatisfied customers engage much often in word of mouth
that satisfied once, making the bad reference to be heard much wider than the positive
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one. For that reason, the company needs to be careful and to have high quality customer
relationship management, in order to prevent such publicity.
6.Marketing Mix
Marketing mix consists of a company’s service and product offerings to consumers and
the methods and the tools it selects to accomplish exchange (Schiffman, & Kanuk, 2010, p
28.). In this segment, the four basic elements of marketing mix will be evaluated including
product, promotion, place and price.
6.1.Product
The key element of the marketing offer and the heart of every great brand is the product
(Kotler and Keller, 2012, p.325). To be successful on the competitive market, company
must provide products and services that are of the superior quality while offering
significant value for the customer. Service provided by sportswear company Nike, NIKEiD,
allows customers to customize their clothing. Initially launched in 1999, it enables the
customer to become designer as they modify look and characteristics of the selected
shoes. Customers are choosing from a range of different materials, features, colours, fit,
and even the ID.
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Three basic components of the product (or service) are:
• Core product is the end benefit for the customer. It gives answers on how some
product or service would in fact, satisfy the needs of customer. NIKEiD are the
training shoes that are comfortable for a variety of sports and reduces the risk of
injury. They are customized, representing the style of the customer and allows them
to fine-tune their fit.
• Formal products are tangible, physical characteristics of the product or service such
as level of quality, style, additional features, branding and packaging. For the
NIKEiD these are the simple training shoes.
• Augmented product are supporting items and all forms of added value that
complete the product some company is offering, and includes warranty, sale
service, delivery and installation (Komppula, 2011). Nike for this product offers
variety of these features, such as home delivery, an expert’s advice, other help
while ordering and possibility of return if not satisfied for any reason with NIKEiD
purchase.
6.2.Promotion
According to Schiffman & Kanuk, 2010, Promotion consist of advertising, sales promotion,
public relation, personal selling efforts designed to awareness of demand for the goods
and services (Schiffman, 2010, p 28). Nike uses number of different communications
channels to effectively present their brand to end consumers. While attractive location of
its stores is essential element for promotional activities, it is supported with the range of
TV commercials, newspapers and magazine ads, website and social networks direct
marketing, etc. In their promotional activities, Nike relies on, and is associated with a
number of famous athletes such as celebrities from different sports, football, basketball,
cycling, golf etc. It also sponsors different international events; through which Nike
established themselves as one of the most recognizable brands in the world. However, for
the NIKEiD, it adopted communication strategy separately from the rest of Nike to
effectively promote these products (Business Source Complete, 2005).
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6.3.Place
Place is the distribution of product or service through specific store or non-store outlets
(Schiffman & Kanuk, 2010, p 28). Nike sells it shoes through stores across the globe. It
has the retailers in almost 200 countries of the world. On the international market, it is
present through the independent distributors, licensees and subsidiaries (Digital Look,
2014). Moreover, Nike offers its products for online purchases. Their offer integrated
channels of distribution, while customers may order the product online, and pick it up in
store, or return the product in store if unsuitable. Also, Nike opened a store specially
dedicated to NIKEiD in London, where the customers may be introduced to this concept
and be offered with a suggestion on the colour combinations (Gallery, 2008).
6.4.Price
The Nike has a strategy of premium pricing. According to Beech and Chadwich (2007,
p.231) they are able to transfer such costs on consumer, as they are associated with
successful sports and organizations. Moreover, the NIKEiD offers an additional feature of
customizing the shoes in number of ways, which enables Nike to price their products with
high premium.
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7.Perceptual Map
High Price
NIKEiD
Lifestyle
Sports
Low Price
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Conclusion and Recommendation
Nike is one of the world leading manufacturers of athletic products and sport apparel.
Recently it launched the product called NIKEiD, which may be fully customized for the use
of potential customers. Customers may choose from a wide range of different materials,
colours, additional features, fit and even ID placement. For those reasons, Nike is able to
price this product with high premium. They are sold both on the Internet and in store, and
they are being promoted separately from the other Nike product. Typical customers of
NIKEiD are male, female or kids athletes in almost all countries of the world. They have
creative mind-set and healthy lifestyles. According to VALS segmentation, the majority of
NIKEiD customers are innovators, strivers and experiencers. However, they may be
influenced by many external factors, such as friends, family, teammates, advertising or
celebrities. All stages in consumer’s buying process are applicable to NIKEiD product.
From problem recognition that may be internally or externally driven, information search
on different aspects of product, evaluation of alternatives to final purchasing decision and
post purchase behaviour.
There are few potential opportunities for further development of both Nike and NIKEiD
brand. Today, customers are more self-conscious and in line with the latest trends in
fashion, technology and entertainment activities (Euromonitor International, 2008). They
are informed, connected and aware of their options. Although Nike is traditionally product
centric organization, it may put additional efforts on promoting Internet platforms to create
customer relationship management on a level as never before (Ramaswamy, 2008).
Moreover, with the football world cup in 2014 and Olympics in 2016 both accommodated
in Brazil, Nike has an opportunity to grow in the developing markets (Euromonitor
International, 2013).
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