Marketing segmentation Market segmentation is the process of dividing the market into dissimilar, distinctive groups of people who have similar needs to be satisfied, alike wants and behavior, or might want some products and services. Markets can be divided depending on a number of wide –ranging criteria. They are: geographic (region, county, climate etc. ), demographic (age, gender, family size, religion) psychographic (personality, life style, attitude etc. ) behavioral (benefit sought, brand loyalty, decision making until etc. According to Philip Kotler, “Market Segmentation is the subdividing of market into homogeneous sub-set of customers, where any subset may conceivably be selected as market target to be reached with distinct Marketing Mix. One of the brands that will be is Nike. In terms of marketing it’s really unique. Its products designed for men, women, and children of all ages. Nike does not sell only athletic shoes, but huge number of sporting goods. It cooperates with independent distributors, has contracts with 110 countries all over the world, also with Internet companies and hi-tech such as Apple computers.
According to demographic segmentation, Nike’s target market shoes are persons between 18 and 35 years old. Generally Nike produces products for all markets, which grew up enough to be profitable. With development of children and women sports, new products were eventually developed. Nike gives out one new shoes style almost everyday. But there is an issue – company faces to decreasing brand-loyalty. Most people start preferring to buy cheaper shoe and clothing brands.
For these reasons its marketing campaign are now making emphasis on the point that a shoe of a higher quality with a good brand name worth money spent still a cheaper shoe are poorer quality and will be wore out more quickly. Another world’s largest major sport clothing producer is Adidas Group, which has legacy of producing some of the highest quality original sport equipment. Just like Nike, Adidas manufactures sport goods for both professional and general public. Products promotes to both males and females of age around0 15-25 years old.
Nike and Adidas are world leaders in sports apparel market, thus are major rivals in this field. However, their strategies are alike. Adidas is also cooperates with retailers all over the world, so that their outlets can be presented in world’s largest cities. Now, one of Adidas target markets are Asia and Latin America, where the company is trying to establish itself as a leader. In that promotional campaign Adidas addressing to people of different ages with particular interests in sport, active healthy life, persons who are brand loyal and prefer expensiveness and a high quality to short-living products.
Another one, even the most interesting company is well-known Apple. Apple segments its market by geography, with operating segments of the America, Europe, Japan, Asia-Pacific and retailers. The Americas segment is comprised of both North and South America. Europe includes all European countries as well as Middle East and Africa. The Asia-Pacific segment includes Australia and Asian countries (not Japan), and lastly, the retail segment with stores in 12 countries, including the USA.
The basis of their success is found in Apple’s segmentation strategies – they have segmented their products by creating for each use case and sold them at the right price for only the most profitable market segments. Also, they identified segments that are willing to pay more the specifics, which Apple provides: the user experience, the quality of their product. By the way, what is very important, they ignore prospect that are not willing to their price. Once Steve Jobs was asked about bring out netbook for $300, he replied “Never. I just do not know how to make a quality product at that price”.
Apple makes quality products for customers who are willing to pay more. The Apple’s and even world’s most popular product is an iPhone which is considered not only as a phone, smart-tool, but either as a fashion accessory. The handheld device was introduced to the American consumer on January, 2007 and made available on June 29 the same year through AT&T cellular provider. Initially it was only available on signing 1 or 2 year contract. The same approach is decided to make everywhere where Apple has decided to make the iPhone available. Apple has taken marketing challenge strategy attacking the market leaders Blackberry, Palm and Nokia.
It has launched an attack right after the announcement of the iPhone in Steve Jobs’ keynote speech in 2007’s MacWorld. On the other hand, Apple has always a customer-centered orientation spotting the growing market for smartphones. It’s segmentation market: 1)Geographic. Officially, Apple iPhone is sold only in most profitable markets, which generates the highest value of revenue. They are: United States, most part of Western Europe, Asia-Pacific. Here, in Kazakhstan approximately every third smartphone is an iPhone, still officially we will not see it soon due to low population level. )Demographic. For example, factory unlocked (free-sim) iPhone costs a person from approximately $600 what is quite expensive, however, Apple gives a chance to own modern smartphone even for “low income customers” selling them with contract, which implies that you pay around $100 for the phone itself, and pay a fixed price for calls around $30 on a monthly basis for two years. With the appearance of new iPhone, the old one is still in the Apple store, furthermore, they are available for free with contract option. As a business strategy, market segmentation is one of the most powerful weapon.
Segmentation is not only for huge corporations like Apple, Nike or Adidas. It’s still important for all “size” and types of business. When companies look carefully at their byers’ use cases, record the outcomes they wish to achieve and define the segments that represent the best business opportunities, then they orient their products and services to serve these market segments better than anyone else. They can then optimize their prices to capture the maximum of these buyers’ willingness to pay, to serve them better than anyone else in their market.