Seminar Four

CONSUMER AND STAKEHOLDER

CURRENT CONSUMER CHARACTERISTICS

Nike's current consumers have a whole different array of characteristics, ranging from: demographic, psychographic, behavioralistic, and geographic. Although there may be differences in these characteristics, their current consumers also have similarities. They all are usually men and women athletes in need of high performance gear, like shoes, apparel, and gear. Those who wear Nike generally have a passion for sports and/or being active. In addition to their passion for activity and movement is their passion for the Nike brand itself. Nike consumers are loyal to the brand and will choose to wear their gear to perform at their max in whatever they do. Nike wants to capitalize on these types of consumers "with a view to ensuring future growth, young athletes are a big part of its sales strategies, especially in categories such as soccer, basketball, and running," (Soni 2014). Alongside young athletes, Nike is also focusing a good amount of attention on appealing more to women as well.

Currently, "women in their 20s and 30s are largely driving the 'athleisure trend,' in which customers buy leggings with the intent of wearing them to the gym, errands, and brunch," (Lutz 2015). Due to this athleisure trend among Nike's women right now, Nike's "Women's Training segment is growing is faster growing than the Men's Training segment (Soni 2014) and "could add $2 billion in additional sales by 2017," (Lutz 2015).

Nike already has a lot of the athletic community at their side. By focusing on all different consumer characteristics, Nike is able to anticipate many types of needs their consumers may have. One need all current Nike consumers have is the need for high performance gear. Nike delivers this need in all the ways they can, gaining them loyal customers and staying ahead in the industry along the way.

DEMOGRAPHICS

Nike has plans to grow its direct-to-retail business to 15% of total sales, or $3.5 billion, from 12% today. In order for them to accomplish this, Nike will have to increase capital spending to $475 million annually, up from just under $400 million. In the past, the managers at Nike used to consider 18- and 22-year-olds as part of the same demographic target. Now they are treated as separate and distinct markets when it comes to age, interests, and tastes. The reason they are doing this is to tailor products to individual consumers (Holmes, 2007).

Nike is unique due to the fact that they have a very general targeted demographic segment. Anyone that wants to be athletic, are going to receive at least one marketing target no matter what their racial profile, economic status, or other sub-demographic may be. Households that make more money will receive additional targets, of course, but everyone who wants to look good while they’re out playing their preferred sport is supposed to want Nike (Gaille, 2015).

• Nikes primary targets are consumers who are between 18-40 years of age.
• They equip teens under the age of 20 with athletic apparel, especially in sports like football and soccer.
• Nike targets households and teens that have a particular desire to look athletic and fashionable at the same time.
• All socioeconomic classes are targeted as part of the segmentation of Nike’s demographics.
• Nike does its marketing mainly in the United States, but this is to increase the market share of their athletic apparel more than it is to advertise their footwear.
• No single customer accounted for more than 10% of Nike’s overall sales in the last year, proving that the company has a very diversified market.
• North American sales for Nike are still 2.5x greater than the next closest market, which is Western Europe (Gaille, 2015).

PHYSIOGRAPHY

Physiological needs can best be described when in reference to Abraham Maslow's hierarchy of needs. "Each level of the pyramid is dependent on the previous level; a person does not feel satisfied until the first level is fulfilled," (Pandya 2014). The first and base level of Maslow's hierarchy of needs happens to be the physiological needs.  He held the belief that "humans strive to reach the highest level of their abilities." In order to reach their highest level of abilities, they must first have their physiological needs met.

Physiological needs include the most basic of all human needs like food, water, and physical well-being. "It pertains to our survival needs and is our most basic motivation because if our physiological needs aren’t met, our bodies will ultimately fail and we will die... As it pertains to marketing, it’s pretty basic. By appealing to a consumer’s primal needs, we encourage them to fulfill their basic psychological motivation," (Lee 2015).  In order for Nike to appeal to a consumer physiological needs, they must sell the brand as a way of keeping you on the track to being physically fit and strong, just as you would need to be for survival. Once Nike markets their products in this sort of way, their consumers are more inclined to purchase because they feel that as a consumer, their most basic physiological needs are being met.

STAKEHOLDER'S CHARACTERISTICS

A stakeholder is a person who has something to gain or lose through the outcomes of a planning process, programme or project. They are affected directly or indirectly in someway by company changes. Not all stakeholders are equal, as some are affected more or have more of an impact than others when decisions are made. Nike has five core stakeholder groups: consumers, shareholders, business partners, employees and the community. Nike stakeholders usually posses a similarcharacteristics and traits, such as:

• Understanding of the apparel and footwear business 
• New and unique perspectives 
• Expertise and reputation in sustainability strategy and/or issue areas ranging from water and energy to labor and chemistry 
• Geographic/nationality, gender and issue diversity (NIKE 2014)

Nike reports stakeholders belonging to several different social groups, including civil society organizations, industry and government, as well as consumers and shareholders. Stakeholder relations are kept through both formal and informal relationships. Nike connects informally through related organizations and connections and formally through stakeholder engagement opportunities and partnership activities.

PRIMARY STAKEHOLDERS

The primary stakeholders of Nike would be individuals or other companies who take interest in Nike and in turn, are affected by the company. These stakeholders include a wide variety of industries and genres such as social society, industry, government, consumers, and shareholders. The strategies and successes of Nike are related to the stakeholders and often Nike relies on their input and feedback on interests and disinterests when introducing new products to the market. One major player for Nike is the Business of Social Responsibility (BSR), which is a non-profit that directs 250 companies on corporate responsibility strategies and practices (Johnson, 2014). This organization gets together with a selection of stakeholders of the company to direct the overall process, lead the stakeholder discussions and to provide feedback, then Nike’s sustainable Business and Innovation team manages the overall reporting process, and participate during the stakeholder engagement as information givers and receivers (Johnson, 2014). Because business starts with the stakeholders, the ones Nike should be more concerned with are individuals like directors, founders, presidents, officers, writers, advisors, and CEO’s.

SECONDARY STAKEHOLDERS

The secondary stakeholders of the company would be the community. Socially responsible organizations like Nike consider the effect of their actions upon all stakeholders, including safety laws, environmental protection and other laws and regulations, and what consumers and the communities want from companies is that they act ethically and socially responsible. When secondary stakeholders become dissatisfied, the reputation of the company could get tarnished. An example of this is when Nike was under the spotlight for their inhumane working conditions in their several sweatshops around the world where their workers were not being treated as they should, the community was not happy with this and Nike saw that through the drop in their sales for a period of time.

STRATEGIC TARGET AUDIENCE

PROPOSED PRIMARY TARGET AUDIENCE

Nike is the world’s leading sports footwear and apparel company. Nike’s high-performance athletic gear is mostly targeted at professional athletes. Nike’s innovations, products, and services seek to develop athletic potential, according to the company.

Right now, Nike is focusing their target audience on young athletes, women, and runners. Nike wants to capitalize on these types of consumers "with a view to ensuring future growth, young athletes are a big part of its sales strategies, especially in categories such as soccer, basketball, and running," (Soni 2014). Alongside young athletes, Nike is also focusing a good amount of attention on appealing more to women as well as the "Women’s Training segment is faster growing than the Men’s Training segment." To handle this growth, Nike is appealing to women by designing more athletic sportswear and gear that can be worn during workouts and doing other "athleisure" activities that are popular with women of this audience.

Runners are being targeted to specifically right now as the sales in this department are not reflecting the recent innovations the company has created for its running shoes. In an effort to increase sales of running shoes, Nike has revamped its Nike+ app for runners. The Nike+ app "lets runners track their route, distance, pace, time, and calories. It also lets them share photos and compare progress with their friends...Nike sponsors grassroots running events around the world to recruit new customers as well," (Lutz 2015).

Young athletes, women, and runners form Nike’s target market in the future.

PROPOSED SECONDARY TARGET AUDIENCE

Nike's current primary target market includes young athletes, women, and runners. However, these aren't these only type of consumers wearing Nike gear. Nike realizes this and tries to appeal to a secondary target audience as well. These secondary consumers wearing Nike products do so to appear fashionable while supporting the largely recognized brand. For example, the Nike Free iD running shoes are also for young adults with a casual lifestyle and a fashionable taste. Nike creates fashionable products for these secondary target audiences to wear and appreciate. Just because these secondary audience members are not as active as the typical primary target audience member, they still have the body that makes them an athlete worthy of wearing the brand.

Digital has been the focus of Nike’s marketing efforts in recent years. The company’s gone hi-tech with its push into digital sport and e-commerce. It introduced the Nike+ running sensor in collaboration with Apple Inc. Other products such as the Nike FuelBand personalize the hi-tech experience for the customer. The FuelBand tracks the intensity of workouts and even motivates the wearers, among its many uses. These products appeal to both athletes as well as non-athletes.

The push into digital gives the company the opportunity to engage directly with the customer. Digital initiatives are especially appealing to younger customers. They also provide invaluable feedback to the company about the overall customer experience.

References

Gaille, B. (2015, April 17). 18 Incredible Nike Demographic Segmentation - BrandonGaille.com. Retrieved March 16, 2016, from   http://brandongaille.com/18-incredible-nike-demographic-segmentation/

Holmes, S. (2007, February 07). Can Nike Do It? Retrieved March 16, 2016, from http://www.bloomberg.com/news/articles/2007-02-07/can-nike-do-it-businessweek-business-news-stock-market-and-financial-advice

Johnson, A. (2014, January 31). Nike- International Activities, Primary Stakeholders, and Charities. Retrieved March 16, 2016, from https://andredjohnson.wordpress.com/2014/01/31/nike-international-activities-primary-stakeholders-and-charities/

Lee, D. (2015, March 10). Maslow's Hierarchy of Needs and Marketing. Retrieved

March 16, 2016, from http://doreydesigngroup.com/blog/maslow’s-hierarchy-needs-and marketing

Lutz, A. (2015, April 07). Nike is Going After 3 Kinds of Customers. Retrieved March 16, 2016, from http://www.businessinsider.com/nike-is-going-after-3-kinds-of-customers-2015-4

NIKE INC. (2014). Nike CR Report. Retrieved March 16, 2016, from http://www.nikeresponsibility.com/report/content/chapter/stakeholder-engagement-reporting

Pandya, D. (2014, March 16). Maslow's Hierarchy of Needs. Retrieved March 16, 2016, from https://prezi.com/-qbhwmcyk42y/maslows-hierarchy-of-needs/

Soni, P. (2014, December 02). Welcome to Market Realist. Retrieved March 09, 2016, from http://marketrealist.com/2014/12/nikes-global-markets-top-revenue-earners/