Nike pricing decision Presentation

Nike

NIKE COMPANY

Nike is one of the most successful companies in
the sports wear market that uses the concept of
value based pricing strategy. For a long time it
has been committed to providing the best
technology and high quality products to its
customers. According to its mission statement,
Nike aims “ to bring inspiration and innovation
to every athlete ( if you have a body, you are an
athlete) in the world”. The company proactively
responds to changing trends and consumer
preferences by adjusting the mix of its product
offerings as well as developing new products,
styles, and categories.

Nike is successful company because it has some
of the best in their marketing. Their brand is no 1
in the sporting goods industry. Nike business
strategy is clear and support celebrity industry
to promote their product, develop their
products that have high quality , market leading
technology and buy out competing sports
brands. Nike has established their brand and
logo through marketing. Nike is spending almost
the same amount on marketing that
under Armour makes in sales. Nike promote
their product with having celebrities ,
professional and college athletes with
sponsorship agreement. Currently Nike focuses
on sponsorships, internet marketing , e mail
marketing, and utilized multimedia marketing
campaigns.

THE COMPANY HAS ALSO ESTABLISHED A SUPPLIE’S TIER SYSTEM WHICH ALLOWS NIKE TO
MANAGE RELATIONSHIP WITH IT SUPPLIERS. BY DOING THIS, THE COMPANY GAINS STRONG
BARGAINING POWER WITH THOSE SUPPLIER THROUGH THE TIER SYSTEM AND CAN CANCEL
ALLIANCES WITH ANY SUPPLIERS THAT FAIL TO MAINTAIN THEIR STANDARDS IN TERM OF
QUALITY AND COST. BESIDE THAT NIKE ALSO HAS CONTROL OVER THE SUPPLIER CHAIN
SYSTEM SINCE THE COMPANY ESTABLISHES CONTRACT WITH RAW MATERIAL SUPPLIERS
AND ENFORCE SHES MANUFACTURER TO PURCHASE RAW MATERIALS OR COMPONENTS
ONLY FROM THOSE COMPANIES LISTED BY NIKE.

FOR INSTANCE, ONE OF THE BIGGEST INDEPENDENT CONTRACTORS IN CHINA AND
VIETNAM IS THE MAIN SUPPLIER OF THE AIR-SOLE CUSHIONING COMPONENTS USED IN
FOOTWARE PRODUCTS. THEREFORE, NIKE CAN GAIN ECONOMIES OF SCALE AND
MAINTAINING A STABLE QUALITY STANDARD AND SHIPMENT PERIOD WITHIN ITS SUPPLY
CHAIN. ALL OF THERE REASONS ALLOW NIKE TO PRODUCE FOOTWARE AT A VERY LOW
COST WITHOUT SACRIFICING SUPERIOR QUALITY. THIS OUT SOURCHING PRODUCTION
STRATEGY ALSO ALLOWS THE COMPANY TO GAIN THE BENEFIT OF A LOWER DEGREE OF
OPERATING LEVERAGE COMPARED TO ITS COMPETITORS SUCH AS ADIDAS AND NEW
BALANCE .

Nike has successfully operated its business, become a
dominant player in the US market, and effectively implement a
declared price leadership strategy. In this situation, it sets
premium footwear prices that competitors in the footwear
industry follow. This strategy will stop being effective if the
company fails to align its mission , operating strategy, and
other marketing strategy. First , the company successfully
aligns its mission with the rest of Its business strategy.

The company mission to bring inspiration and innovation to
every athlete in the world explains Nike’s determination to
provide the highest quality products to customers. In the
terms of marketing strategy , The company has built a strong
brand awareness in the market through celebrity endorsement
as well as price discrimination and the mass customization
strategy to different group of consumers.

WHY ARE NIKE PRODUCTS EXPENSIVE ?

We know that Nike are selling sports shoes
that require with the high quality. It must be
comfortable for those who wear sports
shoes. At the very least, it is suitable for the
foot type. Then Nike’s designer are also
world class. We all know Nike already have
many pattern of shoes it because Nike have
a good designer. Some customer are saying
that Nike has a good quality of the material
that used for shoes is high. Nike are set the
price higher every time and weed-out those
that cannot afford to pay them. In so doing
they separate the poor from the rich and
thus the rich pay it as they’re lulled into a
false sense of buying a high quality
product.

The psychology behind
why people still buy a
luxury good

Buying a luxury goods for example expensive shoes these day it looks
normal and no wonder anymore. The physical appeal of expensive
shoes is undeniable, The shoes are more comfortable but the price
tag is often off-putting. Unless you’ve got a good job or fantastic
saving habits, become luxury consumer goods will sit on your credit
card for a long time.

The • Irrational consumer
Psychology
Behind Why Sometimes when people are buying luxury goods they don’t
People still behave rationally and considering the enormous consumer
buy Luxury debt and they act in their best financial interest. For example
people will be unbearable to buy Nike shoes at price of $2000
Goods without a second thought to achieve his satisfaction. People

will still spend thousand to buy a brand name. It’s always
been this way and consumer’s desire to own the finer things
in life will likely never change. One reason involves the way we

tend to look at the positive elements of a product while
ignoring its disadvantages.

2. Self esteem
Low self esteem is a big factor in whether a
person will buy luxury goods that they may

not be able to afford. Luxury goods are
the Ultimate retail therapy, and fortunately
for luxury brands , the internet has made

them easily accessible for impulse
shopping when you are feeling blue.

REAL ESTATE LISTING － JANUARY 2020 3. Authenticity Matters

For example if we buy an expensive shoes just to
show their reputation or to show off to others and

to feel like belong, why wouldn’t
facsimile do the trick ?

4.Bottom Line

People buy luxury goods for a variety of reasons , all
are related to the strong emotions that we attach to
expensive goods. Whether we are financially comfortable
or not, we will often purchase the expensive things for
example Nike shoes to show off or to gain acceptance

from others and to reward ourselves for an
accomplishment. So the psychology behind why people

are still buying an expensiveshoes we’ll be better
equipped to squash down any

emotions that try to convince the rational part of our
brains that the more expensive something is, the better its

quality.

Reference

Published letter between NIKE to Philip
H.Knight,https://static.independent.co.uk/s3fs-
public/thumbnails/imag/2014/06/02/10/nikey.JPG

(2014)

Nike sells Bauer Hockey for $200 Million". The
Sports Network. February 21, 2008. Archived from
the original on February 25, 2008. Retrieved June

2, 2008.

Nike Company History".

Nike Inc". adage.com. September 15, 2003.
Retrieved January 26, 2020.