Pricing Considerations
In this industry the rivalry between existing competitors is extremely high, businesses are constantly finding new competitive advantages that will separate them from the rest. Pricing is a major key factor that contributes to a successful business. Nike's pricing considerations play a huge part in their success as a business, they're strategies and pricing considerations are what keeps them the worlds largest seller of athletic footwear.
Nike uses value based pricing, this is when a company sets their price according to the value the customer places on the product. The majority of businesses’ use the logic to sell products at the cheapest price as it potentially means more sales however, Nike is focused on delivering the best customer value, "At Nike that will never mean the cheapest product. It will mean the highest quality, most beautifully crafted, most innovative product at the right price." This pricing strategy works for Nike as they promote their business in every ad as the top of the range, this persuades customers buy the product even if it means paying slightly more. Nike needs to consider the most beneficial way to price their products in order to make the most profit possible, another type of pricing strategy Nike uses is segmented pricing. Nike adjusts their prices of products according to their target market. For example, Nike makes the Air Max for adults and children however the prices are drastically different, even though the cost to make an adult sneaker versus a children’s sneaker does not vary significantly.
In this industry the rivalry between existing competitors is extremely high, businesses are constantly finding new competitive advantages that will separate them from the rest. Pricing is a major key factor that contributes to a successful business. Nike's pricing considerations play a huge part in their success as a business, they're strategies and pricing considerations are what keeps them the worlds largest seller of athletic footwear.
Nike uses value based pricing, this is when a company sets their price according to the value the customer places on the product. The majority of businesses’ use the logic to sell products at the cheapest price as it potentially means more sales however, Nike is focused on delivering the best customer value, "At Nike that will never mean the cheapest product. It will mean the highest quality, most beautifully crafted, most innovative product at the right price." This pricing strategy works for Nike as they promote their business in every ad as the top of the range, this persuades customers buy the product even if it means paying slightly more. Nike needs to consider the most beneficial way to price their products in order to make the most profit possible, another type of pricing strategy Nike uses is segmented pricing. Nike adjusts their prices of products according to their target market. For example, Nike makes the Air Max for adults and children however the prices are drastically different, even though the cost to make an adult sneaker versus a children’s sneaker does not vary significantly.