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Pricing And Retail Strategy Essay

579 words - 3 pages

Pricing and Retail Strategy

When most people hear the word “Nike”, they immediately think about the swoosh logo and the motto “just do it”. Nike is known for their durable, high- quality products, which makes it unsurprising that professional athletes are often used in their advertisements. A large percentage of their successful marketing presence is due to their aggressive advertising. In 2011 alone, Nike spent around $877 million specifically on advertising in the United States (statista, 2014).
Nike dominates more than 14% of the global athletic apparel market and is recorded to be bringing in yearly revenues of $25,313 million (NIKE Inc, 2014). They own over 450 retail stores as well as online sales which has resulted in a wider reach in the worldwide footwear market and increased sales (NIKE Inc, 2014).
Particularly in markets that are over saturated, such as ...view middle of the document...

In 2015, Nike released their Nike Air Max 2015 Women's Running Shoe at a price of $190, at which point the price of the 2014 shoes dropped to $120 (Nike Store, 2015). The customers assumed that a higher price equates to a higher quality item regardless of the actual value of the shoe, and Nike customers are willing to pay a premium price for the newest innovative products that Nike releases. As the shoe sits on the market, its price will diminish as the next new shoe is released at a high cost.
Another pricing strategy that Nike uses is “high-low pricing”. Products are priced high regularly, then are offered in a sale at a lower-than-average cost which, compared to the typical high prices, appears to be a highly desirable price. High-low pricing doesn’t typically attract customers who are simply looking for an inexpensive shoe. More typically, customers resulting from high-low pricing are already loyal to the brand and are familiar with the typical price of the products.
Overall, Nike’s pricing strategy is successful because they advertise their products as the pinnacle of innovative new athletic apparel. Their advertisements showcase their products, and by extension the people wearing their products, as heroes who are triumphing against laziness and personal limitations with the help of Nike’s products. Those who exclusively wear Nike products do so because it makes them feel that they are part of an appealing culture of extraordinary, fit people who consistently strive to achieve their best performance. Within this mindset, Nike’s pricing strategy has helped their customers accept the amount of money they spend on their products because the high prices infer that the product is superior to that of the competition.

Grewal, D., & Levy, M. (2012). Marketing (3rd ed.). New York, NY: McGraw-Hill/Irwin.
Nike - Statistics & Facts | Statista. (2014). Retrieved from
NIKE, Inc. SWOT Analysis. (2014). NIKE, Inc. SWOT Analysis, 1-8.
“Nike Store. Nike Air Max 2015 Women's Running Shoe.” Nike Store. Shoes, Clothing & Gear. Web.

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