Nike adopted the policy to produce in undeveloped and cheaper country purely for economic reasons: to sell a price-competitive product in prospering market, production had to be the cheaper possible. Positive effect of Nike strategy Nike’s evolution brought many negative effects, but it created also numerous positive effects. To start, by importing cheaper product, Nike could count on a cheap price. This had two advantages: Nike’s product was affordable, and this helped grew the company’s market all over the world. The other advantage is the profitability: with this lower price, Nike was extremely lucrative, since they had a large profit margin to play with.
Nike should have taken full responsibility of the situation. I think accepting that the agreement made was not a good one and taking measures to improve the situation might have created a better light for Nike. Expanding not only through agreements but merging with the market, culture and improve the working environment boosts employee morale and also fights bad phenomena like poor working conditions, child labor and other factors that impact negatively the world we
As a brand, Nike commands high premiums among many men in the U.S. The organization’s pricing approach employs vertical integration in pricing in that they own participants at various levels of channel or engage in more than one operation channel levels. As such, the company effectively regulates costs and influences the product
Due to high number of products it has to be efficient in its operation. They need to make sure that manufacturing is in sync with the demand. Efficient operation process would remove errors and save up a lot on energy and cost for the company. Outbound logistic is also important part of Nike’s value chain. It is important to make sure that transportation and delivery of the final products is efficient.
Consequently, Nike’s pricing is intended to be economical and competitive to the other sport gear retailers. The pricing is built upon many factors that have been taken into consideration before setting a selling price on the root of the high-class segment as target customers. Nike as a brand orders high premiums. Nike’s pricing strategy makes use of perpendicular amalgamation in pricing in which they target participants with different channel levels or take part in more than one type of channel level operations. This can govern costs and effect product
However, the prices are higher than other brands. Consumer feels that Nike overchanges its consumers and ought to lessen the cost of their items. Celebrity endorsements additionally engaged the consumer's having a feel of belonging, as Nike turned into a fulfilling toward its image. Product Positioning: Segmentation and Targeting: For “Just Do It” campaign, targeting market was: • Young people, from 20-30 years old, low and middle income and social
It helps Nike to increase its economic value creation. For example, Appendix C shows that Nike’s pre-tax income continually increased, and attained $4,205 million in 2015 (Nike, 2015). Nike’s ability in celebrity endorsements and product design is rare. No other sports brand in the world, has such a large number of celebrities from sports using its product in public. Moreover, Nike’s air cushion technology innovation always maintained a leading and monopoly (Nike, 2015).
(Locke, R. 2002) Nike felt the positive impacts of their business strategy, expanding their footwear product range and market share dramatically through the 1980’s. Adding various other apparel to their product line beyond footwear to sports clothing and equipment, and of course growing financially from a modest company to a $10 Billion annual revenue global powerhouse. Nike also expanded their market beyond US borders to become a true global player. This exponential growth and massive success could not have been accomplished without the same business strategy that soon would leave the developed world in shock. The negative impacts began.
This indicates that Nike will attract more customers in different social class. Lower income people could afford to buy their low-priced products. This as a result, Nike can meet the customers income and reduce their customer cost. The strength of high price product strategy is that Nike can earn more on each single item. Also, it can ensure the quality of the products.
High Prices Nike is also famous for selling expensive sport shoes. Its sports apparel is among the most expensive on the global market. Thus, for example, in Italy a person who would like to start the gym, could be intimidated by the prices that Nike offers. He or she could rather goes buying shoes and other sportswear in less expensive sporting goods stores, such as Decathlon, which sells products at different prices in order to better satisfy its customers. However, Nike manages to overcome its weaknesses thanks to its strong brand reputation.