The Appropriate Pricing Strategy

Following in the footsteps of on-screen shoe addicts, such as Carrie Bradshaw, Britains love affair with shoes has continued to assemble pace. Love and interest for shoes has never seen its decline in Britain. A careful research by MINTEL shows that Spending on footwear (including VAT) has risen by 38% since 2001 alone, to attain just over £6. 5 billion this season. Above all, the market is expected to see a regular growth in sales by 17% between 2006 and 2010 so that it is £7. 6 billion.

It has been pointed out that footwear interest has always been remarkably conscious in the united kingdom that as never seen any decline in the wonderful world of fashion.

Fashion retailers have always highlighted the necessity of fashionable foot wears as fast as the clothing taken up to speed the necessity for fast fashion in footwear in the same way we have seen in clothing. Footwear specialists are always found active to meet up with the desires of ever new and different styles in shoes.

Despite the fact the shoe industry hasn't faced any decline in the demand and the growing need for the world of fashion, Producers like Nike need to produce a careful observation of the surroundings which might influence marketing and its own sale. Environmental factors can be classified trough PESTEL framework. Changes in government and polices make a difference consumers' confidence in the foreseeable future, their spending power or their rights. The political environment impacts the economical environment of businesses. Legislators at the local, state and federal levels may provide incentives or tax breaks to companies or they can impose regulations that restrict business transactions.

Nike is extremely popular in Indonesia for it's out source production, Nike is known as big offender and accused of child labor issues, and past it faced a major campaign by us students. At this time Indonesia is the Nikes biggest production center, with 17 footwear factories that employ 90, 000 personnel and produce about 7 million pairs of shoes every month.

The settlement shows that Nike, although still struggling to improve its labour practices and this of its contractors, is wanting to upkeep its position by attending the issues of mistreated factory workers - and before some serious campaign pose it a threat towards its repute and sale, the policies have to be changed or different approach of dealing with the situations must be introduced.

Now, financial growth, inflation, interest, exchange rate and the customers' attitude towards saving, altogether donate to economic factors.

Decline in economical growth in the united kingdom may affect the Nike's sales targets. And the UK economy may face a poor jab of recession as household continues to lessen. After official figures in January showed that the economy may stop by 0. 2% in the last 90 days of 2011, the united kingdom has already been feared to meet another recession which is recognized as consecutive quarters of economic contraction. It fears the economy mar fall to 0. 1% in 2012, but may rise 2. 3% in 2013 if there is no euro zone debt crisis.

Moreover, socio-cultural factors also contribute to the business enterprise progress. As UK allows large number of cultural variations, Nike appears as you included in this.

Social trends affect business to a great deal are one of the key factors affecting a business. Consumer buying patterns are influenced and designed by the running trends, so new fashion determines their desires and demands. It necessitates the need for the NIKE to consider and understand the cultural environment influenced by the society's basic values, perception, preferences, and behaviors which directly affect the sale of the merchandise Nike targets the achievement and victory in the social values of the clients.

In addition, technology may affect the sale of the services as there are being introduced the multiple means of marketing and sales in the market. So the organization needs to keep abreast with such changes to appear as one of the competitive in the market.

It is beyond any doubt that technology has always shown amazing effects on life style and fashion. So each company on the market tries to take technological advances to be always a good competitor.

the research team; under Nike's head and its own supervision has been in constant struggle for almost 16 years visualizing, researching, developing and trying to put the probability of attaching springs to the only real of the athlete's foot into reality. Nike Shox, the most acclaimed and ever wished technological development makes the dream a reality ("Nike"). Therefore, by advancing in technology, Nike holds a competitive edge on the market. Moreover, Nike has also acquired the key position on the market by being the first market with its e-commerce internet site. It provides online purchasing opportunities, a full description of its product lines and display, locations of the various stores, and so many more features which makes it available in every possible way. NIKEID invites its customers for their opinions and suggestion on the purchase they make. this is merely to allow a simple flow of information and close connection with its customers. This method helps the employees reduce time and while getting information about their company's products anywhere. Such efforts of Nike have helped it to increase more than 40% of the global sales.

Still Nike is aware of the fact that to keep up stability in the market it always requires considering and reconsidering their strength, weaknesses opportunities and threats to attain their sale and proposed targets.

In industrialized and developed countries market segmentation is recognized as the vital area of the marketing. Productions of the products rely upon the needs and demand of the clients, so variety in needs triggers all of the production.

"As smith, (1956) recognizes that segments are directly produced from the heterogeneity of customers wants. He also emperies that market segments arise from managers' conceptualization of a structured and partitioned market, rather than the empirical partitioning of the marketplace based on collected data on customer characteristics. "

(Market Segmentation: Conceptual and Methodological Foundations by Michel Wedel, Wagner Antonio Kamakura)

Market segmentation is categorized into four bases

Geographic segmentation: Geographic segmentation is based on the consideration of a location. Quite simply this segmentation is based on size of the region i. e. city size, and climatic requirements. Geographical segmentation ensures the expansion of the business enterprise in a pre planned territory.

Demographic segmentation: Demographic segmentation is undertaken on the basis of age, family size, income or education etc.

Psychographic segmentation: psychographic segmentation is dependant on customers' assessment of the customers' psychological approach. It considers values, attitudes, lifestyle, personality etc.

Behavioral segmentation: Behavioral segmentation explains about the targeted benefits through user's interest, loyalty, status and attitude towards the merchandise. Market segmentation ensures the achievement of the target predicated on well planned marketing approach. It demonstrates the business enterprise is not being launched by leaping in the dark. In fact online marketing strategy is devised after market segmentation.

Segmentation is defined as the analytical solution to increase the focus of targeting on market segments. The better one focuses the wider he provides the profit. If you have better focus, obviously you should have better returns. Segmentation ensures the client association and loyalty can be promoted through the life span cycle of a person. Promotion or communication is one of the factors of marketing mix which totally depends on STP. The communication and correspondence should be targeted on the company's needs. And this communication can accelerate competence, brand recall, equity and customer's retention. This also ensures the profitability at the perfect lowest expenses.

Surprisingly a considerable number of Nike's customers are with sportive interests. As an expert at segmentation, Nike specifically targets athletes aged 15-35 minus the distinction of male or female. . Nike activities on the innovation of the products, brand leadership and an elevated retail presence. Nike establishes its relation through targeting on the agreement between athletic teams sponsored by some authorities and by introducing sponsorship to the members of these teams. This venture on Nike's part opens the door for the other athletes and sports group creating a feeling of competition in product as well as in sport.

Though, after Olympics this graph of sports' or athletes' interest has dropped right down to some extent, so that it is the time for the Nike to introduce different things especially in the UK market which could restore the clients interests and attraction. at this point demographic segment is to be more focused through an operation on launching a new footwear for the clients aged 15 to 28. A s this group always follows the style and modern trend, it will restore the sale's falling graph. Moreover this group is more prone to show its association to the brand, so Nike can take good thing about this interest to promote its business.

Price formulation is one of quite strategic issues as it relates to the merchandise positioning. For the formulation of the price strategy, it is necessary to analyze the marketplace first, segmentation, and the positioning of the merchandise. Moreover, making marketing mix decisions, estimating the demand curve, calculating the price, understand environmentally friendly factors and setting the pricing objective will be the necessary steps which form the essential information.

Having targeted the various segments of the market Nike is targeting the variety of the segments of the marketplace. Nike should follow and adopt a different strategy for the purchase price formulation. In general practice, Nike makes its customers its first concern, especially the clients who are more alive to the quality and utility of the product than the purchase price. Subsequently the clients who consider a product to be high quality are prepared to pay the high price for the typical. This makes them develop the product intimacy and association plus they hardly bother about the price.

Nikes give importance to the leadership strategy and the purchase price based on value. To make their brand of top quality and range, Nike spends a massive amount which ensures its promotion and progress. Customers are always found willing to buy following the brand when it has established its repute. Nevertheless the pricing is dependant on the foundation of premium segments as target customers. Consequently, being truly a popular brand, Nikes demands high premium.

An impressive and elegant couple of Nike shoes grabs about GBP45 to GBP 95. But seldom knows that this cost includes the expenditures of material, machinery, rental and making.

On making one couple of shoe Nike almost spends GBP8 out of which GBP 1. 8 would go to labor and 4 % is paid by the client with a check sign. Obviously the labor cost is really low.

In short, one pair production cost is a, Nikes out GBP8 including shipping duty, making and suppliers operating profit. The expense of production is nearly GBP 08 per shoes. Then GBP 10 is retailers' cost that involves research and development, promotion, and advertising sales, distribution, admin and Nikes operating profit.

Cost for customer then may begin from GBP 55|60. Because of the brand recognition, customers always think it reasonable. Nike wants to increase its gain starching his brand price which, in fact, after Olympic seems hard as there seems almost no possibility in the united kingdom market.

Appropriate pricing strategy:

Keeping because the study on pricing, it's advocated that Nike should make an effort to penetrate by introducing new everyday footwear comparatively at lower prices. This step will subsequently stimulate the growth of market claiming its large share.

The step of introducing low price will discourage the opponents and can set a hard situation for them. Because of this the Nike's product will successfully grab the clients especially the teenagers.

Penetration pricing strategy appears the most successful device to generate an intimacy between the customer and brand. This can help the product spread within a short while. More over the merchandise diffuses instantly attracting their interest for the purchase

Penetration pricing strategy in fact, aims at compelling the customers to improve their bend for buying and switching to the required product. This strategy no doubt does not promise high profit but it does benefit the business in terms of its brand penetration and recognition and having a long term market share.

So, Nike with this pricing strategy can ensure the required promotion of the business by focusing on minimizing unit cost from the initial stages.

This strategy furthermore discourages the others competitors who, as a result stay reluctant and don't put their new business in danger appearing in the market as competitors.

Marketing is most suitably thought as the idea of designing, planning and putting the concept of pricing into practice along with the exploitation of ideas, goods and services. Nike hasn't only been successful in catering quality products which have earned customers trust and loyalty, but also has been proud to employ the superb promotional strategies. Moreover, wisely enough Nike has corresponded some professionals and athletes that could be really very instrumental in drawing the customers focus on the newly launched products. This effort includes soccer stars such as Ronaldinho, Renaldo and Roberto Carlos, Basketball players such as Jermaine O'Neal and Lebron James2, triathlete Lance Armstrong and golf superstar PADRAIG HARRINGTON.

This strategy proved an extremely productive effort as it includes helped introduce and promote the desired products on a variety. Moreover, through media as well, Nike has invested valuable efforts on advertisements.

There are different and multitude of promotional techniques aiming at the progress and success of the business enterprise namely


Public relations,

Sales promotions,

Personal selling's,

Direct sale and internet marketing

Nike after a careful observation adopts the marketplace penetration strategy. They, it focuses the young generation which needs not rely on advertisement and any source to know about the new trends as they themselves are always alive to the innovation and modernity. This strategy save Nike a significant amount which otherwise may incur high expenditures. A report showed that Nike's income graph fell 12% because of its high expenditures on advertisement and its own actual making cost. In a nutshell, the sharp decline after Wall Street closed was $645 million in the years early period

. Revenue rose 10% to $6. 67 billion from $6. 08 billion per year earlier. Revenue in emerging markets rose 8% to $867 million. As the business's expenses outraged heavily during Olympics, administrative expenses touched 18%. future delivery orders from 2012 to 2013 rose 6% to 8. 9% billion from previous year. Though, the future orders have increased by 16% during the first quarter last year. It is expected that the present thoughts and opinions about the firm your hands on the company on the market will show its stability.

Furthermore, there are push and pull strategies that happen to be put on uplift the business enterprise on the market.

Push selling strategy:

This technique is applied by the company to incite consumers to make demands for the sale's products. Basically it forces the clients to choose the products on sales and discount. This system pushes the clients to make buying decisions. So, pushing strategy is a technique that makes use of an company's sales team and trade promotion activities to produce consumer demand for something like discount, different offers. The producer pushes the wholesaler, who in response in his promotion effort, introduces it to the retailers and retailers offer it the consumers.

Pull selling strategy In "pull" selling strategy a lot to attract the consumers. Its success will depend on massive spending on advertisement that could compel the customers through its effective campaign on promotion. This resultantly encourages consumers to demand the retailers, retailers on the part demand wholesalers and wholesalers make demands on producers.

Nike, through market penetration strategy, should apply push selling strategy by offering discounts on different products, like informal shoes which may be used for short time for sake of change Moreover Nike. Should penetrate into the choices of customers through Face book, twitter, direct marketing, sales promotion and blippar for the promotion of the product; because research shows that use of these Medias' is popular than TV or Newspaper among the young people. Furthermore, seasonal introduction through seminars and displays through modeling session can help us uplift its sale and consumers attraction.

Through Customer adoption producer judges the consumers approach and behavior towards their decision of purchase. Some customers appear as innovators as they always prefer to be the first popular to lead others. Then there are a few consumers who emerge as early adopters showing their instant response on the new product in the market. Then there is early majority, late majority and laggards who learn through others experience and then adopt the merchandise.

However Nike should adopt such a policy that ought to captivate early or late majority altogether effectively. Blippar can be adopted as it is a good example of instrumental advertisement; being subliminal it generates the awareness in customers from cognitive to conative stage. Moreover, this type of advertisement ensures minimal expenditures for the maximum profit in return.

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