MARKETING STRATEGY

OF NIKE
Submitted by:
Akhil Kanteti
MYDM-03-2017

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Akhil Kanteti, MYDM-03-2017 MARKETING STRATEGY
Executive Summary
This report shows the Marketing plan for Nike’s products. This report also show how Nike can
offer new products in the market with reference to previous offerings, and contains
comprehensive marketing plan components including company analysis, market analysis and
competitors’ analysis. It shows the Nike’s objectives and marketing strategies in terms of its 4ps
that Nike can offer by which it can increase its product range by offering other related new
products such as aerobic products. This will help NIKE in setting value-based pricing strategy
accordingly for the newly releasing products. It can also focus more on social media to promote
its new products and expand its business in other regions like China, Middle-East etc.
Besides this, financials like Growth rate has been discussed which has been forecasted by
reviewing Nike’s previous years’ revenue, RONA and marketing expenses. Also execution plan
and contingency plan has been shown which thoroughly depends upon Nike’s senior level
management and team work that helps in achieving its objectives, possibly with new offerings.

Mission Statement
‘To bring inspiration and innovation to every athlete in the world’ If you have a body, you are an
athlete.

Vision Statement
‘The Nike goal is to carry on his legacy of innovative thinking, whether to develop products that
help athletes of every level of ability to reach their potential, or to create business opportunities
that set Nike apart from the competition and provide value for our shareholders.’

The Nike Company-Overview (History and Current Status)

NIKE, Inc. is all about innovations and discovery, by providing the products and experiences for
athletes.
Nike was founded by University of Oregon track athlete Phil Knight and his coach Bill Bowerman
in January 1964. Its original name was Blue Ribbon Sports (BRS). The company initially operated
as a distributor for Japanese shoemaker Onitsuka Tiger, which meet Knight's automobile. In 1964,
BRS sold 1,300 sets of Japanese running shoes netting $8,000. After that in 1966, BRS opened its
first retail location at California. By the time after the first retail store, it got expanded in different
regions as in the East Coast, in Wellesley.

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Afterwards Nike had made itself as a leading brand in U.S. athletic market and covered half of its
market share. Also Nike with the association of Wieden Kennedy made various marketing
communication ways to reach the customer and to make them aware about products. By 1980s,
it made association of games with its products offerings to its target market.

Market Overview
Nike incorporation is the words leading sports footwear and Apparel Company. Nike is mostly
targeted towards athletes such as shoes, sporting equipment’s and sportswear. The Demand for
sporting goods is increasing over the period. In coming years the people will become more health
conscious about the sports equipment, which will increase demand for the Athlete equipment’s.
This industry is highly fragmented and considered by the high level of competition.
Nike uses strong brand awareness among consumers to gain market share. Also few sporting
goods manufacturer have vertically integrated operations, which includes the marketing,
manufacturing, designing and retailing processes in their operations. Nike is using the vertical
operations to examine the consumer trends and to implement new technologies.
Consumers purchase different products such as athletic footwear, licensed sports merchandise
athletic apparel, exercise equipment but they are not included in recreational transportation.
Many of the products such as sporting goods are sold through online channels over the internet
and have highest growth in market share of distribution channels. Worldwide Nike and Adidas
are also having greatest revenue as well as market leaders in sporting goods industry and
manufacturing with 27.8 and 20 billion U.S dollars respectively.

Market Trends and Evolution

 The initial product advertising strategy of Nike was through word of mouth and also by
using professional athletes for increasing demand.
 Due to intense competition with Adidas and Reebok. Nike changes its target market from
teenagers to younger consumers and also to expand its target market.
 During the time of recession consumers was willing to pay on that brand because Nike
having superior quality, style and reliability. Nike generates the higher revenue from its
competitors because of its Slogan “Just Do It” and strong product. (Deng, 2009)
 Other than style quality and reliability Nike is also concentrating on technologically
advance shoe models from time to time through innovative advertisements, celebrity
endorsements, successful association and event sponsorships.
 Nike still faces many challenges in changing the fashion trends with increased
competition. Though Nike is trying its best to capture major market share and designing
its products according to present fashion trends.

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PEST Analysis for Nike
Political:

 Nike can take help from government, foreign countries which have favorable relationship
with Nike in manufacturing its products.
 Nike’s internal procedures will be effected by the worker rights and employee laws.
 In US there are positive government policies which support it in increasing their growth
prospects.
 The surroundings legal issues affect it and are handled by Nike itself.
Economic:

 Nike get sponsorship from different other companies.

 Nike can help economy in creating new jobs with their higher growth in economy.
 Due to economic downturn consumers can be affected and it can reduce consumer
confidence towards products of Nike.
 Increasing material prices and labor cost in production. Nike outsourced for increasing
the living standards which also affect Nike’s product sales.
Social:

 Consumer loyalty towards the brand and consumer brand conscious can be advantageous
for Nike.
 Changes in life style, health habits and sport participation leads to increase the demand
of sport products.
 Increasing market share of female customers can also be opportunity for Nike.
 Diversified Consumers preferences and demand Nike can extend its product range.
Technological:

 Technological changes will help Nike to increase its production efficiency and quality.
 Through technology it makes highly innovative products.
 Technology helps Nike in providing different facilities to Nike like interacting to customers
by receiving feedbacks (CRM) and also online shopping.
 Technology helps in promoting the product through different digital channels like
commercials, social media etc.

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SWOT Analysis

Strength Weakness
 It is a global brand and No.1 shoe  Its sales highly depend on the
maker. footwear segment.
 It has strong distribution channels.  It has violations in history and they
 Has innovative shoe design which provide minimal wage rate to its
enable consumer to design their own workers.
shoe online.  Has poor conditions in work places.
 It has diversified products worldwide.  Has higher price compared to its
 Has strong marketing campaigns and competitors as Adidas.
endorses different products.
 Have different segments as baseball,
golf and footwear etc.
 It is strong at research and
development, as is evidenced by its
evolving and innovative product
range.
Opportunity Threats
 It can develop products such as  Economic recession and fluctuations in
sunglasses and cycles. the currency can lead Nike to losses.
 Its brand can also developed in  Higher competition as competitors are
different regions like china, Middle becoming more aggressive and
East etc. creating high quality products.
 It can increase its promotions globally  Sensitivity to price leads maintaining
by sponsoring events like Olympics, reputation of eco-friendly.
etc.
 It can take opportunity in growing
segmentation of women Athletes’.
 It can increase demand and introduce
fashion brand image in market.

STP (Segmentation, Targeting and Positioning)

Nike is unique in the fact that they have a very general targeted demographic segment –their
stated target market is “all athletes”. However, this does not mean Nike does not use market
segmenting to define various market segments more precisely.
Demographic:
Demographic segmentation is a factor used by Nike to target individuals according to their age,
life-cycle stage, gender, occupation, and generation. Although with apparel and sports the

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market can be broad, for the most part Nike primarily targets consumers who are between the
ages of 15-40. The company caters to both men and women athletes equally, and is placing an
increasing focus on tweens and teens to build long-term brand loyalty. Nike addresses this
segment by deploying marketing campaigns about young adults striving to be like their athlete
idols. For example, right before the 2014 World Cup Nike developed a video starring important
Nike sponsored soccer athletes with teenage soccer players. Nike has recently launched a variety
of women’s lines to tap into the fast-growing women’s segment. Currently only 20% of Nike’s
revenues are based on sales of products targeted at women, but this number is expected to grow
significantly in the coming years. Nike does not target consumers based on race, ethnicity,
religion, or social class. However, given the high-price of the company’s products, it does use the
income and education as targeting variables.
Geographic:
Nike uses geographic segmentation to market nations, regions, cities, and population density
differently. For example, in the United States Nike focuses on American football and baseball and
creates and deploys many advertisements and marketing campaigns about football and baseball
products using athlete’s specific to those sports. However sports tend to vary by region, so it is
unlikely to see American football or baseball commercials in Europe. Instead, you are more likely
to see Soccer, where Nike uses soccer stars to market Nike’s products. Similarly, in India, you are
more likely to see cricket, and rugby in England or Australia.
Nike’s largest markets are North America followed by Western Europe and China. In these
geographies Nike’s marketing efforts are largely focused on urban areas with high market
densities.
Behavioral-graphics
Targeting based on this attribute is the genius of Nike. While Nike occasionally focuses on lauding
product attributes, the company largely focuses on how their products make consumers FEEL.
The benefit expectations of the company’s products are clearly defined: You are an athlete. Nike
products make you feel athletic! In addition, with behavioral segmentation, Nike seeks to build
customer loyalty. When customers develop loyal behaviors towards a specific company, the
company reaps rewards by accruing incremental sales and market share. In such competitive
market like the one Nike participates in, it is important to gain and retain consumer loyalty. By
providing consumers with quality, choice and innovation the company excels in this realm.
Psychographic:
Nike also uses psychographic segmentation to target individuals with specific lifestyles and
personalities. To use this variable effectively Nike must target individuals who enjoy sports.
Whether it is playing, watching or simply talking about sports, these activities shape personalities
and lifestyles. Nike’s marketing efforts are targeted at creating a “feeling” that transcends the
product. Nike fosters an attitude, it develops a lifestyle. Events such as Nike: Run with Me, Sports
Improvement Clinics, Social Media contests and athletic and non-athletic endorsements go a long
way to create community and a feeling of “belonging” to the Nike family.

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Targeting
As for market segmentation, Nike has niche market to serve. And Nike focuses and targets,
athlete or sportsperson segment and provides required products to them as footwear and
apparel products with quite specific and unique feature as compared to any other footwear
products. Nike make its target consumers enable to get their desired products through
customization process as own signature shoe is offered to athlete that is it enabled Michael
Jordan to have his name Jordan shoes. Apart from this, its targeting strategies include
sponsorship of its products through sports team or celebrities. It has objective of styling its
product through psychological tactics on target market by linking triumph with apparel that is
products are viewed as victory when athlete celebrities do sponsorship.
Nike also established Nike cross country running in 1989 which caters all the athlete participants
all over the world and trains different sport activities which has also become way to make its
target market satisfied.
Market Positioning
Nike has made such products that satisfy its niche market with all products related to sports with
innovative design. Its slogan ‘Just do it’ has made an appeal to target customers to buy the
product with sense of inspiration and confidence and which has made it major competitor in
athlete industry.
It has following positioning strategies:
• Enhancing athletic lifestyle or fantasy in consumers mind
• Appealing style and attitude
• Positions itself as premium brand with well-designed products
• Appealing quality level and valuable products
HEM (Hierarchy of Effects Model)
Awareness
The Company task is to build awareness, perhaps just name recognition, with simple messages
repeating the product name. Consumers must become aware of the brand. This involves letting
people know about its Brand and its new and existing products. When Nike further promotes this
new and existing line of sneakers, making commercials, internet ads and billboards etc. Nike is a
champion brand builder. Its advertising slogans—“Bo Knows,” “Just Do It,” “There Is No Finish
Line”—have moved beyond advertising into popular expression. Its athletic footwear and
clothing have become a piece of Americana. Its brand name is as well-known around the world
as IBM and Coke. Nike transformed the athletic shoe industry with technological innovations, but
today many people know the company by its flashy ads and sports celebrities.

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Knowledge
Nike raises their consumer’s knowledge by highlighting their advantages and benefits of buying
their product. They highlight their product by showing how famous athletes train and play in the
games while wearing their merchandise and highlighting that they are first to make customized
and innovative shoes example making Hyperdunks for basketball players, they were the first
lightest basketball shoe. This appeals to consumers as it will create the mindset that if they buy
the product they will resemble the famous athlete.

Liking
Liking can be induced in consumers, where Nike made many commercials and billboards utilizing
basketball players wearing these Hyperdunks to get the potential customer attention about
them. The Interest part was utilized to promote Hyperdunks by making clips of basketball players
using them during games and training. One of the most famous Interest grabbing clip used by
Nike was when Kobe Bryant jumping over a Aston Martin while wearing a pair of Hyperdunks.
They also promote this product by saying it is lighter, Durable, cheap price and has many color
variants.

Preference
Nike build consumer preference by promoting quality- Where all their product is durable, lighter
products, and utilizing new technologies like flywire and lunaritive for their new products. Nike
builds value to the customer by telling “TO BRING INSPIRATION AND INNOVATION TO EVERY
ATHLETE IN THE WORLD” and “IF YOU HAVE A BODY, YOU ARE AN ATHLETE.", They promote
their company as an innovators and they price according to best you get with keeping their
innovative technology.
Conviction
Nike conviction problem is about the pricing, like many consumers think that its over-priced. But
if we look to the market Nike was able single handedly drive growth in the U.S. sneaker market,
helping the company to carve out a new “value added” competitive advantage against its
competitors. Nike has done quite a bit of work around its consumer value equation.” Adding,
“the strength of our brand and the innovation that’s in our products means that there is a great
consumer value proposition at higher price points.
Purchase
When all the above factors can be induced among customers by taking help of market forces,
customers will be interested to purchase the product.

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 Fishbein model
Nike Adidas New Sketchers Asics Puma Under others Importance
Balance Armor
Design 7 6 5 7 8 4 6 8 21

Affordable 8 7 6 5 3 2 4 4 4
pricing
Colour 8 6 8 9 4 10 7 5 18

Ankle support 8 5 7 5 6 4 6 7 5

Comfort 6 5 4 3 7 5 3 6 20

High Quality 6 4 4 3 2 7 3 4 31

100

Attitude 8862.3 3753.9 1702.8 1161 1044.9 812.7 309.6 20898 38700

Market Share 22.90% 9.70% 4.40% 3% 2.70% 2.10% 0.80% 54.00%

According to above table you may notice the attributes that show which attribute has a
competitive advantage and disadvantage. So, which you can focus on that attribute through
advertising. The consumers are giving more important to the Foot wear industry for high quality
t=35, Design=21, Comfort=20, color=18 more than Price=4, ankle support=5.

Marketing Mix strategy

Nike has the leading role in marketing and has strongest marketing mix. Nike basically follows
Pull strategy by attracting the consumers to buy
Product
Nike offers a wide range of products including shoes, apparel, and equipment. The first product
of Nike is running shoes. Apart from this, it offers currently in athletics, baseball, ice hockey,
tennis, soccer, lacrosse, basketball products and has wide range of sports products such as cricket
shoes, shirts, and shorts.
Nike NYX and Nike SB shoes offered for the first time in 1987. In 2008, Nike Air Jordan XX3,
basketball shoe was introduced with the high performance, designed for the environment (4P of
Nike). Nike also offers products for tennis, golf, skateboarding, association football, baseball,

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football, cycling, volleyball, wrestling, cheerleading, aquatic activities, and sells shoes for racing
and other sports and outdoor activities as recreational uses.
Recent products: Nike has recently introduced cricket shoes are designed to be lighter 30% than
its rivals i.e. Air Zoom Yorker and Nike Air Max designed for the latest addition to its line skate
Nike 6.0. Nike recently shoe tracks the performance of a corridor on the radio device that
connects to the iPod Nano to produce the Nike + Apple Inc. with the team, while the product
generates useful statistics and enables the users to get value from product.
Beside this, NIKEiD is a sub brand which allows the customers to design their customized Nike
footwear through offering a selection of shoes, what customers want; different colors and
fabrics; they can choose whatever area of the shoes they want. This customization allows
customers to create different designs in large quantities. Customers do not have to design shoes
themselves but have designs that customers can buy a selection of pre made designs. NIKEiD’s
customization process and offers are available in Nike’s website (NikeID).
Pricing
The type of products to be marketed will affect the price of a product. Nike’s pricing strategy is
considered to be competitive than other retailer shoe. The pricing is based on the basis of target
customers as a premium segment. Nike brand commands a high premium. So Nike well known
that most people will pay more dollar for quality products for this product. Pricing strategy makes
use of vertical integration in which they participants at differing channel levels or take role in
operations level more than one channels to control cost and impact product pricing That is why
Nike uses Cost Based/Value Based Pricing other than its competitors.
The target customers of Nike are those who are niche and have almost have the financial
capability of the product, such as the use of expensive clothes is a status symbol. This makes the
customer want to continue to buy the product of Nike. Without a high equity brand, like Nike,
however, this would not be possible rise in prices. Pricing strategy currently used by Nike is like,
it may continue to use it. Nike's current customers currently specify what they would be willing
to pay the cost of the product to ensure the quality and service they receive from Nike.
Place/Distribution
Nike shoes are has multi brand stores and exclusive Nike stores worldwide. Nike has about 20,000
retail accounts in the US and sells its products in about 200 countries worldwide. In the
international market, independent distributors, licenses and subsidies sell Nike products. The
company has manufacturing facilities worldwide and in Asia, customer service and other
operational units.
Nike long term goals is to open more stores and franchise to reach target customers and to
expand the maximum buyers.

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To reduce the cost of Nike’s products, it has outsourcing strategy with China, from developing
countries in Asia, such as Vietnam. And to do more business online because Nike tradition is as
spending on online advertising as compared to advertising media, ecommerce and online
marketing contributions are planned to expanded appropriate channels. Nike has some specific
distribution outlets and use them for distribution of its products, following are the major ones:
• Nike town shop: In big cities of countries, Nike’s outlets are there to serve customers with
products.
• Flagship stores: Nike has contracted with retail stores that has label of flagship of Nike which
serve with high volume of Nike’s products to consumers
• Nikeid: It is a Nike’s online store that is website which serves the customers of all over the world
with customization services.
• Big retail discount stores: The big stores of country also serve with some high demand Nike
products for the target customers.
Promotion
The marketing communications mix is effective because Nike attracts new customers and creates
balance between keeping existing customers.
This is one of the strengths of Nike. Print advertisement in general, simple but send a strong
message. There is virtually no advertising that appears on their price and Nike are almost always
uses a popular athlete to promote its product. The Advertisement exceeds the expectations of
everyone with these shoes and they can demonstrate on the rise for consumers.
Nike uses Commercials, celebrities, or billboards as ways to make its target customer aware
about its offers. But Nike needs other ways for promotion as to encourage more new products.
Then it may use the maxi environment and can create brand awareness. Marketing implication
is that Nike is a marketing strategy for online ecosystem. This means that Nike is preparing to cut
for television and print advertising, and increasing to the social media. Nike also sponsors events
such as Hoop It Up and The Golden West Invitational. Nike’s brand images, the Nike name and
the trademark swoosh; make it one of the most recognizable brands in the world. Nike’s brand
power is one reason for its high revenues and makes other companies to get sponsorship from
it.
IMC (Integrated marketing communication) Strategy
Advertising
In the advertising, Nike's own target is to achieve the greatest possible impact on large
populations of the target audience. These ads are usually expensive, but plays a major in awaring
the products to the customer. Nike uses celebrities represent product to the client or ideal user.
Extremely popular personalities such as professional athletes used as offering the Nike’s

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products. Target customers are watching their favorite celebrities use the company's products.
As a result, customers are motivated to imitate the behavior of these celebrities. Brazilian
football team, like Nike especially Ronaldo and Roberto Carlos are as brand ambassadors of Nike;
LeBron James, Tiger Woods and Lance Armstrong cycling golf are number of famous athletes and
used by Nike as celebrity endorsement strategy to promote its products. Nike focuses on other
countries’ sportsman as Brand ambassador for making its all target customers of all countries
aware about its offers and currently Indian football captain Baichung Bhutia is as Nike new brand
ambassador.
Personal Selling
For this IMC strategy, Nike has in stores personal sales efforts. The stores offer staff’s help for
customers to learn more about the company's products and to purchase these products. In some
cases, sales staff helps customers to find the right products to promote the Nike Company
through personalized service.
The customer experience has been developed by staff trained to help and persuade sales.
Customers feel good about buying Nike products. They also sell these products which customers
feel as having better decisions. Therefore, the combination of Nike’s marketing communication
while promoting the company's products, improves customer experience and use personal
selling to build relationships with customers.
Direct Marketing
Nike uses direct marketing to promote new products to the target market. These new products
are usually advertised heavily. The firm uses salespeople to approach certain organizations or
individuals in target market segments. As the Nike approaches sports organizations in colleges to
promote its products. Nike’s uses direct marketing to establish stronger relations with target
customers and motivate them to purchase the company’s products.
Sales Promotions
Nike’s sales promotions include coupons and special offers to customers which it target. The
characteristics of these products business and its benefits can be as discount coupons can make
customers to save and by using special offers new things are offered to customers, showing sales
promotions enable customers to be motivated. Nike uses sales promotions whenever Nike want
to attract new customers to drive demand, so customers would be motivated to buy the products
of Nike based on the perceived benefits.
Public Relations
Nike rarely used public relations. The company depends on social problems such as the use of
workshops and green technology that use public relations to cope. In some cases, Nike may use
similar charity events and public relations activities as a sponsor. This kind of public relation

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would bring better perception of the brand, the brand uses to solve problems and promote public
relations.
Social Media
Nike is one of the biggest brands in the world and therefore has been a big surprise followed on
social media. Especially for new technology based or current products of Nike it may increase its
social media strategy to get in line with customer’s way of receiving promotions. Nike has
recently use some social media communication mix for its promotion of products where
customers can take advantage of the campaign, by acting in social site to share photos of
themselves call this demographic youth to demonstrate their sports skills by uploading them,
where the Winners will receive $ 500 in cash or a scholarship.

CHANNELS & DISTRIBUTION

NIKE is a highly centralized and extremely focused company. Management concentrated on a
few core corporate functions, such as brand building and supply chain management. In addition,
a dedicated sales force sold NIKE products to retailers or, in a limited number of countries, to
distributors. NIKE has relocated production of its footwear and clothing to 600+ contract factories
in 40 countries as of 2011. where its third-party production units employ more than 800,000
workers. From its headquarters in Beaverton, Oregon, NIKE manages a worldwide virtual
company combining internal R&D functions with a low cost manufacturing strategy.
NIKE has a phenomenal product creation center in Montabelluna, Italy, where craftsmanship is
king. NIKE has taken those learning, and shared them with their manufacturing partners in Asia,
and fundamentally changed the game and raised the bar of what it means to deliver incredible
sportswear products in the athletic industry.
NIKE has 15 contract manufacturers in India (located in Karnataka, Tamil Nadu, Andhra Pradesh,
Madhya Pradesh, Uttar Pradesh, Maharashtra, Uttrakhand, and Haryana) that it has outsourced
the manufacturing of its footwear and apparel.
Market Expansion strategies

 Shared distribution channels among varied product lines lowering cost

 Large Size provides opportunity for more leverage against competition
 Efficient use of production facilities lowers cost
Global Sourcing
NIKE has relocated production of its footwear and clothing to 40 countries where its third-party
production units employ more than 800,000 people

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From its headquarters, NIKE manages a worldwide virtual company combining internal R&D
functions with a low-cost manufacturing strategy. They control their activity from Oregon and
Tennessee and developed jointly by American and Asian technicians in the USA, Taiwan and
South Korea. Sneakers are then assembled in South Korea and Indonesia from dozens of
components supplied by firms in Japan, South Korea, Taiwan, Indonesia, China, Vietnam, India,
Malaysia, United States, etc. Similarly NIKE outsources distribution to firms that specializes in
Logistics services.
NIKE depends upon tightly controlling the athletic footwear supply chain and getting retailers to
commit to orders far in advance.
In India, NIKE‘s strategy was to increase local manufacturing to be price competitive. They also
increased the number of local stores in each of the metros and Bangalore, and wanted to support
these local outlets with visual merchandising, where each of the stores projects their brand
statement – “Just Do It”.
In 2002, the distribution network of NIKE India had eight distributors, 25 exclusive NIKE outlets,
15 multi-brand outlets and 20 specialty doors across major cities. In 2004, instead of renewing
the franchise with Sierra after a 7 year license agreement, NIKE India became the subsidiary. This
was the turning point for NIKE in India.

PRICING STRATEGY
Value Based Pricing
The setting of a product or service's price, based on the benefits it provides to consumers. By
contrast, cost-plus pricing is based on the amount of money it takes to produce the product.
Companies that offer unique or highly valuable features or services are better positioned to take
advantage of value-based pricing, than companies whose products are services are relatively
indistinguishable from those of their competitors.
Nike has taken a new approach to their pricing model, using a consumer value model based on
analysis of how much a consumer would be willing to pay for each product.
Their CFO Don Blair said Nike has “done quite a bit of work around its consumer value equation.”
Adding, “the strength of our brand and the innovation that’s in our products means that there is
a great consumer value proposition at higher price points.” Some would argue that my comments
seem a little bit arrogant and risky, but the market doesn’t lie. Nike was able to single handedly
drive growth in the U.S. sneaker market, helping the company to carve out a new “value added”
competitive advantage against its competitors.
Nike is trying to migrate to appealing as a “premium product”. This price tactic is an effective one
as Nike was able to add $168m to total industry dollars by driving up their average selling prices.
By looking their annual report 2014 during the change of price strategy was effective “NIKE brand
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 footwear and apparel revenues increased 12% and 10% respectively…” it continues to say
“Footwear unit sales in fiscal 2014 increased approximately 7% and the average selling price per
pair increased approximately 5%, driven nearly equally by price increases and a shift in mix to
higher priced products.”
Nike had originally used a “cost-plus” model. This model is simple, you calculate what your cost
of goods is and then markup the products selling price to achieve your desired profit. This works
fine because you are guaranteeing yourself a certain percentage of profitability if consumers are
willing to pay. With a company like Nike, it’s obvious the consumer is more than willing to pay
for their sneakers. That’s why this consumer value equation is so effective for Nike. That pricing
model is based on one simple idea: how much would a consumer be willing to pay for a product,
ignoring any outside cost components. One other factor in this consumer value added to consider
is that Nike has always been viewed as “Cool”. The “cool factor” seems to always raise prices and
cause consumers to pay a little bit more for the next big thing like Apple products.
Customer Value analysis
Nike Adidas New Sketchers Asics Puma Under others Importance
Balance Armor
Design 7 6 5 7 8 4 6 8 0.21

Affordable 8 7 6 5 3 2 4 4 0.04
pricing
Colour 8 6 8 9 4 10 7 5 0.18

Anckle support 8 5 7 5 6 4 6 7 0.05

Comfort 6 5 4 3 7 5 3 6 0.20

High Quality 6 4 4 3 2 7 3 4 0.31

100

Quality 4 4 4 4 2 4 3 3 4

Price $ $ $ $ $ $ $ $ 53
70.00 68.80 55.00 35.00 43.00 40.00 66.00 45.00

RPQ 0.82 0.66 0.73 0.77 0.42 0.68 0.61 0.51

RPP 1.32 1.30 1.04 0.66 0.81 0.76 1.25 0.85

As you may see the above table showcasing about customer importance towards the attributes.
The customers has given more importance to the quality and design more than price. So the

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Nike has implemented there pricing to the value-based pricing, they have taken their product to
a premium level. Basically they have targeted niche market, where consumers think about the
quality in brand more than price. And as you may see in the below perceptual mapping that still
Nike is top in quality and price according to the quality. This may be imitated by the
competitors. But Nike as a competitive advantage that the brand is much aware to the
customers and its innovative products with customization, the brand itself stands as a cool
factor like an Apple product. So it may take time to imitate but not for very long time. Nike has
to come up with a new strategy.

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References
1. http://about.nike.com/
2. https://marketingdiscussions.wordpress.com/2015/03/18/nike-pricing-strategy-cost-
plus-vs-consumer-value-equation/
3. https://www.reference.com/business-finance/pricing-strategies-nike-utilize-
4c9bf736720bc089
4. http://sales-management-slides.com/marketing-strategy-of-nike/
5. https://www.researchgate.net/publication/299889166_Strategic_Marketing_Plan_of
_Nike
6. https://www.statista.com/statistics/246501/athletic-apparel-companies-ranked-by-
global-market-share-in-footwear-sales/

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Akhil Kanteti, MYDM-03-2017 MARKETING STRATEGY