Pricing of Nike Shoes

WEBSTER UNIVERISTY

PRICING OF NIKE SHOES

MICHAEL LINDER

PROC 5830 PRICING

DOUGLAS MOWCZKO

1 MARCH 2013

Since its beginnings in Oregon, Nike has been one of the leading producers of athletic footwear and apparel. In 1964, Bill Bowerman and Phil Knight founded a company called Blue Ribbon Sports. They would later officially change the name, in 1978, to Nike. Nike, in Greek, is known as the goddess of victory. The iconic swoosh was first used on a shoe, in 1971. Nike also registered the Swoosh with the U.S. Patent and Trademark in 1974. Nike’s first advertisement did not feature any products but the slogan, “There is no finish line,” was used to entice buyers. In less than ten years, Nike had gained 50% market share of the U.S. athletic shoe market in 1980. To increase popularity in it’s products, Nike began paying top athletes to don their merchandise with the hope of boosting sales. Some of the first endorsers of Nike are Steve Prefontaine, John McEnroe, and Carl Lewis. During the 1980’s the NBA had a major boom in popularity. Nike saw that as way to improve it’s share of the shoe market and signed an up and coming basketball player to an endorsement contract. That player was none other than Michael Jordan, now probably the most recognizable figure in sports around the world.

Throughout the years, Nike has been criticized for the pricing of their shoes. Nike uses Price Leadership strategy and value based pricing. This is when a company sets is price based on the value the consumer places on the product. Nike has spent a lot of money to promote their brand as top of the range. Customers buy the product for the Nike symbol and are willing to pay high prices regardless of the products actual value. The advancement in technology has helped Nike stay above its competitors and justify the pricing of some of their shoes. Nike has been an innovator and has provided quality products that their target consumer appreciates. Two of the...