A significant part of the sport industry comprises sport footwear and apparel su
ID: 342734 • Letter: A
Question
A significant part of the sport industry comprises sport footwear and apparel suppliers. They are useful barometers of the state of sport since the more people there are engaging with sport, the more sales will expand. The most successful sport footwear and apparel suppliers have become household names, and have created some of the commercial world’s strongest global brands. Four of the world’s most popular brands are listed below, together with their website addresses.
www.rbk.com (Reebok website)
www.nike.com (Nike website)
www.fila.com (FILA website)
www.adidas.com (adidas website)
Choose one brand of athletic footwear from Nike, Reebok, FILA and adidas.
Questions
How might you go about creating a list of shoe products from the least expensive to the most expensive?
Having created a list, how wide is the range of pricing?
Can you identify a particular positioning strategy that drives these pricing arrangements?
How many distinctive price ‘points’ are there? In other words, at what levels are the prices set (e.g. $80, $100, $130, $160 and so on)?
To what extent are these different price points indicative of differences in manufacturing costs?
Is there a close correlation between price and quality?
Apart from cost and quality, is there any other factor that might explain the price differentials for these shoe products?
Explanation / Answer
The footwear company which has been selected for the purpose of analysis is the Nike. Nike is a leading foot wears company which is popular for its brand image, quality of products etc.
1. A list has been prepared which highlights the product lines of the company Nike from least expensive to most expensive.
Nike Roshe One: $75
Nike Air force 1: $99
Nike Air Huarache: $110
Air Jordan 1: $135
Nike Shoks Gravity: $150
Nike Air max: $160
2. When considering the variation of the price ranges, there is no wide gap between each brands. From the given list the least expensive is Nike Roshe one with $ 75 and the most expensive is the Nike air max which is of $160. When considering this variation in the price, it can be considered as too high.
3. Positioning strategy is the strategy adopted by the organization in order to generate a space in the mind of the customers. Here when considering the case of the organization Nike, the positioning strategy which they have adopted is the quality price perception. As the price increases the quality of the sport shoe, the designs, features etc is seen to be enhanced. This strategy will make the buyers to think about the high priced products as they have been utilized for the sports.
4. The price points are considered as the price which is having relatively higher demands rather than the other prices. The consumers usually purchase the products with prices which doesn’t vary much. In the case of the Nike the variation of the price for each product is less which makes the consumers chooses the products with the prices in the middle of the list.
When the number of pricing points of Nike is considered it is more than 10 strating from $ 75 to $175 with a variation of $5 for each product. The pricing points which the customer have higher tendency to buy is form $110 to $135.
5. When considering the manufacturing cost of each of the product line of the Nikes, it will be mostly equal. Small variations can happen as there will be additional features in the most expensive shoes. For example the most expensive shoe in the list is Nike air max which is manufactured with the mixture of the leather and textile. Since, it is a sports shoe, there wont be much difference in the production costs.
6. When considering the correlation of the price and the quality from the manufacturing end the correlation exist. For producing quality products quality raw materials are required which enhances the production costs. Hence, the cost of the end product will be higher.
7. When considering the shoe product the cost of production and the quality of the product determines the price of the product to a large extent. The other factor which can impact is the price differentials are the demand of the product. The products which has a higher demand or having higher customer acceptance will have high price.
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