When founder Phil Knight began selling shoes from the back of his Plymouth Valiant in 1964, few (including Knight himself) could have predicted the meteoric rise of Nike over the ensuing decades. The sports apparel and equipment company’s brand alone is worth around $30.44 billion, which by some estimates makes it the most valuable in the world.
Price
Nike uses a mixture of value and premium-based pricing for its products. Value-based pricing means the company considers the current market conditions when determining how to price its products. In other words, what price are Nike customers ultimately willing to pay? While Nike has multiple competitors, some consumers are willing to pay more for Nike products because of the perceived value of the brand.
Premium-based pricing is also used by the company to recoup costs associated with research and development or where products have been endorsed by celebrities or sports stars. Here, Nike uses the same brand equity to charge premium prices for certain products, with some products part of a limited edition or collectible series that appeal to fans.
Product
In the early days of the company, Nike’s running shoes addressed needs for athletes which until that point had not been met by any other company. Over the years, Nike has leveraged its innovative success to offer apparel and equipment for other sports such as basketball, tennis, football, cricket, and baseball. However, it also continues to draw on its history of research and innovation to improve its core shoe range.
Today, Nike offers products for men, women, and children and is constantly adding new products to its mix via superior design, innovation, and material sourcing. The company has also added new products via several acquisitions, including Converse, Hurley, and Cole Haan.
Place
Nike operates over 1,000 branded retail stores around the world, with thousands more stocking its products. The reason for its significant bricks-and-mortar presence is obvious: Nike sells many products that benefit from being tried-on before purchase.
However, this is not to say that Nike has neglected eCommerce. While some consumers enjoy the experience of visiting a physical Nike store, others are more than content ordering their products online.
To solve the problem of an individual ordering the wrong size shoes from its store, the company introduced Nike Fit. This is a feature within the Nike app that uses data science, machine learning, artificial intelligence, and recommendation algorithms to provide a complete and accurate measurement of both feet.
Promotion
To some extent, Nike’s brand equity means many of its products do not need to be promoted in order to sell. Nevertheless, the company is an astute employer of high-profile sponsorships and endorsements with sports figures such as Michael Jordan, Tiger Woods, Lebron James, Serena Williams, and Rafael Nadal, among others.
The company also performs direct marketing in conjunction with schools, universities, sports organizations, and local sports teams. What’s more, Nike is well-versed in promoting its brand on social media to predominantly younger generations of consumers, with over 204 million followers on Instagram making it the 14th most-followed account on the platform.
Nike’s “Just Do It” campaign is one example of the company’s marketing ability. Launched in 1988, the campaign has become the de facto slogan of Nike because it inspired positive emotions in consumers and resonated with their values and desires.
Key takeaways:
- Nike uses a mixture of value and premium-based pricing for its products. High brand equity means the company can charge higher prices than competitors to boost profits or recoup R&D costs.
- Nike’s original product was a running shoe that met the needs of athletes at a time when no such product existed. Today, the company has leveraged its heritage and expertise to branch out into other sports and associated apparel and equipment.
- Nike uses sponsorships and celebrity endorsements to promote its products to younger generations of consumers on social media and at related events at schools, universities, and sports organizations. The company has also found a way to sell its shoes and apparel online with technology that provides accurate sizing.
Read Next: Nike Business Model, Nike Mission Statement and Vision Statement, History of Nike, Nike Organizational Structure, Nike PESTEL Analysis, Nike Competitors, Nike SWOT Analysis.
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