Pricing

·       each entry should illustrate your personal experience and appreciation of a different marketing mix element to which you have been exposed

A brand such as Nike have a different pricing mechanism to many other brands. This is the case as they have developed a significant market share in the shoe industry that enables them to have pricing power and influence the prices of other competitive firms. Their brand image and popularity has meant that they are able to set their prices high for their shoes. When shopping online recently for a new pair of shoes, I saw that the prices of shoes had risen. The average pair of shoes goes for at least £80 on their website. Nike potentially used market orientated pricing when setting their prices for their shoes, which looks at 10 different factors. Given their products high quality or perceived high quality, they are able to increase the price as the consumer believes that they are buying a high quality product worthy of the extra investment. The costs of production however do not justify their high prices. Production costs are minimal, especially in light of recent revelations of near sweat shop working conditions overseas in their factories. Their's and Adidas' joint dominance over the market place has however given them the ability to price highly as the lack of quality alternatives with a similar brand image gives them control and assurance that consumer demand for their product will remain high. If Nike didn't have this dominance, then they would have to abide by the market clearing price, or else face the danger of being competed out by competitors, however there dominance has given them the ability to set the market price.

When deciding how to price their good, a brand has several factors that they have to consider. Tghe first of these is where the market clearing price is. If they set their price above this price, then they are likely to make minimal profits as people will source their goods from elsewhere. Similarly, if they price too low, then they could also see diminishing returns, as the returns for their sales will not bring about sufficient profits for the company to function.

Market orientated pricing looks at 10 different factors when setting their price for a new product. These include the value of the product to the customer, marketing strategy, price-quality relationship, product line pricing, negotiating margins, political factors, costs, effect on distributors/ retailers, competition explicability. When looking to set a price for a new product, or altering the price of an existing one, a brand such as Nike must take these factors into account. If they fail to do so, then they will fail to gain demand for their product and this could have impacts on their profit margins