Mock-Up Advertisement for a Sport Nike Product - Essay Example

Sport Marketing Introduction Attractive pricing strategy is regarded as a key marketing approach for organizations, which tends to attract s.In such circumstances, organizations can adopt several pricing strategies namely psychological pricing, price skimming or penetration pricing. Psychological pricing depends on the individualities of human mind-set for making the price of products more attractive to the customers. This type of pricing is subjected to the notion that people are not perfectly rational and thus certain prices appear more attractive in comparison with others. On the other hand, price skimming involves temporarily charging higher price for any innovative or new product and afterwards lowering the price over time. Then again, price penetration is the other important strategy, used by organizations in order to enter and make strong position in a market quickly by setting low prices. This strategy is used with the intention of gaining higher market share (Kaser & Oelkers, 2007). With the above discussed concerns, the essay focuses on developing a mock-up advertisement for a sport product i.e. men’s shoe of Nike Inc. by using one psychological pricing strategy i.e. odd-even pricing. Furthermore, the essay also discusses about how pricing strategy namely skimming and penetration use by sports brands follows other components of marketing mix elements. Odd-Even Pricing Odd-even pricing is an approach of setting prices in odd numbers, i.e. below an even number. For instance, pricing a product at US$29.95 rather than US$30.00. The objective of this type of pricing is to make the price seem significantly lower than the real value. This type of pricing approach generally works by using emotional response of the customers. For instance, with respect to the price of products at US$29.95 and US$30.00, a completely sensible customer would identify that the difference in price is only US$0.05 and is trivial on a required product. However, in practical scenario, customers do not behave in such sensible way, rather they act emotionally and round down the cost. In other words, although the price of the product is closer to US$30.00, several customers would tend to believe the price at range of US$20.00 (Kaser & Oelkers, 2007). Following is the two versions of advertisement of one particular product i.e. men’s shoe of namely Nike. Fig 1: Advertisement 1: Odd Pricing of Nike Fig 2: Advertisement 2: Even Pricing of Nike Evaluation of Purchase Intent and Consumer Perception Price is simply a method for quantifying the value of products being exchanged. With respect to Nike sports shoes, the perceived value are comfortable products, great appearance and quality. From analyzing the pricing strategy, it has been found that most of the customers perceive odd prices are cheaper than even prices. The perception is much stronger for consumer products such as sports products. This tendency of pricing account for the perception of saving and the misunderstanding that prices in odd numbers is much cheaper than even number. Such customers tend to perceive that they are saving money, which is a strong tool for organizations for developing pricing strategy. Nevertheless, it is worth mentioning that odd pricing do not basically results in generating sales more than the forecasted demand (Asamoah & Chovancova, 2011). The preference of customers for odd pricing is also accredited to the outcome of conditioning of market in order to influence consumers. A reason, which explain the preference for odd pricing from the viewpoint of purchasers is that such prices tend to stimulate a perception of discounted price in comparison with even price. Thus, the underlying assumption of odd pricing is that money saving can impose extensive impact on purchase intention of people. Indeed, saving is regarded as great influential factor for making purchase decisions for consumer goods products. However, while purchasing sports shoes such as Nike, the perceived value for customers are less than on saving money and more than on attractiveness and comfort. With respect to reputed sport brand like Nike, monetary saving is not only the perceived advantages of promotional appeal. Still, monetary saving through odd pricing provides certain intrinsic simulation and can fulfil the requirements of the customers regarding quality as well as price. Thus, it is presumed that customers are highly sensitive to certain prices namely odd prices and therefore considering this pricing strategy, i.e. using even prices would lead to lowering the demand of the Nike men’s shoe product. With respect to the perceived quality, there is low level of significance on either odd pricing or even pricing of the sports product (Dodds & Monroe, 1985). Price Skimming Strategies Price skimming is a popular strategy for sports brands based on which organizations charge high price for certain products. Two popular sports brands that use price skimming strategy are Adidas and Nike. The rest of marketing mix elements also follows the pricing strategy by an organization. For instance, with respect to product, the price skimming strategy can only be used at the time when a new product is being introduced in the market. With respect to new product or any innovative product, the price skimming strategy i.e. high price signify the uniqueness and the quality of the product delivered to the target customers. The key assumption of price skimming strategy is that due to the factor of innovativeness, the demand of such product will certainly increase in market and the organization can exploit high demand by charging high price. In this context, it can be stated that since Adidas and Nike have maintained a culture of delivering quality products by pointing at providing best value to the customers, they use price skimming strategy. The price skimming strategy is also related with the place element of marketing mix. Since, price skimming works on those products that have strong brand reputation, the organizations using such pricing tactic must concentrate on controlled space (Pride & Ferrell, 2004). Thus, it can be apparently observed that both Adidas and Nike have their own retail outlets, e-commerce facilities, franchise stores, partnership with major retail chains and cooperation with other sports related organizations. Such placing strategies help to develop strong control on brand and ensure concentrated growth in the market. Finally, the promotional strategy also follows the pricing strategy of an organization. Since high pricing is used, promotion is required in order to increase the level of sales. Meanwhile, Adidas and Nike use diverse promotional tools for attracting more customers towards their products. These two brands have also developed an incomparable portfolio of promotional partnership with several sports institutions (Pride & Ferrell, 2004). Penetration Pricing Strategies Penetration pricing is the other popular strategy, which used by many organizations where prices of products are set at relatively low prices than the market price in order to attract more customers. Two popular sports brand that use this strategy are Puma and Reebok. The key objective of such pricing is to enhance the market share along with sales volume. Such products are in high demand in the market because of their inexpensiveness and user-friendly in nature. Most importantly, the prices of such products are varied and affordable for most of the customers i.e. customers are able to adjust their budget in order to purchase products of Puma or Reebok. As a result, such pricing strategy assisted these brands to compete with other popular brands such as Nike and Adidas. The distribution strategy also follows the price penetration strategy. Since, the objective of penetration is to enter in a market and to increase the sales, the marketplace must be broad. Hence, it is clear that the market of Puma and Reebok is quite broad in nature and their products are distributed globally. People can easily obtain these brands from retail outlets, official distributors as well as from e-commerce stores. With respect to promotion, organizations that use price penetration strategy develop strong promotional activities. Similarly, brands like Reebok and Puma promote their respective products to the customers through advertisements, print media and internet in order to raise the figure of product sales. It also collaborates with other organizations for making a strong brand and position in the market (Kaser & Oelkers, 2007). Conclusion The pricing strategy, which uses by an organization impose considerable impact on the purchasing decision of the customers. In any market, pricing is regarded as one of the most important components of marketing mix. It determines the sales as well as the survival of organizations. Proper pricing strategy also helps in obtaining the attention of possible customers and inspiring them to purchase products. Furthermore, pricing also assists in defining a product with respect to quality and to a certain extent, it also promotes a product to the customers. Most importantly, it helps to determine the perceived benefits that a customer can gain while purchasing a product, therefore maintaining a positive relationship with the customers. Pricing as a key portion of marketing mix is vital and therefore remains as one of the challenging decisions for organizations to make. This is mainly because improper pricing not only generate negative feeling regarding the products, but also mislead the customers with respect to quality. Thus, for international sports brands such as Nike or Adidas that have global operations necessitate sharp pricing strategies by understanding the environmental aspects. References Asamoah, E. S., & Chovancova, M. (2011). The influence of price endings on consumer behavior: an application of the psychology of perception. Universitatis Agriculturae Et Silviculturae Mendelianae Brunensis, LIX(7), 29-38. Dodds, W. B., & Monroe, K. B. (1985). The effect of brand and price information on subjective product evaluations. Advances in Consumer Research, 12, 85-90. Kaser, K., & Oelkers, D. (2007). Sports and entertainment marketing. United States: Cengage Learning. Pride, W. M., & Ferrell, O. C. (2004). Marketing: concepts & strategies. India: Dreamtech Press. Read More