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Nike's Place and Price Strategy

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Submit an analysis on the following Place and Price on Nike.

Place analysis should discuss distribution channels (how are they getting their product to market?) It should also look at where the product is being sold and the approach to inventory.

Price: Your price analysis should describe the pricing system in place. Is it cost-based, value-based, or competition-based, and how did you come to that determination? Include an evaluation of the pricing strategy in your analysis.

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Solution Summary

This detailed solution is an analysis on the place and price of Nike. It includes discussions of distribution channels, sales channels, and Nike's approach to inventory. It also discusses and evaluates Nike's pricing system. It includes links and examples.

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Nike manufactures product throughout Asia and South America in more than 900 factories due to the proximity of cheap labor and raw material available. Nike does not own the factories in which product is produced, however, typically the vast majority of the product manufactured in each factory are Nike goods. Nike chose not to invest in factories in set locations to allow them to source product based on the most favorable conditions. If prices rise in one country Nike has the ability to source the product elsewhere. As a result distribution costs are higher to get the product to the retailer and consumer. The savings of having the product manufactured in the current locations, however, outweigh the additional distribution costs.

Once manufactured the product bound for the United States market is shipped to one of four distribution facilities, including a state of the art 1.1 million square foot distribution center in Tennessee, from which product is shipped to retailers and consumers (http://www.commercialappeal.com/news/2009/nov/19/swoosh-supply/). China is Nike's second largest market and Nike opened its' largest distribution center in Asia in China this year. It will handle all ...

Solution provided by:
Sally Baldwin, Ed.D
Education
  • BA, University of Southern California
  • MSS, United States Sports Academy
  • Ed.D, Boise State University
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