This Article is based on interview of a Nike franchise owner in Pakistan. In interview he revealed how Nike set its prices for local markets. And how much they have control over pricing strategy during crisis, currency fluctuation and recessions.
NIKE ‘Just Do It’
It’s an US multinational brand engaged in designing, manufacturing, marketing and selling of footwear, apparel, accessories and services for sportsperson.
The region of Islamabad, Rawalpindi and Peshawar is owned by this retailer. All Nike branches in this area are controlled by his son. So, I have conducted an interview with him. As he is the decision maker for all pricing strategies in this specified area.
He said our target market is sportsperson. We have three branches in Islamabad and two in Rawalpindi. And we cover almost 9.5 % of overall footwear market in this region. In his interview he mentioned the following pricing points.
- Standardised Premium pricing strategies are implemented here. Local retailers can’t change it. Nike prices varies from product to product according to their models and trends.
- Prices are quoted on each order.
- Yes, currency fluctuations impact our pricing strategies. But only on new imports, otherwise no variation will be implemented on existing older modules.
- Hardly, prices are increased by 2.5% per year. Price changes occur only after each year, not before it.
- Currency fluctuation does not impact on existing quoted orders. Like if a product price is 10,000 rupees quoted and in three weeks’ dollar price devalues from 106 to 100 Pakistani rupees. It will not impact on existing product prices.
- But according to regional situation and culture, we are authorised to offer discounts in case of dollar devaluation.
- Government tax rate is fixed 17% of profit. But in case of change in government policies or raise in tax rate we have the authority to raise prices.
- On purchasing via online store, there is 2% increase in prices. It is due to delivery and transportation expenses. Which is always mentioned in delivery order before delivering the products.
- He also said, tax rates are increased by 1% from 17 to 18% due to sudden change of government of Nawaz Sharif. But this situation occurs once in my 7 years of experience. Due to which we raised Nike product prices. But it was our responsibility to inform customers about the situation and why we suddenly increase the prices of Nike products.