Adidas is widely known brand and in order to maintain their brand equity, they have to
manage its product quality, designs, and most importantly the price. Customers often
psychologically equate high prices with high quality – as the saying goes, “You get what you
pay for.” Adidas uses skimming pricing for new products and competitive pricing,
acknowledging their competitors such as Nike and Reebok. Adidas also uses psychological
pricing where price are set at $9, $89, $99, $189, $299, to perceive as being at a lower price.
If the organization undercuts its competitors pricing excessively, it will not be appealing to
stockholders. If the organization’s product or services are overpriced, it might risk and lose
potential customers. …show more content…
Product Life Cycle: Adidas is classified as under the ‘Growth Stage’. They are constantly
introducing new products into the market that are different from its competitors and thus
result in rapid increase in sales with aggressive pricing. There are also many competitors in
the market such as Nike, Puma, and Asics etc., this results in Adidas having to fight for retail
space for a broader distribution. If customers were to be more satisfied with other brands,
they would selectively demand for those brands instead of Adidas and thus, Adidas has to
constantly think of new ways to innovate and create so as to keep ahead of competitors.
Cost: Cost of production is also crucial especially when it comes to price decisions. The
higher the cost of production is, the higher the price of product in the store. The lower the
cost of production, the lower cheaper the item is. Hence, Adidas uses high quality materials
to produce their goods to ensure that their customers are paying not only for the brand but
for also durability and that they are paying for what its worth.
External Factors: (Uncontrollable)
Competition: this means the availability of substitutes, which would result in the price …show more content…
Adidas is known as the “brand with the three
stripes”, making it a distinctive and widely recognized brand. Hence, Adidas is able to set its
price at their own benchmark. This is the most instinctive type of competition market, and
Adidas is classified under this as their products require an enormous amount of framework
and discussion. Such examples would be the ‘Adidas Spring Blade’ and ‘Adidas Originals’.
Due to its unique features, other competitors in the market have yet to come up with
similar products. Monopolistic Competition is another competitive market that would cause
an impact on the pricing decision of the organization. Monopolistic competition has many
competitors competing on both price and non-price factors such as product features and
advertising. One of Adidas biggest competitor is Nike. They have been competing and
producing similar products in the market. Hence with unique products that belong only to
Adidas, Nike would have to come up with more innovations to ensure competition is still
fresh and this allows Adidas to have an advantage. Through their advertising campaigns
with celebrities, this allows Adidas to be even more widely established as a brand
manage its product quality, designs, and most importantly the price. Customers often
psychologically equate high prices with high quality – as the saying goes, “You get what you
pay for.” Adidas uses skimming pricing for new products and competitive pricing,
acknowledging their competitors such as Nike and Reebok. Adidas also uses psychological
pricing where price are set at $9, $89, $99, $189, $299, to perceive as being at a lower price.
If the organization undercuts its competitors pricing excessively, it will not be appealing to
stockholders. If the organization’s product or services are overpriced, it might risk and lose
potential customers. …show more content…
Product Life Cycle: Adidas is classified as under the ‘Growth Stage’. They are constantly
introducing new products into the market that are different from its competitors and thus
result in rapid increase in sales with aggressive pricing. There are also many competitors in
the market such as Nike, Puma, and Asics etc., this results in Adidas having to fight for retail
space for a broader distribution. If customers were to be more satisfied with other brands,
they would selectively demand for those brands instead of Adidas and thus, Adidas has to
constantly think of new ways to innovate and create so as to keep ahead of competitors.
Cost: Cost of production is also crucial especially when it comes to price decisions. The
higher the cost of production is, the higher the price of product in the store. The lower the
cost of production, the lower cheaper the item is. Hence, Adidas uses high quality materials
to produce their goods to ensure that their customers are paying not only for the brand but
for also durability and that they are paying for what its worth.
External Factors: (Uncontrollable)
Competition: this means the availability of substitutes, which would result in the price …show more content…
Adidas is known as the “brand with the three
stripes”, making it a distinctive and widely recognized brand. Hence, Adidas is able to set its
price at their own benchmark. This is the most instinctive type of competition market, and
Adidas is classified under this as their products require an enormous amount of framework
and discussion. Such examples would be the ‘Adidas Spring Blade’ and ‘Adidas Originals’.
Due to its unique features, other competitors in the market have yet to come up with
similar products. Monopolistic Competition is another competitive market that would cause
an impact on the pricing decision of the organization. Monopolistic competition has many
competitors competing on both price and non-price factors such as product features and
advertising. One of Adidas biggest competitor is Nike. They have been competing and
producing similar products in the market. Hence with unique products that belong only to
Adidas, Nike would have to come up with more innovations to ensure competition is still
fresh and this allows Adidas to have an advantage. Through their advertising campaigns
with celebrities, this allows Adidas to be even more widely established as a brand