Nike Has To Think Deeply About Entering The Two Or Three Line Market At A Low Price.

Though convinced

Liang Yuchang also believes that Nike's low price strategy faces at least three obstacles.

First, Nike suppliers must produce cheaper shoes while maintaining profitability. The two is how to mobilize Nike dealers.

He thinks price and

In Ma Gang's view, Nike headquarters "timely" released the low price of the wind, hoping to explore the consumer group and all aspects of the acceptance of partners.

If all aspects of the conflict are relatively high, Nike will intervene in the low price market through the way of brand combination, so that the two brands of CONVERSE and UMBRO will be low price pioneers, and Nike's main brand will continue to stick to the high-end.

In addition, if Nike is determined to enter the two or three tier market, in addition to adjusting the product line, it is necessary to make some changes in the existing distribution channels, so that the channel can be flat.

For example, the Nike outlets in the two or three tier market are generally purchased from the Nike distributors in the primary market, so the cost of the goods in the two or three tier market is higher, which is the main reason for the limited profitability of the two or three tier Nike market.

Domestic and foreign capital encounter

Before UBS had conducted research on the price of footwear products in the two or three cities of mainland China, it was found that footwear products in the 170~250 yuan range could not only protect the profits of manufacturers, but also allow local consumers to accept them, which is the "perfect price" range of footwear products.

And when consumers spend more than 50 yuan to buy Nike shoes, where will the domestic brands go?

Especially in the past few years, Lining is constantly raising the price, and now the average selling price of its footwear products is also around 300 yuan.

A recent order will show that Lining's footwear orders in the 3 quarter of 2010 increased by 11%.

In addition, the average price of KAPPA brand shoes in China's trend is around 370 yuan.

Liang Yuchang said that the impact of Nike's low-priced shoes on such brands is the most obvious.

He believes that the marketing budget of domestic sports brands will be an important factor in deciding whether they can survive in this wave.

Some companies with limited marketing resources are likely to be eliminated in this encounter.

However, Nike's entry into the two or three tier market also has its own handicap.

A dealer told reporters that at present, the profit margin of agents such as Anta and Lining is generally about 5 percentage points higher than that of agent Nike.

For the majority of small and medium-sized distributors, they would prefer to profit from the same domestic brands.

And Nike's current distributor, such as BELLE, does not necessarily have the experience and strength to penetrate into the two or three tier market.

If Nike wants to enter China's two or three tier market, it needs to do much more than just launch products.