Nike has announced its most expensive shoe ever — the LeBron X basketball shoes, expected to sell for $315 — pushing the upper limit of consumer dedication to the brand. (See ESPN news video below.) The sneaker feature built-in electronics that measure athletic performance. The president of the National Urban League urged Nike to abandon the pricy shoe saying, “It’s the consumer’s choice, but it’s insensitive to market a $300 shoe to kids going back to school and struggling to buy school supplies.”
The price on most of its other shoes are also rising 5-10% due to material cost increases. Nike’s gross margins are lower than most of its competitors.
- Is this pricing strategy smart? The shoes are unique, and the price will raise Nike’s margins, but is it insensitive to the mass market that can’t really afford them?
- Is there a way to be sensitive to cash-strapped buyers while, at the same time, introduce an expensive new model?
- How would you handle the public relations backlash to these pricy sneakers?