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Some firms such as supermarkets set low prices for certain products in order to encourage consumers to buy other fully priced products, leads customers to the store, then they normally buy more, they have a greater profit available.

Example:
PS have there price on the playstation set lower, potentially making a loss, so that the consumer will buy full priced extras like games and controllers, they will then maximise profits on these products.

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Intended to give an impression of a value (£3.99 not £4.00). Some firms like M&S don't use this type of pricing anymore as they feel it doesn't attract more customers.

Example:
Technological items will sell for hundreds of pounds, however, use psychological pricing as they don't price it on £500 for a TV but for £499 as it looks more appealing.

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Firm sets very low prices in order to drive other firms out of the market, cut airline fares have led to some small airlines closing/ being taken over by competitors.
Can be known as 'destroyer pricing'.

Example:
Greggs set up near other small bakery in busy town centres etc. they then have the brand power to set the price low and increase it over time. They will be able to run the small bakery out of business over time, as the customer drawn to them.

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Firm fixes the price for its product by adding a fixed percentage profit margin to avg cost of production per product. The size of the profit depends on factors: competition and strength of demand.

Example:
Milk is set at a price to get a specific profit margin. If cost of production for a firm is £1.00 then the company will set the price at £1.30 to get a specific profit of 30p.

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Opposite of Penetration Pricing, its used in the introduction stage of a new product. Used for technological and fashion products, appeal to early adopters.
It skims the market, it appeals to exclusive market. The objective is to maximise value added and profits, as well as establishing the brand name.

Example:
Apple has added a twist to the skimming strategy. Rather than introducing their products at a high price and then lowering their prices later, Apple stakes out a price and then maintains and defends that price by significantly increasing the value of their products in future iterations.

For example, over the past six years, the average sales price of the iPhone has remained remarkably stable with the subsidized price remaining at ~$200 and the unsubsidized price hovering around $650.

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Prices are set low, to break into a market or achieve rapid growth in market share.
Many firms may use this when their product is first released or to entice new customers.
Can be used as an extension strategy or to attract a new market segment.

Example:
When Netflix entered the market, it had to convince consumers to wait a day or two to receive their movies. To accomplish this goal, it offered introductory subscription prices as low as a dollar. The pricing strategy was so effective that traditional providers such as Blockbuster soon were edged out of the market

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Competitor-based pricing involves setting prices based on what rivals are charging. If there is strong competition, customers are faced with wider choices of who to buy.
They will most likely buy from the cheapest provider.
Most providers in a competitive market do not have the power to set price higher than the competitive market.

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Overview of the Industry

There is an intense competition that businesses faced in Sports industry. The companies and marketers have to be stylish and functional at the same time to remain competitive. Within this industry, Adidas and Nike are two prominent names across the world countries. Adidas and Nike are the most significant brand names in the minds of customers.

Comparison of Markets

Nike majorly deals in industries of Children and Women shoes, Running, Cross-training, and Basketball. On the other hand, Adidas primarily deals in Athletics, Tennis, and Soccer.

Comparison of Strategies

Adidas and Nike operate and use similar marketing strategies while different approaches of implementation. Both organizations focus greatly on technology, as well as make efforts to innovate and produce new products.

1. Focus of Strategies

Nike concentrates on the US market; on the other hand, Adidas concentrates on the market of Europe.

2. Production Strategies

Nike does not own production plants as the company merely advertises, distributes and designs their goods and thus, the company outsources to severe Asian countries, such as Korea and Taiwan that outsources their production plants in Vietnam, Indonesia, and China. On the contrary, Adidas has production plant in Germany, and in recent time, has adopted the outsourcing approach of Nike by outsourcing to countries in Asia.

3. Marketing Strategies

Adidas and Nike pursue a strategy of premium pricing that refers to an approach where businesses charge higher price for their goods. Nike and Adidas faced an intense competition.
For example, during the World Cup 2010:

"Write the future" campaign was launched by Nike, which was a 3-minutes advertisement in which celebrities were featured, and received overwhelming response from customers on YouTube.

On the other hand, Adidas answered back with 2-minutes video that featured stars such as Daft Punk and Snoop Dogg into a prominent shot from the Star Wars movie.

Nine teams sponsored by Nike while twelve teams sponsored by Adidas.

Key Differences in Marketing Strategies

Nike has a domestic market focus, while Adidas has an international market focus.

To gain the global recognition, Nike shifted focus to soccer. Adidas governs the global market, mainly the soccer that is deemed the "world sports."

Nike began sportsperson sponsorship frenzy, and to create an appeal among bored consumers have created new look shoes. Adidas sponsored professional athletic teams and athletes as a reaction to marketing techniques of Nike.

Nike offers customization to gain competitive advantage; in contrast, Adidas tries to cut production costs and time to be more successful.

Nike employs abroad production factories to reduce costs of production. Adidas offers low salary to reduce costs of production.

Nike improved its e-sites with custom options of footwear; whereas, Adidas increases its' advertising and marketing budgets.

Nike has led the sportswear in marketing and advertising strategies; however, Adidas has presently attempted to expand its market to sports apparel and equipment.

Conclusion

To be concise, Adidas and Nike have different marketing strategies in how both companies interactive with consumers online. The above discussion made it apparent that a strategy of Nike revolves around creating a unique and distinct identity for each sport is effective and smart. However, both Adidas and Nike have a significant digital presence and impressive viral marketing strategies.

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Comparison of Strategies between Adidas & Nike

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There is an intense competition that businesses faced in Sports industry. The companies and marketers have to be stylish and functional at the same time to remain competitive. Within this industry, Adidas and Nike are two prominent names across the world countries. Adidas and Nike are the most significant brand names in the minds of customers.