What it is
A customized shoe costs more than the same shoe off the shelf. The question was how much more, and why.
The reset plan that Khounlavong inherited had answered part of it. The strategy deck of May 2017 moved the platform from one upcharge of $40 to $45 over the regular shoe to two global pricing tiers, $20 and $40. Its stated aim was to match what consumers expected to pay for the value they got.
The same plan organized the line in three product tiers: essentials, seasonal premium and studio.
What Khounlavong did
- Wrote a one-page pricing framework, dated October 10, 2017 and marked work in progress, that gave each of the three product tiers its own upcharge.
- Set essentials at $20 over the regular shoe. The consumer changes color. The example on the page is Gear Up, the team color program for performance basketball.
- Set premium at $30. The consumer gets color, material and a brand story. The example is the Shield pack, the holiday 2017 story on running shoes.
- Set studio at $40. The tier adds an event or collaboration, or a new innovation. The example is the ACG Mowabb made with Pendleton and the collector Jay Gordon.
- Developed the framework with the product creation team, as his record of the year states.
- Applied it in the seasonal plans sent to the geographies. The fall 2018 broadcast of October 2017 notes that the Minerals color story carried essentials pricing. The spring 2018 plan marks the Epic React at a $40 upcharge.
- Listed pricing among the strategies the merchandising function owned, in his functional summaries of November and December 2017.
- Kept pricing on the agenda. His fiscal 2019 to 2021 plan names "own launch and pricing" as an enabler and calls for easier pricing execution in the geographies.
Results
- His record of fiscal 2018 lists the new consumer pricing framework among the strategies implemented.
- The job description for his seat, dated July 2018, makes the line plan framework, pricing and flow the core merchandising principles of the role, weighted at 20% of the job.
- The documents do not measure the effect of the framework on revenue or margin.
At a glance
| Project type | Pricing strategy |
|---|---|
| Industry | Athletic footwear, digital customization |
| Seat | Senior Merchandising Director, Nike By You (Global) |
| Ran through | Nike |
| Dates | October 2017 |
| Scope | Global, four geographies |
| Related pages | Jimmy Khounlavong, Nike By You: a rebrand executed mid-flight, Fall 2019 line plan framework |
| Principal | Jimmy Khounlavong |