Two examples of brands where manufacturing costs are well below the selling price are Apple

and Nike.

1. Apple

Apple is known for its premium pricing strategy, often selling its products at higher prices

compared to competitors despite relatively low manufacturing costs. Apple has been successful

in charging high prices to its consumers due to several factors:

Apple has cultivated a strong brand image associated with innovation, quality, and exclusivity.

Consumers perceive Apple products as premium and are willing to pay a premium price for them

(Koehn, 2017). Apple products stand out in terms of design, features, and user experience. The

perceived value of these features justifies the higher price point for consumers. Apple invests

heavily in marketing and branding efforts to reinforce its premium positioning in the market.

Through sleek advertising campaigns and store experiences, Apple creates an aspirational appeal

that drives demand and willingness to pay higher prices.

2. Nike

Nike is another example of a brand that charges premium prices for its products despite

relatively low manufacturing costs. Nike's success in charging high prices can be attributed to:

Nike is one of the most recognizable and trusted brands in the athletic footwear and apparel

industry. Its strong brand equity allows Nike to command higher prices compared to its

competitors (Vignali, 2001). Nike continually introduces innovative products and technologies

that enhance performance and appeal to consumers. The perceived value of these innovations
justifies the premium pricing strategy. Nike's marketing campaigns and high-profile

endorsements from athletes contribute to its premium image. By associating itself with top

athletes and promoting a lifestyle of athleticism and excellence, Nike creates a strong emotional

connection with consumers, influencing their willingness to pay premium prices.

Customer Information in Pricing Strategy

Customer information plays a crucial role in shaping pricing strategies for brands like Apple and

Nike:

Both companies utilize customer information to segment their target markets based on factors

such as demographics, psychographics, and purchasing behavior. This segmentation allows them

to identify premium customer segments willing to pay higher prices for their products (Chernev,

2018).

Apple and Nike use customer data to personalize their pricing strategies, offering customized

products, promotions, and pricing based on individual preferences and buying patterns. By

tailoring offerings to specific customer segments, they can maximize revenue and profitability.

Customer information enables Apple and Nike to implement price discrimination strategies,

charging different prices to different customer segments based on their willingness to pay.

Through dynamic pricing algorithms and targeted promotions, they can extract maximum value

from each customer segment while maintaining overall profitability.

Both companies leverage customer information to design loyalty programs that reward repeat

purchases and brand advocacy. By offering exclusive benefits and discounts to loyal customers,

they reinforce brand loyalty and encourage continued patronage at premium price points

(Hinterhuber & Liozu, 2014).

Conclusion

In summary, brands like Apple and Nike have been successful in charging high prices to

consumers despite low manufacturing costs by leveraging their strong brand equity, product

differentiation, and effective use of customer information in pricing strategy formulation and

execution.

References

Chernev, A. (2018). Strategic marketing management. Cerebellum Press.

Hinterhuber, A., & Liozu, S. M. (2014). Is it time to rethink your pricing strategy? MIT Sloan

Management Review, 55(4), 53-62.

Koehn, N. F. (2017). Brand new: How entrepreneurs earned consumers' trust from Wedgwood to

Dell. Harvard University Press.

Vignali, C. (2001). Nike: The global brand. Journal of Brand Management, 8(1), 16-28.