08/23/2012 05:17 pm ET Updated Oct 23, 2012

What Small Business Owners Can Learn From Nike's Lebron X Brand Pricing Controversy

The clothing, footwear, sportswear, and equipment giant, Nike, is under scrutiny over a recently announced product line -- the LeBron X, which is slated to hit stores this fall, with shoes that will retail at a $315 price point -- the most expensive shoe marketed by the company to date.

The specific LeBron X version (in current debate) is estimated to comprise twenty percent of sales coupled with a standard (lower-priced) offering. Nike spokesman Brian Strong recently clarified that the main version of the shoe would come at a significantly lower price point. "The LeBron X will be launched in the fall at a suggested retail price of $180," Strong said, in a statement.

"The initial introduction of the LeBron X will be the red, white and blue Nike+ enabled version and that price is still being set, but will be at a higher price to reflect the Nike+ technology embedded in the shoes."

Nike’s LeBron X Controversy

Loyal Nike customers await the new launch with bated breath.

However, the premium-priced LeBron X product line has been met with marked criticism from advocacy groups and consumers. Some argue that Nike’s pricing strategies are insensitive.

National Urban League President Marc Morial has urged Nike to drop plans to release its LeBron X sneakers,” according to recent reports. “To release such an outrageously overpriced product while the nation is struggling to overcome an unemployment crisis is insensitive at best,” Morial said in a statement.

Reportedly, the president of the National Urban League has taken 'incessant phone calls and emails' from angry consumers who can't afford the new shoes.

The Bigger “LeBron X” Picture

Recent events have left members of the small business community, including myself, wondering: Should we persecute Nike for marketing a segment of their new product line at a high price point, amidst economic uncertainty?

The entire debate leaves me a bit confounded, with one predominate thought:


Can we revisit the for-profit business model for a brief moment?

Nike brand marketers aren’t plotting evil deeds -- they’re simply doing their job and navigating the challenges that face most businesses -- rising costs, global macroeconomic pressures and slowdowns.

Market leadership and premium brand positioning are rare commodities. Any entrepreneur endeavoring to build a world-class brand understands this. Particularly, footwear marketers operate in a dynamic, competitive environment that is highly fragmented.

To address these pressures, many premium brands such as Nike, Louis Vuitton, Tag Heuer, Mercedes-Benz and others employ a diverse pricing strategy to reinforce positioning and drive sales.

Ultimately, a company’s pricing strategies and subsequent sales are based on what the market can bear.

If you cannot “bear it,” don’t buy it.

It’s My Company and I’ll Charge What I Want To

“Clearly Nike needs no tutorship in selling athletic gear; the company made $20.9 billion last year.”

But, finding the right pricing strategy can seem elusive for any business. Inevitably, you will encounter mixed reviews from consumers who may argue, “You’re priced too high? That price isn’t worth the investment?”

Pricing is one of the most challenging dilemmas any company will face. Testing price sensitivity in market is no easy feat -- just ask Nike.

A wide array of variables impact pricing decisions and further market acceptance. This is why it is essential for entrepreneurs and marketers to know, with laser-focused precision, who their customer base is and why they buy your brand. You may find that your brand appeals to multiple audience segments. If so, prioritize accordingly.

Spark conversations with your actual customers early and often, and qualify market perceptions. Most importantly, before you set prices, use qualitative and quantitative research to validate your pricing strategy.

When in doubt -- test.

Should Small Businesses Yield to Pricing Criticism?

Many arguments surrounding the pricing of Nike’s LeBron X product line are tied to the perceived insensitivity of Nike releasing a premium product in a challenging economic environment.

If this is a logical argument, then every company in America could be deemed “insensitive.” In fact, possibly all prestige products should be pulled from the market completely?

Not quite.

Is it socially “irresponsible” to launch a product line with varied price points, including value-based and premium-placed products? No.

Should we blame (or persecute) a company for misaligned financial decisions made at a household level?

No, again.

Instead of penalizing for-profit businesses for producing, distributing and marketing premium products, it would benefit us (as consumers and entrepreneurs) to address the root of the issue: financial education.

As a consumer, I take responsibility for my own actions.

In layman’s terms, you should not buy what you cannot afford and then blame the company who sold it to you. It’s a bit insensitive, don’t you think?

The new LeBron X shoes will hit stores in the fall.

Consume wisely.