The Making of the Shoe

Steps and Price Breakdown

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Step 1: The Design Process                    

-establish target price, target audience and product features

-produce "tech package" to send to subcontractors in factories in Europe and Asia

Step 2: Supplies

A. Raw Materials

-fabric

-plastic

-rubber

-foams

-metallics

B. Textiles and Leathers

Step 3: Manufacturing

-cutting

-sewing (of upper section above the sole)

-stock fitting (prepares the sole)

-lasting (prepares attachment of upper to the sole)

-heeling (attaches and shapes heel bottom to final form)

-finishing

-treeing (attaches accessories)

After the manufacturing process, the shoe is then shipped to distribution and trading companies where it is then distributed to retailers and sold to consumers.

Summary: Price Breakdown *As noted in the article "Sweating For Nike"

Using a typical Nike Shoe from production to retail:

-Production Labor $2.75

-Materials $9.00

-Rent, equipment $3.00

-Supplier's operating profit $1.75

-Duties $3.00

-Shipping $0.50

-Cost to Nike $20.00

-Research and Development $0.25

-Promotion and Advertising $4.00

-Sales, Distribution Administration $5.00

-Nike's operating profit $6.25

-Cost to Retailer $35.50

-Retailer's Rent $9.00

-Personnel $9.50

-Other $7.00

-Retailer's Operating Profit $9.00

-Cost to Consumer $70.00

Based on these calculations, the consumer pays an additional seventy percent between what it costs Nike to make the shoe and the price sold on the market. The majority of this mark up is used by Nike and other branded athletic footwear industry to pay for the development of an image. This marketing strategy is what Nike has perfected and is the reason why it continues to be a leader in such a competitive industry. Nike is selling, not only a shoe, but the idea of