Proposal drafted for Texas-based athletic fashion startup Use of price range of equivalent goods from Nike based on athleticwear revenue streams (not accessories/footwear) to find best pricing in competitive environment

1. Athletic Fashion and Optimal
Pricing Strategy
Potential product placement under assumptionsof like-quality
athletic clothing lines
Image: Nike Womencampaign

2. 1. INTRODUCTION
We are in a new age of athletic fashion—from grassroots product lines to social media
placement, strategy, and influencer promotions (i.e. FashionNova) to large competitors
in the market space (UnderArmour, LuluLemon, Adidas, etc.) the appropriate course of
action given the scope of growing competition can be a very daunting task.
You can rest assured I will be able to help your product lines reach the next level
through meticulous analysis and attention to detail if you have current sales/revenue
data and product mix information where applicable.
This brings several questions:
1. What company are you aspiring to be?
2. How do you want to position yourself?
3. Do you have current copywriting/marketing collateral on hand?
4. What would be a proposed deadline for this?
5. Most importantly—when can I start?
2. UNDERLYING ASSUMPTIONS
For the sake of this study I will assume you will be trying hard to “eat Nike’s lunch” and,
therefore, have designed a simulation in which you would be hypothetically replicating
the revenue streams for Nike’s athleticwear lines and as such the revenue streams for
footwear and athletic accessories have been left out.
According to Nike’s most recent quarterly statement athleticwear from new retail sales
made up roughly 30% of their revenues. Given current market conditions and possible
long-term equitability from your fashion brand this study and Monte Carlo simulation
producing is designed such that Nike’s revenue streams will have a 10% margin of error
resulting in a range of roughly 20-45% of Nike’s revenues. This combined with current
income per capita data from the St. Louis Federal Reserve from 2015-present and
current Nike products being sold in a range of $15 to $150 from a topical glance for
similar goods.
3. OPTIMAL PRICING STRUCTURES GIVEN SIMULATED REVENUE STREAMS
From the data and process used it can be stated that the suggested optimal retail price
at launch should be roughly $75 and advertised to a household income level of roughly
$53,500/yr as shown in the total revenue model depicted in Figure 1 on the next page.
58% of applicable simulated prices (price greater than 0) were in the range of $47 and
$75 while 28% lie in the range of $25 to $47. This may suggest where your target pricing
should be if you wish to produce a like-quality product from Nike’s catalog for your
product mix.

3. FIGURE 1
y = -3E-05x2 + 3.284x - 84782
R² = 0.9961
-200
-150
-100
-50
0
50
100
48000 49000 50000 51000 52000 53000 54000 55000
ATHLETICWEARTOTAL REVENUEMODEL WITH RESPECTTO
OPTIMAL RETAIL PRICES AND HOUSEHOLD INCOMES