Critics of Nike often complain that its shoes cost almost nothing to make, yet they are priced so high. Identify the elements of providing and communicating value that add to Nike's cost structure and result in the high price of Nike shoes.
Answer: Although the raw materials and manufacturing costs of a sneaker are relatively low, marketing the product to the consumer is quite expensive. Providing value includes R&D costs and the costs associated with shipping to retail locations as well as the retailers' overhead. Communicating value includes obtaining celebrity endorsement and extensive advertising. Nike must also pay for a sales force that communicates the product's value to retailers and helps ensure that products are available in retail locations convenient to end consumers.