Running With a Cheaper Sneaker. Will a half-price athletic shoe get respect in a market where status equals cost? FOOTNOTES ON FASHION

GEORGE LOIS is facing a question that isn't even supposed to exist. ``Is it OK,'' the New York adman asks, ``to pay one-half the amount for a great product?'' Pretty soon he'll have an answer. Mr. Lois has signed on to do the ads for a new brand of basketball shoe called Phoenix. The manufacturer says the shoe will offer the quality of today's trendy models at a much lower price. The effort says a lot about the strange economics of a consumer culture, especially in the inner city.

Textbooks say that competition brings down prices. And if there's competition anywhere, it's in athletic-style shoes.

But basketball shoes aren't like beans in Adam Smith's England. Once kids wore a pair of P.F. Flyers or Keds until they fell apart. Today these shoes - you can hardly call them ``sneakers'' - are a fashion item, a symbol of status and taste. As any kid can tell you, the more they cost, the ``badder'' they are.

Today, the hot shoe is the Nike Air Jordan, which looks like a space boot and sells for about $110. New Balance has a $150 entry, which Nike will challenge this fall with a $160 model that inflates for a perfect fit.

``It's gonna sell, I guarantee you,'' says Young Kim, who owns the Wing Foot store in Queens, N.Y. Mr. Kim predicts a $200 shoe by 1990.

The inflatable shoe represents inflation of another kind, arising not from oil prices or government deficits, but from life-style expectations and sophisticated marketing. Worse than the burden on family budgets is what happens when the money doesn't come from Mom or Dad. Some kids work to support their shoe habit, but others deal drugs, collecting high-price shoes the way drug kingpins collect Mercedeses and fine suits.

``They come in with cash,'' says Michael Gonzalez, manager of the City Athlete on Orchard Street in New York's Lower East Side. ``I don't know where they get it,'' he adds with a knowing laugh.

A low-cost shoe that didn't make kids feel like chumps would be like a tax cut for their parents. And it would diminish a bit the pressure on youngsters to run ``crack'' to passing cars.

That's what Roberto Muller, the Phoenix president, has in mind. With aviator glasses, Latin accent, and slicked-back hair, Mr. Muller could have stepped out of an Italian movie. But when he talks about the shoe business, as he did at a press conference last month, he has the zeal of a William Jennings Bryan.

Technically, he says, it's possible to produce a high-quality basketball shoe that sells for $30 or $40. But the big companies are playing a different game. They devote huge amounts to advertising and promotion and - he claims - cumbersome distribution systems. They push pictures in the mind, not more quality on the foot.

Wing Foot's Kim used to work in shoe factories in South Korea and says the cost of making a shoe of quality there is about $20 a pair. The difference between that and the price tags in the United States is largely promotional hype, he says, such as multimillion-dollar endorsement contracts for pro players.

Muller's idea is to prick the promotional balloon: Produce a solid if unexceptional shoe, avoid expensive TV ads, ship right off the boat to stores like Sears and Penney's, and sell it to people ``who don't get rich by trading paper on Wall Street.''

``We want the kid to feel he can play on the playground with the kid playing in Converse or Adidas,'' Muller says.

In such an image-intensive business, however, it takes hype even to sell anti-hype. So Muller hired Lois, an irreverent basketball fan who helped make Volkswagen a symbol of utilitarian chic in the 1960s. Muller also signed Patrick Ewing, the all-star center of pro basketball's New York Knicks. He calls Ewing a hardworking player who is ``very much the image of what the consumer of this product is.''

The first question, of course, is whether the shoe is any good. The model shown at the press conference looked OK for the court, though just passable for the street. Kim thinks it needs work. ``Ewing is one of the best players, but you have to make me a decent-quality sneaker,'' he says.

That aside, the more basic problem is selling utility when people are buying prestige. This puts Phoenix in the marketing netherworld between fashion and anti-fashion. Lois talks about conjuring a ``new social status,'' as he did with the Volkswagen. ``A black kid in Harlem doesn't have to pay $100,'' he says. ``He can dig up 40 bucks and feel good.''

But Volkswagens didn't sell everywhere. Whether a no-nonsense basketball shoe will isn't at all clear. For some, basketball shoes aren't just shoes. They're a touch of class, a consumer high. They are attached to the wearer and therefore harder to steal than, say, a leather jacket. (Though in New York, even shoes aren't safe.) Street gangs mark turf by wearing particular brands.

High price is part of the aura. ``That's definitely a big part of it,'' says David Fabricant, a New York high school student who worked at Paragon, a major shoe retailer.

A Phoenix marketing rep spoke hopefully of a resurgence of moderation. But a few blocks away, the New Balance $160 model was going out the door as fast as it came in. ``They go like crazy,'' says Rich Boerio, manager of US Athletes on 23rd Street.

Muller is realistic. ``We're not going to break the inner-city kids,'' he says. ``I'm going for middle America.''

So it's like the Cheryl Tiegs clothing line at Sears - middle-class class. Which might still be good news for parents. But it leaves the inner city with a problem.

The shoe companies aren't about to stop selling their most profitable products there. ``We honestly can't think of anything reasonable we could do to prevent it,'' says Liz Dolan, a spokeswoman for Nike.

Kim thinks they don't have much choice. They spend so much on endorsement contracts and the like, he says, that ``they have to make a very expensive product in order to run their business.''

So the pressures on kids to get that cash will continue. ``The person who doesn't wear the [expensive] shoe will have a very bad feeling,'' Kim says. ``That's the saddest thing.''

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