Nike price elasticity of demand

We use cookies to give you the best experience possible. It holds that when prices rise, the quantity demanded decreases whereas the quantity supplied increases. This is the universal law of demand and supply. The demand and supply curve is illustrated below showing the equilibrium price and quantity. Don't use plagiarized sources. However there are instances when prices are constant and only the other variable or determinants of prices vary.

In such a scenario, there is either a shift in the demand or supply curve depending on the prevailing circumstances.

In such a case the prices will be forced to fall due to pressure that is mounted on the quantity supplied without a proportionate increase in demand. This is the economic explanation of the behavior of demand and supply when any of the variables affecting either demand or supply changes.

In the same way, the rise in supply shifts the supply curve to the right thus causing the price to fall to 8. However the joint effect results into a change of equilibrium to a price of 13 and a quantity of This is just an example to exemplify the way the products of NIKE inc.

Price Elasticity Of Demand Between All Nike Shoes

The red curves represent the shifted curves. It should not be confused with a movement along the curves. Usually, a movement along the curve is due to a price fall or a price increase. In such a case, it is only the price that quantity demanded that will change.

Also, a movement along the supply curve follows from the change in prices that is a fall or rise in the price. Nike inc. This was a very common phrase in the s and early s. The innovativeness and creativity has led to increase in the supply and demand of the product. Following the discussion about demand and supply and shifts that arise from the forces of demand and supply of the products of Nike Company, there have many different many scenarios that have been observed in many parts of the world.

Sometimes, the prices have followed the laws of demand and supply but in other instances it has not. Therefore the prices do not generally have to increase.

But the company is not in a decline stage but at an expanding spree, for example the recent acquisition of the Umbro Ltd in England which has been a major supplier of soccer equipments.

Thus there is an increase in supply that follows from the increase in the demand for the product. Also, there has been generally fall in the price of the product of the company due to the forces of competition, improved technology, and other forces that would cause the products to trade unfavorably if its prices remained high. The real life situation has been that the there has been a shift in the demand curve to the right, that is a general increase in demand; prices increase.

There has also been an increase in the supply of the products following the expansion and growth of the company, thus generally, prices have gone down. The general equilibrium is that the price falls and quantity rises.

The revenue, even from reports supplied by the company show that profits have been increasing. But the revenue is not entirely out of the increases prices due to increased demand but it is partly from the increased quantity sold due to the increased supply of the product.

Economics: An Introductory Analysis. Accessed April 15, This is just a sample. You can get your custom paper from our expert writers. Chris Precht as the co-founder once said that we all lost the relation with nature and to enclose ourselves with nature, the studio comes out with the project proposal. So, we can encircle ourselves with nature even in the Different countries celebrate the ocassion on different dates like 11 September in Argentina, 15 October in Brazil as Teacher Appreciation Day etc.

The social penetration theory states that as relationships develop, communication moves from relatively shallow, non-intimate levels to deeper, more personal ones. It mainly concentrates on the developmentIn Germany, Nike was seen as a cool product brand, not as a performance partner. At the same time, we were seeing audiences move away from public social media-based conversations to the closed world of private messaging: Facebook Messenger, WhatsApp, etc.

This was particularly pronounced in Germany, where privacy is paramount. We kept athletes on track for weeks by serving each one of them with the best of Nike, based on their individual needs, all via chat. We delivered timely reminders, bespoke playlists, run routes, nutrition advice, training plans, motivation, and a whole lot more.

The qualitative messaging sentiment and quantitative activity data that we gathered during service hours was collected and analyzed twice daily, with teams in the US working though the European night to turn around actionable insights for the morning shift. These insights then formed the basis of bespoke motivation e. We used activity data, Nike experts and chat to get to know consumers individually and provide them with totally personalized nudges that changed their behavior, time and time again.

Over 6 weeks, we exchanged over 22K messages and enabled athletes to unleash their potential. Because Nike On Demand was human-driven, not a stale chat bot, we were able to send wake-up messages that got athletes out of bed, reminders that got athletes to the gym, messages that kept them on track. In return, our users shared personal stories about their lives and the motivations behind their goals, screengrabs of their accomplishments, even holiday photos.

Nike On Demand Nike. Winner, WhatsApp. Audience Honor Winner, WhatsApp. Silver, Innovation: Medium Innovation.Mastering managerial economics involves calculating values, with the ultimate goal of determining how to maximize profit. The usefulness of the price elasticity of demand depends upon calculating a specific value that measures how responsive quantity demanded is to a price change.

nike price elasticity of demand

The symbol Q 0 represents the initial quantity demanded that exists when the price equals P 0. The symbol Q 1 represents the new quantity demanded that exists when the price changes to P 1.

In this formula, the price elasticity of demand will always be a negative number because of the inverse relationship between price and quantity demanded. As price went up, quantity demanded went down, or vice versa. When price goes down, quantity demanded goes up. Price and quantity demanded always move in opposite directions, hence the price elasticity of demand is always negative. Suppose that you own a company that supplies vending machines.

At that price, customers purchase 2, bottles per week. Start by dividing the expression on top of the equation. Do the final division of the remaining values on the top and bottom of the equation.

The price elasticity of demand is simply a number; it is not a monetary value. What the number tells you is a 1 percent decrease in price causes a 1. Whenever the absolute value of demand is greater than one, price decreases will increase revenue. How to Determine the Price Elasticity of Demand.James Bullard — Bio Vita. In this report, find out how banks, foundations, CDFIs and others are engaged in impact investing in St. How is your community reflected in our work?

Louis Fed board and advisory council members share their perspectives. How elastic are rubber bands? There's more than one way to answer this question.

The word "elasticity" is commonly used to describe things that have a stretchy quality to them. You might try to answer the question by stretching a rubber band across your finger and shooting it across the room. To an economist, however, elasticity can have a whole other meaning. Learn more in this episode of The Economic Lowdown. Rubber bands are elastic and have a stretchy quality to them. But just how elastic are rubber bands? One way to answer that question is by stretching a rubber band across your finger and shooting it across the room.

However, to an economist, the elasticity or stretchiness, of rubber bands can have a whole other meaning. The economist would likely refer to how much the quantity of rubber bands demanded changes—or how much it stretches—when the price of rubber bands changes. The law of demand tells us that when the price of a good or service rises, consumers tend to buy less of it. Likewise, when the price of a good or service falls, consumers tend to buy more of it.

However, the law of demand does not tell us how much more or less consumers tend to buy. For some goods, the quantity demanded stretches a lot when the price changes: for others, not so much. It is a measure of how sensitive, or responsive, consumers are to a change in price. For any given good or service, the price elasticity of demand measures how much the quantity demanded by consumers responds to a change in the price of that good or service.

So a good that is price elastic has a very stretchy quantity response when there is a change in price. In economic terms, the quantity demanded of that good changes a lot when there is a change in the price of that good. Well, if the percent change in the quantity demanded is greater than the percent change in the price, economists label the demand for the good as elastic.

For example, if the price of a good increases by 10 percent and the quantity demanded of that good decreases by 20 percent, that good is said to have elastic demand. The quantity demanded has stretched a lot relative to the change in price. In such a case, consumers are considered sensitive, or responsive, to a change in the price of that good.

On the other hand, a good that is inelastic does not have very stretchy demand. In economic terms, the quantity demanded does not change a lot when the price changes.Economics Analysis of Nike Abstract Nike leads the market of athletic footwear and apparel. The company also offers other products such as sports equipment and accessories. This paper covers an economic analysis of Nike, and analyzes different economic aspects of the firm. The analysis reveals that Nike is highly impacted by demand and supply conditions, mainly their strategies are shaped in line with market demands.

The price elasticity of Nike's products is high due to the high number of substitutes available in the market such as Reebok-Adidas, Puma, and so on. Nike leads the market due to several business aspects that provides it a competitive advantage, including innovation, brand recognition, diversity, sustainability, quality, new and creative marketing campaigns, customized footwear, and continual improvement of the technology.

The company captures a greatest market share in athletic footwear and apparel. The best market structure that describes Nike position in the market is oligopoly. The company is expected to keep flourishing in future periods. Economics analysis of a company helps in identifying the impact of economic factors on the business. In addition, it supports in understanding the company's position within the market Quiry et al.

Thus, conducting an economic analysis of a company helps a lot in understanding the positioning and performance of a firm with respect to economic variables. This essay provides an economics analysis of Nike; covering various economic factors, including price elasticity of demand, competitive advantage, supply and demand, substitute, market share, and market structure.

The company sells athletic apparel and athletic footwear across the globe. Nike sells its products to retail accounts, via their personally owned retail stores as well as online sales and using a blend of independent licensees and distributors. It sells its product in around countries across the globe.

In addition, Nike also markets the products designed for children and for other recreational and athletic uses, for example cricket, baseball, football, cricket, golf, lacrosse, tennis, volleyball, outdoor activities, wrestling and walking Nike - Company Portfolio, ; Reuters, Nike designs athletic footwear products mainly for particular athletic use.

The firm sells sports accessories as well as apparels, and athletic accessory items and bags. Nike also markets apparel with licensed college and professional teams. Besides, company also sells performance equipments such as timepiece, devices, eyewear, sports balls, and several others.

Nike sells its products directly to customers via Nike Financial Plan www. Free research that covers company ownership nike Nike Functional Analysis www.

nike price elasticity of demand

Free research that covers introduction nike's Swot Analysis Of Nike www. Free research that covers abstract nike has e Nike In Malaysia www. This research paper is a summary of an invest Financial Analysis Of Nike www.

Price Elasticity of Demand and Supply | Graph & Examples

Nike Inc.This cross-price elasticity calculator helps you to determine the correlation between the price of one product and the quantity sold of a different product. Thanks to this tool, you will be able to immediately tell whether two products are substitute goods, complementary goods, or maybe entirely uncorrelated products.

In this article, we will provide you with a cross-price elasticity formula and show you an example of step-by-step calculations. Once you have learned how to calculate the cross price elasticity of demand, we recommend taking a look at the optimal price calculator. As mentioned before, the cross-price elasticity measures how the demand for a product let's call it product B changes if we change the price of product A. At first glance, the concept sounds a bit complicated, but we'll clarify it with a simple example.

Imagine that you are the owner of a company that produces both coffee capsule machines and coffee capsules. Now, let's analyze what will happen with the demand for coffee capsules. As you could expect, the drop in price will cause an increase in the quantity of sold machines. More customers will need your coffee capsules, so the demand for them will increase, too! This concept is similar to the price elasticity of demand - make sure to check it out, too!

Now that we know what this metric shows, it's time to learn how to calculate it. All you have to do is apply the following cross-price elasticity formula:. You can get one of three results: a cross-price elasticity coefficient that is positive, negative, or equal to zero.

A positive elasticity is characteristic for substitute goods. It means that as the price of product A increases, the demand for product B increases, too. For example, this can be true for butter and margarine; once the price of butter goes up, more people opt for margarine, increasing the demand.

This phenomenon is especially visible for situations in which only two competitors try to monopolize the market.

A negative elasticity is characteristic for complementary goods. When the price of product A increases, the demand for product B goes down.

nike price elasticity of demand

A good example would be the coffee machine and capsules situation described earlier: if you increased the price of the coffee machine, fewer people would be inclined to buy the capsules, hence decreasing the demand. If the elasticity is equal or very close to zeroit means that the two products are uncorrelated. The change of price of product A does not influence the demand for product B.

If you're still not sure if you understand how the cross-price elasticity works, take a look at the example below.

Cross Price Elasticity Calculator can be embedded on your website to enrich the content you wrote and make it easier for your visitors to understand your message. Get the HTML code. Omni Calculator logo Embed Share via. At timepoint 1. Price of product A. Demand for product B. At timepoint 2. Cross price elasticity. Products are Check out 2 similar microeconomics calculators. Optimal price. Price elasticity of demand.However, this does not mean the relationship between demand and price is equal across all types of consumer goods.

Some types of consumer goods display high price elasticity of demand, while others show very little. There are a variety of factors that determine a good's price elasticity of demand. These include such things as the essential or non-essential nature of certain goods, the availability of competitive substitutes, and the effect of a good's brand name and marketing. Consumer staples are a sub-category of consumer goods that are regarded as essential products.

Examples of this include food, beverages, and certain household goods. Consumers view these goods as primary and essential for life. These are the staples people are unable or are unwilling to eliminate from their budget.

Additionally, these products are non-cyclical, meaning they are needed and used year-round, not just seasonally. Non-essential goods, on the other hand, are products that are not absolutely necessary.

nike price elasticity of demand

Examples of non-essential items that consumers spend money on are impulse purchases, dining out, jewelry, and electronics. During financially difficult times, consumers frequently cut spending on non-essential goods, eliminating them from their budget. As a category of goods, essential goods have a low elasticity of demand. There will always be a need for consumer staples and a change in price is unlikely to impact demand. On the other hand, the demand for non-essential goods can fluctuate greatly.

The demand can plummet depending upon the economy and the overall financial situation of consumers. Because of this, non-essential goods have a high elasticity of demand. There are several important factors that influence a good's price elasticity of demand. If the good has plenty of competitive substitutes, elasticity tends to be greater because consumers can easily make a switch when prices rise too much.

More expensive goods also tend to be more elastic since consumers are more sensitive to purchases that take up larger proportions of their income. Within the category of consumer staples, the price elasticity of demand changes if the marketplace has responded by offering competitive substitutes or if the consumer is willing to accept a lower-priced product over another.

For example, hamburgers have a relatively high elasticity of demand because there are plenty of alternatives for consumers to choose from, such as hot dogs, pizza, and salads. Gasoline and oil, however, have no close substitutes and are necessary to power equipment and transportation.

These have a low price elasticity of demand.

Own-Price Elasticity of Demand

Brand names and marketing have a large impact on the price elasticity of demand as well. When comparing similar products with different price points, consumers may purchase the higher-priced product if their brand loyalty to that product is high.

Goods that are considered essential have a low elasticity of demand. Electricity, gas, oil, and water are all relatively inelastic because consumers rely on these as necessities rather than luxuries. Also, keep in mind that the price elasticity of demand is very time-sensitive. More consumers notice and react to price changes as time goes on, meaning price elasticity of demand tends to increase as time passes.

Behavioral Economics.


comments

Leave a Reply

Your email address will not be published. Required fields are marked *