As the popularity of the Nike brand grows, the demand for its products increases, which leads to an increase in the company’s revenue. On the other hand, Nike is a large company with 190 stores in different countries, which means that they have the capability to increase their supply of products to meet the demand. The price elasticity of demand for Nike products is relatively low. This means that changes in the price of Nike products have a relatively small effect on the quantity of Nike products demanded by consumers (Liu et al., 2021). This is because Nike has a strong brand reputation, and consumers are willing to pay a premium for Nike products due to the perceived quality and prestige associated with the brand.
Figure 1 below illustrates the supply and demand for Nike products, with quantity on the horizontal axis and price on the vertical axis. The demand curve is downward-sloping, showing that as the price of Nike products decreases, the quantity demanded increases (Jiang, 2019). The supply curve is upward-sloping, showing that as the price of Nike products increases, the quantity supplied by Nike increases. The intersection of the supply and demand curves represents the equilibrium price and quantity of Nike products.
The increase in demand for Nike products due to the ongoing global economic distress caused a shift in the demand curve to the right, from D1 to D2. This resulted in an increase in the equilibrium price of Nike products, from P1 to P2, and an increase in the equilibrium quantity of Nike products (Nike, Inc., 2022). Overall, the strong brand reputation and the low price elasticity of demand for Nike products indicate that Nike has a relatively stable market position and the ability to adjust prices as needed to maintain profitability.
References
Jiang, W. (2019). Sustainable development of supply chain in footwear industry – Take Nike as the case. Asian Business Research, 4(3), 1-11. Web.
Liu, X., Ma, L., & Zhou, Y. (2021). Supply chain management of Nike. International Conference on E-Commerce and E-Management (ICECEM), 2021, 437-441. Web.
Nike, Inc. (2022). Form 10-K [PDF document]. Web.