Introduction

NIKE is one of the well-known brands in the world. NIKE, pronounced NI-KEY, is the winged goddess of victory according to Greek mythology. She sat at the side of Zeus, the ruler of the Olympic pantheon, in Olympus. A mystical presence, symbolizing victorious encounters, NIKE presided over history's earliest battlefields. A Greek would say, "When we go to battle and win, we say it is NIKE." Synonymous with honored conquest, NIKE is the twentieth century footwear that lifts the world's greatest athletes to new levels of mastery and achievement. The Nike company began in 1964 as Blue Ribbon Sports,

was founded by University of Oregon track athlete Phil Knight and his coach Bill Bowerman, first distributing Japanese brand of running shoes in the USA. 1972 was the first year of using the famous mark known as the Swoosh on Nike's first line of footwear. The rest is history. The NIKE 'swoosh' embodies the spirit of the winged goddess who inspired the most courageous and chivalrous warriors at the dawn of civilization. NIKE designs, develops, and sells a slew of products and services to help in playing basketball and soccer (football), as well as in running, men's and women's training, and other action sports.

Under its namesake brand, NIKE also markets sports-inspired products for children and various competitive and recreational activities, such as golf, tennis, and walking, and sportswear by Converse and Hurley. NIKE sells through more than 800-owned retail stores worldwide, an e-commerce site, and to thousands of retail accounts, independent distributors, and licensees. Chairman Philip Knight controls the company. .Other than that,  Nike is well known and popular in Youth culture, Chav Culture and Hip hop culture as they supply urban fashion clothing. Nike recently teamed up with Apple Inc. to produce the Nike+ product which monitors a runner's performance via a radio device in the shoe which links to the iPod nano. The brand alone is valued at $10.7 billion making it the most valuable brand among sports businesses. The Nike company has been taking an active and leading role in supporting, sponsoring and organizing sports events, like Nike Prefontaine Classic, Nike is also the official sponsor for the Indian cricket team, sponsors famous soccer clubs such as Arsenal, Manchester United, Barcelona, Valencia, Inter Milan and Juventus, various minor events including Hoop It Up (high school basketball) and The Golden West Invitational (high school track and field).

Reasons of choosing NIKE as the research company :           

• NIKE is one of the well-known brands in the world
• NIKE Company is a very reliable company because it has been operating the market for years.
• Products produced by Nike Company are quality assured.

The objective of the research 

• To understand the demand factors of the NIKE shoes.
•  To determine the price elasticity of NIKE shoes.

The problem statement of the research 

1. What are the demand factors of NIKE shoes? 
2. Why the consumers purchase NIKE shoes? 
3. Will the consumers purchase more NIKE as the income level is getting higher?
4. Will the consumers continue purchasing NIKE shoes if the price of other sport shoes brands      decreases?

The limitation of the research 

1. Being rejected by respondents. 
2. The survey form were distributed to some respondents but were refused to answer. 
3. Some of the respondents fill it simply without thinking carefully.

Market Competiton

          The market competition of NIKE Company is categorized as monopolistic competition. Monopolistic competition is a market structure in which many firms sell a differentiated product, into which entry is relatively easy, in which the firm has some controls over its product price, and in which there is considerable nonprice competition. (Flynn, 2012)

            There are several characteristics of NIKE Company that have caused the NIKE Company to be categorized as monopolistic competition. First of all, there are fairly large numbers of firms (Flynn, 2012)in the sport shoes industry. The NIKE Company determines its own pricing policy (Flynn, 2012) without considering what the reactions of the competitors will be. Secondly, the NIKE Company distinguished themselves from competitors by product differentiation. (Flynn, 2012) NIKE Company produces products with is homogenous with the competitors but different in the appearance, design, comfortably and quality. In addition, the companies in the sports shoes industry are easy entry and exit. (Flynn, 2012)  The companies which invest in this industry do not need a large capital to enter the market. However, NIKE Company is successfully stood out from all competitors because of its product differentiation. Next, monopolistic market company is price maker. NIKE sets the price of its products without the need of following the market price as its competitors because its products are unique. Last but not least, in the long run, the company would have a normal profit. Based on the theory, NIKE Company would have a normal profit in the long run too.

Methodology

First, the discussion among the group members has been held and the topic” Demand and Supply” has been chosen. All the group members have agreed to choose ‘NIKE’ as the research company. In order to conduct the survey to determine the factors of demand and supply, all members have created a survey form with many forms of questions regarding to the NIKE shoes, for example the reasons of purchasing NIKE shoes, the ratings for NIKE shoes and so on. After that, the members had edited the survey form after seeking the advices from tutor and the fully completed survey form has been printed. Then, the members have carried out a survey at Taylor’s University Lakeside Campus and the survey forms have been distributed to the 10 students of Taylor’s University. Lastly, the survey forms were collected then and there; the results were evaluated, interpreted and analyzed.

Based on the survey form, there are many factors that will affect the demand of the NIKE shoes. First of all is the price. Price of the NIKE shoes has been taken into consideration by consumers when purchasing NIKE shoes. Besides, the factors such as quality, design, brand, fashion, and preference in sport shoes have affected the consumer before purchasing NIKE shoes and those factors have caused the changes in the demand curve. However, those factors are depending on individuals’ preference and interests. Those factors show that what consumers see in the NIKE shoes that cause consumers to purchase it. In addition, the income level is important as the ability of the consumers to purchase NIKE shoes mostly depends on the income. Last but not least, the substitute of other brands is one of the important factors that could affect the demand of the consumers towards the NIKE shoes. This is because the consumers might think of other brands with the lower price that could offer them the same function of NIKE shoes.

Finding & Analysis

      According to the survey that has been conducted towards teenagers’ ages raging between 18-20 years old, 80% of the teenagers have NIKE shoes whereas the other 20% of the teenagers don’t have NIKE shoes. This has been shown through pie chart A.

Pie chart A

 There are several factors that teenagers will purchase NIKE shoes or any other sport shoes, such as the quality, design, fashion trend, brand of Nike shoes and the preference in sports shoes of consumers. Referring from pie chart B, 70% of teenagers will choose to purchase NIKE shoes from any other sport shoes is due to the quality of the shoes. But the majority, which is 27% of the teenagers, purchased NIKE shoes, is due to the design of shoes. Another 20% of teenagers look at the brand as a purchasing magnet while the other 17% of teenagers purchase them because of the trend and how fashionable is the shoes. Lastly, 13% of teenagers come from the great preference in sport shoes.

Pie chart B

Besides, price factor is also taken into consideration by the consumers before purchasing Nike shoes or other shoes. Based on the survey that has been conducted, there are 80% of the teenagers who will consider buying Nike shoes if the price were to decrease, whereas the other 20% of the teenagers will not consider about it. As a result, when the price of Nike shoes decreases, the number of people purchasing this product increases. Thus, the demand for Nike shoes is elastic.

Pie chart C

In addition, the income of the consumers will definitely affect their decision in purchasing NIKE shoes. In pie chart below has shown that 80% will purchase NIKE shoes when their income increases. According to the analysis, people tend to purchase NIKE shoes is because the shoes are awesome and worth it. The reason in the increase of teenagers purchasing NIKE shoes is because of the increase in their income. Therefore, Nike shoes are normal goods.

Pie chart D

 Competitions in the market now are getting fierce because of the increasing amount of substitute goods in the markets. According to the survey there are 70% of teenagers will consider of purchasing Nike shoes even though other brands lower their prices. This is because of the good quality of Nike shoes and brand loyalty. There are 30% of teenagers that will not consider of purchasing Nike shoes because they would like to purchase sport shoes at a lower offered by the other companies. This is clearly shown in the pie chart E.

Pie chart E

Last but not least, pie chart F shows the ratings of the Nike that has been rated by the people during the survey. Substitute goods are inelastic in this survey due to brand loyalty as stated before. There are 20 % of teenagers have rated 4-6 for Nike,50% of the teenagers have rated 7-8 for Nike while 30% of teenagers have rated Nike with the highest rating, which is 9-10.

 Pie Chart F

Conclusion 

To wrap this up, Nike is an elastic demand because Nike is heavily influenced by the price of the product. When the price of the product decreases, the demand is higher while the price of the product increases, the demand of product is lower. When the income of consumer increases, the demand of the product will be higher as they are willing to spend more proportion of their income. Besides, the most influential demand factor is Quality. Most of the consumers prefer products with high quality because they have a high standard of living. Moreover, consumers of Nike still choose to continue consuming Nike products even though the substitute goods is lower in price due to brand loyalty and the good quality in Nike products. In addition, the majority of consumers have rated NIKE products in the rating of 7-8, it shows that the satisfaction level of the consumers towards Nike products is above average. In order to improve this research, more surveys are encouraged to be conducted. The increase in surveys number will help to analyze the demand of the product and the results of the research will be more reliable. Furthermore, questions in the survey must also be simple and easy to understand because consumers might have different interpretation if the questions are too complicated. Besides, negative feedbacks should be accepted with an opened heart because it will help to improve the performance of the company in the future.  Last but not least, surveys are vital so that the firms will get to have greater understandings in the consumers’ behavior and consumers’ opinions will be heard.

References

• nikeinc.com/pages/about-nike-inc(n.d) About Nike Inc. [online] Available at: http://nikeinc.com/pages/about-nike-inc  [Accessed: 4 May 2013]. 
• nike.com (n.d) About Nike Inc. [online] Available at: http://nike.com [Accessed: 4 May 2013]. 

• Deviga, V. and Karunagaran, M. (2007) Principles of Economics. Selangor : Oxford Fajar, p. 150-153, 174-175.