Supply and demand is an economic model, which helps the business in determining the price of the products in the market. Nike is not exceptional as it applies the same model in determining the prices of its products in the market. Nike Company is among the largest companies globally offering sporting materials and equipment ( Macchion et al., 2017 ). Considering the recent annual sales of athletic shoes in the company, ii increased by 4% as per the fourth quarter ended 31 May 2017 while the selling, administrative, and general expenses fall by 4% to $2.7 billion. Prices derived from https://store.nike.com/us/en_us/pw/mens-lifestyle-shoes/7puZoneZoi3
| Price $ in ( X 10) | Demand | Supply |
| 100 | 0 | 100 |
| 90 | 10 | 90 |
| 80 | 20 | 80 |
| 70 | 30 | 70 |
| 60 | 40 | 60 |
| 50 | 50 | 50 |
| 40 | 60 | 40 |
| 30 | 70 | 30 |
| 20 | 80 | 20 |
| 10 | 90 | 10 |
| 0 | 100 | 0 |
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Despite the stiff competition faced by Nike in the market, the company managed to satisfy the needs of the market by achieving the equilibrium level. Nike sustains the competition in the market by supplying quality products at affordable prices ( Bandi, Moreno, & Xu, 2017 ). Additionally, the company is motivated by the higher demand for quality products in the market, which is supplied at higher prices.
Price elasticity of demand is a model used in economics to determine the elasticity or the response to the demand of the product about the changes in prices. According to the rule of supply and demand, when the demand is high, the prices are higher, and when the supply is higher, the prices are lower. In the case of Nike Company, the company enjoys the monopoly in the market, as minor changes are experienced as a response to the changes in supply and demand ( Macchion et al., 2017 ). The demand for Nike athletic sports shoes is price inelastic as minor change are experienced in quantity demanded when the prices are increased or reduced in the market.
Quality of the product is the major factor that determines the customer responsiveness to the price changes of athletic sports shoes in the market. The demand for the products remains high despite the increase in the price of the products.
Since the demand for the product is price inelastic, the company has the liberty to increase the prices as per the quality of the products supplied in the market. When the quality of the product is improved, the company will increase the prices without affecting the demand for the product ( Bandi, Moreno, & Xu, 2017 ). The revenue received by Nike Company from the product increases steadily, as the quality of the products remains higher while the price increases.
References
Bandi, C., Moreno, A., & Xu, Z. (2017). The Hidden Costs of Dynamic Pricing: Empirical Evidence from Online Retailing in Emerging Markets.
Macchion, L., Danese, P., Fornasiero, R., & Vinelli, A. (2017). Personalisation management in supply networks: an empirical study within the footwear industry. International Journal of Manufacturing Technology and Management , 31 (4), 362-386.
