Cut to 1963. Phil Knight travelled to Japan on a world-tour, filled with the wanderlust of young men seeking a way to delay the inevitable call of professional life. Seemingly on a whim, Knight scheduled an interview with a Japanese running shoe manufacturer, Tiger--a subsidiary of the Onitsuka Company. Presenting himself as the representative of an American distributor interested in selling Tiger shoes to American runners, Knight told the businessmen of his interest in their product. Blue Ribbon Sports--the name Knight thought of moments after being asked who he represented--was born. The Tiger executives liked what they heard and Knight placed his first order for Tigers soon thereafter.
By 1964, Knight had sold $8,000 worth of Tigers and placed an order for more. Coach Bowerman and Knight worked together, but ended up hiring a full-time salesman, Jeff Johnson. After cresting $1 million in sales and riding the wave of the success, Knight devised the Nike name and trademark Swoosh in 1971.
By the late '70s, Blue Ribbon Sports officially became Nike and went from $10 million to $270 million in sales. Katz (1994) describes the success via Nike's placement within the matrix of the fitness revolution: 'the idea of exercise and game-playing ceased to be something the average American did for fun,' instead Americans turned to working out as a cultural signifier of status. Clearly, the circumstances surrounding the shift are not this simple; it is one of the aims of this project to discover other generators of popular attention to health.
If Nike didn't start the fitness revolution, Knight says, "We were at least right there. And we sure rode it for one hell of a ride" (Katz, 66). The 80s and 90s would yield greater and greater profits as Nike began to assume the appearance of athletic juggernaut, rather than the underdog of old. "Advertising Age" named Nike the 1996 Marketer of the Year, citing the "ubiquitous swoosh...was more recognized and coveted by consumers than any other sports brand--arguably any brand" (Jensen, 12/96). That same year Nike's revenues were a staggering $6.74 billion. Expecting $8 billion sales in fiscal 1997, Nike has targeted $12 billion in sales by the year 2000. And all from the back of a car
The following information was gathered from various sheets of Economic schoolwork.
Law Of Demand:
The Lower the price, the higher the quantity demanded and the higher the price, the lower the quantity demanded.
Price
Quantity Demanded
The diagram shows the price increasing and so theoretically, the quantity demanded will decrease and vice versa for a decrease in price. The only thing that causes a movement along the Demand Curve is a change in the price itself, otherwise it causes a shift.
According to the law of Demand I think that there will be a relatively large response by consumers if there were a change in price therefore I think it is relatively elastic. I think this because I am considering the other brands at competition on the market with Nike. They are substitute goods, which consumers may buy in place of Nike trainers because of an increase in price, but if the price decreased, Nike would probably substitute the normal buyers good because the buyer is being rational by choosing the cheaper good.
Income may affect the amount bough because if, for example, someone is made unemployed, they will obviously have less money to buy Nike trainers which could be considered as quality. And so, they will have to substitute Nike for a less expensive brand of trainers.
Law of Supply:
The higher the selling price the greater the quantity of the good which will be supplied, and the lower the selling price the less the quantity of the good which will be supplied.
Price
Quantity Demanded
The diagram shows a movement along the Supply curve which is caused by a change in the price of the good itself.
Price
Quantity Demanded
On the other hand this diagram shows a shift in the Supply curve. This happens when some way or another there is a change in the Quantity Demanded with the price remaining constant. These factors could be:
- A change in the price of other goods
- Government legislation
- Expectation of future events
- Technology
- Weather, changes in climate
According to the Law of Supply, I would expect that if Adidas trainers increased in price, Nike would increase their quantity supplied.
I do not expect that if Nike increased their quantity supplied to consumers that this would encourage people to buy more as consumers are not really interested in how many trainers will be provided.
Equilibrium:
This refers to a situation where there is no tendency towards change. At a point of equilibrium, producers are selling all of their output so there is no need for them to reduce their selling price. Similarly, all those people who are willing to buy the product can be accommodated by the supply available.
The factors that could cause the equilibrium price to change are:
- Change in the costs of production
- New firms entering or existing firms leaving the industry
- Consumers in general becoming beter off
- A change in the price of other goods (substitute, complementary)
- The good in question becoming more or less fashionable
Price
Quantity
Sometimes, in the situation of Equilibrium excess supply and excess demand can occur. Excess supply is when the quantity supplied is greater than the quantity demanded which usually results in a price decrease. On the other hand, excess demand is when the quantity demanded is greater than the quantity supplied, which usually results in a price increase.
Now…
I asked, all together seven people from the street, ten questions related to trainers, it will be interesting to see the results.
Looking at the responses of my questionnaire, I can conclude that:
- From question 1, I know that there will be a relatively large response if the ‘price of a pair trainers goes up by £10’ so they are therefore relatively elastic.
- From question 2, I know that there is a cross between buying these trainers and finding another pair, which suggests I asked different people with different fashion ideas.
- From question 3, I know that a small increase in income doesn’t have much effect whether someone buys more or less trainers, which shows that maybe people aren’t very bothered about buying more trainers. Again, the answer differs on the type of people I asked.
- From question 4, I know that a large increase does not affect greatly the amount of trainers someone buys. This does not agree with my other answers. This suggests that the product is relatively inelastic. Could my results be biased?
- From question 5, the results tell me that a small decrease does not affect the amount of trainers bought which is what I would expect.
- From question 6, I do not think it is surprising that most people will buy fewer trainers in response to a large decrease of their income. This suggests the product is relatively elastic.
- From question 7, I know that most people would buy an unfashionable pair of trainers from 20% cheaper than when they were fashionable. I think they are being rational about the situation.
- Question 8 tells me that most people would like to buy a fashionable pair of trainers that were less expensive than other trainers but then again this is what most people would want.
- From question 9, I know that the rational consumer would rather wait until the ‘sale in three months’ to get the trainers even though they may not be the fashion any more.
- The last question is almost balanced telling me that most people would stick to their favourite brand yet others would buy the cheaper trainers. I would not have expected this.
I think that looking back at the responses of my questionnaire, most of it was balanced, perhaps just a few biased results perhaps. I think that the main reason for this could be that I interviewed to few people. I f I had more results I would see more patterns forming yet with few people the results can go either way.
is a website reviewing the trainers I am studying. Apparently, these trainers have taken a long time of research and public response to get right. Many trainers had been created before these to try and achieve a goal, but unfortunately ‘were not liked by customers as much as predicted.’
Relating the Questionnaire to the Hypothesis
I think that, from the Questionnaire, the trainers are relatively elastic. I know that some answers disagreed with this statement but on average, this is correct. I think that the age group of people I asked determined the results I got. I asked a variety of different aged people. Two people were quite old and I asked three middle-aged people, finally I asked two young people probably still in their teens. The younger people may have answered the questionnaire relating to being in fashio, on the other hand, the older people may not be worried about fashion but mainly concerned with price or comfort. I don’t think I got any definite results as I asked too few people of a variety of ages. I think it would have been better if I asked more people from the same age if I were only going to interview seven people. I think I would have got a more definite result.
I think that question four was the most surprising:
This is surprising because it does not agree with the other questions, which suggest the product is relatively elastic. I think that this question is biased and that maybe someone gave a false answer or I marked it down wrong. If I had more answers this would not be a problem.
I find it interesting to know that Nike started from selling trainers from the back of a car. My History and timeline information was obtained from
I think that most of my results tell me that price and income are very much concerned with Nike trainers. I think that this is mainly because there are so many substitute goods which are willing to provide their customers with an adequate pair of trainers at a different price or different style (fashion).
