NIKE FOOTBALL SHOES

ECONOMICS
DEMAND FACTORS
DEMAND FACTOR #1: CHANGES IN INCOME
LEVELS

Disposable Income Disposable Income calculates the money available for •

consumers’ expenditures after subtracting the current tax. This factor
indicates that people would like to consume more money when the number
is higher. Source: Federal Reserve Bank of St. Louis When the disposable
income increases, people will have more money to spend, thus the
performance of the companies will benefit from the increasing spending
and S&P Index will also increase to some extent. The demand for the
consuming goods will also increases following the trend. Disposable income
in recent three years keeps upward trend. Currently it is 38,165 capita.
Our team expect that disposable income will increase to 42,000 capita for
long term. Nike Company will benefit the increasing demand for its
products and its domestic sales will boost up. Nike will also gain more sales
.for the short term
DEMAND FACTOR #2: CHANGES IN PRICES OF
RELATED GOODS -NON PRICE DETERMINANT-

• There are several football shoe industries that might affect the
demand of Nike football shoe. For instance, Adidas is a
competitive substitute to Nike. Where if the price of Adidas
football shoe increased, the points on the demand curve will
contract to the left and the demand curve of Nike football shoe
will shift to the right.
• On the contrary, if the price of the complements for a Nike
football shoe increases and the points on the demand curve
contracted to the left , then the demand for the shoe shift to the
left (decreases); for instance, if the renting of a football field was
expensive in an economy, then the demand for a football shoe
decreases and vice versa.
DEMAND FACTOR #3: ADVERTISING

• If NIKE were to make a successful advertising campaign for

football shoes, they will attract new consumers and encourage
existing ones to increase their demand on football shoes. And if
ADIDAS, being a rival for NIKE in the area of football shoes, were
to make a successful advertisement, the demand for NIKE football
shoes would decrease because they are substitutes.
DEMAND FACTOR #4: POPULATION

• The relationship between the population and the demand curve

for a nike football shoe is that as the population increases the
demand for a Nike football shoe increases causing the demand
curve to shift to the right. Because theoretically, greater
population equals to higher demand for a certain product.
DEMAND FACTOR #5: CHANGES IN TASTES
AND FASHION

• Nike needs to stay on the top of changes in consumer taste and

preferences as evidenced by changes in fashion. For instance, in the
football shoe field, the tastes had changed in 2015 where people
have declared that the trend is based on a superfly football shoe
with a fiber surrounding the ankle, moreover in 2018, the trend was
that the tastes have changed to develop a lace less shoe for
maximum productivity and zero time wasting in a game. Due to
constant changes in consumer tastes and fashion, these industries are
always changing. If Nike cannot follow the fitness trends in the
market they will face risks of losing demand and thus loss tragic can
occur. To compete with this risks and problems, Nike should position
it as a trendsetter and not a trend follower and be responsible to
their customers. If Nike adapts to the social trends and fashion the
demand for a Nike football shoe will increase.
DEMAND FACTOR #6: WEATHER

• If the weather in a country is becoming rainy, snowy and cold, the

demand on NIKE football shoes will decrease, because people do
not prefer to play football in the cold and rain. And vice versa to
when the weather in a country is pleasant, sunny and warm,
where the demand for NIKE football shoes will increase.
DEMAND FACTOR #7: GEOGRAPHIC LOCATION
AND CULTURE

• Another crucial factor affecting the demand of a Nike football

shoe is geographic location and culture; for instance; the demand
for a Nike football shoe will decrease in areas that are rocky and
based on mountains like the far east, and areas that are snowy
and rainy which such circumstance affect the football game in
general, and in areas such as Rio De Janerio, where the play
football but prefer beach football. On the contrary, the culture
also affects the demand for a Nike football shoe, Cultures such as
England which it is considered the home of football have the
demand for a Nike football shoe HIGH, while areas such as USA and
India, their cultures are based on sports such as cricket, baseball
or American Football, and in such cultures the demand for a
football shoe is LOW.
DEMAND FACTOR #8: SEASON (SALES, LIMITED
EDITIONS…)

Throughout the years there are many seasons that impact the •
demand of products offered by Nike these seasons or special world
wide knows events include Christmas sales ,back to school, black
Friday, cyber Monday . These increase the average percentage on
the sales since the normal price of the items decrease which will
increase the demand on the items since consumers are known to
be price sensitive. Moreover Nike offers a large variety of items
that are limited editions meaning that they is a limited quantity of
these items therefore this triggers  the consumers into wanting to
.own something the is limited in supply yet trendy
SUPPLY FACTORS
SUPPLY FACTOR #1: CHANGES IN COSTS OF
FOP’s
If the price of one of the FOP’s increases, then the cost of these FOP’s changes as well causing the producer to
decrease his supply of the product. The FOP’s of Nike football shoes are divided into 2 phases;
Phase 1: Production
Land: For the products to be made you would need leather for football shoes, oil used for the power plants and
factories and also silk to be used for the threading in the shoes.
Labor: For production, the manufacturers/ employees who make and create the product (over 1 million), executives
of Nike who think of ideas for a new type of product or design, and also professional athletes who contribute ideas
for a new product.
Capital: Machines used to create Nike football shoe (Ex: sewing machine, or a heat press machine
for the logo
Phase 2: Packaging
Land: To package football shoe products, you need cardboard for boxes (trees), and you also need paper that is put
inside shoe boxes (also trees).
Labor: For packaging, the employees who work on the assembling area of the factory, owner of the factory that is
responsible for the packing department, and also the person in charge of making sure each factory is at a "bronze
level" and reaching its expected amount of production.
Capital: For packing, there are 2 examples of capitals in football shoe production packaging. Machines that cover the
box with bubble wrap to ensure the product is not damaged or ruined, and a tool used for taping all the
boxes/sealing them.
SUPPLY FACTOR #2: IMPORVEMENT IN
TECHNOLOGY

• Technological advancements in production

methods or capital goods such as more efficient
machinery, and a faster and easier rate of
production will result in an increase in the supply
of NIKE football shoes.
SUPPLY FACTOR #3: TAXES

• There are several factors that impact the Supply; these factors include
sales tax and income tax. Sales tax usually increases the cost on the
company in which in this case increase the resources that are needed to
produce the goods therefore the cost that Nike will have to pay increases
there the quantity that is going to be produced decreases since the
relationship between the cost and supply or quantity is inversely
proportional meaning that if one of them increase the other decrease and
vise versa. as for the income tax it is usually calculated at the end of every
year when you have to subtract the expenses ( cost, ads and campaigns)
from the total income or sales however after wards the government will
take a certain percentage of your net profit consequently the profit of the
company (Nike) will decrease.
SUPPLY FACTOR #4: PRICES OF OTHER
PRODUCTS –NON PRICE DETERMINANT-

• As the price increases the quantity supplied increases too, causing

the supply curve to extend to the right and vice versa. The non-
price determinants of the supply curve in Nike football shoe is the
changes in price of other goods, where if the price of Adidas
increases, the price of Nike increases too, which increases the
quantity supplied.