Just Do It - Possibilities


The Background of Nike, Inc.

Nike, Inc was founded on January 25, 1964 as Blue Ribbon Sports (BRS) by Bill  Bowerman and Phil Knight.  In 1972, BRS founded their "Nike" (pronounced NI-KEY), named after the Greek Goddess of Victory, line of footwear and BRS officially renamed itself to Nike, Inc in 1978. It had overtaken nearly 1/2 of the athletic footwear market, though not by traditional advertising means; for Nike did not run a TV advertisement until 1982.  After the following years, Nikes are sold in 40 foreign countries, over 200 unique Nike shoes are mass-produced, and sport-specific shoes and cleats appear all over the world.  Nike then began it reputation for creating unique and inspiring ads, beginning with its "Just Do It" slogan in 1988.


Do you jog? Do you do exercise frequently? Are you a sports master?
A pair of comfy sport shoes always playing an important part for the athlete. When mentioning about sports, most of the people would directly think about the brand of shoes, such as: Nike, Adidas, or New Balance. However, Nike is always the most outstanding among so many different brands of shoes and it has a large group of customer. Thus, we would like to study whether the price of Nike is sensitive with the demand change and would the price of Nike influence the demand.

Market Competition

Nike is in the monopolistic competition which there are existence of many firms that operate and sell similar but not identical products. There is freedom to entry or leave the market because there are no major barriers to entry or exist. Nike offers differentiated products to the market which are different designs, quality and making materials. From this, it shows Nike is a price maker firm as they could charge a higher or lower price than its competitors. Nike can set its own prices and does not have to be a price taker from the industry. For demand elasticity, Nike could be more elastic than monopoly as there are many firms existed in the industry and having a lot of close substitutes products. Example like, Adidas, Puma, New Balance and others.

Problem statement

  • What are the factors of people consider when buying sport shoes?
  • How are consumers being affected by the changes in the price of Nike shoes, changes in the price of substitutes goods, alternative means of transport, etc.?
  • Why do people choosing Nike brand when buying sport shoes? 


  • To understand the main demand factors of Nike among the consumers, and how it affects their choices.
  • To analyse the elasticity of demand or the sensitivity towards changes in price, for Nike in the local consumer market.


The limitation in conducting survey :
  • Respondent are not clearly answer the survey given question.
  • Group members are lack of experience in designing survey questions.


First of all, select a company or product that we are going to the survey on. Identify the factors that affect the demand and demand elasticity of the product by doing research in internet and academic reference. Nike shoes is our choice and there are some factors that will affect the demand and demand elasticity of Nike shoes while the price is constant.

Factors of demand 
  • Taste and preferences
  • Price of other related substitute goods
  • Brand
  • Quality

Factors of demand elasticity 
  • Necessity
  • Level of Income

Discuss and design the survey questions with group members afterwards. We have created 10 online survey questions, 6 for closed ended question and the remaining 4 are likert-scale question. Questionnaire were given out to 28 people and the survey was conducted through internet. Each survey questions has different objective and it is important to show the factor that affect each survey recipient buying shoes and elasticity response of the survey recipient if the prices, income and price of other shoes change. After we got our data, we evaluate the data and identify the relationship between factors and the demand and demand elasticity.

Click the "Survey Form" to view our online survey questionnaire.
Survey Form

Finding and Analysis

                      DEMAND FACTOR                    


Figure 1

According to The Law of Demand, it states that there is an inverse relationship between quantity demanded of any good and the price charged. When price of a certain good rises, quantity demanded of that goods falls. However, when price falls, quantity demanded rises. Therefore, we designed the question in Figure 1 to proof this statement. From the responses, we can see that 75% of respondents consider price is a factor that influences them when purchasing shoes. Their purchasing decisions are based on the increase and decrease of price. Thus, it shows that price is a factor of demand and it has proved the statement.


Figure 2

There are three other factors of demand of shoes that influence people purchasing shoes. The factors include the consumers taste and preferences, quality of the shoes, and brand the shoes.

Preferences of consumer is the main factor that affect people buying Nike shoes. It contains 54% which is the highest percentage among the three factors of demand. In 28 survey recipients there are 15 people concern about the preference. This type of customer are usually more care about the outward appearance of shoes such as style, design and color. They will tend to purchase more if Nike produce shoes that meet their preference. Thus the quantity demanded will increases.

The second highest factor that affects the demand of  would be the quality of  shoes. There are 39% of people are attracted by the quality of Nike shoes. They are concern about the quality of shoes because it is important for customer to have a comfy and last-longer shoes.

The factor which has the least influence in considering on buying shoes is the brand which consists of 7% over the overall results as shown in Figure 1. In this category, customer are usually not loyal towards the brand. For branding is kind of luxurious so mostly people would not concern so much. Thus, brand is the lowest factor of influencing the demand of shoes.

Figure 3

In addition, the substitute goods is also one of the other factors than price. Substitute goods are two goods that could be used for the same purpose. There are lots of brands as Nike like Adidas, New Balance, Puma which sell similar products but not identical products. Since there are many substitute goods existed in the market, people would more sensitive on the price and can be easily used to place one another. Example like, from our survey in Figure 3, there are 12 people out of 28 people would prefer to choose Adidas instead of Nike when Nike shoes cost higher than Adidas’s. This is because if the price of one good increases, then the demand for the substitute is likely to rise. Therefore, having substitutes goods could able to influencing people when purchasing products and which brand to buy.

Conversely, there are 15 people out of 28 people would going to purchase Nike shoes instead of Adidas shoes even though the cost of Nike shoes is higher than Adidas’s. This may because experiences and loyalty influence consumer’s purchasing decisions. Experiences and loyalty could affect consumer to choose which brand to purchase because they’re believing and confident with the brand, so they would like to make next time purchase.

                                   ELASTICITY OF DEMAND                                        

Factors of Elasticity

Figure 4

For factors of elasticity, there are two main factors which decided the elasticity of Nike. The first factor is necessity. From the survey question above in Figure 4, it shows that respondents are more tend to concern about the price when the shoes are necessary items for them. The reasons of this situation might be they have more choices as there are many substitute brands to choose and at the same time they can compare the prices among these brands.

On the other hand, there are also some respondents would not concern about the price which show that they are inelastic to Nike. It may because of personal habits that they are loyal to Nike or prefer the design. Besides that, Necessity is the main reason since it is necessary for them, therefore they may think that it is worth to pay.

Figure 5

The second factor of elasticity demand is income level. According to our survey that we have done in figure 5, it shows that high income level indicate inelastic demand of purchasing more shoes as mostly the people wouldn’t purchase more shoes when their income has increased. Out of 28 people, that only 13 people which is 46.43% will choose to purchase more shoes when their income level has increased. Meanwhile, there are 53.57%, 15 out of 28 people will choose to go for others things instead of purchasing more shoes. Basically, the reason that leads to this result is most of the masses think that it’s unnecessary and a waste on buying so many shoes. Some people would have choose to save their money in the bank.  However, Nike is affordable to some people; they might be purchasing all their favorite sport shoes as their collection. But the main reason will be the people would like to catch up the trend of sports shoes, especially for the teenagers.


In summary, price factor will be the major factor that affects customer in purchasing shoes. In monopolistic market, it’s hard to categorize whether it’s inelastic or elastic demand as some of the consumer would more concern about the price of shoes but some of them would not. 

Other than the price of shoes, there are some factors that also will affect the demand of shoes, for instant: preferences, quality, brand and availability of substitute products. Among four of these, preferences is the major factor of demand of shoes. 

Besides that, hobby or opinion of others could be the minor personal reason on affecting their purchasing decision. For example, a husband feels strongly negative on the shoes that his wife wanted to purchase. 


From this study, we will recommend that Nike should have more concentrate on customer benefits. It can create a privilege for the members for bonding the relationship between the customer and the company. It also can improve the customer services by conducting survey to more understanding the customer needs.


McConnell, R. (2012) Economics: Price, Quantity, and Efficiency. America: The McGraw-Hill Companies

HIConsumption (2013) Nike Free Flyknit. Available from: http://hiconsumption.com/2013/07/nike-free-flyknit/  [Accessed 5 November 2013]

Chavis (2013) History & Background of Nike. Available from : http://www.ehow.com/facts_5453124_history-background-nike.html [Accessed from 14 October 2013]