Why is the reason for Nike despite being recognize and a big brand, at the moment it increase their products prices they have an inelastic response?
Nike is apopular brand that is recognized in the entire world as a one of the biggest brand in terms of selling sport products. Nike has high profits, because million of people buy their products. This brandhas found the way of create the necessity for people to buy their products, by many marketing strategies, one that we can say is when Nike in 1972, CEO Phil Knight contended that if "five coolguys"--the best and most popular athletes--wore his shoes, other people would want to as well. This strategy worked perfectly and now Nike control de 47% of USA market in sporting shoes. But the problem isthat Nike right now has become very common.
The economic internal crisis has affect Nike profits, Nike have achieve a balance in their benefits, but their sales in all the market had decreased. Thekey of have balance is that Nike has a strong internal restructuring and production have started. The reduction in terms of advertising costs and cutbacks in all departments of the group as well as inproduction`s plants. Have save 1,550 million dollars (1,060 million euro). We can see de decline of the market with one of the worst performance in Eastern Europe where sales fell 18% to 1,100 milliondollars (752 million euros), due to the decrease of the lines of sportswear and footwear. The U.S. market also fell 5% and revenues of U.S. $ 1,800 million (1,213 million euros). Again sportswearswere the worst they had a compartment with a drop of 9%. All the markets were where Nike was working suffered a decreased in their sells, generating problems to the brands.
They have no spent the marketto other variables, it means that they still manage the same concept of attracting people and that can boring them, and they can lose the interest in buying Nike products. With this problem another...