Due to the economic recession, most companies and been forced to fired workers due the low level of demand for their goods and services, many companies have even been forced to close down. A recession causes you to have a lower income such as no bonuses as companies try to cut costs a even worst scenario is lossing your job, it also makes prices of necessities to increase such as fuel forcing people to take public transport more often and could even make you bankrupt. However despite all this, not all companies are serously affected by the recession. One good example of this is the Sports apparel giant Nike.
Nike is one of the few companies that have been able to put up rather good numbers during the this recession. At the end of 2008 Nike had make a profit of $391 million which was more then what Thomson Reuters (First Call) earned at that time. Despite having a drop of $400 million compared to 2007, Nike has not much to worry about as it is still seeing strong demand for their products.
One main reason for this high level of demand is due to their strong advertising. By having sports stars to wear their products, Nike is able to lure in majority of the athletes. This is because sports enthusiasts buy their products either to feel closer to their idols such as Micheal Jordan or Kobe Bryant both legends in the basketball world, while others simply but their products to gain that competetive edge against their opponents.
Another reason for the high level of demand is Nike's strong brand image due to having high quality goods and their ability to be flexible and thus maintaining a large variety of fashionable goods which is constantly changing to fit consumers' wants.
Therefore although the economic situation may seem very dark right now, there is still hope for the economy to bounce back.
I feel that your point on marketing having a great impact on demand was put through clearly but to what extent will having celebrities as the models have an impact on a consumer's decision to buy something especially amidst this economic recession?
ReplyDeleteI agree with your opinion that nike does have a high demand due to their marketing strategies and ability to change alterate their products so as to keep up with the changing demands of the consumers.
ReplyDeleteHowever, I dont really agree with your opinion that the economy can bounce back due to companies that have such strong branding that they do not suffer as greatly and hence creates a significant part of the aggregate demand in the economy. It would depend on what good it is (inferior or normal). Moreover, as their advertising costs are of a higher percentage especially during the recession to try to further increase demand despite falling profits. They are more likely to increase prices so as they would not see their profits suffer and hence, reducing the quantity demanded for the product.
Good application of using demand concepts and applying it to Nike! Since you feel that part of the reason for the strong demand lies in their advertising and image branding, with a recession and budget cuts, do you think this is continually sustainable? In your eyes as a consumer, how does the Nike brand set itself apart from others since all the big brands have fat advertising budgets?
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