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Demand Analysis of Nike Air Jordan Basketball Shoes

Nike is one of the most powerful brands in the world. The company is primarily involved in the design, making and marketing of footwear and apparel products. Nike has a worldwide distribution of its products. Nike’s pair of Air Jordan basketball shoes are among the most expensive, retailing at $185. Since 2003, a pair of Air Jordan basketball shoes averaged between $160 and $190. By using economic principles, it is possible to see why Nike charges this amount. First, there is a high demand for Nike shoes globally. The high demand is driven by production of quality and innovative footwear products that appeal to a large segment of the consumers. Nike made use of innovative ad campaigns and promotions to market its products to the consumers. Superstars such as Michael Jordan were used to promote the brand name to the consumers. The result was a high brand awareness and more demand for the company’s products.

Thus due to the high demand, Nike is able to charge a premium price and still make sales. Another reason is because the Nike’s Air Jordan basketball shoes are marketed as luxury goods. Luxury goods do not necessarily obey the law of demand where price increases leads to decline in demand of the product in question. In luxury goods, higher prices contribute to the product’s allure. This means that consumers value more the luxury goods that are priced higher and hence they are willing to offer a higher price in order to acquire the same goods. These type of products are commonly known as Veblen goods, in which Nike’s Air Jordan basketball shoes may be categorized. The demand of Veblen goods is proportional to high price, which contradicts the law of demand (Deepashree, 2013).

Reference

Deepashree, N. (2013). General economics: For CA Common Proficiency Test (CPT). New         Delhi: McGraw Hill Education (India.

 

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