The Athletic Footwear Industry: Nike

The current market for footwear particularly sneakers is booming, fueled by millennial demand and the organization 's strategic business approach. The international sneaker market has also grown by approximately 40% since 2014 to an estimated $55 billion. In 2015 the athletic footwear industry in the United States grew by 8% generating about $17.2 billion in sales. Out of that number, Nike sales are approximately 3% with the average selling price increasing by 5% which translates to $61.15 (Hill, 2009). The millennials alone are driving the market as they spent approximately $21 billion on footwear in 2014. In Japan alone, the organization has boosted the market by about $2.6 billion. Furthermore, the footwear industry is expected to be one

The organization reduced prices for its products even though the amount charged for its shoes was still higher than in the past. Nike realized exceedingly high revenue in the past, and the Nike brand was the best seller in first quarter of 2016 making the organization profits of $2.9 billion (Hill, 2009). This is about 6.4% higher than the last quarter of 2015, allowing for a prediction of about $10 billion pre-tax income for the full year 2016 (Hill,

This is because there is more than one substitute in the industry which implies that there are many sellers of these products both regionally and globally. Large competitors such as Reebok and Addidas set a range of pricing for the shoes, apparel, and equipment so if Nike raises its prices above the current limits, it is likely that customers will turn to competitors as they look for places where they can get more for their money. This is primarily because of the high demand elasticity. On the other hand, dropping prices is not enough for the available supply as consumers may start to worry about the low price offered for the products since low prices are often associated with low quality items. Also, it is imperative to note that revenue affects price elasticity. Since there is significantly high competition for Nike, prices need to be set to be competitive which limits profits to the price level that the buyers are willing to