REEBOK DEMAND ANALYSIS AND ELASTICITY OF DEMAND

REEBOK
Reebok is an American-inspired, global brand that creates and markets sports and lifestyle products built upon a strong heritage and authenticity in sports, fitness and womens categories. The brand is committed to designing products and marketing programs that reflect creativity and the desire to constantly challenge the status quo. REEBOK'S VISION Fulfilling Potential Reebok is dedicated to providing each and every athlete - from professional athletes to recreational runners to kids on the playground - with the opportunity, the products, and the inspiration to achieve what they are capable of. We all have the potential to do great things. As a brand, Reebok has the unique opportunity to help consumers, athletes and artists, partners and employees fulfill their true potential and reach heights they may have thought un-reachable. REEBOK'S MISSION Always Challenge and Lead through Creativity At Reebok, we see the world a little differently and throughout our history have made our mark when weve had the courage to challenge convention. Reebok creates products and marketing programs that reflect the brands unlimited creative potential.

REEBOK COMPETITOR ANALYSIS

DEMAND ANALYSIS OF REEBOK

DEMAND: The amount of a particular economic good or service that a consumer or group of consumers will want to purchase at a given prices.

LAW OF DEMAND: The Law of Demand states that HIGHER THE PRICE LOWER THE DEMAND AND VICEVERSA, OTHER THINGS REMAINING THE SAME. CHARACTERISTICS OF LAW OF DEMAND: INVERSE RELATIONSHIP There is an inverse relationship between price and quantity demanded, as when the price rises the quantity demand falls and visa versa. INCOME EFFECT

The income effect is when the change in the quantity of that good consumed when the budget constraint is shifted holding its slope constant to intersect with the new endowment point. SUBTITUTION EFFECT The substitution effect is the change in the quantity of that good consumed when the budget constraint reflects the new relative prices, but keeps the agent on the original indifference curve. NECESSITY OF DEMAND ANALYSIS Sales Forecasting Production Planning Cost Analysis and Financial Planning Pricing and cost of promotion Resource and inventory Management DEMAND OF REEBOK ( ARTICLE 5201) FOR 5 YEARS: 2006 Price Qty Demanded 7999 24000 2007 6999 21000 2008 5999 23500 2009 4999 25000 2010 4999 24700

PRICE IN RUPEES QTY DEMANDED OF SHOES PER YEAR

DEMAND FOR REEBOK 5201 FOR 5 YEARS: YEAR 2006 2007 PRICE 7999 6999 SALES 24000 21000 DEMAND 191976000 146979000

2008 2009 2010

5999 4999 4999

23500 25000 24700

140976500 124975000 123475300

DEMAND CURVE:

The demand curve is a downward sloping curve as consumers are willing to buy more of a product or service as the price decreases.

DEMAND CURVE FOR REEBOK ( 5201)

IMPORTANCE OF THE LAW OF DEMAND Price Determination To the Finance Minister To Farmers In the Field of Planning

EXCEPTIONS TO THE LAW OF DEMAND CONSPICIOUS CONSUMPTION called by Vablen C.C. are the goods , When prices of such goods rise , there snob appeal increase and they are purchased in bulk . Special types of Inferior Goods or Giffen Goods Articles of Distinctions Expectation of Rise and Fall in Price in Future Ignorance of Part of Consumers About Quality

FACTORS AFFECTING THE DEMAND Price of the Commodity Income of the Consumer Prices of related goods Tastes of the Consumers Wealth Population Government Policy Expectations regarding the Future Climate & Weather State of Business.

ELASTICITY OF DEMAND Elasticity of demand: Elasticity of demand measures the responsiveness of change of quantity demanded of a good because of the change in prices.

Type of elasticity of demand: 1) Price elasticity of demand 2) Income elasticity of demand 3) Cross elasticity of demand Price elasticity of demand: price elasticity of demand is the ratio of the percentage change in the quantity demanded of a good to a percentage change in its price. Price elasticity of demand =- % change in quantity demanded % change in price

Different methods of price elasticity of demand A) PERFECTLY ELASTIC DEMAND: Perfectly elastic demand is one in which a little change in price will cause an infinite change in demand

B) PERFECTLY INELASTIC DEMAND: Perfectly inelastic demand is one in which a change in price produce no change in demand

C) UNITARY ELASTIC DEMAND: Unitary elastic demand is one in which a change in price produces an equal change in demand Income elasticity of demand: Income elasticity of demand refers to the ratio of the percentage change in the quantity demanded of a good due to a percentage change in income. Income elasticity of demand = % change in quantity demanded % change in income

Cross elasticity of demand: Cross elasticity of demand refers to the change in the quantity demanded of a particular commodity due to the change in the price of another commodity. Cross elasticity of demand = % change in quantity demanded of x % change in price of y