Bauer Hockey Accelerating the Worlds Fastest Athletes

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Bauer Hockey Accelerating the Worlds Fastest
Athletes
Group 12
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Group Overview

• Overview, Brief History and Corporation
  information about Bauer Colin Sebastian
• Supply and Demand and Elasticity Pat Connelly
• Substitutes and Advertising Doug Johnston
• Compliments, Monopoly and Oligopoly Matt
  Sniezek
• Competiton and Factors of Productions Dylan
  Wyrostek

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Timeline of Events

• Founded in 1930, Bauer became part of Nike in
  1995 through the acquisition of Canstar Sports
  Inc.
• In 1998 Nike, forms a new hockey category
  business unit, to be based in Montreal, Quebec.
• In 2004 Nike / Bauer announces that it will
  sponsor two players for the first time ever.
  Marcus Naslund of the Vancouver Canucks and Ilya
  Kovalchuk of the Atlanta Thrashers.

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Nike Ownership of Bauer

• Nike uses its global marketing expertise to help
  promote all of the Bauer Products, including
  hockey skates.

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Bauer Hockey

• Bases in Montreal Canda, Bauer is one of the
  worlds biggest manufacturers of ice hockey
  Equipment. They specialize in all of the
  following

Helmets Sticks Shoulder Pads Skates Pants
Goalie Equipment Shin Guards Gloves
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Nike / Bauer as a Major Corporation

• Bauer / Nike Hockey is one of the largest hockey
  corporations in the world.
• Philip H. Knight is the current CEO, President
  and chairman of Nike INC.
• Chris Zimmerman is the CEO of Bauer / Nike hockey.

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Bauer Skates

• One of Bauers most popular products is their
  hockey skates, including the
• Supreme Series
• Vapor Series

• The Bauer Vapor XX, is the most popular skate in
  the National hockey League.
• Currently 60 of players wear this skate

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Supply and Demand

• Supply the amount of an item that sellers are
  willing and able to sell at certain prices
• Demand the amount of an item that consumers are
  willing and able to buy at a certain price

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Supply and Demand

• -In the ice skate market, prices of skates tend
  to rise when the quantity of skates demanded
  exceeds the quantity of skates supplied at that
  price
• This leads to a shortage of skates

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Supply and Demand

• Conversely, the prices of skates tend to fall
  when the quantity of skates supplied exceeds the
  quantity of skates demanded.
• This causes the market to approach an equilibrium
  point at which quantity supplied is equal to the
  quantity demanded. Price is thus seen as a
  function of supply curves and demand curves.

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Elasticity

• -An increase in price will not lead to an
  increase in profit
• -not possible, because of the Law of Demand
• -An increase in price will force consumers to
  weigh their alternatives
• Elasticity the price elasticity of demand is a
  measure of how sensitive quantity is to a change
  in price

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Price Elasticity

• Price elasticity measures the proportional change
  in quantity with respect to a proportional change
  in price. There are two types of price
  elasticity
• Price elasticity of demand - measures the change
  in quantity demanded with respect to the change
  in price.
• E of d ? in quantity of skates demanded
• ? in price of skates
• Price elasticity of supply - measures the change
  in quantity supplied with respect to the change
  in price.
• E of s ? in quantity of skates supplied
• ? in price of skates

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5 Cases of Elasticity

• 1) Unit Elasticity demand is equal to 1
• The ? in the price of skates is equal to the ?
  in the quantity of skates demanded
• 2) Elastic Demand the ? in quantity demanded
  is larger than the ? in price
• 3) Inelastic Demand the ? in quantity demanded
  will be smaller than the ? in price

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5 Cases of Elasticity (cont.)

• Perfectly Elastic
• Perfectly Inelastic

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Determinants of Elasticity

• The availability of close substitutes
• The importance of a products cost in ones
  budget
• The period of time under consideration

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Advertising of Bauer Hockey Skates

• Forms of Advertisement
• Hockey magazines
• Sponsoring Professional Players
• Sponsoring College Teams
• Word Of Mouth
• Television Commercials
• Dashing Boards of Ice Rinks

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Why Bauer Uses Advertisements

• Increase profits by selling more skates.
• Make the price of skates less elastic.
• Examples Encourages young players to wear the
  skates their heroes wear and let people know of
  the latest or newest innovations.

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Ice-Hockey SkatesSubstitutes

• Average Prices For Top Selling Skates

Bauer 400
Easton 350
CCM 370
Graf 450
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Price of Substitutes

• If the Price of a Substitute Increases the Demand
  for Bauer Skates will Increase.

• If the Price of a Substitute Decreases the Demand
  for Bauer Skates will Decrease.

D 1
D 2
D 2
D1
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Substitute For Ice Skates

• Example of Increase in Price for Substitute

Price
Demand For Easton Skates
Price
P2
P1
Q1
Q2
Quantity
As the Price for Easton skates increase, the
quantity demanded decreases.
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Substitutes For Ice Skates
Demand For Bauer Hockey Skates
D1
D2
As the Price of Easton skates increase, the
demand for Bauer skates will increase or shift
the demand curve to the right.
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Compliment Goods

• Compliment good A good that goes with or
  matches that particular good.
• As the demand for compliment goods increase so
  does the demand for the good in question, and
  vice versa.

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Compliment Items to Bauer Hockey Skates

• Ice Skate Laces
• Skate Sharpening
• Ice Hockey Stick
• Helmet
• Gloves
• Skate Chases and Holders

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MONOPOLY

• One seller with no substitutes
• Heterogeneous products
• Difficult entry and leaving barriers
• Price Setter

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Monopoly on Ice Hockey Skates?

• No!!
• CCM, Graf, Mission, and Easton make comparable,
  almost identical products.

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OLIGOPOLY

• Characterized by a few firms producing
  Homogeneous or Heterogeneous products.
• Dependence is recognized.
• Growth via merger.
• Price Rigidity
• Game Strategy

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Bauer Hockey Skates OLIGOPOLY

• Growth through Merger
• Dependence on other companies
• Game strategies
• Tit for Tat

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Competition
Perfect Competition A market structure in which
there are many buyers and sellers, the product is
standardized, and sellers can easily enter or
exit the market.
Bauers Competitors
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Percentages of Skates Worn by NHL Players
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Competition in the Hockey Skate Industry

• Bauer is an Oligopoly, there are not many
  competitors.
• Whatever one company does, the others have to
  make a comparable product.
• This product must be similar in price and quality
  in order to compete.

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Factors of Production

• Land The physical space on which production
  occurs, and the natural resources that come with
  it.
• Labor The time human beings spend producing
  goods and services.
• Capital Long-lasting tools used in producing
  goods and services
• Entrepreneurial Activity The combination of
  land, labor, and capital to make a profit.

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• Land Bauer has two factories in Canada, one in
  St. Jerome, Quebec and the other in Mississauga,
  Ontario ( once merged with Nike some equipment is
  manufactured in Asia.

• Labor Bauer has roughly 800 unionized employees
  between the two Canadian factories who earn a
  minimum of 12 an hour Canadian currency.

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Capital Bauer skates are mass produced on an
assembly line in their factories, this along with
their factory workers is how the skates are
produced.

• Entrepreneurial Activity The usage of the
  assembly line along with the factory workers in
  the two factories is how Bauer can efficiently
  manufacture skates

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Any Questions?
Group 12 thanks you for staying awake