A CASE STUDY

ALOMBRO
CLARIN WII BY NINTENDO
GALAO
VALLES
STATEMENT OF • Would the demand for the Wii console be relatively inelastic or
relatively elastic (the sensitivity of demand to the changing in
THE PROBLEM price)? State why.

(DECLINE OF SALES • Draw the demand curves as you have described them.
BECAUSE OF SUPPLY • Was the severe shortage for over two years an old marketing
SHORTAGE) ploy called intentional scarcity, in which a company purposely
keeps its hot product in short supply to build buzz. Or was it
simply bad planning on Nintendo’s part? What did this mean for
THE CASE SEEKS household? What were the implications for Nintendo?

TO ANSWER • Can you suggest a reason why Nintendo dropped the price of the
Wii Console in late 2009. How would you expect this to affect
THE SPECIFIC revenues?
PROBLEMS:
ECONOMIC CONCEPT

• SUPPPLY AND DEMAND

CONCLUSION
1. WOULD THE DEMAND FOR THE WII CONSOLE
BE RELATIVELY INELASTIC OR RELATIVELY ELASTIC
(THE SENSITIVITY OF DEMAND TO THE
CHANGING IN PRICE)? STATE WHY.

• The demand for the Wii Console is relatively elastic. The demand is greatly
affected by the change in price and there are a lot of substitutes to the
product (Microsoft and Sony). According to the given case, it was stated that
when they dropped their price, it has ended the decline in sales.
2. DRAW THE DEMAND CURVES AS YOU HAVE
DESCRIBED THEM.
3. WAS THE SEVERE SHORTAGE FOR OVER TWO YEARS AN OLD
MARKETING PLOY CALLED INTENTIONAL SCARCITY, IN WHICH
A COMPANY PURPOSELY KEEPS ITS HOT PRODUCT IN SHORT
SUPPLY TO BUILD BUZZ. OR WAS IT SIMPLY BAD PLANNING ON
NINTENDO’S PART? WHAT DID THIS MEAN FOR HOUSEHOLD?
WHAT WERE THE IMPLICATIONS FOR NINTENDO?

• The severe shortage is simply a bad planning on Nintendo.

• They would not initiate a price drop by 2009 instead make its price higher with
respond to the demand of the consumers who are eager to buy.
• Households tend to buy substitutes due to the scarcity of the product.
• For Nintendo, it resulted to a decline in sales.
4. CAN YOU SUGGEST A REASON WHY
NINTENDO DROPPED THE PRICE OF THE WII
CONSOLE IN LATE 2009. HOW WOULD YOU
EXPECT THIS TO AFFECT REVENUES?

• To attract again more consumers to increase their sales.

• Based on the shortage for over 2 years they might have occurred a big loss in
revenues. Dropping the price made it back again on its worldwide top-grossing
product that caused for a higher earnings.
RECOMMENDATION
• The company should have been more efficient in their
production since they already know that they have great
competitors which could steal their potential customers, to
maintain and even achieve higher sales and revenues.