Today… • Understand that the strengths and weaknesses of competitors will need to be researched when running a business • Understand what a business can analyse of their competition
WHAT IS COMPETITION? • The degree of competition can be described as - the number and strength of other businesses selling products or services within ‘your’ market sector. • Competition occurs when two or more organisations act independently to aim and supply a product at the same Target Market.
INDIRECT COMPETITION: Whenbusinesses produce/sell products which, although not ‘head to head’ competition, still compete for the same money in the customers’ pocket.
The basic aim of any business is to maximise profits. However, the basic aim of the customer is to buy high quality products at the cheapest possible price with ease of availability.
DIRECT COMPETITION: Where businesses produce similar products that appeal to the same target market. The more similar the product, the fiercer the competition For Example: Tesco and Asda.
How can a business compete with another business? • Product Range • Quality and design • Selling Experience • After Sales Service • Price • Brand Image
After Sales Service After sales telephone helpline Repairs
Price £38 £16 £25
Which has a better brand image? Brand Image
Task Choose ONE of the following business sectors: Shoe shops: Clarks and Barratts Car Retailers: Jaguar and Ford Clothing Retailers: Primark and Next Using the grid provided, compare what the 2 businesses do/offer to their customers. eg which is the most expensive? Use the helpsheet.
Tyler’s is a small independent shoe store. It is located in a local high street. A new supermarket that sells shoes as part of its product offering has just been built at the bottom of the high street. Tyler’s has seen its sales fall in recent months and the owner is looking at ways he can compete more effectively.
Which TWO of the following methods are most likely to help reduce Tyler’s costs in an effort to compete more effectively? A – Increase its advertising in the local newspaper B – Provide better service by taking on more staff C – Increasing the range of its shoes D – Ordering cheaper shoes from its suppliers E – Making one member of staff redundant in order to be able to offer lower prices.
Which TWO of the following methods are most likely to help reduce Tyler’s costs in an effort to compete more effectively? D – Ordering cheaper shoes from its suppliers E – Making one member of staff redundant in order to be able to offer lower prices.
Which TWO of the following reasons are the most likely explanations for why Tyler’s has lost half its sales since the new supermarket has been built? A – The Supermarket is a more convenient place for shoppers to buy shoes B – The level of customer service has got worse at Tyler’s C – The average price of shoes at Tyler’s has increased D – Tyler’s has cut its cost by making one of its four staff redundant E – The supermarket offers for sale many of the same styles of shoes as Tyler’s
Which TWO of the following reasons are the most likely explanations for why Tyler’s has lost half its sales since the new supermarket has been built? A – The Supermarket is a more convenient place for shoppers to buy shoes E – The supermarket offers for sale many of the same styles of shoes as Tyler’s
A business makes bottled & canned soft drinks. Which ONE of the following in itself is most likely to make it more competitive against its rivals? A – The employment of two extra workers B – An increase in profit compared to last year C – The launch of a new range of drinks D – A rise in the price of its drinks range
A business makes bottled & canned soft drinks. Which of the following in itself is most likely to make it more competitive against its rivals? C – The launch of a new range of drinks
Case study… Turn to page 23 and read the ‘over to you’ case study. Answer each question in your book. Answer the multiple choice questions.
Ellie Morgan Question 1 4 Marks Identify FOUR different ways in which gyms compete with each other for customers. Question 2 6 Marks Analyse why it might be too expensive for Ellie to set up a successful gym aimed at adults. Question 3 6 Marks Do you think that Ellie could make a success of a gym for children in London? Justify your answer using the case study.
How can gyms compete? • Target different genders at different times • Offer range of gym equipment • Offer personal trainer • Good quality gym equipment • Pleasant facilities – eg well equipped changing room • Helpful, pleasant staff • Competitive prices • Offer deals on membership
Why is it too expensive to set up? Cost of: • Gym equipment and machinery – compare to the national chain of gyms • Employing staff to work in the gym – give an example of an employee who might work for Ellie • Cost of rent in London would be very expensive • A lot of competition – some gyms well established – give an example • Paying to install good facilities – give an example
Reasons why the gym might be successful • Plenty of customers – school children • She has experience of managing and working in a gym • Ellie has spotted a gap in the market – equipment and a trainer hired by primary schools or community centres • Her idea does not require premises
Reasons why the gym might not be successful • Too costly to set up • May not be a demand - will have to carry out market research with schools and community centres to check there is a demand
Use the mark scheme to mark the person’s work.15 = A*13-14 = A12 = B10-11 = C8-9 = D7 = E5-6 = F
Competition Is Beautiful Competition I’m sure you’ll agree Means lower prices for you and me As firms battle hard each other to beat The results for consumers are really quite sweet More choice better quality, innovations abound In a competitive market you get more for your pound You can keep you Monopoly or Oligopoly I’ll stick with the market structure That delivers you see