3Today…Understand that the strengths and weaknesses of competitors will need to be researched when running a businessUnderstand what a business can analyse of their competition
4WHAT 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.
5INDIRECT COMPETITION: When businesses produce/sell products which, although not ‘head to head’ competition, still compete for the same money in the customers’ pocket.
6The basic aim of any business is to maximise profits 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.
7DIRECT 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.
8How can a business compete with another business? Product RangeQuality and designSelling ExperienceAfter Sales ServicePriceBrand Image
15Task Choose ONE of the following business sectors: Shoe shops: Clarks and BarrattsCar Retailers: Jaguar and FordClothing Retailers: Primark and NextUsing the grid provided, compare what the 2 businesses do/offer to their customers. eg which is the most expensive? Use the helpsheet.
16Analysing the Competition What can be analysedPrimarkNextProduct RangeQuality and designSelling ExperienceAfter-Sales servicePriceBrand Image
17Tyler’s is a small independent shoe store 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.
18Which 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 newspaperB – Provide better service by taking on more staffC – Increasing the range of its shoesD – Ordering cheaper shoes from its suppliersE – Making one member of staff redundant in order to be able to offer lower prices.
19Which 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 suppliersE – Making one member of staff redundant in order to be able to offer lower prices.
20Which 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 shoesB – The level of customer service has got worse at Tyler’sC – The average price of shoes at Tyler’s has increasedD – Tyler’s has cut its cost by making one of its four staff redundantE – The supermarket offers for sale many of the same styles of shoes as Tyler’s
21Which 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 shoesE – The supermarket offers for sale many of the same styles of shoes as Tyler’s
22A business makes bottled & canned soft drinks 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 workersB – An increase in profit compared to last yearC – The launch of a new range of drinksD – A rise in the price of its drinks range
23A business makes bottled & canned soft drinks 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
24Case study… Turn to page 23 and read the ‘over to you’ case study. Answer each question in your book.Answer the multiple choice questions.
25Ellie Morgan Question 1 4 Marks Identify FOUR different ways in which gyms compete with each other for customers.Question MarksAnalyse why it might be too expensive for Ellie to set up a successful gym aimed at adults.Question MarksDo you think that Ellie could make a success of a gym for children in London? Justify your answer using the case study.
26How can gyms compete? Target different genders at different times Offer range of gym equipmentOffer personal trainerGood quality gym equipmentPleasant facilities – eg well equipped changing roomHelpful, pleasant staffCompetitive pricesOffer deals on membership
27Why is it too expensive to set up? Cost of:Gym equipment and machinery – compare to the national chain of gymsEmploying staff to work in the gym – give an example of an employee who might work for EllieCost of rent in London would be very expensiveA lot of competition – some gyms well established – give an examplePaying to install good facilities – give an example
28Reasons why the gym might be successful Plenty of customers – school childrenShe has experience of managing and working in a gymEllie has spotted a gap in the market – equipment and a trainer hired by primary schools or community centresHer idea does not require premises
29Reasons why the gym might not be successful Too costly to set upMay not be a demand - will have to carry out market research with schools and community centres to check there is a demand
30Use the mark scheme to mark the person’s work = A* = A 12 = B = C 8-9 = D 7 = E 5-6 = F
31Competition Is Beautiful Competition I’m sure you’ll agreeMeans lower prices for you and meAs firms battle hard each other to beatThe results for consumers are really quite sweetMore choice better quality, innovations aboundIn a competitive market you get more for your poundYou can keep you Monopolyor OligopolyI’ll stick with the market structureThat delivers you see