What have we done so far??..
Analysing the
Competition
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: When
businesses 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
Product Range, Quality and
Design for Ford Cars
Product Range, Quality and
Design for Jaguar Cars
Selling Experience
After Sales Service
After sales telephone helpline
Repairs
Price
£38
£16
£25
Brand Image
Which has a better
brand image?
Task
Choose ONE of the following business sectors:
Shoe shops:
Car Retailers:
Clothing Retailers:
Clarks and Barratts
Jaguar and Ford
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.
Analysing the Competition
What can be
analysed
Product Range
Quality and design
Selling Experience
After-Sales service
Price
Brand Image
Primark
Next
• 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
13-14
12
10-11
8-9
7
5-6
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=
=
=
=
=
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A*
A
B
C
D
E
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