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CSEC Economics

SBA

Title of Project

A comparative

study

of the demand for KFC and Japs at

period September

5

and 26,

201 1

a particular high school between the

Comments

The Title

The title of the project was clearly stated.

It

was

for this level.

The full two marks were awarded.

a

micro-economic topic and was

appropriate

Puiose of the Project

Three objectives

awarded.

were

adequate

although

seven

were

listed.

The

full

three

marks

were

Collection of Data

Five sources of data collection

were used.

The full three marks were awarded.

Presentation of Data

A combination of tables,

graphs,

charts

and diagrams

and labelled.

The full

seven marks were awarded.

were used.

ll

were

accurately named

retationandApalsis

An

excellent analysis

were awarded.

of data using

relevant

economic

theory

was

done.

The

full

ten

marks

Findings

Seven findings relating to the objectives

were presented.

The full

six marks

were awarded.

Recommendations

The

objectives.

seven

recommendations

listed

were

based

The full

four marks

were awarded.

on

the

findings

and

were

linked

to

the

stated

Communication of Information

Excellent use

of language

and

five marks

were awarded.

reporting

skills

were

evident throughout

the

report.

The

full

This SBA scored the maximum

forty

(40)

marks.

Economics School-Based Assessment 2010-2011

Name:

Subject: Economics Teacher:

Title: “A comparative study of the demand for KFC

and Japs at

Higi School

between the period September 5th 2011 to September 26th 201 1

TABLE OF CONTENTS

TITLE

Iiitrc:,cjiictjon AimsandObjectives Methods of Investigation Pz.esentat.ion of Data

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.

I Anaiysis and Interpretation of Data

F’indingsandObservations

Recorrir,iencIations

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.

.

.

.

.

Concli.ision

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.

.

.

.

.

.

.

Bibliogzaphy

Appendices

.

PAGE

 

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4

 

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23

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24

 

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26—30

INTRODUCTION

With the increasing desire to satisfy one’s appetite, spend less time cooking and more time accomplishing tasks and enjoying friends and family, the fast food industry is dynamic, quick and ever-growing Fried chicken and chips, sandwiches, breakfast. lunch or dinner, cultural foods or even light snacks can be bought and consumed in under 10 or even 5 minutes. in a world where people eat firstly with their eyes, there is a food shop for evervone Thus, I have decided to investigate the Fried Chicken industry with reference specifically to Japs and KFC.

I would like to thank everyone who would have contributed to the completion of this School-Based Assessment:

God firstly for the opportunity to do such a project My teacher for her constant advice and willing guiding hand My fellow group member for working on the SBA. with me

All those who answered the questionnaires distributed My family for helping and supporting me during the execution of this project.

.:tivesofresearch

The aims of this investigation are:

*

I,

To establish the type of relationship there is between price and quantity

demanded for fried chicken at KFC and Japs 2. To determine if the demand for fried chicken at KFC and Japs is normal or perverse 3. To examine the principal factors affecting the demand of KFC or Japs

- 4. To examine the joint demand of fried chicken and its complements -÷ 5. To examine the price elasticity of demand of fried chicken at KFC and Japs

- 6. To briefly examine the market structure for fried chicken in Trinidad and Tobago

affecting the supply of fried chicken at

* 7. To briefly examine the market conditions KFC and Japs

*

+

+ Met4:

The SBA was conducted on the compound of St. Augustine

Girls’ High School

jSrces:

1, gnnajre.

One hundred and twenty questionnaires were shared out to students of

the S.A.G.H.S. body. This was geared towards gaining demand information and trends for

fried chicken and its complements at KFC and Japs outlets.

2. InteJçjps. Managers of KFC and Japs outlets in St. Helena were interviewed to obtain

supply information such as the factors affecting supply and methods used to attract customers.

çda

Sources:

.1. Textbooks, Economics textbooks were used to have a clear understanding of the Laws of Demand and Supply

2. Internet. The websites listed in the bibliography were used to further clarir economic

concepts to enhance the schooIbased assessment

3. Jpcaifews ciers. These were used to obtain fried chicken advertisements as evidence of the methods used to persuade customers to buy from KFC or Japs

Question

I

CAll students

ate

fried

chicken

at least

students surveyed

ate

fried

chicken monthly.

once

per ear.

More

Data

than half

of

the

-------

80

60

50

40

30

10

0

4

2

Weekly

47

Monthly

67

Yearly

4

of Students and how often they eat fried chicken

Weekly

67

Monthly

4

Vearly

# of

Students and how often

they eat fried chicken

Question

piece.

2Of

the

20

students, 4323%

—-

2pieces

Jk(CS

said

that they would buy 2

pieces

at $1

L00

eec

eces

8

eces

[jp.iees

# of Students and how much pieces of chicken bought

50

50

40

20

0 pieces

33

I piece

52

2peces

.—--

1

,.

pieces

at

8

4 pieces

$11.00/piece

I

5 pieces

I

7 pieces

I

10 pieces

# of Students and

pieces of chicken

$110O/piece

how much

bought at

Question 3.

chicken

even

5 1% of

the

students agreed

that they would buy

though

there was

a

small

increase

in

price.

the

ithiin

bflOOto3.OO

Number of students who would:

Buy

less

fried

chicken

Suy

more fried

chicken

Buy

the

same

amount

ab

If

1

61

same

H

amount of fried

U of students and how much fried chicken they

61

would

buy

5 Buy less fried chicken a Buy more fried chicken Buy same amount

Question 4. With a price increase of $200 to $100, the mrjority said that they would buy 2 pieces of fried. chicken at $1100/piece and 1 piece at $1400/jiece.

At $1100 pernieee:At At400 per piece:

.

.

.

 

# of students

0

13

1

25

2

50

4

[••3

J L

#Of pieces

fIen .

1

LQ_ 2il_J

1

2

3

4

5

43

36

10

f4

2

How much fried chicken students would buy at specific prices

60

50

40

30

20

10

0

0 pieces

1 pie.ce

50

2 pieces

.

hi At $1100/piece At $14M0/pece

Question &60% of the students preferred KFC while 40% preferred Japs.

whorefer:

Japs

8

KFc

72

# of students and preferred choice of fried chicken

:41 laps

21 KFc

I!

Fl

0

z

a Ut9.

It-I

0

IxI

aO.

0

1r—t—-’,•

.4

I

I1

Question

7Of all the fActors considered

in

the

important factor affecting choice.

previous

question, Taste was as

the most

Number of students

ran

each_astheostimpfttactofgffeetinclo1ce

:t

Taste

Advertising

Location

Number of outlets

Special offers/discounts

Complements

€7

1

10

2

2

21

4 of students ranking each

21

fact as most important

Question

8.

The

majority of students

surveyed,

80%,

said

increases,

they would

rem

.

in loyal to their choice of source

that even

though price

for fried,

chicken,

j#of students who continue

buying .from preferred

switch

source

source

Loyalty to

source

s

#

of students who

continue buying

from their preferred

source

#

of students

who switch

source

Question

9J)2% of students said that their purchase of fried chicken also encourages

them to buy complementary goods.

Option

# of students

Encouraged to buy

I O

çhPEP lcm.cntary goods Not encouraged to bu t ccmpjgmentary oods

10

U of students and complementary goods

a # encouraged to buy complements

4 not encouraged to but corn p1 emen ts

Question

from

KFC.

10.

63%

or

aps

!KFC

76

students

said

that

they

76

prefer

to

buy

complementary goods

—-

Preference of source for complementary

goods

4 laps

KFC

‘‘caaa I

bZWCflGOWOOt%)Ø

I C) I

C)

I

pg

S

ptJ I

3

M

(M

I-’

at

—.

.t

I-’

a.

Question

12.

chicken if

in. ore

Most

students (67

students or 59%)

complements were available.

said

that they won’t buy more

Buy

more

fried chicken’

T#

of

stud

nts

-

‘tes

j3

zzzzzzzzzzzi

Effect of

Complementary

chicken

goods

on fried

A

U of students buying

more

students

buying

mare

not

fried

Question

13.

Of the

varied response in

less/fresh oil he used to fr’

chicken.

this

question,

a

eiin’i’

C can

tlLhht

the ch cken better

Season the chicken

better

Semove

excess

fat from chicken

(ik

chicken

beter

most

18

P

20

2

students

suegested

that

SUPPLY INFORMATION

Response of interview conducted in St. Helena at KFC and Japs outlet

1,

What methods do you employ to attract customers?

KFC

Advertisements

Spedal combos

V

V

V

p_cL

s

Promotkns

Other

2.

What factors affect your supply of fried chicken?

::-_

Quality of Chicken Cost of Production

Puce

of Substitutes

Puce

of Complements

Use of technology

V

V

V

Japs

X

V

x

X

V

V

V

V

3

Analysis and Interpretation of Data

120 questionnaires were given to students from all forms in the S.AGHS. community. Twc interviews were conducted with the managers of KFC and Japs outlets in St. Helena,

In Trinidad, fried chicken falls under the fast food industry and this industry is one of a monopolistic market structure. Thus, there are many firms (eg. KFC, Japs, Royal Castle, Popeyes and Mac Donald’s) product differentiation and many buyers. As such, there are good competition levels which ideally lead to customer satisfaction and welfare. The Monopolistic nature of the industry is also shown by customer and brand loyalty. 80% of the students surve ed said that even though price increases, they would continue buying from their original choice for fried chicken.

Of the 120 students, 2, 47, 67 and 4 students eat fried chicken Daily, Weekly, Monthly and Yearly respectively. This difference in consumption rate may be due to health purposes, addiction or personal preference

a,

a

S

a,

0

————

\\

\

03.

iz

a c(Q-cQd

L- d cN

/ .r/3

\\

.

c

0

‘4.

j

1

IN

o

\ N N

S

‘ZzzZEZIE

.Qj

de,,,dpd

a

Figure 1: Price increase of frted chicken from Figure2: Price increase of fried chicken from Si L00/ piece to S 1300/piece (demand for 2 pieces) SI LOU/piece to 31400/piece (demand for 2. pieces)

P

E

ij

4

£

021

t

U

2

S P’ce

32

Quantity

P

E

D

=

i6

-L21

nOt p

1

S Przce

22

2

a ‘ide 1

Quantity

43.4% of the students showed willingness to purchase 2 pieces of fried chicken at $11.00/piece. As price of 2 pieces increases from $11.00/piece to $13.00/piece, the quantity demanded decreased thus, the law of demand stands. The P.E.D was calculated as -0.2 1, indicating price inelasticity. As the price increases from $1 1.00/piece to $14.00/piece, demand also decreases and the Law of demand is also obeyed. The P.E.D. in this case was -1.12, thus, indicating price elasticity.

4

S

S.

a*w1

d,anaa.aet

01 9e44. &tJ

Ivin it

*

L

U

/

ei4.oi. ChLCI&tfl lan .1

Figure3: Price increase of fried chicken from $11.00 Figure4: Price increase of fried chicken from to $13.00/piece (demand for 1 piece) $1 1.00/piece to $14.00/piece (demand for 1 piece)

E D

=

Quantity demanded A Price

—8

2

11

33

—-1.33

Price

Quantity

E

I)

= A Quantity demanded A Price

10

3

11

33

—+1.11

Price

Quantity

As the price of fried chicken changes from St 1.00/piece to $13.00/piece to $14.00/piece, the demand trend obeys both Perverse and Normal demand. With the first abovementioned increase in price ($11.00 to $13.00), the demand goes from 33 to 25 and thus, demand hen is Normal. The P.E.D. here is -1.33 which shows Normal demand and price elasticity of demand. As price increases from $11.00 to $14.00 however, demand goes from 33 to 43. The P.E.D. in this case is ÷1.11 and thus, there is a Perverse Relationship. This perverse relationship could be due to price akticipation.

Many

factors

affect

and

Complements.

the

demand

for

Of the

range

of

a

specific

brand of fried chicken

such as Price, Taste

factors

affecting

demand,

111

students

said Taste

affected

their choice and

of

the

111,

67

students ranked Taste as

the

most important

factor.

This

is

so

because

since fried chicken

taste appeal as the

deciding factor,

with price

is

a food product,

people would

generally rank

and complements following

suit.

Thus,

60%

of the students

KFC

preferred

that

KFC

KFC

while

is

40%

preferred Japs. method

some

students preferred

shows

employing

The

fact

that more

of

attracting customers

that Japs is lacking.

These

methods

include Advertising,

Special

Promotions

and

Special

Combos.

Japs only uses the latter.

the

entire family

since

the

fast

food

KFC

implements

a

marketing

service

offers

a

substitute

for

strate’ where they

target

cooking while

the

demand

for KFC can

be linked

to

the desire

methods

can

increase the demand

to

for

purchase toys

fried

chicken,

for

children.

Effective

lower production

cost,

use

of

result

these

in

a

rightward shift

of

the

supply curve,

decrease

cost price

and lead

to

an extension of demand,

all of which

increases a

firm’s

profits.

KFC

has

Japs and would have a better grasp

on

how

to

also

been

in

business

for

much

longer than

operate

under the competition

oresent in

the

industry and how

to

effectively

market their product.

The

concept

of Joint demand

holds

for

fried

chicken

and

it

complements

but

in

a

biased

manner.

their purchase

This

is because of fried chicken

even

though 92%

encourages

of

the

them

surveyed student population

to buy complementary goods,

said

that

59%

of the

students

chicken.

students’

stated that buying more complements

does not encourage

them to buy more fried

63%

of the students

preferred complements

from

KFC,

with

Chips

being

the

favourite.

This

was

made

based on

the

factors

affecting

demand,

with Taste

possibly have

the

greatest influence.

Many

efficiency in production.

factors

would

affect

the

ability

of KFC

which

and Japs

are

to

achieve

production

and

These

factors,

essentially the factors affecting

alloc ative

supply,

include

Complements

the

Quali of chicken,

ost

of

Production.

,

Both

KFC

Price

of

Substitutes,

Price

of

of

nd the Use of Technology

and Japs implement all

these

However,

the

extent of implementation of each

factor would

account

for

the

difference between

KFC and

Japs

and

thus,

the

cost price

of

fried

chicken.

supply

As

firms

expand,

increasing,

production,

the

Minimum

Efficient

Scale

on

they

could benefit from economies

of

scales

and produce

the

Averae Cost Curve.

In

this

manner,

there

could

he

a

at

rightward

shift

of the supply

curve

and consumers

could

benefit

from

low

prices.

With

health and disease

to improve fried chicken

to our pots,

suggestions

awareness on the rise,

we

see

that the most prevalent

suggestion

is

to

use less

oil, In

the Caribbean where

we

have

a special flavour

were

made

to

cook and

season

the

fried

chicken better.

Findings and Observations

The main factor affecting demand for fried chicken and its consumption rate is that of Taste.

• Fried Chicken is generally price elastic, possibly due to the varied number of substitutes avsi1eb1e. However, there are cases of a perverse relationship for fried chicken, possibly due to price anticipation.

• The Joint Demand for fried chicken and its complements is biased since the majority of students are encouraged to buy complements with their purchase of fried chicken but not to but fried chicken with their purchase of complements.

The existence of foreign firms in the local economy can create good competition and result in higher consumer satisfaction.

+ Observing the demand and supply trends for KFC and Japs, KFC would generate more revenue from sales but Japs would have a lower Cost of Production than KFC.

KFC is in a better financial position than Japs since they have better marketing strategies than Japs and they also have a larger consumer market.

+ Both factors affecting the demand and supply of fried chicken in turn impact the profitability of KFC and Japs.

Recommendations

Both KFC and Japs can endeavour into

improving in

the

following areas if

they haven’t

already

done so

order to boost sales and have a

better

competitive

stance:

+ Increasing their potential consumer market by having more outlets

nationwide

+ Increase advertising

+ Use more Special Gifts, combos and promotions

customers

+ Clean

and season the chicken better

+ Use less oil to fry chicken

+ Cook the chicken better

to attract more

+ Use suggestion boxes to get feedback from customers

business.

Japs

consumer

and

implementations

these recommendations

industry

Conclusion

In this

role that

investigation between KEG and Japs, I have come to realize the majo

economics

plays in the

operation of a

It

was

deduced th

KFC

is

in

a much better

financial

position than

many

since they have

a bigg

the

cou

market. Consumers

chicken

made

suggestions to help improve

of

quality of fried

hold the

general improvement of the

in the

future.

Books:

Bibliography

—* Bahaw, Edward, and Wajid Mollick.Comprehensive economics for CSEC. San Fernando, Trinidad: Caribbean Educational Publishers, 2008.

—, Harvey, Jack. Modem economics: an introduction for business and professional students. 7th ed. London: Macmillan, 1998.

-. Hosein, Roger, and 0. F. Stanlake.Longman economics for CXC. Harlow: Longman,

2005.

-> L.ipsey, Richard

0

An introduction to positive economics. 6th ed. London:

Weidenfeld and Nicolson, 1983.

-4 Whitehead, Geoffrey. Economics: made simple. 13. ed. London: Heinemann, 1986.

Websites:

-4

hL.ix! /www.trr;o

i

on September 15th 2011.

—., ntr_/v.•,:

‘.;

’de!n•.

1

September 19th 2011.

Interviews:

.

vc:.

i.:’zn:nd

:

.

Retrieved

Retrieved on

—* Manager of KFC St. Helena, September 10th 2011 at 4:30 pm -. Manager of Japs St Helena, September 10th 2011 at 5:00 pm

Appendices

flrnleuesflonnaire

M name is Renee Voisin. As part of my investigation for my school-based

assessment., this questionnaire is prepared for any volunteers to fill out. Your

responses will be deeply ajpreeated.

Ac:

Form class:

10-13

14-16

Z.17 and over

1

On average, how often do yeu eat fried chicken?

Daily

Li Wee:kly

Li Monthly

H Yearly

a

-a

2. If one piece of fried chicken cost $11.00. how mneh pieces would yon purchase?

3

rieces of chicken

if this price increased

Lv S2.00 to $300, wb*!ch oftbon woven sot choose

Buy less fried chicken

hue more fried chicken

Plea so

5

1

3

1))

10001

:

1Odi

wcfl1Li

1)117 0.1 each

p

oice:es 01

rr:. oh chicken

—)

5.

Whose

Li Japs

Li KFC

fried

chicken

do you

prefer?

—*

—.

6.

What factors

Price

affect

Taste/Fashion

Li

Advertising

H

Location

Number

of Outlets

your choice

in question

Special

Offers/Discounts

Li Complements (eg.

Chips,

beverages)

5?

7.

In

order of importance, I

question 6.

* Price

Li Taste/Fashion

El Advertisii. g

Location

Number of Outlets

* Soccial

Oflbrs/ Discounts

Li Co.mnlcn.

cuts

being

the

most important,

rank the

options

8.

if

once

chicken?

L:Ycs

UN0

ncncascs,

would

von

remain

Iovai to

your choice

of

source

Ion

you

chose

fried

in

*

9. Does your purchase of fried chicken encoursge ycu to buy complementary goods (chips, beverages, salads) also?

—*

10. If yes to question 7, from whom do you prefer?

Li Japs

*

I I. What complementary goods do you prefer most?

LI Beverages

12. Would you buy more fried chicken if more complements were available?

*

13. V/hat do you think can be done to improve the quality of fried chicken?

The

Principal,

St.

Augustine

Evans

Street,

Girls

Curepe.

30th

June 2011.

High

School,

Dear Miss,

member

She

is

in

of

the

Form

the

process

the

bearer

of this

letter,

is

S

student

body

in

St.

Augustine

Girls’

of collecting

research for her Economics

High

School,

SBA

entitled,

“A

comparative

study

of

the

demand

for

KFC

and

Japs

in

St.

Augustine

Gir.Is’

High

School

between

the

period

September

5th

201.1

to

September

26th

201

1.”

She

requests

permission

to

surve

persons

in

the

form

of

a

questionnaire

as

part of the research process.

 

Any

support given to her will be deeply appreciated.

Mrs

P.

Balgaroo

Economics

Teacher

Date

of Signature

DIAGRAMS showing KFC using Advertising as a Marketing Strategey

I