CSEC Economics SBA

Title of Project A comparative study of the demand for KFC and Japs at a particular high school between the period September 5 and 26, 201 1 Comments The Title The title of the project was clearly stated. It was a micro-economic topic and was appropriate for this level. The full two marks were awarded. Puiose of the Project Three objectives were adequate although seven were listed. awarded.

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 were used. ll were accurately named and labelled. The full seven marks were awarded. retationandApalsis An excellent analysis of data using relevant economic theory was done. The full ten marks were awarded. Findings Seven findings relating to the objectives were presented. The full six marks were awarded. Recommendations The seven recommendations listed were based on the findings and were linked to the stated objectives. The full four marks were awarded. Communication of Information Excellent use of language and reporting skills were evident throughout the report. The full five marks were awarded. 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 th between the period September 5 2011 to th September 26 201 1

TABLE OF CONTENTS
TITLE
Iiitrc:,cjiictjon AimsandObjectives Methods of Investigation Pz.esentat.ion of Data
. . . . . . . . . . . .

PAGE
3 4 5
. . . . . . . . . . . .

618
.

Anaiysis and Interpretation of Data... FindingsandObservations.............. Recorrir,iencIations Concli.ision

. . . . . . . . . . . . . . . . . .

1921 22 23 24 25 2630

Bibliogzaphy Appendices
.

INTRODUCTION
With the increasing desire to satisfy ones 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 7. To briefly examine the market conditions affecting the supply of fried chicken at 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. InteJjps. 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.

da

Sources:

.1. Textbooks, Economics textbooks were used to have Demand and Supply

a clear understanding of the Laws of

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

Data
Question I CAll students ate fried chicken at least once per ear. More than half of the students surveyed ate fried chicken monthly.

----

---

Weekly Monthly Yearly

47 67 4

4 of Students and how often they eat fried chicken

80

67
60 50 40 30

# of Students and how often they eat fried chicken

10 0

2
Weekly
Monthly

Vearly

Question 2Of the 20 students, 4323% said that they would buy 2 pieces at $1 L00 eec
piece.

2pieces
Jk(CS

eces eces [jp.iees

# of Students and how much pieces of chicken bought at $11.00/piece

50
.--

52
50

40

33
# of Students and how much pieces of chicken bought at $110O/piece
,.

20

....1

8 I
0 pieces I piece

2peces

pieces 4 pieces 5 pieces 7 pieces 10 pieces

Question 3. 5 1% of the students agreed that they would buy the same amount of fried
chicken even though there was a small increase in price.

ithiin

bflOOto3.OO

Number of students who would:

Buy less fried chicken Suy more fried chicken Buy the same amount ab

If
1 61

U of students and how much fried chicken they

would buy

5 Buy less

fried chicken

61

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:
. .... . .

0 1 2 4

# of students 13 25 50 [3

#Of pieces

fIen 43 36 10 4 f 2

1
.

LQ_ 2il_J
1 2 3 4 5

_______J L____

How much fried chicken students would buy at specific prices

60

50
50

40

30

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

20

10
.

0 0 pieces 1 pie.ce 2 pieces

Question

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

whorefer: Japs KFc 8 72

# of students and preferred choice of fried chicken

:41laps 21 KFc

10

z
0 .4

:0

I 1111
I

I 117!EL1!. I1
Fl

1
1rt-,

iizzz:z:zz.:zz::::
aO. It-I
IxI

.1
t
t

a...
Ut . 9 0 0

I
I!

Question 7Of all the fActors considered in the previous question, Taste was as the most
important factor affecting choice.

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 fact as most important

21

Question 8. The majority of students surveyed, 80%, said that even though price
increases, they would rem in loyal to their choice of source for fried, chicken,
.

j#of students who continue buying .from preferred source

switch

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 IO lcm.cntary goods hPEP Not encouraged to bu..t 10 ccmpjgmentary oods

U of students and complementary goods

a # encouraged to buy complements

4 not encouraged to but corn p1 emen ts

Question 10. 63% or 76 students said that they prefer to buy complementary goods
from KFC.

aps
!KFC 76

Preference of source for complementary goods

laps
KFC

S I

I:
C) C)

.t

J LiII
I- (M
.

I
4*

pg

ptJ

at
3

I
bZWCflGOWOOt%)

I1
caaa

I II
I

Is I

I-

a.

ii

Question 12. Most students (67 students or 59%) said that they wont buy more fried
chicken if in. ore complements were available.

Buy more fried chicken

T#

of stud nts

zzzzzzzzzzzi
Effect of Complementary goods

tes

j3

on fried

chicken

A U of students buying

more students not

buying mare

Question 13. Of the varied response in this question, most students suegested that less/fresh oil he used to fr chicken.

a____ eiini

tlLhht C can the ch cken better Season the chicken better Semove excess fat from chicken (ik chicken beter

18 P 20

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 p_cL__s Promotkns Other V
V V

Japs
X

x
X

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

V
V

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 Donalds) 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

N N S

IN

c
0
4.

a, a
S
a,

..

\\

\
\\

03. iz a c(Q-cQd L-

o
.

ZzzZEZIE de,,,dpd a .Qj

cN

/ .r/3

Figure 1: Price increase of frted chicken from Si L00/ piece to S 1300/piece (demand for 2

pieces)

Figure2: Price increase of fried chicken from SI LOU/piece to 31400/piece (demand for 2. pieces)
nOt p 1
=

P E ij

S Pce
4 32

Quantity

P E D

a ide 1 Quantity

i6

S Przce 22

021

-L21
19

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.

S.

1 a*w
01

d,anaa.aet

9e44. &tJ Ivin it

.oi. ChLCI&tfl 4 ei

lan .1

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

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

ED

Quantity demanded A Price 11 8 33 2

Price

Quantity

E I)

A Quantity demanded A Price 10 11 33 3

Price Quantity

-1.33

+1.11

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. 20

Many factors affect the demand for a specific brand of fried chicken such as Price, Taste and Complements. Of the range of 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 is a food product, people would generally rank taste appeal as the deciding factor, with price and complements following suit. Thus, 60% of the students preferred KFC while 40% preferred Japs. The fact that more students preferred KFC shows that KFC is employing some method of attracting customers that Japs is lacking. These methods include Advertising, Special Promotions and Special Combos. Japs only uses the latter. KFC implements a marketing strate where they target the entire family since the fast food service offers a substitute for cooking while the demand for KFC can be linked to the desire to purchase toys for children. Effective use of these methods can increase the demand for fried chicken, lower production cost, result in a rightward shift of the supply curve, decrease cost price and lead to an extension of demand, all of which increases a firms profits. KFC has also been in business for much longer than Japs and would have a better grasp on how to 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. This is because even though 92% of the surveyed student population said that their purchase of fried chicken encourages them to buy complementary goods, 59% of the students stated that buying more complements does not encourage them to buy more fried chicken. 63% of the students preferred complements from KFC, with Chips being the students favourite. This was made based on the factors affecting demand, with Taste possibly have the greatest influence. Many factors would affect the ability of KFC and Japs to achieve production and alloc ative efficiency in production. These factors, which are essentially the factors affecting supply, include the Quali of chicken, ost of Production. , Price of Substitutes, Price of Complements nd the Use of Technology Both KFC and Japs implement all of these However, the extent of implementation of each factor would account for the supply difference between KFC and Japs and thus, the cost price of fried chicken. As firms expand, increasing, production, they could benefit from economies of scales and produce at the Minimum Efficient Scale on the Averae Cost Curve. In this manner, there could he a rightward shift of the supply curve and consumers could benefit from low prices. With health and disease awareness on the rise, we see that the most prevalent suggestion to improve fried chicken is to use less oil, In the Caribbean where we have a special flavour to our pots, suggestions 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.

22

Recommendations
Both KFC and Japs can endeavour into improving in the following areas if they havent 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 to attract more customers + Clean and season the chicken better + Use less oil to fry chicken + Cook the chicken better + Use suggestion boxes to get feedback from customers

23

Conclusion
In this investigation between KEG and Japs, I have come to realize the majo role that economics plays in the operation of a business. It was deduce d th KFC is in a much better financial position than Japs since they have a bigg consumer market. Consumers made many suggestions to help improv e the quality of fried chicken and implementations of these recommendations cou hold the general improvement of the industry in the future.

Bibliography
Books:
*

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

-.

->

-4

Websites:
-4 hL.ix! /www.trr;o..i

Retrieved ..de!n. 1
.

on September 15th 2011.

., ntr_/v.,:
.;

vc:.

i.:zn:nd

Retrieved on

September 19th 2011. Interviews:

*
-.

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

25

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.

10-13 Ac: Form class:

14-16

Z.17 and over

1 On average, how often do yeu eat fried chicken? Daily Li Wee:kly

Li Monthly

Yearly

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

-a 3 if this price increased Lv S2.00 to $300, wb*!ch Buy less fried chicken hue more fried chicken

oftbon

woven sot choose

Plea so

10001 1Odi wcfl1Li 1)117 0.1

1 3 1))

oice:es 01

each p rr:. oh chicken

11

5. Whose fried chicken do you prefer? Japs

Li

Li KFC

6. What factors affect your choice in question 5? Price

Taste/Fashion Li Advertising H Location

Number of Outlets Special Offers/Discounts

Li Complements (eg. Chips, beverages)

7. In order of importance, I being the most important, rank the options you chose in
question 6. * Price

Li Taste/Fashion

El

Advertisii. g Location Number of Outlets

* Soccial Oflbrs/ Discounts

Li Co.mnlcn. cuts

8. if once ncncascs, would von remain Iovai to your choice of source Ion fried

chicken? L:Ycs

0 UN
2?

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 Girls High School,

Evans Street, Curepe.
30th

June 2011.

Dear Miss,
the bearer of this letter, is member of the Form S student body in St. Augustine Girls High School, She is in the process of collecting research for her Economics 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

29

DIAGRAMS showing KFC using Advertising as a Marketing Strategey