CSEC Economics

SBA

Title of Project

A comparative study of the demand for KFC and Japs at a particular high school between theperiod September 5 and 26, 201 1

Comments

The TitleThe title of the project was clearly stated. It was a micro-economic topic and was appropriatefor this level. The full two marks were awarded.

Puiose of the ProjectThree objectives were adequate although seven were listed. The full three marks wereawarded.

Collection of DataFive sources of data collection were used. The full three marks were awarded.

Presentation of DataA combination of tables, graphs, charts and diagrams were used. ll were accurately namedand labelled. The full seven marks were awarded.

retationandApalsisAn excellent analysis of data using relevant economic theory was done. The full ten markswere awarded.

FindingsSeven findings relating to the objectives were presented. The full six marks were awarded.

RecommendationsThe seven recommendations listed were based on the findings and were linked to the statedobjectives. The full four marks were awarded.

Communication of InformationExcellent use of language and reporting skills were evident throughout the report. The fullfive 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 KFCand Japs at Higi Schoolbetween the period September 5th 2011 toSeptember 26th 201 1”

TABLE OF CONTENTS

TITLE

Iiitrc:,cjiictjon

AimsandObjectives

Methods of Investigation .

Pz.esentat.ion of Data . . . . . . . . . .

I Anaiysis and Interpretation of Data...

F’indingsandObservations..............

Recorrir,iencIations . . . . . . . . . . . . .

Concli.ision . . . . . . . . . . .

Bibliogzaphy

Appendices .

• . . . . . . . .

• . . . • • . .

. . . . . . . . .

• . . . . . . . .

. . • . . . . . .

PAGE

3

. . 4

5

. . . 6—18

• . . . . . . • . . . 19—21

• . . . • . . . . . 22

. . . . . . . . . • 23

• . • 24

. . . . . 25

26—30

2

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 thisSchool-Based Assessment:

God firstly for the opportunity to do such a project

My teacher for her constant advice and willing guiding handMy fellow group member for working on the SBA. with meAll those who answered the questionnaires distributedMy 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 atKFC and Japs

4

+ Met4: The SBA was conducted on the compound of St. AugustineGirls’ High School

jSrces:

1, gnnajre. One hundred and twenty questionnaires were shared out to students ofthe S.A.G.H.S. body. This was geared towards gaining demand information and trends forfried chicken and its complements at KFC and Japs outlets.

2. InteJçjps. Managers of KFC and Japs outlets in St. Helena were interviewed to obtainsupply information such as the factors affecting supply and methods used to attractcustomers.

çda Sources:

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

2. Internet. The websites listed in the bibliography were used to further clarir economicconcepts to enhance the schooIbased assessment

3. Jpcaifews ciers. These were used to obtain fried chicken advertisements as evidence ofthe 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 thestudents surveyed ate fried chicken monthly.

-------

Weekly 47Monthly 67Yearly 4

# of Students and how oftenthey eat fried chicken

4 of Students and how often they eat fried chicken

67

80

60

50

40

30

102

0

4

Weekly Monthly Vearly

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

—-

2piecesJk(CS —

eces 8eces[jp.iees

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

50 .—--

52

50

40

33

# of Students and how muchpieces of chicken bought at$110O/piece

20 ....1,.

8

I I 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 friedchicken even though there was a small increase in price.

U of students and how much fried chicken theywould buy

ithiin bflOOto3.OO

Number of students who would:

Buy less fried chickenSuy more fried chickenBuy the same amount

abIf

1 61

H

61

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 wouldbuy 2 pieces of fried. chicken at $1100/piece and 1 piece at $1400/jiece.

At $1100 pernieee:At At400 per piece:. .... . .

#Of pieces fIen.

1

LQ_2il_J1 432 363 104 f4

5 2

How much fried chicken students would buy at specific prices

hi At $1100/piece

At $14M0/pece

# of students0 131 252 50

4 [••3

_______JL____

60

5050

40

30

20

10

0

0 pieces 1 pie.ce 2 pieces

.

9

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

whorefer:

Japs 8

KFc 72

# of students and preferred choice of friedchicken

:41laps

21 KFc

10

.4 II

z0

1111

:0 1

117!EL1!..I

1iizz

z:z:zz.:

zz::::

1r—

t—-’

,•

I I I

.1 t t I I!

aO

.It-I

Ix

I a...

Ut

9.0

0

Fl

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

Number of students ran each_astheostimpfttactofgffeetinclo1ce

:tTaste €7

Advertising 1

Location 10

Number of outlets 2

Special offers/discounts 2

Complements 21

4 of students ranking each fact as most important

21

Question 8. The majority of students surveyed, 80%, said that even though priceincreases, 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 buyingfrom their preferred source

# of students who switch source

Question 9J)2% of students said that their purchase of fried chicken also encouragesthem to buy complementary goods.

Option # of students

Encouraged to buy I O

çhPEPlcm.cntary goodsNot encouraged to bu..t 10ccmpjgmentaryoods

U of students and complementary goods

a # encouraged to buycomplements

4 not encouraged to butcorn p1 emen ts

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

—-

aps

!KFC 76

Preference of source for complementarygoods

4 laps

KFC

S

JI

LiII

.t

I-’

(M

—.

I

ptJ

M

I pg I

C)C) I

4* III’ I

at_

—

3

I: I I •1 I Is I I I I

‘‘caaa

bZ

WC

flG

OW

OO

t%)Ø

I‘ii

I-’ a.’

Question 12. Most students (67 students or 59%) said that they won’t buy more friedchicken if in. ore complements were available.

Buy more fried chicken’ T# of stud nts -

‘tes j3

zzzzzzzzzzzi

Effect of Complementary goods on friedchicken

A U of students buyingmore

students notbuying mare

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

a____eiin’i’ tlLhhtC can the ch cken betterSeason the chicken better 18Semove excess fat from chicken P(ik chicken beter 20

2

SUPPLY INFORMATION

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

1, What methods do you employ to attract customers?

KFC Japs

Advertisements X

Spedal combos V V

p_cL__sV x

Promotkns V X

Other

2. What factors affect your supply of fried chicken?

::-_

Quality of Chicken V V

Cost of Production V V

Puce of Substitutes V

Puce of Complements V

Use of technology 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,

Popeye’s 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

\N

N

S

IN

c0

‘4.

____

..————

a, \\

a \

Sa, \\

3

j

1

0 03. iz o ‘ZzzZEZIE

a c(Q-cQd .

de,,,dpd a

L- €d cN / .r/3 .Qj

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

P E ij— £ t U 2

P E D =

nOt p 1 a ‘ide 1

S P’ce Quantity S Przce Quantityi6 22

4 32 2

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, thequantity 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. inthis case was -1.12, thus, indicating price elasticity.

4 * /

S.

S

_________

L U

____________

a*w1 d,anaa.aet

01 9e44. &tJ

Ivin it ei4.oi. ChLCI&tfl lan .1

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

E D = Quantity demanded PriceE I)

= A Quantity demanded Price

A Price Quantity A Price Quantity—8 11 10 11

2 33 3 33

—-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 abovementionedincrease in price ($11.00 to $13.00), the demand goes from 33 to 25 and thus, demandhen is Normal. The P.E.D. here is -1.33 which shows Normal demand and price elasticityof 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 perverserelationship could be due to price akticipation.

20

Many factors affect the demand for a specific brand of fried chicken such as Price, Tasteand Complements. Of the range of factors affecting demand, 111 students said Tasteaffected their choice and of the 111, 67 students ranked Taste as the most importantfactor. This is so because since fried chicken is a food product, people would generally ranktaste 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 morestudents preferred KFC shows that KFC is employing some method of attracting customersthat Japs is lacking. These methods include Advertising, Special Promotions and SpecialCombos. Japs only uses the latter. KFC implements a marketing strate’ where they targetthe entire family since the fast food service offers a substitute for cooking while the demandfor KFC can be linked to the desire to purchase toys for children. Effective use of thesemethods can increase the demand for fried chicken, lower production cost, result in arightward 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 also been in business for much longer thanJaps and would have a better grasp on how to operate under the competition oresent in theindustry and how to effectively market their product.

The concept of Joint demand holds for fried chicken and it complements but in a biasedmanner. This is because even though 92% of the surveyed student population said thattheir purchase of fried chicken encourages them to buy complementary goods, 59% of thestudents stated that buying more complements does not encourage them to buy more friedchicken. 63% of the students preferred complements from KFC, with Chips being thestudents’ favourite. This was made based on the factors affecting demand, with Tastepossibly have the greatest influence.

Many factors would affect the ability of KFC and Japs to achieve production and allocativeefficiency in production. These factors, which are essentially the factors affecting supply,include the Quali of chicken, ost of Production. , Price of Substitutes, Price ofComplements nd the Use of Technology Both KFC and Japs implement all of theseHowever, the extent of implementation of each factor would account for the supplydifference between KFC and Japs and thus, the cost price of fried chicken. As firmsexpand, increasing, production, they could benefit from economies of scales and produce atthe Minimum Efficient Scale on the Averae Cost Curve. In this manner, there could he arightward 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 suggestionto improve fried chicken is to use less oil, In the Caribbean where we have a special flavourto 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 consumptionrate is that of Taste.

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

• The Joint Demand for fried chicken and its complements is biased sincethe majority of students are encouraged to buy complements with theirpurchase of fried chicken but not to but fried chicken with theirpurchase of complements.

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

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

• KFC is in a better financial position than Japs since they have bettermarketing strategies than Japs and they also have a larger consumermarket.

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

22

Recommendations

Both KFC and Japs can endeavour into improving in the following areas ifthey haven’t already done so order to boost sales and have a bettercompetitive stance:

+ Increasing their potential consumer market by having more outletsnationwide

+ 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 majorole that economics plays in the operation of a business. It was deduced thKFC is in a much better financial position than Japs since they have a biggconsumer market. Consumers made many suggestions to help improve thequality of fried chicken and implementations of these recommendations couhold 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 professionalstudents. 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 Retrieved

on September 15th 2011.—., ntr_/v.•,: ‘.; 1..’de!n•. . 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

flrnleuesflonnaireM name is Renee Voisin. As part of my investigation for my school-basedassessment., this questionnaire is prepared for any volunteers to fill out. Yourresponses will be deeply ajpreeated.

Ac: 10-13 14-16 Z.17 and overForm class:

_____

— 1 On average, how often do yeu eat fried chicken?

Daily

Li Wee:kly

Li Monthly

H 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 oftbon woven s’ot choose

Buy less fried chicken

hue more fried chicken

Plea so 10001 1Odi wcfl1Li 1)117 0.1 each p

5 1 3 1)) : oice:es 01 rr:. oh chicken

11

—) 5. Whose fried chicken do you prefer?

Li Japs

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

UN0

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, ismember 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. AugustineGir.Is’ High School between the period September 5th 201.1 to September26th 201 1.” She requests permission to surve persons in the form of aquestionnaire 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

I