Economics: Supply and Demand and Fried Chicken
A comparative study of the demand for KFC and Japs at a particular high school between the period September 5 and 26, 201 1
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.
Purpose of the Project
Three objectives 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 were used. ll were accurately named and labelled. The full seven marks were awarded.
An excellent analysis of data using relevant economic theory was done. The full ten marks were awarded.
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
Title: “A comparative study of the demand for KFC
and Japs at
between the period September 5 2011 to
September 26 201 1”
TABLE OF CONTENTS
Methods of Investigation
Pz.esentat.ion of Data
Anaiysis and Interpretation of Data…
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.
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
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.
.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
Question I CAll students ate fried chicken at least once per ear. More than half of the students surveyed ate fried chicken monthly.
4 of Students and how often they eat fried chicken
# of Students and how often
they eat fried chicken
Question 2Of the 20 students, 4323% said that they would buy 2 pieces at $1 L00 eec piece.
# of Students and how much pieces of chicken bought
# of Students and how much
pieces of chicken bought at
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.
Number of students who would:
Buy less fried chicken
Suy more fried chicken
Buy the same amount
U of students and how much fried chicken they
5 Buy less
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
How much fried chicken students would buy at specific prices 60
hi At $1100/piece
&60% of the students preferred KFC while 40% preferred Japs.
# of students and preferred choice of fried
Question 7Of all the fActors considered in the previous question, Taste was as the most important factor affecting choice.
Number of students ran
Number of outlets
4 of students ranking each fact as most important
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
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.
# of students
Encouraged to buy
Not encouraged to bu..t
U of students and complementary goods
a # encouraged to buy
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.
Preference of source for complementary
Question 12. Most students (67 students or 59%) said that they won’t buy more fried chicken if in. ore complements were available.
Buy more fried chicken’
of stud nts
Effect of Complementary goods
A U of students buying
Question 13. Of the varied response in this question, most students suegested that less/fresh oil he used to fr’ chicken.
C can the ch cken better
Season the chicken better
Semove excess fat from chicken
(ik chicken beter
Response of interview conducted in St. Helena at KFC and Japs outlet
1, What methods do you employ to attract customers?
What factors affect your supply of fried chicken?
Quality of Chicken
Cost of Production
Puce of Substitutes
Puce of Complements
Use of technology
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. Also interesting to read about Demand and Supply Wii console case study answers
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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
Figure 1: Price increase of frted chicken from
Si L00/ piece to S 1300/piece (demand for 2
P E ij
Figure2: Price increase of fried chicken from
SI LOU/piece to 31400/piece (demand for 2. pieces)
P E D
nOt p 1
a ‘ide 1
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.
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)
A Quantity demanded
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 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 firm’s 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.
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
+ 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
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.
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 hL’.ix! /www.trr;o..i
on September 15th 2011.
September 19th 2011.
Manager of KFC St. Helena, September 10th 2011 at 4:30 pm
Manager of Japs St Helena, September 10th 2011 at 5:00 pm
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.
Z.17 and over
1 On average, how often do yeu eat fried chicken?
—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
woven s’ot choose
Buy less fried chicken
hue more fried chicken
rr:. oh chicken
10001 1Odi wcfl1Li 1)117 0.1
1 3 1))
5. Whose fried chicken do you prefer?
6. What factors affect your choice in question 5?
Number of Outlets
Li Complements (eg. Chips, beverages)
7. In order of importance, I being the most important, rank the options you chose in question 6.
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
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?
I I. What complementary goods do you prefer most?
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?
St. Augustine Girls High School,
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
Date of Signature
DIAGRAMS showing KFC using Advertising as a Marketing Strategey