Use economic theory to explain how supermarkets in my local area compete for custom.

The seventh question showed me that most people (45 out of 50) don't ever shop online. You could say this was an unsuccessful question because most people just said they didn't shop online at all. Again this question could have been replaced with a more useful question.

The eighth question told me that shoppers generally spent around £31-£40 each time they shopped (27 out of 50 people). This was followed by the next popular choice chosen by 11 people of £41-£50. The results of this question were quite good because they showed me that people spend quite a lot at supermarkets. It means that the supermarkets are doing really well and competing against each other because they are attracting customers who are willing to spend a lot, which means more profits for the supermarkets.

The ninth question usefully told me that people do generally look to save money and care about promotions. This showed me that supermarkets do compete on promotions because a lot of people are well aware of the promotions being made.

The tenth and last question was very useful because it told me that people were not fully aware of what price they were paying for a popular product. I also found out that supermarkets do compete on price a bit because they all try to keep their prices the same, especially on the common products. For example, if one store put the prices lower, the rest of the stores would follow and vice versa. I knew that the supermarkets kept their common product prices the same because the nine people out of fifty that said they did no the price of the product, all stated a price of 88p.

As I said earlier the sample that I chose was fifty because I felt this was a sample that I would be able to do, and I felt it would give me okay results for what I was trying to find out. Obviously this sample is no way near the sample needed to get a good representation of the population, this number would be a 1,000 if not more. I didn't have the resources as a GCSE student to do a proper sample like this; I tried to do the sample as big as I could manage. If I had the resources, more time and money this is an improvement I would make to my questionnaire. I would certainly make my sample a lot larger.

In my research plan I said that I intended to use a 'Quota Sample,' but in the end I did not have the resources to do this as a GCSE student. Instead I did more of a random sample, except it wasn't completely random because I intentionally gave most of my questionnaires to older people. Like I have said before, this was so that my questionnaires were answered well and efficiently. This would have caused my results from the questionnaire slightly biased because I intentionally asked older people more than younger people. This leads me to another improvement I would make to my questionnaire. To improve it if I had the money, resources and time I would use quota sampling so that the results I got were a fair representation of the population. By using quota sampling it would make my questionnaires results far more reliable and less biased.

Another improvement that I would make to my questionnaire is that the questions that were not as useful would be replaced by more useful ones. For example whether the individual was male or female would be replaced because it didn't help my in answering the coursework question.

The last improvement that I might make if I did the questionnaire again is to ask people in different parts of Leicester, not just the Shires. This is because there might be people who have very good views about supermarkets who do not go to the Shires. I would try to visit lots of places in Leicester and get my questionnaires answered.

Theory of the Firm

Supermarkets are in a market, which by definition is a place where buyers and sellers are able to communicate and exchange goods and services. The market is the place where the supermarkets compete against each other.

Competition occurs in any market where firms are trying to sell the same type of products to consumers. The firms compete against each other in an attempt to gain more customers and increase both their profits and market shares. Competition is good for consumers because if there is a lot of competition it means that consumers will not be overcharged for the product that they want to get with the best possible use being made of resources.

The main advantage for the consumer when there is a lot of competition in a market, as is the case with the supermarket market, is that they will probably get cheaper products overall. This is because the firms are in competition with each other so try to attract customers to their store; one of the ways they do this is by lowering prices. More advantages are that services will improve to attract customers, for example customers might get better after care with the product. There would also be more choice because the firms would try to attract customers by making new products that the other firms haven't yet got.

If a firm succeeds in becoming the dominant supplier in a market then they will have more control over the prices, and will be able to change the prices that it charges to customers in order to maximise profits. This is not good for the consumer. Also if a firm or a group of firms act together, they can see off existing competition and establish barriers to entry to new competition. The firm may then abuse this market power by misleading consumers, cutting product quality and raising prices in order to make huge profits. They may also not offer as much choice. These things are obviously not good for consumers.

In a market the aim is to survive, then make profit and grow in size. The more profits and larger the firm gets, the more successful it will be. To be successful the firms have to give the consumers what is in demand and 'wanted,' if they do not give something in demand they run the risk of going out of business.

Governments can try to protect consumers against these anti-competitive practices and the abuse of monopoly power by passing laws to control the behaviour of the firms, to make sure that they act in public interest. The measures that can be taken by a government to control the behaviour of monopolies and dominant firms are known as competition policy. These measures are thought to act in public interest. The competition policy includes Prohibition. This is where monopolies can be banned or forced to break up. For example, a company such as Microsoft. The competition policy also includes Regulation. This means that the government can allow a private sector monopoly to continue, but pass laws to make sure that the monopoly acts in the public interest. The competition policy also includes the Imposition of Fines. These fines can be imposed on firms who are thought to be abusing their market power and overcharging customers.

Before any of these actions are taken by a government it is important to investigate each case of anti-competitive behaviour and then decide which action is appropriate.

Now I will talk about the 3 different types of competition and decide which type of competition applies to supermarkets. Here are the 3 types of competition:

) Perfect Competition.

2) Monopolies.

3) Oligopolies.

One of the extremes of competition is perfect competition. Perfect competition has many characteristics. The first of these characteristics is that there will be a large number of small producers. All of the firms will be selling the same product. This product is known as a Homogeneous product. The second of these characteristics is that there will be lots of buyers and sellers of the product. None of the buyers or sellers will be able to buy or sell enough to be able to influence the price of the product. As the buyers and sellers will not be able to affect the market price for the product they will have to accept the price. They are known as price takers. The third of these characteristics is that the firms and buyers will have perfect information about the market. This means that all the buyers will know all about the prices and products on sale. Also all the sellers will have the information on the latest production techniques. What this means is that all of the firms will have the same information so one will not have an advantage over the other, as they all share the same information. The forth and last characteristic of perfect competition is that there is a freedom of entry and exit to the industry. This means that new firms can enter the industry when they want, and firms can leave the industry when they want. There are no perfectly competitive industries in the world. This is because no industry has all four of the characteristics of perfect competition mentioned above. Some industries have some of them, for example, farming.

There are advantages to perfect competition. One of these advantages is that the prices will be low. This is because the firms are in competition to make profits, and prices have to be put low so customers can be attracted. Another advantage is that if a firm is less efficient than other firms it will make less than normal profit. This could make the firm go out of business. However, if the firm is more efficient it will earn supernormal profits, so the competition makes the firms more efficient. This desire to make supernormal profits will encourage the firm to make new technology, making it more efficient. Another advantage is that because all the products are homogeneous there will be a lack of advertising. This will lower the firm's costs. Another advantage is that there is consumer sovereignty. This is where the consumers get what they want because there are many small producers, they have lots of choice.

There are also disadvantages of perfect competition. The first of these is that as output increases the costs per unit decrease. This means that the economies of scale are not fully exploited as all of the firms are small. Another disadvantage is that there may be a lack of investment because any extra profits created as a result of investment will tend to be competed away.

Supermarkets do not fit into this market. I know this because supermarkets do not share the same characteristics as perfect competition. Firstly supermarkets do not produce the same or homogeneous product. Some supermarkets sell products that others don't and vice versa. Secondly not all the supermarkets have the same 'perfect' information. Some supermarkets have different information to others. Lastly in the market of supermarkets there are barriers to entry, a firm can not just join when it wants and similarly a firm can not just leave when it wants. Because of these reasons he supermarket market is not perfect competition.

Now I will talk about the second type of competition. This competition is when there is a monopoly, and is the complete opposite from perfect competition. A monopoly is when a firm is a pure monopoly where there is a single supplier of a good or service that has no close substitutes. Under European and UK law a monopoly is also defined as any firm, or group of firms acting together supplying between 25%-40% or more of a market. A small group of large firms may agree to work together to become a type of monopoly. They will try to keep their prices and all their profits as high as they can. Their cooperation amounts to the setting up of what is called a cartel or price fixing ring of firms. If the firm is a monopoly it tries to compete by promotions to attract customers instead of price.

Now I will tell you about the main features of a monopoly. Firstly there is no competition as the firm is the only producer in the whole market. It has no other firms to compete with so there is no competition. Secondly as there is no competition in this market the firm can earn abnormal profits. This is where the firm makes huge profits of nearly 100%. Thirdly as the firm is the only producer it can make the price so that it makes huge profits, and the market just has to accept this price. They can also use their power and dominance to reduce the supply of the product so the price is increased again. An important feature of a monopoly is that they can set up barriers of entry so that other firms cannot enter the market. This is possible because they are the only firm in the market and have utter dominance of the market. Also the monopoly can use aggressive tactics and intimidation to scare other firms from entering the market. They can also use these tactics so that the supplier does not give any supplies to any other firms, so again there is no competition. The last main feature of a monopoly is that there are non-homogenous products. This means that there is one firm that sells the same product. This is different to perfect competition as this has lots of firms selling the same product.

There are certain advantages to monopoly. The first of these is economies of scale. This is where a monopolist producers a large output and can benefit from economies of scale. It also means that as the output increases the cost per unit decreases, making the firm more efficient. Another advantage of a monopoly is that research and development will be increased because the monopoly will know that it can earn high profits to repay its investment. This will improve the firm, making it more efficient. The barriers of entry will also stop other firms from taking customers and profits away e.g. medicine. Lastly the monopoly will have the ability to compete with firms abroad, making it able to compete in global markets as well.

There are also disadvantages to a monopoly. Firstly there could be poor levels of service as customers have a limited amount of choice. This makes the services not very good for the consumer. Secondly there are low output and high prices. This is because the monopoly want to make as much profits as possible, so may charge higher prices for their products. This can be done by restricting the supply. Thirdly there is producer sovereignty; this is where the monopoly chooses what goods and services it provides to consumers. Consumers do not have a choice in the decision. The last disadvantage is that inefficient high cost firms can still stay in business. They do this by using barriers of entry to competition so they can stay in business.

Supermarkets do not fit into this market. I know that supermarkets do not fit into this market because they do not share the characteristics that monopolies do. The main reason is that the supermarket market has lots of competition from different firms. This is the opposite of monopolies where there is only one producer in the market. Also supermarkets so not usually make near to 100% profits and abnormal profits like monopolies do. Another difference is that supermarkets have lots of firms that sell different products, whereas monopolies sell one product which is only produced by one firm. Because of these reasons supermarkets do not fit into monopolies.

Now I will talk about the third type of competition. This competition is when there is an oligopoly. Oligopoly is defined as an industry in which there are a few firms. They are able to control the supply of a commodity to a market. The firms are interdependent, and are aware of their future prospects. Policies made by itself and other rivals affect its future and success. These types of firms can be found in many markets including banks and oil companies.

Now I will tell you about four characteristics about oligopoly. The first is that the few firms sell similar products to each other. Secondly the firms are interdependent on each other, decisions and policies made by one of the firms will affect the rest of the firms. Thirdly, there are some barriers to entry for new competition. Lastly Oligopolies tend to take advantage of economies of scale. This is because they buy in bulk so that they get cheaper products. They also get the products cheaper because they tell the supplier to give products cheaper or go elsewhere. The supplier will go out of business if they don't sell their products so have to accept the firms offer.

The market in oligopoly can be dominated by a few large firms. These few firms take up a large percentage of the market they are in. Advertising and marketing are important features of competition between the firms, and can greatly affect their success in the market.

The interdependence between the firms creates uncertainty in the market. This is because a firm has to take into account what the reactions of other firms in the market will be when they make pricing decisions and other important decisions. This is why competition in oligopoly is very strong and there is a lot of rivalry. This can be good for consumers because prices are often put down and services are also given to attract customers. The barriers of entry that are in place allow the firms in the long run to make abnormal profits.

Supermarkets fit into this market because they share characteristics with oligopoly. Firstly they are able to control the supply of a commodity to a market. Also supermarkets are interdependent on each other and decisions and policies made by one of the supermarkets will affect the rest of the supermarkets. Another reason is that supermarkets also sell similar products and this is a characteristic of oligopoly too. In the supermarket market there are also some barriers to entry which again is a characteristic of oligopoly. Lastly like oligopolies supermarkets take advantage of economies of scale. They do this because they are dominating in their market and force the suppliers to sell their products cheap or go elsewhere to sell. They also buy in bulk which gets cheaper products. Because of these reasons supermarkets fit into oligopoly.

Price Comparison

The table below shows the Tesco pricelists. I decided to do 20 products for my pricelists, as I felt that this would be enough products to find out what I wanted to find out about whether supermarkets compete on price. This would also give me lots of different products so I could compare the prices of lots of products instead of just a few. I have given the weight of the products along with the price of each product, as lots of products come in different weights and sizes. Giving the weight of the product tells you which product weight or size I am giving the price of. The table shows the prices of the 20 products on two different dates, 2/09/02 and 9/01/03. The table also shows the cost of the whole shopping bill of the 20 products on the two dates.

TESCO

Product

Weight

Price (£) 2/09/02

Price (£) 9/01/03

Semi Skimmed Fresh Milk

6pt

£1.44

£1.44

Frosties

750g

2.08

.98

Cheerios

375g

.48

.47

Granny Smith Apples

per Kg

.19

.19

Wotsits (Cheese)

6 X 19g

0.89

0.87

KP Peanuts Ready Salted

500g

.32

.32

Coca Cola

2L

.22

.21

Haagen Daz Strawberry Cheesecake

500ml

3.49

3.27

Goodfellas Cheese Pizza Supreme

410g

.96

.96

Large Free Range TESCO Eggs 12's

.68

.62

TESCO Baked Beans

420g

0.23

0.21

Heinz Baked Beans

4 X 415g

.23

.34

Silver Spoon Granulated Sugar

Kg

0.54

0.54

Jaffa Cakes 12's

0.57

0.57

Hobnobs

300g

0.57

0.57

Birds Eye Haddock Fish Fingers

300g

.43

.69

Andrex Aloe Vera 4 Roll Tissue Paper

.99

.99

Hovis Medium White Bread

800g

0.59

0.58

Anchor Butter

250g

0.77

0.77

Fairy Liquid Spring Fresh

500ml

0.88

0.88

Total Price Of Products

£25.55

£25.47

The table below shows the ASDA pricelists. I decided to do 20 products for my pricelists, as I felt that this would be enough products to find out what I wanted to find out about whether supermarkets compete on price. This would also give me lots of different products so I could compare the prices of lots of products instead of just a few. I have given the weight of the products along with the price of each product, as lots of products come in different weights and sizes. Giving the weight of the product tells you which product weight or size I am giving the price of. The table shows the prices of the 20 products on two different dates, 2/09/02 and 9/01/03. The table also shows the cost of the whole shopping bill of the 20 products on the two dates.

ASDA

Product

Weight

Price (£) 2/09/02

Price (£) 9/01/03

Semi Skimmed Fresh Milk

6pt

£1.37

£1.44

Frosties

750g

.98

.96

Cheerios

375g

.47

.44

Granny Smith Apples

per Kg

.08

0.99

Wotsits (Cheese)

6 X 19g

0.87

0.87

KP Peanuts Ready Salted

500g

.32

.32

Coca Cola

2L

.22

.21

Haagen Daz Strawberry Cheesecake

500ml

3.27

3.27

Goodfellas Cheese Pizza Supreme

410g

.96

.48

Large Free Range ASDA Eggs 12's

.58

.62

ASDA Baked Beans

420g

0.21

0.21

Heinz Baked Beans

4 X 415g

.32

.32

Silver Spoon Granulated Sugar

Kg

0.54

0.54

Jaffa Cakes 12's

0.41

0.57

Hobnobs

300g

0.57

0.57

Birds Eye Haddock Fish Fingers

300g

.44

.69

Andrex Aloe Vera 4 Roll Tissue Paper

.54

.99

Hovis Medium White Bread

800g

0.59

0.58

Anchor Butter

250g

0.77

0.77

Fairy Liquid Spring Fresh

500ml

0.88

0.88

Total Price Of Products

£24.39

£24.72

The table below shows the Sainsbury's pricelists. I decided to do 20 products for my pricelists, as I felt that this would be enough products to find out what I wanted to find out about whether supermarkets compete on price. This would also give me lots of different products so I could compare the prices of lots of products instead of just a few. I have given the weight of the products along with the price of each product, as lots of products come in different weights and sizes. Giving the weight of the product tells you which product weight or size I am giving the price of. The table shows the prices of the 20 products on two different dates, 2/09/02 and 9/01/03. The table also shows the cost of the whole shopping bill of the 20 products on the two dates.

SAINSBURYS

Product

Weight

Price (£) 2/09/02

Price (£) 9/01/03

Semi Skimmed Fresh Milk

6pt

£1.41

£1.44

Frosties

750g

2.09

2.09

Cheerios

375g

.48

.48

Granny Smith Apples

per Kg

.29

.19

Wotsits (Cheese)

6 X 19g

0.89

0.89

KP Peanuts Ready Salted

500g

.32

.32

Coca Cola

2L

.22

.21

Haagen Daz Strawberry Cheesecake

500ml

3.49

3.49

Goodfellas Cheese Pizza Supreme

410g

2.09

2.09

Large Free Range SAINSBURYS Eggs 12's

.75

.79

SAINSBURYS Baked Beans

420g

0.23

0.21

Heinz Baked Beans

4 X 415g

.08

.34

Silver Spoon Granulated Sugar

Kg

0.54

0.54

Jaffa Cakes 12's

0.59

0.59

Hobnobs

300g

0.49

0.49

Birds Eye Haddock Fish Fingers

300g

.89

.72

Andrex Aloe Vera 4 Roll Tissue Paper

.99

.99

Hovis Medium White Bread

800g

0.59

0.59

Anchor Butter

250g

0.78

0.77

Fairy Liquid Spring Fresh

500ml

0.88

0.88

Total Price Of Products

£26.09

£26.11

The table below shows the Safeway pricelists. I decided to do 20 products for my pricelists, as I felt that this would be enough products to find out what I wanted to find out about whether supermarkets compete on price. This would also give me lots of different products so I could compare the prices of lots of products instead of just a few. I have given the weight of the products along with the price of each product, as lots of products come in different weights and sizes. Giving the weight of the product tells you which product weight or size I am giving the price of. The table shows the prices of the 20 products on two different dates, 2/09/02 and 9/01/03. The table also shows the cost of the whole shopping bill of the 20 products on the two dates.

SAFEWAY

Product

Weight

Price (£) 2/09/02

Price (£) 9/01/03

Semi Skimmed Fresh Milk

6pt

£1.47

£1.48

Frosties

750g

2.19

2.09

Cheerios

375g

.69

.67

Granny Smith Apples

per Kg

.29

.29

Wotsits (Cheese)

6 X 19g

.09

.11

KP Peanuts Ready Salted

500g

.49

.49

Coca Cola

2L

.29

.27

Haagen Daz Strawberry Cheesecake

500ml

4.19

4.15

Goodfellas Cheese Pizza Supreme

410g

2.19

2.19

Large Free Range SAFEWAY Eggs 12's

.99

.99

SAFEWAY Baked Beans

420g

0.27

0.27

Heinz Baked Beans

4 X 415g

.45

.42

Silver Spoon Granulated Sugar

Kg

0.59

0.61

Jaffa Cakes 12's

0.65

0.66

Hobnobs

300g

0.67

0.67

Birds Eye Haddock Fish Fingers

300g

2.08

2.11

Andrex Aloe Vera 4 Roll Tissue Paper

.55

.99

Hovis Medium White Bread

800g

0.65

0.65

Anchor Butter

250g

0.89

0.89

Fairy Liquid Spring Fresh

500ml

0.99

0.99

Total Price Of Products

£28.67

£28.99

By doing these price comparisons it enables me to see the differences in prices of different products, and identify which supermarket is the cheapest and which is the most expensive. I will also be able to see which supermarkets cut costs in order to gain more customers and therefore gain more revenue. Furthermore I will be able to see whether supermarkets do actually compete on price, or on other things. The twenty products that I chose are mainly everyday items that are frequently purchased, and more importantly are available in all four of the supermarkets so that I could get a price of each of them in the different supermarkets. As I said before I gave the prices of the products on two different dates, 2/09/02 and 9/01/03. This was done so that I could see over a long period of four months whether the prices of the products increased, decreased or stayed the same. I would also be able to tell whether some products changed prices more dramatically than others. The price of the products reflects the season that they were taken in.

Here is a graph to show the differences in price of the whole shopping bill from the two different dates of 2/09/02 and 9/01/03.

From the graph we can see that overall the order from cheapest to most expensive of the supermarkets is ASDA, Tesco, Sainsbury's and Safeway. We can also see from looking at the tables and the above graph we can see that the prices of the shopping bills, at each supermarket on the two different dates changed price. (It is hard to see the change in price on the graph for Sainsbury's, but it has increased by 2 pence).

Firstly I will look at Tesco. From the tables and the graph we can see that the price of the shopping bill on 2/09/02 was £25.55. On 9/01/03 the price of the shopping bill had decreased to £25.47. This means that the price of the shopping bill decreased by 8p between the two dates. The price cut means that overall the products were decreased in price more than increased in price. This was done to attract more customers to the store as sales might have been lower than they expected. The profit lost would be outweighed by the money made by the new customers so revenue would still be increased. The prices also probably got cheaper to compete more successfully with other supermarkets, most notably ASDA. The decrease in price shows that supermarkets are willing to compete on price so that their prices are at least the same as their rival supermarkets.

Now I will look at ASDA. From the tables and the graph we can see that the price of the shopping bill on 2/09/02 was £24.39. On 9/01/03 the price of the shopping bill had increased to £24.72. This means that the price of the shopping bill increased by 33p between the two dates. The price increase means that overall the products were increased in price more than decreased in price. This was most probably done because their prices were too low so that they were losing out on revenue that could be made. This increase in price may not seem huge but would make the store millions because they sell so many products. However, ASDA didn't increase their prices so much so that the customer numbers decreased, as this would lose revenue.

Now I will look at Sainsbury's. From the tables and the graph we can see that the price of the shopping bill on 2/09/02 was £26.09. On 9/01/03 the price of the shopping bill had increased to £26.11. This means that the price of the shopping bill increased by 2p between the two dates. The price increase means that overall the products were increased in price more than decreased in price. Like ASDA this was probably done because their prices were too low so that they were losing out on revenue that could be made. This increase in price may seem very small but would make the store millions because they sell so many products. However, Sainsbury's didn't increase their prices so much so that the customer numbers decreased, as this would lose revenue.

Finally we will look at Safeway. From the tables and the graph we can see that the price of the shopping bill on 2/09/02 was £28.67. On 9/01/03 the price of the shopping bill had increased to £28.99. This means that the price of the shopping bill increased by 32p between the two dates. The price increase means that overall the products were increased in price more than decreased in price. This was most probably done because their prices were too low so that they were losing out on revenue that could be made. This increase in price may not seem huge but would make the store millions because they sell so many products. However, Safeway didn't increase their prices so much so that the customer numbers decreased, as this would lose revenue.

ASDA, Sainsbury's and Safeway all increased their prices between the two dates. They would have all taken into account the Price elasticity demand or P.E.D so that they would no how much they could increase prices without the demand falling.

From the tables and the graph we can see that the shopping bill prices from ASDA, Tesco and Sainsbury's are quite similar. However, Safeway are way more expensive. This may be one of the reasons why Safeway is not as successful as the other three supermarkets.

If the supermarkets only competed on price, then as ASDA seems to be the cheapest supermarket it would mean that ASDA is the most successful supermarket. However, this is not true because Tesco is the UK's leading supermarket. This is evidence that supermarkets do not just compete on price but also compete on other things. The other things that supermarkets compete on will be looked at in my non-price competition section of this coursework.

Now I will look at some prices of individual products and discuss them. Firstly I would like to look at 'Hovis Medium White Bread.' At Tesco and ASDA it first cost 59p then cost 58p. At Sainsbury's it cost 59p both times. At Safeway it cost 65p both times. Apart from Safeway the price of the bread is very similar. This is because bread is a very common product which lots of people buy so the supermarkets want to keep the price of it basically the same so they are seen as 'cheap' supermarkets. As Tesco and ASDA were exactly the same they are probably directly competing on price so that when one supermarket puts the price down the other follows suit. Safeway probably don't mind keeping the price of the bread very high. This is because bread is an inelastic product, which means that if the price of it is changed the demand will stay the same. So they probably think that the demand will be about the same no matter what the price of the bread (the price has to be reasonable though).

Now I will look at 'Semi Skimmed Fresh Milk.' At Tesco it cost £1.44 both times. At ASDA it cost £1.37 then £1.44. At Sainsbury's it cost £1.41 then £1.44. At Safeway it cost £1.47 then £1.48. We can see that the prices are very similar, even from Safeway. This is because milk is an extremely common product and the supermarkets want to keep the price of it similar so that their supermarket is not seen as 'expensive.' This product again shows that the supermarkets so compete on price, especially common products, so that their supermarket is not seen as more expensive than others.

Finally I will look at 'Goodfellas Cheese Pizza Supreme.' At Tesco it cost £1.96 both times. At ASDA it cost £1.96 then £1.48. At Sainsbury's it cost £2.09 both times. At Safeway it cost £2.19 both times. We can see that the price of this product varies from store to store. ASDA and Tesco seem to be competing because the first cost of the product was £1.96 at both supermarkets. But ASDA then dramatically reduced the price to £1.48, this was probably due to low sales and lost revenue. The price of this product generally varies because it is not a popular product when compared to bread and milk. So the supermarkets do not compete on the price of it because if their price is more expensive people will not generally notice because not as many customers buy this product.

Now I will sum up briefly on this section. ASDA seems to be the cheapest supermarket followed by Tesco, Sainbury's and the most expensive supermarket Safeway. Each supermarket tries to keep prices of the common products the same so that their supermarket is not seen as more expensive than the others. The less common products prices vary because people don't really notice that the prices of these products vary from store to store. This means that supermarkets only really compete on the prices of the common products such as bread, milks and eggs. Overall supermarkets do not really compete on price because if they did ASDA would be the most successful supermarket because it is the cheapest out of the supermarkets. However, this is not the case as Tesco is the most successful supermarket in the UK, so supermarkets must also compete on other things. I think that supermarkets don't really compete on price because it would be too damaging to their firm. If they continued to drive prices lower and lower then the firm would end up losing too much revenue not enabling it to survive any longer. They would probably have to close down.

Evaluation of Price Comparison

I feel that overall my price lists were quite successful. There are a few reasons for this. Firstly I felt that I did enough products (20) to give me a variation of products so I could compare the prices of lots of products instead of just a few. Also I felt that I did enough products to give me a good idea of whether supermarkets did actually compete on price. I also felt that I did well by writing down the weights and sizes of the products so that people could tell which weight or size type of the product I was talking a bout.

There were also things about my price lists that were not that good. If I did it again I would get the prices of the products on more dates. I got the prices of the products on two dates four months apart. If I did it again I would do about four dates each a month apart. This would enable me to compare the prices better and see if they changed monthly. It would ultimately allow me to answer the question more reliably about whether the supermarkets did compete on price. Although I said that I think that 20 products were enough if I had more time I still would do more products. I would do about 30; this would enable me to compare more and different types of products, and would give me more variation. Again it would allow me to answer the question more reliably about whether the supermarkets did compete on price.

Non-Price Competition

In the last section of price comparison I found out that overall supermarkets do not really compete on price. Competing on price can be very expensive as if they drive prices down too much they will lose too much revenue and may be forced to shut down. So the supermarkets find other ways to attract customers to their stores. They compete on other factors. I will explain as many of these factors as I can in this section. The factors are things that the supermarkets compete on that don't involve price. These factors help to gain customers for the supermarkets and therefore the all important thing, revenue. There are a large amount of factors which supermarkets compete on which don't include price. This is why competition between supermarkets is so stern. Here is a list of some of the factors of non-price competition:

* Advertising

* Loyalty Cards

* Petrol Stations

* Café's

* Financial Services

* Clothing Departments

* In store Newsagents, Pharmacists and Post Offices

* Home Delivery System

* Layout of the Store

* Disabled Services

* Toilets

* Helpful Staff

* Selling of Household Goods

* Selling Entertainment Goods

* Car Parking

* Long Shopping Hours

* Online Shopping

* Dry Cleaning Facilities

* Photo Processing Facilities

* Fresh Food

* Crèches for Children

* Support for Charities

* Clean Stores

Advertising is one of the most important factors of non price competition. Advertisements catch the attention of the public that the goods are on sale, and that they should go out and buy them. Advertisements are a way in which supermarkets gain new customers who will hopefully become loyal ones, who end up shopping at their store for their lifetime. Advertisements can take many shapes and forms. Advertisements can be leaflets in the newspaper and advertisements on the TV and radio. The leaflets are normally very eye-catching and colourful which helps to get the readers attention. The leaflets also highlight special offers on the supermarkets products such as buy one get one free and as ASDA use 'Rollback.' They always use slogans, which are easily remembered. For example ASDA sometimes uses 'Always LOW PRICES,' this helps to make the customer believe that the prices are lower than the other supermarkets. Sainsbury's use 'Making life taste better for less.' This again leads customers to believe that the quality of the products is good, and that they are also good value for money. At the back of my coursework, in my appendix you will find some leaflets from supermarkets. Like I said before these leaflets highlight many special offers to attract the customer to come to their store and buy these products. However, as other products are not on offer the supermarkets make profits and huge revenue when the customers shop at their store.

Most probably the most important factor of non price competition is keeping the customer happy. If a supermarket can keep a customer loyal and happy the customer will continue to shop at that store and hopefully advise other people to come to that store. Getting more customers is how a supermarket survives and then grows so it is a very important factor.

Loyalty cards are used so that the customer stays loyal with their chosen supermarket. The loyalty card can also give rewards when the customer gets lots of reward points from buying products and being a regular customer. This rewards of getting some products cheaper for a while help to keep the customer loyal to the supermarket, and make them become a regular shopper at the supermarket. In the appendix at the back you will find a page from Sainsbury's website that introduces the 'Nectar Card.' This is Sainsbury's loyalty card. One of the good things about it is that it applies to other shops as well like Barclaycard and bp.

Lots of factors of non price competition are to do with keeping the customers happy. They are known as factors that increase the customer's convenience.

The supermarkets compete on petrol stations. The petrol stations are very important to the supermarkets indeed as this is a big way other than advertising of how new customers are brought in to shop at their store. What happens is that someone goes to the petrol station which is usually conveniently placed on a main busy road right next to the supermarket. Then the person gets their fuel and might be given a loyalty card from the petrol station pay point. As they get reward points they think that they should use them in the supermarket so go and have a shop. Then they keep on coming back to the store and the supermarkets have made yet another loyal customer. Then these customers advise others to go to the supermarket because of the petrol and shopping. Instead of going to a supermarket and a petrol station, they can conveniently go to a place where they can do both. The petrol station is also a big source of revenue for the supermarket as petrol in this country is expensive for the public to buy.

Café's are another factor of non price competition that keeps the customer happy. The shopper may feel like having a snack or meal after a long, hard shop so conveniently placed is a café so that they can satisfy their hunger. The customer might also just want to come in from school or work to eat grab some lunch, and eat in a peaceful environment. He café again brings in a lot of revenue for the supermarket as it is popular with the customers. This is why a lot of supermarkets have café's these days.

Nowadays supermarkets even offer various financial and banking services such as supermarket banking accounts, VISA cards, home insurance, car insurance and even mortgages. All of these things help to attract customers to the store because they can do everything at one store. They don't have to worry about having to deal with different companies all the time; they can just deal with Sainsbury's. In the appendix at the back of this coursework you can see a number of leaflets that shows these various financial and banking services that Sainsbury's offers. It is also a great source of revenue. Since Sainsbury's Bank opened there years ago it has attracted over 1.25 million customers with deposits in excess of 1.6 billion pounds. It is a good way of competing with other stores as people will join the banking services then start to shop at that supermarket. It makes the customers feel happy so they may spend more as well. Tesco, Safeway and more recently ASDA all offer various financial services as well.

Some Supermarkets also have clothing departments. Having a clothing department again makes it more convenient for the customer, as they can get everything they want under one roof. The customer will go around looking for food but then might decide to buy some clothes as well. It is a source of revenue for the supermarkets and helps them keep prices of food low, as they know the clothing department is bringing money in. ASDA have a big range of clothing under the name of George and TESCO sell clothes in some stores as well.

In store newsagents, pharmacists and post offices increase the customers' convenience again. Instead of going to the local post office the customers can again get a lot of services under one roof. The consumer can save time by doing all things like buying newspapers, lottery and medical supplies under one roof. It saves petrol money for customers as they would have to travel to a few shops. It is a source of revenue for the supermarket and helps to keep the supermarket quite busy.

Most supermarkets now offer online shopping for this shopper. This is very useful for the customer because for whatever reason they might not be able or want to go to the supermarket. But it does not matter; they can just go on the supermarkets website and easily order the food and other items that they want. All the products are easily accessed because the supermarkets make the websites easy to use. It saves the customer from driving to the supermarket which can sometimes be a hassle and they get the food delivered straight to their door. This is a home delivery system. Online shopping is good for the supermarket because it attracts new customers all the time who don't like to go and shop in the supermarket, but just want to do it from home. Online shopping means more revenue for the supermarket because the customers are shopping, and also there are sometimes delivery charges, which the supermarket benefits from. Online shopping also allows the supermarket to get more publicity and become well known because anyone who has the internet goes on their website. If they became global they could dramatically increase profits and revenue.

The layout of the store is also important when thinking about non price competition. All the goods are conveniently placed and there are lots of well labelled signs showing where the products are placed. This again increases customer convenience so that they do not spend lots of time searching for a product. This helps to make new customers loyal to the supermarket as if everything is labelled they become impressed. Also the supermarkets cleverly make customers walk through certain sections of the supermarket to get to other parts. This tempts customers as they are walking to buy more products that they didn't intend on getting in the first place. This brings in extra revenue for the supermarkets.

The supermarkets normally offer a number of disabled services. These services include special toilets for disabled people. Also there is disabled parking so that disabled people can get convenient parking close to the supermarket entrance. Also the supermarkets provide staff that can help to pack your goods into your bag, carry the goods around the store, pick items off the shelf, and unpack goods into their car. This makes it very convenient for disabled people, and by helping disabled people the supermarket creates a good image that they care about less fortunate people. This attracts more customers to the store including more disabled people because they can see that shopping will be easy at that store. This boosts revenue for the supermarket.

All the major supermarkets have toilets for the shoppers to use if they feel they need to go before, during or after shopping. This is convenience for the shopper because they do not have to wait until they get home to go to the toilet. This makes the customer happy and maybe they will then spend more money during their shop. This would again result in more revenue for the supermarket.

The supermarkets also always have helpful staff. This is because they need to keep the customer happy so that they become loyal and always shop at their store. Also if the customer is happier they tend to spend more money when shopping. This is again more revenue for the supermarket. The helpful staff try to help with any problems that the shopper has. This helps to attract more customers as the happy customers advise other people to shop at that store because everyone is happy and willing to help with any problems. New customers will result in more revenue.

At most supermarkets lots of household goods, electrical goods and entertainment goods are available. These are items such as frying pans, cleaning appliances, TV's, DVD players and music CD's. These items provide a huge source of revenue for the supermarket and the entertainment section with music is especially popular. This is because while their mum and dad are shopping the kids can buy the latest CD's and computer games. They don't have to go all the way to town; they can get just what they want at their local supermarket. This is another case in which customers can get all sorts of goods all under one roof. This makes the customer happy and saves them time meaning that they will probably keep coming back to buy these type of goods. The supermarkets can then lower prices on food and drink as they know they are getting lots of revenue from other parts of the store. This will make the supermarket more popular and new customers will be made, again resulting in a boost of revenue.

Another factor of non price competition is car parks. The supermarkets again try to increase customer convenience by providing large supermarkets so that customers can find spaces more quickly without having to wait. Sometimes if they are forced to wait a long time because of a shortage of car parking spaces they might leave and go to another supermarket. The supermarkets don't want to lose customers as this would lead to a loss in revenue so they make large car parks.

Long shopping hours are very important when it comes to factors of non price competition. Services such as 24 hour shopping allow people who work late or people that have come from somewhere else to still purchase goods at unusual times. This is convenient for the customer, and makes them happy and loyal customers. Shopping at this time is also more convenient for the customer because the store is less busy, as people are sleeping at this time. The customers would enjoy their shop more and would probably decide to come back again because of the flexible hours of the supermarket. It saves electricity costs because people would normally be stacking shelves at this time anyway, but instead they can get revenue from paying customers as well. More customers will be attracted to the store so more revenue would be made by the store.

Dry cleaning and photo processing facilities are also available in lots of supermarkets. This is very convenient for shoppers because while they are shopping they can be getting their clothes dry cleaned, so that when they finish shopping their clothes are ready to be picked up. Also shoppers can get photos for passports and other things taken conveniently. It is another case of having everything under one roof. The shoppers can save time as they don't have to travel from shop to shop. Also it is a source of revenue for the supermarkets, as dry cleaning and photos can be quite expensive.

More fresh food is also available now at supermarkets. These fresh foods include pizza, bread, and salads. This provides more convenience and choice for the customer because they can get everything under one shop. It helps to keep the customer happy and become loyal shoppers.

In many supermarkets there are also crèches for children of the customers. This service allows the child to be in safe hands while the parents go and do their shopping. It is convenient for the customer as they don't have to take their baby around with them and don't have to make arrangements before they shop. They parent becomes worry free and doesn't have to worry about their child, because they know he or she is in good hands. This allows the customer to shop for longer so they buy more products. The customer will be happy and will become a lifelong and loyal shopper at that supermarket. This means extra revenue for the supermarket.

The supermarkets also give charity support to various charities. They place collection containers for people to donate money to needy causes. This shows that the supermarket cares about those less fortunate than themselves, and helps to boost consumer popularity. This would attract more customers, which means boosted revenue.

Lastly the supermarkets try to keep their supermarket clean and free of mess. This appeals to the customer as they know that all the food is clean so don't hesitate in buying the food. It also helps to please the customer so they may become loyal customers. They will also attract more customers and all these things mean more revenue.

As we can see there are a lot of ways in which supermarkets compete other than price competition. In fact supermarkets appear to compete on non price competition more than they do on price competition. The actors of non price competition help to gain more revenue, allowing the firm to grow and dominate the market.

Evaluation of Data

Overall I felt that the results and findings that I made were reasonably reliable. I felt it was reliable enough to come up with a good conclusion on what supermarkets compete on.

Firstly I did my questionnaires. To get results for my questionnaires I decided to use the Shires shopping centre in Leicester City Centre. I asked people whether they would answer my questionnaire. I tended to go for older people (15 or over) as I felt they would be able to answer my questionnaire efficiently. I asked them for their answers and ticked the boxes that were appropriate to them. I went on two separate occasions and managed overall to get fifty people to answer my questionnaires. I chose fifty because I felt this was a sample that I would be able to do, and I felt it would give me okay results for what I was trying to find out. Obviously this sample is no way near the sample needed to get a good representation of the population, this number would be a 1,000 if not more. I do not have the resources as a GCSE student to do a proper sample like this; I tried to do the sample as big as I could manage.

One thing that was good about my questionnaire was that it was easy to understand and answer. Also most of the questions that I asked were useful by giving

me information that helped me answer how supermarkets compete for custom.

At the start of this coursework I intended to use a 'Quota Sample,' but in the end I did not have the resources to do this as a GCSE student. I did more of a random sample but I did intentionally ask older people, so my questionnaires would be answered efficiently. This has made the results found from doing my questionnaire slightly biased.

Improvements to my questionnaire that I would make are:

If I had the resources, more time and money I would certainly make my sample a lot larger.

If I had the money, resources and time I would also use quota sampling so that the results I got were a fair representation of the population. This would make my questionnaire more reliable and less biased.

Another improvement that I would make to my questionnaire is that the questions that were not as useful would be replaced by more useful ones.

The last improvement that I might make if I did the questionnaire again is to ask people in different parts of Leicester, not just the Shires. This is because there might be people who have very good views about supermarkets who do not go to the Shires.

My price lists were generally successful. Some reasons for me believing this are:

I felt that 20 products were enough to give me a good variation of products so I could compare the prices of lots of products instead of just a few. I did enough to give me a good conclusion that supermarkets didn't really compete on price. I also felt that writing down the weights and sizes of the products was good so people could tell which weight or size type of the product I was giving the price of.

Improvements to my pricelists that I would make are:

I would get the prices of the products on more dates. I would get the prices of the products on four dates each a month apart. This would enable me to compare the prices better and see if they changed monthly. It would ultimately allow me to answer the question more reliably about whether the supermarkets did compete on price.

I would still do more products even though I said 20 products were enough. I would do about 30; this would enable me to compare more and different types of products, and would give me more variation. Again it would allow me to answer the question more reliably about whether the supermarkets did compete on price.

Conclusion

At the beginning of this coursework my aim was to use economic theory to explain how supermarkets in my local area compete for custom. After lots of work though this coursework I feel that I have come up with a good, reliable answer to the question. I also feel that economics was able to predict what I set out to find.

In conclusion, supermarkets essentially compete in many ways. Supermarkets do not really compete on price alone. They attempt to keep prices of popular products like milk and bread similar so consumers don't see their supermarket as more expensive than others in this ologopolistic market. However, the prices of less common products such as pizzas and certain biscuits fluctuate because people don't really notice that the prices of these products differ from store to store. They don't really compete on price but try to keep prices of common products the same. Anther reason why supermarkets do not really compete on price is that if they did ASDA would be the most successful supermarket because it is the cheapest out of the four supermarkets I am studying. However, this is not the case as Tesco is the most successful supermarket in the UK. I believe that supermarkets don't really compete on price because it would be financially crippling and damaging to their firm. If they continually drove prices lower and lower then the firm would end up losing too much revenue not enabling it to survive any longer. They would probably have to close down.

As supermarkets do not really choose to compete on price they have to compete on other things. These factors are known as factors of non price competition. They are many factors that supermarkets compete on that don't include price. Here is a list of some of them:

* Advertising

* Loyalty Cards

* Petrol Stations

* Café's

* Financial Services

* Clothing Departments

* In store Newsagents, Pharmacists and Post Offices

* Layout of the Store

* Disabled Services

* Toilets

* Helpful Staff

* Selling of Household and Entertainment Goods

* Car Parking

* Long Shopping Hours

* Online Shopping with Home Delivery

* Dry Cleaning and Photo Processing Facilities

* Fresh Food

* Crèches for Children

* Support for Charities

* Clean Stores

Advertising plays a big part in non price competition. Advertisements catch the attention of the public that the goods are on sale, and that they ought go out and acquire them. Advertisements are a method in which supermarkets increase customers who will hopefully become loyal ones, who end up shopping at their store for their lifetime. Advertisements can take many shapes and forms and can be leaflets in the newspaper and advertisements on the TV and radio.

As the main aim of supermarkets is to satisfy the customers, the factors of non price competition include a lot of things that keep the customers happy. These factors include having reward cards, clean stores, helpful staff and good facilities. Overall convenience for the customers is also a huge factor in non price competition. If the supermarket is convenient, the shopper becomes happy and comes to the store for life. The customer becomes a loyal one, and that is what supermarkets desire, so they can make good revenue. That is why supermarkets do all they can to ensure that their supermarket is convenient. These factors help to make the store seem more attractive and appealing than the rival supermarkets.

Bibliography

Here is a list of sources of information that helped me to complete my coursework:

Mr Martin - Mr Martin helped me when I did my coursework. He was very useful in informing me about minor mistakes I has made.

Economics For GCSE Second Edition by Alain Anderton - I thought that this book would be very useful, but in the end I didn't use it at all.

http://news.bbc.co.uk/1/hi/business/2630563.stm. - This is the website of one of the articles I used. It is about 'New supermarket price wars.' I analysed the article in my appendix.

http://www.timesonline.co.uk/ - I used this website to gain another article. I searched on the website and found an article about 'The future of supermarkets.' I analysed the article in my appendix.

http://www.asda.co.uk/

http://www.sainsburys.co.uk/

http://www.tesco.co.uk/

http://www.safeway.co.uk/

Apart from Safeway I got the prices of the products in my price lists from the supermarket websites. This was very useful because I didn't have to go to each store separately. I did go to the Safeway store twice though.

I also got the supermarket logos used on my title page from each of the websites.

Oadby & Wigston Mail - I got an advertisement on travel from this paper. It was on CO-OP but was still quite useful as it showed that Supermarkets also can compete on the travel industry.

I briefly used http://www.yahoo.co.uk/ to search for some advantages of a perfect economy. I got two advantages of a perfect economy from a website; and used my own words to explain them. However, I cannot remember the name of the website.

Appendix

Here is an article from Times Online about the future of supermarkets:

CLICK HERE TO PRINT

CLOSE WINDOW

January 09, 2003

Supermarkets: what does the future hold?

BY MADELEINE ACEY

The falling food prices that British consumers have enjoyed for the last ten years will be accelerated by today's planned takeover of Safeway by Morrisons, but supermarkets may soon resemble department stores with built-in entertainment.

"The good news for the customers is that the already great deal that they get on food is going to get even better," said Richard Hyman, chairman of Verdict Research, a retail consultancy.

He said that Britons pay less than they did ten years ago for food and the merger of Safeway and Morrisons would push price competition even further.

But looking longer term he said the trend in supermarkets was to sell more and more non-food goods, adding that 62 per cent of food retailers' growth was expected to come from this area.

"These guys are going to become like the new breed of department store."

He added that they would expand on existing successful forays into clothing and electronics, but would stop short of top shelf items. "You won't be putting an Armani suit in your basket along with your beer."

But in five to ten years' time we would see supermarkets take a leaf out of fashion retailers' books and use more visual selling techniques, according to Mr Hyman.

"On a mannequin you see the whole outfit, including accessories and although you don't need a new suit you think 'that looks really good'. Most of the clothing we buy we don't need - they persuade us to want things. Food retailing is light years behind.

"What you want to see is someone to inspire you to do all sorts of things you haven't done. I think we're going to see chef's in supermarkets offering demonstrations.

"You can see something innovative they're doing with a mix of ingredients and buy the whole thing in a box with wine to go with it. Food shopping can be made more exciting and attractive."

Sally Patten, Times Retail Correspondent, said that there would be a clear split between those that sold non-food goods and those that did not. Morrisons is strictly food-only, but Asda would stick to its growing non-food lines.

She added: "There could be a further price war. It's certainly bringing a third cheap player into the South to join Asda and Tesco. Sainsbury's is perceived as more expensive I think they may have to change that perception."

She said that most supermarkets were continuing to have both bigger edge-of-town stores and more, smaller inner city stores as there was a huge move to convenience shopping.

Val Elliott, Times Consumer Editor, said: "The inner-city stores are for the lunch market or the shopper grabbing a pint of milk and a ready-meal. They're not for family shopping.

"There's a growth in single-person households, but surely they aren't all going to live out of a packet? Morrisons could well appeal to the new generation of sophisticated cooks out there as they are good for ingredients shopping.

"However, I'm told by everyone that the future for vegetables is for everything to be pre-cut."

Mr Hyman agreed that the move towards pre-prepared food would continue. He said it could swallow-up the takeaway meals market.

"Twenty years ago the fresh food in UK supermarkets was appalling. Now it's very good. If the supermarkets could do good curry, good Thai food, etc, it's very convenient to get it all in one go. They could probably undercut a lot of the take-away market."

Take-aways wouldn't be the only group to suffer, according to Friends of the Earth, which has called for the Competition Commission to investigate the takeover of Safeway

It says that putting a large chunk of the food chain into the hands of fewer and fewer companies was bad for consumer choice. "Small shops cannot compete against another all-powerful supermarket and small farmers are unable to stand up to the bully-boy tactics of the big buyers."

The article starts off by saying that Morrisons will take over Safeway. It continues to say that the public will continue to get cheaper products as it has in the last 10 years. It also says that the non food products in supermarkets will continue to grow, you will be able to buy a lot of things from a supermarket. It says that in the future there will be chefs giving demonstrations of how to cook certain foods. The article continues that there could be more price wars with another supermarket joining ASDA and Tesco as the cheap ones. Sainsbury's may have to change themselves so they are seen as cheaper. People will continue to convenience shop by going to bigger outer city stores rather than smaller inner city stores. The fresh food products will continue to increase in the supermarkets and the small shops will suffer compared to the supermarket giants.

Here is an article from the BBC News website about a new price war:

Monday, 6 January, 2003, 07:00 GMT

New supermarket price war

Some prices are being cut but others might rise

Two of the UK's biggest supermarkets have announced price cuts to lure shoppers through their doors.

Typically in the two or three months leading up to one of these initiatives, prices are increased

Kevin Hawkins, Safeway director

Tesco said it was cutting £80m ($129m) from the price of more than 1,000 products with some prices falling by nearly a third.

And rival Asda said it would be cutting some prices in its George clothing range.

But Kevin Hawkins, a director of the country's fourth biggest supermarket, Safeway, said he viewed the reductions with a big touch of scepticism.

He told BBC Radio 4's Today programme: "We have these so-called price wars about three times a year.

"Typically in the two or three months leading up to one of these initiatives, prices are increased."

And he warned that while the price reductions were being highlighted, the cost of other goods would go up.

Losing customers

At Tesco, director John Gildersleeve said: "Lots of customers are telling us they need to tighten their belts this year.

"We've listened and taken pounds off their shopping in a bid to help."

An Asda spokeswoman said of her company's clothing price cuts: "They are permanent price cuts.

"It is part of an ongoing commitment to pass any savings we can make back to customers.

"The reason we can do this is because we were bought by Wal-Mart in 1999 so we have much more buying power."

If Tesco and Asda really are engaging in a tough price war then their rivals, Sainsbury and Safeway could lose some of their customers.

Smaller chains such as Somerfield might also be hit.

See also:

7 Dec 02 | Business

Go-ahead for Tesco's corner shop deal

7 Sep 02 | Business

Tesco profits jump again

1 Oct 02 | Business

Asda 'closing in on Sainsbury'

06 Sep 02 | Business

Safeway boosted by Asda bid rumour

20 Nov 02 | Business

Sainsbury soothes the City

21 Nov 02 | Business

Safeway profits on track

Internet links:

Tesco

Asda

Safeway

The BBC is not responsible for the content of external internet sites

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The article starts of by saying that Tesco will reduce more than 1000 products by £80 million. It continues to say that ASDA will cut prices on its George clothing range. But Kevin Hawkins, the director of Safeway is not convinced by the price cuts. He mainly states that in the leading months up to these price wars the prices of the products are increased slowly. He also said that although the highlighted items will be cheaper other goods prices will go up to make up for the loss in revenue. John Gildersleeve, the director of Tesco says that they have listened to the calls of the public and have reduced prices, so people don't spend as much. An ASDA spokeswoman said that the price cuts on George clothing would be permanent. She said that the price cuts were done to give back something to its customers. The reason ASDA can do this is because they were bought by Wal-Mart in 1999 and have much more buying power. The article finishes by stating that if Tesco and ASDA were engaging in a real price war Sainsbury's and Safeway could lose customers, as smaller chains like Somerfield would.

The CO-OP advert shown below from the Oadby & Wigston mail, shows that supermarkets can also compete on holidays and things in the travel industry as well. The advert mentions a number of special offers and holidays that it offers.

Here are a number of leaflets from Sainbury's and ASDA. The ASDA leaflet shows many special offers that are taking place in January 2003. The big Safeway leaflet shows many special offers that are currently taking place in Sainsbury's. I have also included a number of smaller leaflets from Sainsbury's that show financial services they offer, and some recipe cards that they hand out free.

In the plastic wallet on the next page are all of my 50 questionnaires that I got answered in The Shires.