Competitive markets

The loyalty card - competition in action

15 years ago Tesco launched the Clubcard. As a reward for shopping in stores customers build up rewards which are exchanged for discount vouchers. This is a great way for supermarkets to compete with each other, in fact a year after its introduction Clubcard holders were spending 28% more at Tesco and 16% less at Sainsbury’s. Unsurprisingly Sainsbury’s responded with the Nectar card. Approximately 85% of households in the UK have at least one loyalty card.

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99p pint - is this right?

JD Weatherspoon’s are under fire for introducing a two week promotion that puts the price of pint of Greene King Ruddles, a Gordon’s gin and mixer, a glass of wine or a bottle of Carlsberg Export lager at just 99p. As a demerit good alcohol has negative externalities and if left to the free market would be over consumed. Concerns are that a promotion like this would encourage binge drinking.

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Fun Fact Friday - Fat Tax

Innes talked last week about a fat tax. The key issue is how fair would this type of tax be. This weeks fun fact looks at the percentage of households that buy too much saturated fat (by income).

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Cadbury takeover - market structure in action

Now that the takeover of Cadbury by Kraft has been agreed we are left with 4 dominant firms in the chocolate market in the UK; Mars, Ferrero, Nestle and Cadbury/Kraft. This graphic from the Guardian is great for showing how big each firm is in the market.
It will be interesting to see if this merger will create greater economies of scale for the Kraft/Cadbury firm which will mean possibly in the long run a greater number of products due to research and development increasing.

Competition in action - Human Bed Warmers!

I just had to write about this when I read this. How often do you get into bed and it is really cold? Well if you are staying at a Holiday Inn this feeling could be a thing of the past. Don’t worry you will not be having to share your bed with anyone. The walking electric blankets are dressed in special all-in-one sleeper suits and are sent to warm the Holiday Inn beds before guests get under the covers.

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On this day 10 years ago….......

Glaxo Wellcome and SmithKline Beecham merged to become Glaxo SmithKline. The £107bn merger of two British pharmaceutical firms aimed to become the largest pharmaceutical firm globally. It is in fact now the second largest pharmaceutical firm in the world. The companies products include: Aquafresh, Tums and Lucozade.

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Competition in action - Ray ban

This caught my eye this morning. Firms are trying all the time to find new ways to compete with each to get more customers and ultimately more profit. Ray ban (the sunglasses company) have set up a production company called ‘Never Hide Films’ complete with its own youtube channel. By tapping into a growing trend of consumers watching youtube videos Ray ban have managed to get a lot of people talking about their product.

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Camel milk anyone?

Most of us will be putting cows milk on our breakfast cereal in the morning, some may use goats milk or soya milk. This year you will be able to buy camel milk from Dubai. Camelicious, may be heading to a supermarket near you in 2010!

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Surge in demand for home grown Christmas trees

Who would have thought that a weak pound would increase the demand for British Christmas trees. Most Christmas trees make their way from Denmark to the UK for Christmas, however, this year as the pound has weakened it has meant that the imported Christmas trees are 30% more expensive.

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Go Go’s gone!

We reported on a blog a few weeks ago that there were concerns that there would be toy shortages at Christmas as manufacturers have misjudged the demand. Well it looks like this has happened with the must have toy, Go Go Pets.

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It’s Mega Monday!

Today is the day when online stores are expecting their highest takings of the year! Experts predict £400m will be spent in the run up to Christmas. As the UK is expected to be out of recession soon consumers have much more confidence than this time last year.

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Woolworths - 1 year on

1 year ago Woolworths went bust. For many this was the defining moment in the recession. So what has happened in the last year?

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Petrol prices set to rise

The cost of a barrel of oil has risen from $40 a year ago to $80 now with the price expected to rise even further in the coming months.
These oil tankers are apparently refusing to dock and unload their contents until the price of oil rises!

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Toy shortage at Christmas?!

Have toy manufacturers misjudged the amount of sales this Christmas? With the UK still in a recession toy manufacturers could have presumed that Santas budget was much lower this year and therefore produced fewer toys.

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Competition in action - M&S to sell top brand names

Marks and Spencer have recently lost market share in part due to the emergence of Waitrose but also due to shoppers trading down supermarkets due to the recession. Well M&S have decided to fight back.

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Demand and Supply in action - The housing market

The housing market has seen six consecutive months of price increases suggesting an upturn. We have also seen the first annual percentage price rise, 2% on the previous year.

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Price war in the mortgage market?

Competition in most markets is great for the consumer. It can help to drive down prices and improve quality. The market for mortgages is no exception. Nationwide have this week slashed interest rates on their mortgages and are once again offering 95% mortgages.

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Demand and Supply in action - Champagne affected by the recession

As a luxury good it is probably unsurprising to hear that the sales of champagne have dropped significantly.

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House prices rising but could it all be about to stop?

House prices have been on the rise for the last five months after a disastrous year of falls. The average price of a house in the UK in September stands at £161,816. This figure is £19 higher than this time last year. If we go back to February this year the average house price had slumped to £147,746.

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Demand and Supply in action - cocoa shortage to affect price of chocolate

For those chocolate-lovers out there like me this item may send shivers down your spine! We are currently seeing the biggest shortage of cocoa for 40 years.

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Demand and supply in action - fall in demand for apples

Consumption of apples has fallen by 3.2% in the last year, despite Government guidelines stating we need to have our five a day.

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Demand and Supply in Action - Second hand car prices rise

We would normally expect the value of our cars to fall (depreciate) over time. This year though the reverse is happening. Due to a shortage in supply the price of second hand cars have risen.

 

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Return of the £5 note to cash machines

How many times have you gone to the cash machine and really wanted just a fiver rather than a tenner? Well as banks are trying to help their recession hit customers they are going to be bringing back the £5 note to cash machines.

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Can our shopping basket tell us the recession is nearing the end?

In a blog earlier this week I asked the question, what constitutes a green shoot? Perhaps we can add to the list baked bean sales. Apparently in a recession we buy more baked beans.

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Xbox Project Natal – Competition revision

The 2009 OCR case study is likely to have a number of questions on competition. I noticed Microsoft’s new fully hands free control system in the news and thought it was a fantastic example of using innovation to compete. Press read more for two BBC videos of the new system and GCSE style questions on competition for revision.

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