What Does the Competition Look Like?

	You are here: Home > Educators > Level 2 Business and Economics Education > Knowing your Competition > What Does the Competition Look Like?

Level 2
- Business/Economics »
16-19
- Business Studies »
  - A2 »
  - AS »
  - BTEC »
- Economics »
  - A2 »
  - AS »
- BTEC Travel and Tourism »
- HE
  - Resources »

What Does the Competition Look Like?

In assessing the extent of the competition, the use of market share is very helpful.

Market share refers to the proportion of total sales of a good or service accounted for by a business. For example, if the total sales of crisps are 10 billion packets a year and Walkers sell 5 billion packets, then their market share is 50%.

Looking at the market share means that you can get some idea of how your business is performing in terms of capturing sales compared to your rivals. It also helps to remind the business who else is selling those items, and whether any new sellers are entering the market and capturing market share.

When changes in market share occur, a business might have to ask why. If one of your rivals increases their market share from 15% to 16%, you might have to ask what they are doing to encourage more customers to go to them and where those customers are coming from. Are they moving from another business or from yours?

Supermarket customer choses bottle of wine.

The supermarket industry is a good example to use to help understand market share and the nature and extent of competition. © iStock.com

Either way, you will have to analyse what is happening and respond to it. Below is a table showing the market for groceries in the UK. The market share for the main supermarkets is given where available. The total value of the UK grocery market was estimated at £115 billion in 2004.

Supermarket	2000 (%)	2001 (%)	2002 (%)	2003 (%)	2004 (%)	2005 (%)
Aldi	1.5	1.3	1.7	n/a	n/a	2.2
Asda	14.1	14.7	16.1	17	16.7	16.5
Co-op	5.4	5.0	n/a	n/a	4.8	n/a
Iceland	2.8	2.8	2.6	2.3	2.1	1.9
Somerfield	4.5	6.3*	5.7*	5.5*	n/a	5.7*
Lidl	1.3	1.4	1.4	n/a	1.8	n/a
Marks and Spencer	n/a	n/a	n/a	n/a	3.5	n/a
Morrison	4.9	5.4	5.7	6.0	14.6**	12.2**
Netto	0.6	0.6	0.6	n/a	0.6	n/a
Sainsburys	17.9	17.8	17.1	16.2	15.7	15.9
Tesco	25.0	25.2	25.3	26.5	29	29.8
Waitrose	2.7	3.1	3.1	3.2	3.5	3.7

Source of data: Food deserts - Web site

* data includes the acquisition of Kwik Save

** data includes the takeover of Safeway

Task

Describe the main trends and changes in the market share of the grocery market in the UK as suggested by these figures.
Use the data to produce a pie chart showing the change in the market share of the top five supermarkets from 2000 to 2005. (You can copy and paste the data from the table into a spreadsheet package such as Excel and use the graphing facility to do this. If you wish to do it manually, then take the relevant market share (for example 25%), and multiply this by 360 degrees to get the angle within the circle. So, 25% = 25/100 = 0.25. 0.25 X 360 = 90 degrees).
Suggest some possible reasons for the changes in the market share that you have identified.

| Index | Previous | Next |