Chapter II

MARKET STUDY

Marketing aspects is the sum total of all business activities which deal with

the movement of goods or product from the producer to the ultimate user. This

chapter tackles the different marketing strategies and techniques to be used in

order to reach, maintain and increase perspective higher. The major

consideration of the study is whether, there is an ample demand for the product

being produced or proposed to produce. If ample demand exist, then it is

important now to find out if it is met by the current producers. In other words, it

determines whether substantial excess demand so that a new firm could enter

the industry. During the study if the demand was discovered not enough for the

product, a new demand will be created. If not, then the product must be

abandoned before and substantial loss will be incurred.

On the other hand, if the findings indicate that the demand was sufficient

for the product, then the firm’s competitive position in the industry will be

investigated. Other information shall be gathered on the prevailing pieces for the

interest of the quality development and adoption of the product relative to the

current existing related product.

Objectives of the Study

The general objective of the study is to determine the market feasibility of

K-embutido in the market.Specifically, it attempts to discuss the following

objevtives:

1. To identify the target market of the proposed business;

2. To identify the demand and supply of the product;

3. To establish the desired market share after analyzing the demand

and supply situation

4. To formulate the appropriateness marketing strategies and

programs in order to penetrate the market.

Methodology

The proponents used the descriptive method in collecting data necessary

for the study. The researchers visited the Batangas City to search data gathering

their target market in order to determine the demand and supply of the proposed

product. They will conduct personal interviews and proportionally distributed

survey questionnaire to the household selected belonging to individuals from 15-

69 years old in Batangas City. The proponents will implement the following plan

to acquire appropriate data to be used in the study.

Since the feasibility is concerned with the determination of the profitability

of Saba embutido manufacturing business using present statistical information,

the descriptive method of research is deemed to be the most appropriate method

to be used.

Research Design

The study used descriptive type of research design. The descriptive type

of research design is used in the study involving present condition. Its purpose is

to find the truth. Studies using descriptive design are valuable in providing facts.

They provide essential knowledge about the future of objects and persons

(Calmorin and Calmorin, 2001). This method concerns on the present condition.

It describes the nature of a situation as it is existed at the time of the study and

explores the cause of a particular phenomenon.

Subject of the Study

The subject of the study were households residing in urban barangays of

Batangas City with the family income of Php 10 000 above. These barangays

include Poblacion 1-24; Alangilan, Balagtas, Calicanto, Cuta, Gulad Itaas, Gulad

Labac, Kumintang Ilaya, Libjo, Malitam, Pallocan Kanluran, San Isidro, Sta.

Clara, Sta Rita Aplaya, Sta. Rita Karsalla and Wawa. They were chosen by the

proponents to represent the target market for the reason that they are considered

potential buyers of K- Embutido. On the other hand the proponents prepared

questionnaires that will be distributed to the target market. The information

gathered from the surveys is used to know if the target market is willing to buy or

purchase the proposed product.

Data Gathering Instrument

The proponents relied and depended on primary and secondary sources

of information in gathering and collecting data needed in the study. Surveys,

interviews and distributed will be conducted to serve as primary data. On the

other hand, journals, magazines, books and other related material resources will

also serve as the secondary data.

An evaluation research questionnaire was used for data gathering,

which was also the tool for obtaining data from the respondents. A letter was

prepared by the proponents with the approval of the adviser in order to gain

access to the corresponding respondents.The proponents made two sets of

questionnaires, one the household respondents and the other for the retailers

which include supermarket and stalls in old and new public market. The

questionnaire served as a tool for gathering data, to have systematic and reliable

basis in determining demand and supply of the proposed observations to

determine the accuracy of the given data. The respondents are given enough

time and can freely answer the question. The question for the supplier covers the

form of their establishment, the cost of selling the embutido and how much they

are willing to sell and buy embutido.. the questionnaire for retailers was used to

determine the market potential of the K-embutido. The other questionnaire was

for the consumers. The questionnaires covers the monthly income of the

consumers that determines their capacity to buy the product, if they buy

embutido, how many embutido they consume and how much they spend for

embutido. The proponents prepared the questionnaires and presented it in an

organized manner in accordance to the approval of the adviser.

Data Gathering procedure

The mains task to gather information is to find related files and documents

that already have the data that you need. The proponents visited libraries to

gather the necessary data from books and other research materials that are

related to the proposed product. They also gathered other information in the

internet for additional data. The proponents make sure that the data gathered

was reliable and accurate. Other related studies also served as their reference

for the background procedures of the study in gathering data.

The researchers will also prepare the questionnaires to be used to

determine the feasibility of the proposed product on the target market. The

proponents will give the questionnaires to the chosen retailers and consumers to

provide the projected demand and supply needed for the study. The proponents

will make survey to the 24 Barangays of the Batangas City with the 396

questionnares distributed proportion to their population. The proponents will

gather other information if possible and interviews to gather specific details as

accurate as possible for any other improvements that can be applied to the

product to be more successful to the market.

Determining the success of the operation is also one factor that is

considered to determine if the business should be established or not. One of

these was determining the possible disbursements in the business. Besides the

income the proponents also considered the possible out flow in the business.

The proponents made a canvass when for the prices of the materials,

utilities and equipment needed for the establishment and operation of the study

in the supermarkets, old and new market, malls and other stores. This

determines the projected expenses and capital needed in the business and to

project the profit outcome. This study will also determine the possibility of

establishing the business in a cheaper yet profitable and high quality product to

be more efficient and effective as a business.

Statistical Treatment Data

Profitability sampling was used to obtain the estimated sample size based

on the population of the target market in determining the sample size.

n= __N__

1+ Ne2

In which

n = the size of the sample

N = the size of the population

e = the margin error

n= ____37 390_____

1+ 37 390(.05)2

n= ____37 390____

94.475

= 395.76 or 396

Table 2.1

Respondent per Barangay

Barangays Household number Number of questionnaires

1 269 3

2 249 3

3 142 2

4 289 3

5 238 2

6 552 6

7 238 2

8 196 2

9 105 1

10 132 1

11 191 2

12 505 5

13 142 1

14 105 1

15 39 1

16 28 1

17 44 1

18 203 2

19 203 2

20 198 2

21 374 4

22 70 1

23 176 2

24 701 7

Alangilan 2686 28

Balagtas 1678 18

Bolbok 2600 27

Calicanto 2483 25

Cuta 2364 25

Gulod Itaas 930 10

Gulod Labac 531 6

Kumintang Ibaba 2399 25

Kumintang Ilaya 2215 25

Libjo 2149 24

Malitam 1120 12

Pallocan Kanluran 1356 14

San Isidro 1166 12

Sta. Clara 2898 31

Sta, Rita Aplaya 457 5

Sta. Rita Karsada 3684 39

Wawa 1285 13

Demand

The demand for a product is the quality of goods that buyers are willing to

buy (CM Pagoso, 1990). In this case where holding all other to factors constant,

the price of a good or service increase as the demand increases. An analysis of

demand is a part of the important task of identifying the needs of the consumers

and determining whether they are willing and have the capacity to pay for the

product a business in contemplating on production.

Major consumer of the product

As a new business in the market, various factors are considered by the

proponents in order to respond effectively in the needs and wants and

preferences of the prospective buyers and to increase sales and profit. Before

penetrating the desired market, the proponents should first identify the

consumers.

The proponents will use the category of households as the major

consumer of the K- Embutido residing in urban Batangas City with the monthly

income of Php 10 000 above.

Historical Demand

Projected Demand

Supply

Supply of the product is the quantity of goods that sellers are able to

provide. It shows how the quantities offered for sale as the good is dependent on

its determinant. The most important of which is the price of goods is sold (CM,

Pagoso 2001).

Historical Supply

Projected Supply

Demand and Supply Analysis

Market Share

SWOT Analysis

To understand the business environment of a particular firm, you need to

analyze both the general environment and the firm’s industry and competitive

environment. Generally, firms compete with other firms in the same industry. An

industry is composed of a set of firms that product similar methods of production.

Gathering industry information and understanding competitive dynamics among

the different companies in your industry is the key to successful strategic

management (dess/Lump Kin/ Eisner, 2007)

Strength

Availability of the resources. The proposed products raw materials are

very easy to find in the market most likely the Saba banana, a major component

of the product. It is one of the most typical fruits not only in Batangas Province

but also the whole Philippine country.

Health Benefits. The proponents’ product K- embutido has the potential

to meet demands on the market. It is best for maintaining and keeping the body

healthy. People who do not eat pork could eat the K- Embutido considering that it

is made out of Saba banana.

Weakness

Proponents do not have adequate experience. Since the business is

newly established for operation its management lacks enough knowledge and

experience in the business. The management may encounter problems

especially during the first year of its operation. Having all these things in mind,

the proponents are willing contribute all they know in order to have a smooth flow

and operation profitable operation.

Limited Capital. Since the business proponents are just starting a new

source of income. There would be limited capital for the business. The business

will also be limited for big finances.

Opportunities

Support of Sales force trades. With the continuous increase and with

the fluctuation of the value of the peso, this is a tendency to set a high price on

the product. It would be difficult for the company to attract investors and creditors

whenever appropriate since the business do not have any records and still

building their trust

Increasing retail store. In present time many of the retail stores in

business and that would also be an increase in prospective retailers for the

proposed product. It could also increase the sales because of the large number

of retailers.

Population Development- inflation. Because of the inflation, there would

be a large number of consumers and demand in the market. It could result to

increase sales and profit.

Threats

Competition to large companies. There is a big advantage for the large

companies that produce embutido in the market since they are already well

known. It would be hard for the business to penetrate the market because of the

consumer’s trust that was earned by the existing companies before us.

Consumer’s preference. Not all of the consumer could widely accept the

idea of the embutido made out of Saba banana. Consumers might find it

inadequate. The product must catch up to the taste preferred by the consumers.

Marketing Strategies

The Marketing Mix model (also known as the 4 P’s) can be used by

marketers as a tool to assist in implementing the M. strategy. M. managers use

this method to attempt to generate the optimal response in the target market by

blending 4 (or 5, or 7) variables in an optimal way. It is important to understand

that the MM principles are controllable variables. The MM can be adjusted on a

frequent basis to meet the changing needs of the target group and the other

dynamics of the M. environment. The function of the marketing mix is to help

develop a package that will not only satisfy the needs of the customers within the

target markets, but simultaneously to maximize the performance of the

organization. (Nirmalya Kumar - Marketing As Strategy)

Many qualities in the product must be determine which are the function,

quality, appearance, packaging, brand, service, support, and warranty. The

success of the business depends mainly upon the product and good product

means a higher opportunity for recognition. One of the factors that must be

considered is the price. The price composed of list price, discounts, financing,

leasing options and allowances. It determines the value of the product and its

affordability to the consumers. Right place is also important in the service

considering the target market and other factors like channel members, channel

motivation, market Coverage, and service levels. One great factor that

determines the business is on where the business would be established.

Determining the nature of the business and its appropriateness to the place must

be considered. And the last is promotion, the most critical part of a starting a

new product is the promotion. It determines on how the public will recognize the

product. Factors that should be considered are the advertising, public relations,

message, and the budget.

Product

Product can be classified as tangible or intangible that can be offered in

the market for attention, acquisition, use or consumption that might satisfy a need

or want of the consumers. It not only includes physical objects, but also persons,

ideas and services as well (Pagoso et. Al, 2002). This indicates the proposed

product’s attributes, benefits packaging and pricing. It deals with the consumers

to be marketed.

The proponents’ firm is named “Nutri-Steamed Food Manufacturing

Enterprise” and manufactures “K-embutido”, which is made up of mixture of

grinded Saba banana, bell pepper, black pepper, egg, salt, bread crams, soy

sauce, chopped onion and carrot. It does not contain pork that made it different

from other related product.

Product Size/Quantity/Category

K-Embutido belongs to food/viand category. Embutido is now widely eaten

now a day’s paired to our rice. It is often serve in Filipino occasions like wedding

and in different celebrations.

The proposed product is going to be manufactured per pack at 450

grams .Each pack of product contains 5 pieces of embutido inside and file

horizontally to each other. Just like an ordinary embutido it is rolled also in

aluminum foil for better packaging and preservation. Its taste will give you a so

delighted feelings that catch your attention to buy the product

Brand Name

Choosing the right product is very important. It should be a name that can

be easily remembered. The name should describe the product’s character and

what it can offer to the consumers.

The proponents derived their brand names from its main ingredient. From

this, the proponents believe that using the name K-Embutido will not only create

positive outlook and provides consumers a product that is made up of nutritious

ingredients.

Packaging

The first thing that attracts a consumer to a product is how it is presented

visibly, that is , how it look and what perception is elicited by the product (Young

& Pagoso,2008).This is referred to packaging.

K-Embutido is packed in a transparent packaging film that allow

attractive product presentation as the packaged product is visible.A pack has

5pcs.of K-Embutido and weighs 450grams. Its design and logo portrays the

delicious and mouth-watering taste of the product.

Figure 2.1Product Label

Figure 2.2Logo

Pricing

Pricing is one of the four major elements of the marketing mix.The

other three aspects are product, promotion and place.It is an important

strategic issue because it is related to product positioning.(Svend

Hollenson,

Table 2.2Pricing Component of K-Embutido

450g/pack(Daily Process)

Manufacturing Cost Price/pack with 5 piecesDirect Materials Php10.71Direct Labor 3.00Factory Overhead 3.00Total 16.71Mark-up (60%) 10.02Selling Price to Retailers 26.73Input vat 12% 3.20Suggested Selling Price Php29.73

Table 2.3Related Price of Competitors

Other Commercial Brand Price /pack WOW Embutido Special Php32.00/3 piecesJMD Pork Embutido Php50.00/5 piecesPampanga’s Best Embutido Php47.10(250g)

Place of Distribution

Distribution system is the determination of the best distribution network

that a company should adopt in order to facilitate profitability flow of goods from

the warehouse and factory to the respective retail outlets. The firm best prospect

markets are household people of Batangas City. The firm will be established at

barangays 015 Poblacion Evangelista Street, Batangas City. The location of the

firm is chosen for making the product widely available and accessible to target

markets. The consumer goods marketing channel that will be used by the firm is

one-level channel which contains one selling intermediary, the retailers. Direct

marketing channel will be observed also through mail order and manufacturer.

The proponents will negotiate to possible retailers in the the in the old and the

new market. The proposed selling price of the K-embutido would be 20 pesos.

On determining the retailer’s price, the proponents will conduct a survey that is

currently organizing.

Figure 2.1

Channes of Distribution

Promotion

Promotion in the broad sense consists of coordinated seller initiator efforts

to establish channels of information and persuasion to foster the sale of a good

or service, or the acceptance of ideas or point of views. (Young and Pagoso ,

2008). It also encourages the consumer to purchase the product which the

product is selling K- Embutido, Saba embutido.

The proponents took different promotion mix strategies used to direct

persuasive communication to target buyers and public.

MANUFACTURER

RETAILER

CONSUMER

Table 2.4

Promotion Mix Strategies

What Who When Where How Budget

Internet marketing

Proponents 10 days before the operation

Facebook / Twitter

This site from the contest for firm’s history, mission and products. Interesting information will be updated regularly to prevent staleness and encourage return visit.

Php 500 standaed user (blog). The proponents will use blog to advertise our product.

Radio advertising

Proponents 5 days before the operation

GB 99 Through radio interview and mentioning of our product by friend DJs

Free

Product Launching

Proponents On the day of the proposed product will be introduced.

NutriSteam Food Manufacturing enterprise

This will start with ribbon cutting in the enterprise and introduce the newly proposed product.

P 5000

Total Php5,500.00

Generalization

This feasibility study is conducted to test the viability of producing and

selling K-embutido in the market. It gave emphasis on the product tself. The taste

and quality of the product price, place and promotion were identified.

In the market study, the proponents gave some point of view about the

supply and demand of embutido to its market. In order to identify them, the

market plan and its strategies for the dissemination of the said product market

were established by the proponents.

At first, the proponents determine the potential market and target market.

They had taken into consideration the general factors like the powered sources,

communication and availability of raw materials to fill in the demand of embutido

in the area. Informal interview and distribution of questionnaire will be done.

On the other hand, SWOT analysis was order to identify strengths and

opportunities to take advantage of it. Weaknesses and threats were also

considered to avoid possible problems that may be encountered in the near

future.