SANTOL Extract Marketing Aspect

Marketing Aspect Introduction In a very competitive market nowadays, coming up with a product is a very sensitive talking. The risk that is impliedly attached therewith is high, risks such as the strategy of making the product being acceptable in the market. Questions in mind that tackles who are the target customers, what is the range or how wide the target market is, and how you will introduce it to the market and the likes. Marketing is the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit. Marketing identifies

unfulfilled needs and desires. It pinpoints which segments the company is capable of serving best and it designs and promotes the appropriate products and services. Marketing is a very important aspect in business since it contributes a lot in determining the customers needs, wants and expectations. The production and distribution of products and services greatly depends on the demands of consumers. Marketing covers advertising, promotions, public relations and sales. It is also the process of introducing

new product or service to the market and encourages sales from the public. Conducting a market survey is one of the key factors to business success. This also can help you in formulating your action plan when starting a business and sooner could help you polish some processes and improve offerings. Determining the customers, competitors, and the market place is vital in putting up a business in order for it to go on track. This process must be conducted and researched well, if not, the company might just be wasting their time and effort and they would just be incurring expenses without future benefits. Competition is something that is always present in the market. This may be youre threat as a new entry in the market or rather it would become your opportunity as you benchmark on their standards. In this competitive world, getting the product noticed is not that easy but promotional tactics could be done so that these products would be known and recognized in the market since marketing promotes product awareness to the public. In order to reach a wide scope of the market and increase public awareness, the company must develop

marketing strategies according to the needs of the customers and the positioning of competitors. These strategies are designed for an increase in the business profit and revenue growth by addressing customers needs and increasing level of competitiveness against other companies. Product Description Wild Mangosteen and cotton fruit are the English name for what is commonly known as santol in the Philippines. It is a tropical fruit that is very popular to some country in Southeast Asia such as Thailand and Singapore. Santol tree is bearing the fruit in a seasonal basis. Its season is usually in the third quarter of the year. Santol Oil is made from the seeds and fruits of santol. The pulp of the fruit is rich in Byronic acid and sandorium acid which are anti-allergy ingredients. Another nutrient from the fruit is its astringent quality which is essential to beauty products such as lotions because it will clean and close the pores to secure the skin from dust and other foreign materials. Hence also moisturize the skin.

Target Market After studying the different considerations, it is decided that people in Baguio City in the province of Benguet will be the target market. Baguio City as the business center in Benguet and having an increasing population is judged as a very good market for the product. Plant for production will be put up in La Trinidad, Benguet. The plant site is also reflected in deciding the target market. The location of Baguio City, as one of the target market is not a problem. Since, La Trinidad is just a few minutes away from Baguio City. The mode of transportation is also really good for going through the two places is accessible by jeepneys and taxis any time. In addition, the product is for household use. Therefore, not only the adults and teenagers can use the product but also the children which are also them help to fight dust and other foreign objects enter their body. Santol Extract contains eucalyptus that helps fight body pain and itchiness, emollients (moisturizer) which prevents skin from dehydration and prevents eczema from flaring up, protein that enable skin cells to regenerate,

and also iron that makes the skin look more radiant and glossy.

Table 1.1: Population of Baguio City

Year

Population of Baguio City

2007 2008 2009 2010 2011 2012 2013

301,926 309,474 317,211 318,676 327,630 336,836 346,301

The population shown above is the actual population gathered from the National Statistics Office. Formula The Slovins Formula is used in order to determine the sample size that will represent the population of Baguio City.

Sample Size= = = Where: n= sample size

N 1+ Ne 346,301 1+346,301(.05) 399

N= current year population e= margin of error The Slovins formula is used to make the sampling neutral, conservative and for the survey to be reliable, the 5% margin of error is used. The proponents then floated 450 questionnaires randomly to individuals within Baguio City. Fortunately, 400 questionnaires were returned back and were answered but the other 45 questionnaires were not answered nor returned. Questionnaires Analysis The following data are gathered resulting from the questionnaires floated around Baguio City. The questions that have been floated are as follows. Question No. 1. Are you using oil/ ointment?

This question will determine the number of people using oil/ointment.

Table 1.2 Percentage of Individuals Using Oil/Ointment OPTION Yes No Total No. of Respondents 284 116 400 Percentage 71% 29% 100%

Figure 1.1 Per of Individuals Using Oil Oinment

29%

71% YES NO

Based on the above data, 71% out of 100% are using oil/ointment. This means that 71% of the total population is possible consumer of the business.

Question No. 2. What primary benefits do you want to be present in the ointment? This question refers to the feature/s of an oil/ointment an individual is looking for so as to determine the needs and demands of each individuals. The two benefits with the highest percentage would be the features of the product.

Table 1.3. Most Preferred Benefits of Oil/Ointment No. of Response out Of 400 31.25% 27.50% 46.50% 26.50% 131.75%

Option Skin moisturizer Mosquito Repellant Pain Reliever Treats Skin Disease TOTAL

No. of Respondents 400 400 400 400

No. of Response 125 110 186 106

Percentage 23.72% 20.87% 35.29% 20.11% 100.00%

Figure 1.2 Most Preferred Benefits of Oil/Oinment

20.87% 35.29%

23.72% 20.11%

Skin Moisturizer Mosquito Repellant Pain Reliever Treats Skin Disease

Based on the survey, the first two benefits which have the highest scores are the pain reliever and skin moisturizers with a percentage of 35% and 23% respectively. The first one, which is the pain reliever, helps the user fight pain instantly and effectively, resolves inflammation, sprain, strain, frozen shoulder and also fights itchiness. The second is the moisturizer which prevents skin from becoming dry and prevents eczema. It also improves skin tone and texture, and mask imperfections.

Question No. 3.Santol is rich in acids which have antiallergy ingredients. If an ointment is manufactured from santol primarily for the purpose/s you selected in question #2, are you willing to buy? This question would help the proponents in determining the willingness of the respondents in buying the product based on the benefits that they have chosen.

Table1.4. Percentage of individuals who are willing to buy the product Option No. of Respondents Percentage

Yes

319

80%

No

81

20%

TOTAL

400

100%

Figure 1.3 Percentage of individuals who are willing to buy the product.

20%

80%
YES NO

Based on the graph shown above, 80% of the respondents are willing to buy the product and they are the prospective buyers and consumers of the project. Question No. 4. How often do you expect to buy the product in 30 ml (good for one week daily usage)? This would determine the frequency of buying the product.

Table 1.4 Frequency of Using the Oil/Ointment Frequency No. of Respondents Percentage Once a week 137 43% Once every two weeks 65 20% Once a month 117 37% TOTAL 319 100%

Figure 1.4 Frequency of Using the Oil/Ointment

37%

43%

20%

Once a week Once every two weeks

Based on the graph, 43% of the respondents will be buying the product once a week, 37% will be buying once every two weeks, while only 20% will be buying once a month. Question No. 5. How much are you willing to pay? This would refer to the price that the respondents are willing to pay and would suit their budget. Table 1.5. Price of the Product for a 30ml Bottle Option Php30.00 Php35.00 Php 40.00 TOTAL No. of Respondents 192 48 79 319 Percentage 60% 15% 25% 100%

Figure 1.5 Price of the Product for a 30ml Bottle

25%

15%

60% Php30.00 Php35.00 Php40.00

Based on the survey, 60% of the respondents chose Php35.00 as the selling price of the product which implies that the 60% respondents might not purchase the product if the price would exceed Php35.00. Demand Demand can be defined as the ability or the willingness to acquire and consume a particular commodity at a given point of time. Demand is also defined elsewhere as preferences that are weighted by income. It is important to determine the ability of the customers to buy because it will serve as the basis in order to determine the supply of a certain product. Price plays a very important role in the supply analysis, in a sense that the relationship of the two is inversely. In which the increase in price of a certain product will decrease the demand of the market and

vice versa. Also, the demand analysis will lead to the determination of future decision regarding expansions and sustaining growth. To determine the demand of the market, different considerations with regard to the customers is needed to be studied. Those determine the demand is really customer oriented such as; the price of the particular good, taste preferences, level of income, rules and regulations, prices of related goods, events and happenings, seasons or weather and available alternative products. The analysis of the demand is very important to cater the needs and wants of the growing market. It is concluded that the demand will increase because it is paralleled to the increasing of population of Baguio City annually. The sample size is 399 to be exact, which is computed using the Slovins Formula. The proponents floated 450 questionnaires to be conservative. Currently, the computed demand of Baguio city is 71% resulting from the respondents who answered yes in the question that tackles if they are using skin oil.

Demand Projection Statistical Parabolic Method Actual Population (2007-20013) Table 1.6

Actual Population Year Y 2007 301926 2008 309474 2009 317211 2010 318676 2011 327630 2012 336836 2013 346301

X -3 -2 -1 0 1 2 3

X2 9 4 1 0 1 4 9

X4 81 16 1 0 1 16 81

XY (905,778) (618,948) (317,211) 327,630 673,672 1,038,903

X2Y 2,717,334 1,237,896 317,211 327,630 1,347,344 3,116,709

bX (21,243) (14,162) (7,081) 7,081 14,162 21,243

cX2 33 15 4 4 15 33

Calculated YC Absolute Squared 301,354 (572) 326,773 308,435 (1,039) 1,078,774 315,516 (1,695) 2,871,807 322,597 3,921 15,377,059 329,678 2,048 4,195,776 336,759 (77) 5,874 343,840 (2,461) 6,054,753 Total 29,910,816

Standard Deviation

Projected Population (2014-2018) Projected Demand (2014-2018) Table 1.7

Projected Population 350,921 358,002 365,083 372,164 379,245 Market Projected Share Demand 71% 249,154 71% 254,182 71% 259,209 71% 264,237 71% 269,264

YEAR 2014 2015 2016 2017 2018

Using the four different methods of projections, the proponents come up with the decision to use the Statistical Parabolic Formula which resulted to the lowest standard deviation of 2,067.n Standard Deviation It is a measure of the dispersion of a set of data from its mean. The more spread apart the data, the higher the deviation. Standard deviation is calculated as the square root of variance. In finance, standard deviation is applied to the annual rate of return of an investment to measure the investment's volatility. Standard deviation is also known as historical volatility and is used by investors as a gauge for the amount of expected volatility.

Supply Analysis The determination of supply that will be made available to the market will be base from the projected demand in the future five years of operation. The projected demand is computed using the different ways of projection for population. Since, the business is still categorized as new and starting, wastage should be out of the vocabulary. Because of the reason that Santol fruit is very seasonal, and is moderately perishable, the consumption by the company of the fruit which will be processed should be just at par to the demand needed for production yearly. The availability of supply to cater the demand of the market will affect the image of the company. Supply is the expression in the market of the cumulative willingness of all firms to produce various amounts of product or service at a various prices. A company should be able to meet the demands of its customers. The competitors of Santol Extract are the Katinko Ointment product, the Omega Pain Killer, and the EfficascentOil which are also pain reliever and are well known in the market because theyare distributed worldwide.

But since the company is in its starting point, there would be enough time to produce a product with greater benefits than other brands. The proponents will add features that could greatly satisfy the needs of the consumers and will be producing enough amount of the product to meet the demands of customers. Computation of Supply for 2013: Direct Competitors Katinko Ointment Omega Pain Killer Efficascent Oil Indirect Competitors Total Supply for 2013 46,716 77,450 62,698 186,864 31,349 218,213

Table 1.9 Total Projected Annual Supply

Year 2014 2015 2016 2017 2018

Projected Supply 223,887 229,708 235,680 241,808 248,095

Demand and Supply Analysis The projected supply is computed using the percentage of the respondents who are willing to buy santol oil. Table 1.10 Frequency of Demand for Santol Extract

Year

2014 2015 2016 2017 2018

Projected Percentage of Demand Willingness Frequency 80% 249,141 199,313 254,169 203,335 259,196 207,357 264,224 211,379 269,251 215,401

Once a Once Every Week Two Weeks 43% 20% 85,705 39,863 87,434 40,667 89,164 41,471 90,893 42,276 92,622 43,080

Once a Month 37% 73,746 75,234 76,722 78,210 79,698

The table shows the projected demand for the next five years of operation. In which, the annual production for supply is based. Through this, there will be an efficient and effective catering of demand for the market. Also, wastage will be minimized by maintaining the minimum production but providing margin of safety.

Annual projection of annual demand is as follows: Table 1.11 Projected Annual Demand per frequency (in bottles)

Year

Once a Week 43% 85,705 87,434 89,164 90,893 92,622

Once Every Two Weeks 20% 39,863 40,667 41,471 42,276 43,080

Once a Month

2014 2015 2016 2017 2018

Yearly Demand Once a Once Every Once a 37% Week Two Weeks Month 73,746 4,456,638 1,036,428 884,950 75,234 4,546,570 1,057,342 902,807 76,722 4,636,503 1,078,256 920,665 78,210 4,726,435 1,099,171 938,523 79,698 4,816,367 1,120,085 956,381 Totals 23,182,513 5,391,282 4,603,325

Anuual Demand

6,378,016 6,506,720 6,635,424 6,764,128 6,892,833

Based on the computation of total supply and demand, the market share of the competitor is derived.

The computation shows that 88.75 of the market demand for oil/ointment products is already supplied by the direct and indirect competitors. The target market of the proposed oil product will be the unsatisfied demand.

Table 1.12 Demand-Supply Gap

Year

2014 2015 2016 2017 2018

Projected Projected Unsatisfied Annual Annual Demand Demand Supply 6,378,016 5,670,055.80 707,959.72 6,506,720 5,784,473.88 722,245.90 6,635,424 5,898,891.97 736,532.07 6,764,128 6,013,310.05 750,818.24 6,892,833 6,127,728.14 765,104.41

The table represents the unsatisfied demand, the difference of projected annual demand and projected annual supply, of the consumers in the market. Market Share

Table 1.13 Market Share

Year

Unsatisfied Demand 707,959.72 722,245.90 736,532.07 750,818.24 765,104.41

Percentage of Those Who Will Avail the Product 80% 80% 80% 80% 80%

Market Share 566,367.78 577,796.72 589,225.65 600,654.59 612,083.53

2014 2015 2016 2017 2018

The market share shown above will be the basis of projecting revenue if it will be lower than the normal capacity.

Competitive Analysis A business in order to be in lined with the competition, a remarkable advantage among others must be established. Advantage can be defined as traits or characteristics of a product that is superior among the competitors. Competitive analysis is an assessment of strengths and weaknesses of current and potential competitors. The following table would identify firms major competitors and their strengths & weaknesses in relation to a sample firms strategic positions. Table 1.14 Competitive Profile Matrix

Critical Success Factors Weight 1.Advertising 0.1 2.Customer Service 0.1 3.Social Responsibility 0.15 4.Product Quality 0.45 5.Environmental Issues 0.2 Total 1

Santol Omega Pain Katinko Efficascent Extract Killer Ointment Oil Rating Score Rating Score Rating Score Rating Score 2 0.2 3 0.3 1 0.1 2 0.2 2 0.2 1 0.1 2 0.2 1 0.1 3 0.45 3 0.45 4 0.6 4 0.6 4 1.8 4 1.8 3 1.35 3 1.35 2 0.4 3 0.6 3 0.6 3 0.6 3.05 3.25 2.85 2.85

**Note: Data are based on interviews to individuals and research done by the proponents. The only crucial in this matter is on how or what will be your ways and means in order to create and maintain your advantage. Sample competitor is the Omega Pain Killer. As you can see, in the competitive profile matrix, its rating is 0.20 higher than Santol Extract Comp. sinceSantol Extract would just be starting its operations in the next year. Therefore, as observed in the in the matrix, Santol Extract have high probability of achieving success over the other competitors. Summary of SWOT A business, ever since conceptualized, the creation and maintenance of its competitive advantages are based from the analysis of the business itself and the environment where it operates. Environmental scanning is also a term for (Strength, Weakness, Opportunity, Threat) SWOT analysis. Studying the Internal environment includes determining the possible strengths and weaknesses of the company. Furthermore, with regard to the external environment, possible opportunities and threats to a company will come into the picture.

Table 1.15SWOT Analysis Matrix Strength- S 1. Low Selling Price 2. Quality Products 3. Reputation for innovation SO Strategy S1.O1. Lower selling price would be set up to capture great amount of population S3.O2 Innovation of products over time in order to meet the changing preference of the market. Weaknesses- W 1. Branding and Reputation 2.Online presence

SWOT MATRIX Santol Extract Company OpportunitiesO

WO Strategy W1.O3. Offer cheaper products with greater benefit than competitors. W2.O1. The proponents will enter the social networking site since the increasing population is now knowledgeable about computers and other high-tech materials. WT Strategy W1.O2. The proponents will build a good reputation to customer and a strong customer relationship and maintain the quality products.

1.Population Growth 2. Changing preference of costumers 3. Similar products are more expensive

ST Strategy Threats- T 1. Competitors launched new advertising campaign S3.S2.T1.

The proponents will continue to develop their quality products and this 2.Environmental is the advantage to competitors having Constraints their campaigns.

In the internal environment, strength can be the companys distinguished advantage over the others in a specific business industry. Strength of a company may include its corporate governance, which may refer to the ethics and values of the employees of the company. Another is the pricing of the product, in a way, that the company has low price compare to the others without having the quality of the product into compromise. The companys strength is also one of the reasons why companies are able to survive the competition. This may refer to a customers question of why do they chose the product over the others. Another, still under the internal environment is the weakness, which, is the opposite of the strength. These characteristics of the company will definitely break the company if not properly adhered to. Examples of a companys weakness are wrong investing strategy, poor customer orientation, low customer satisfaction, low employee satisfaction, etc. In the external environment, which are those things that are normally out of the managements control. It is viewed in a macro aspect. In lined with the study is the possible opportunity of the company. Chances of expansions, new investments, new product, new penetrated market, and

new customer should also be decided soundly. On the other hand that is contrary to opportunity is the possible threat a company may face in the process of obtaining its organizational objective. Usual threats in every business are the government laws and policies, world businesss conditions, recessions, inflation, etc. The reason why it is needed to conduct a SWOT analysis to come up with a plan on how to address these likes of business matters. And, on what is the proper way of deciding how to handle weakness of a company and eventually turn it into strength, and threats into opportunity. Pricing Strategy Price as a very important element in coming up with a marketing strategy will affect much the customers. When the proponents talked about prices, customers are looking for a product with the cheapest price and will be of great resistance to a product which is rather expensive. In pricing strategy, cost benefit analysis is applied to come up with the best starting price for the product. The matters regarding expenses starting from the product at its raw state until the point wherein it is ready for customers consumption must be studied.

Importantly, cost which will exceed the benefit is not allowed and cost that will bring to the business benefits either quantitative or qualitative will be part of the operation. Moreover, in the pricing strategy, the business must set up the best price, preferably low, but not sacrificing the quality of the product. Advertising and Promotion Advertising is the promotion of a product or service and is extremely pervasive in contemporary society. To maximize sales, companies will pay a premium for wide exposure through the mass media. Advertising space is common, but not restricted to these realms; billboards, public transportation, movies (product placement), schools, clothing, even bathroom stalls carry ads and the industry is constantly finding new ways to advertise. Truly, advertising is very essential to every company, especially those trying to penetrate the market. It is the most effective way of reaching to the people and letting them know of the companys existence, its products and/or services. Even if the company or the product has already established a name in the industry where it belongs, advertising is inevitable because one should capture the

customers attention to stay at par with other competitors. Not only is it use during the introduction stage of every product or product line, but also during maturity stage, where advertising is needed to keep people in remembering the product, and decline stage, where promoting new varieties of the product will be of great help to maintain its standing in the industry. Among the many advertising strategies and mediums, the proponents chose to use the following: 1. Newspaper The newspaper is a widely read publication and is very accessible to many people. Putting advertisements therein would ensure that numerous readers would be informed regarding the product. The advertisements would appear for two issues of the newspaper every month beginning a year before the start of operations. And since the target markets are the residents of Baguio City, the proponents chose to lay-out the advertisement at Baguio Midland Courier availing a spot of 2 columns x 3 inches with a total cost of Php 52,992.00 in a year.

2. Flyers A form of advertisement that is very inexpensive to produce, flyers can be distributed anywhere and directly given to the people. By giving out flyers, you can reach out to people that have no access or does not have the time to get in contact with the other mediums of advertisement. The proponents are going to print and float 1,000 pieces of flyers in a 4.25 by 5.5 size within a month before operations around Baguio City with a total cost of Php5,000.00. 3. Internet. The internet has a wide range of connections. Since many people are very fond of social networking sites, the proponents would be creating a Facebook page, which is free of any charge, which would showcase the product, what it is made of and especially the benefits that they can get from it.

Channel of distribution Figure 1.6 Channel of Distribution

Producer

End Users

In the distribution of the product, cost benefit analysis is again helpful. The place where in finished product has made available to customers is the matter concerning the Building, the land and the exposure of the place to customers. In the building, the company could choose whether to construct or to lease. Therefore, if it chooses to construct its new building, it is also necessary to own a land in the target market. Also, it should acquire proper legal authorizations from the government regarding the building of its building. But, if the company chooses to lease then it will just be paying its monthly rental. In which, leasing is the best choice because of the business is still starting, new, and small.

Transportation and Delivery Products will be delivered to the branch through hiring cab which is cheaper than acquiring a new delivery truck because the packaging are in small boxes containing which could occupy the space of the cab and the fare is cheaper than the gasoline considering the distance of the factory to the branch and the number of deliveries per week.