1.

1 Marketing Environment Analysis Formatted: Font: Bold

1.3.1 Current Market Analysis Formatted: Font: Bold

Ice cream and pastry goods have been an all-time favorite dessert for Filipinos in all ages. Formatted: Justified

The demand for ice cream usually reaches its peak during hot summer months while pastry goods

has been an all year round confectionary. However, the demand for these products is stimulated

by different factors such as festivities, celebrations, birthday parties, and even the mood of the

consumer. As such, consumption of ice cream and pastry goods remains significant whole year

round. Furthermore, the aforementioned accounts play a vital role in the analysis of ice cream

and cake’s current market.

Based on a report published by Canadean, a global scale data provider, in 2015, the rising

disposable income and a large proportion of young consumers will drive the demand for consumer

packaged goods. Ice cream consumption in the Philippines is forecast to register growth at a

compound annual growth rate (CAGR) of 6.6% during 2014-2019.

Among the key findings are the volume consumption of Ice Cream products that is

forecasted to grow from 97.1 Kg million in 2014 to 133.7 Kg million in 2019 to register growth at

a CAGR of 6.6% during 2014-2019. Also, on-trade transactions accounted for 31.3% of the

market share of Ice Cream products value sales in local currency terms and 25.3% of volume

sales in 2014. With the pastry products, its market is expected to grow annually by a CAGR of

5.4 % during 2018-2021.

In the present, companies are introducing flavors that the younger age groups enjoy and

family packs and assortment packs which can be enjoyed during family and social gatherings

such as birthday parties. Unilever has a wide brand portfolio, which gives it a presence in bulk

dairy ice cream, single portion dairy ice cream and single portion water ice cream. While it is

strongest in bulk dairy ice cream with Selecta 3-in-1+1, which contains four flavors in one pack,
its popular brands offer a variety of choice at affordable price points. The latest new variants by

Cornetto, the main brand in impulse ice cream, include Red Velvet Disc, Cookies & Dream and

Like You A Latte. Ice Cream brands can leverage on this demand as consumers are willing to pay

a premium in order to experience indulgent and new flavors.

Currently, there are ice cream shops that offers innovative products to lift their current market

standing. The Ice Cream House, 7/11, Dairy Queen are the shops that offer and serve ice cream

near C.J Santos St. The Ice Cream House not only offers ice cream but also other food like pizza

and pasta. 7/11 offers their customers soft-served ice cream and Dairy Queen’s ice cream cake

and Blizzard that is served upside down.

The baked goods industry in the Philippines continue to be dominated by locally owned

brands as a result of the numerous independently owned bake shops in the Philippines.

Goldilocks Bake Shop is expected to record the fastest value growth, up by 11%. Its main

growth driver is its store outlet performance. Moreover, the company continues to invest highly

in product innovation by regularly introducing new flavors and designs especially for cakes and

pastries. The company has also been able to capitalize on providing high-quality Filipino

traditional baked goods delicacies such as polvoron, ensaymada and pandesal. As one of the

leading bakeries in the country, Red Ribbon has endeavored to make the consumption of

cakes, breads and pastries a regular fare. What sets the company apart is its inherent

understanding of the market that allows it to innovate its product offerings to better delight

customers. Aside from its best-selling favorites like Black Forest, Triple Chocolate roll, Butter

Mamon, and Dedication Cakes, Red Ribbon leads in developing flavors and variants that

celebrate the many occasions Filipinos observe such as Mother’s Day, Father’s Day, Christmas,

Easter, and the like.

 Single-portion cakes have higher volume sales than multi-portion cakes mainly because

these are offered at lower prices and are widely available in the supermarkets and other common

distribution channels. The single-portion cakes are also competitive in terms of quality and taste.

Brands such as the Regent, Cup Keyk and Fadgee Bar were amongst the popular brands.

Another reason for the higher consumption of single-portion cakes is that the multi-portion variety

is mainly consumed only during special occasions, such as birthdays, in the Philippines.

Ice cream has been an all-time favorite dessert for Filipinos in all ages. The

demand for the product usually reaches its peak during hot summer months. However,

the demand for this product is stimulated by different factors such as festivities,

celebrations, birthday parties, and even the mood of the consumer. As such, consumption

of ice cream remains significant whole year round. Furthermore, the aforementioned

accounts play a vital role in the analysis of ice cream’s current market.

Based on a study conducted by Canadean in 2015, the rising disposable income

and a large proportion of young consumers will drive the demand for consumer packaged

goods. Ice cream consumption in the Philippines is forecast to register growth at a

compound annual growth rate (CAGR) of 6.6% during 2014-2019. In connection to that,

they provided an in depth analysis and information on value and volume data by category

and distribution channel. Leading brands, the most opportunistic foodservice channels,

and packaging material and container consumption are also covered.

Among the key findings are the volume consumption of Ice Cream products that is

forecasted to grow from 97.1 Kg million in 2014 to 133.7 Kg million in 2019 to register

growth at a CAGR of 6.6% during 2014-2019. Also, on-trade transactions accounted for
31.3% of the market share of Ice Cream products value sales in local currency terms and

25.3% of volume sales in 2014.

The Ice Cream market is dominated by a few players such as Unilever PLC, Nestle

S.A. and F and N Foods Pte Ltd. Bag/Sachet was the most commonly used container

type in Ice Cream market and accounted for 44.7% of the market share in 2014. A study

by the Euromonitor International reported Unilever RFM Ice Cream as the company that

continued to post the fastest growth in 2017, with a 10% increase in retail current value

sales. As a result, the company led ice cream and frozen desserts with a 54% retail value

share, an increase of two percentage points on 2016. It remains the leading, and fastest-

growing, player due to the active launch of new flavours, supported by television

advertisements.

In the present, companies are introducing flavors that the younger age groups

enjoy and family packs and assortment packs which can be enjoyed during family and

social gatherings such as birthday parties. Unilever has a wide brand portfolio, which

gives it a presence in bulk dairy ice cream, single portion dairy ice cream and single

portion water ice cream. While it is strongest in bulk dairy ice cream with Selecta 3-in-

1+1, which contains four flavours in one pack, its popular brands offer a variety of choice

at affordable price points. The latest new variants by Cornetto, the main brand in impulse

ice cream, include Red Velvet Disc, Cookies & Dream and Like You A Latte. Ice Cream

brands can leverage on this demand as consumers are willing to pay a premium in order

to experience indulgent and new flavors.

Today, there are ice cream shops that offers innovative products to lift their current

market standing. The Ice Cream House, 7/11, Dairy Queen are the shops that offer and
serve ice cream near C.J Santos St. The Ice Cream House not only offers ice cream but

also other food like pizza and pasta. 7/11 offers their customers soft-served ice cream

and Dairy Queen’s ice cream cake and Blizzard that is served upside down.

1.3.2 Competitive Analysis

As technology advances, new products emerge and develop from the usual ones.

Competitors establish not just a product with high quality and reasonable price but they

also consider other factors such as relationship with the public, promotional media, etc.

Entrepreneurs are having a hard time in innovating product that will make a boom in the

market. Consumers, most especially millennials, are becoming pickier and they criticize

products not only on the price and the quality but also on how it is being presented and

its originality. Rivalry between products of the same kind are getting stiffer that even

substitutes acts as principal product. This analysis will determine the type of marketing

strategies that the business must maintain to get the edge and advantage in the market.

Direct Competitors

To this date, various establishments offer a variety of ice creams and brazo de

mercedes. The proponents considered these establishments’ main product line and their

vicinity to the target market place of this project as factors in determining the direct

competitors. These are:

1. Dairy Queen Ice Cream located at the Ground Level of SM Valenzuela. McArthur

Highway, Brgy. Karuhatan, Valenzuela City is considered as one of the direct

competitors of this project. Dairy Queen, often abbreviated as DQ, is a chain soft

serve ice cream and fast food restaurants owned by International Dairy Queen,
 Inc., a subsidiary of Berkshire Hathaway. Today, DQ has more than 6,000 stores

in 27 countries, including more than 1,400 branches outside United States and

Canada. In the Philippines, Dairy Queen opened in 2006 and has approximately

35 branches all over the country. Dairy Queen Outlets in the Philippines are the

following: Bulacan, Valenzuela, Quezon City, Marikina, Madaluyong, Makati, Rizal,

Pasig, Baguio City, Taguig, Las Pinas, Muntinlupa, Cavite, and Laguna among

others. Currently, it offers a variety of ice cream and ice cream sandwiches, waffles

and cakes.

2. Ice Cream House found in C.J Santos St., Poblacion II, Valenzuela. Unlike DQ,

Ice Cream House offers not only ice cream and sandwiches but also meals such

as pastas, pizzas and fries as well as other beverages. The proponents of this

project considered Ice Cream House as a direct competitor because their products

can be consumed inside a café which is similar to the plan of this project. Ice

Cream House was first started in 1991 as a small ice cream store in Sariaya,

Quezon Province with the name Ice Buko Center. In 2005, Stan Castillo, the

creator of the shop, decided to open the business for franchising. Currently, Ice

Cream house has more than 60 branches in the Philippines.

3. Spinner Ice Cream located at the Ground Floor of Valenzuela Town Center.

Spinner Ice Cream is engaging in an ice cream kiosk similar to Dairy Queen. Aside

from soft-serve ice cream, Spinner also offers frappucinos, floats and shakes.

IGGoodwill Enterprise, a Filipino-based company, created the Spinner Ice Cream

brand on 2006 to revolutionize ice cream wherein both dessert and snack are

achieved to change how consumers see ice cream as just a dessert. Currently,
 Spinner Ice Cream has a total of 30 branches nationwide with their principal branch

found at 747 Gov F. Halili Avenue, Spinner Building Bocaue, Bulacan.

Indirect Competitors

The proponents considered establishments offering ice cream as a supplemental

product among the other products that they sell. These are:

1. McDonald’s, specifically the branch located at the ground floor of SM Valenzuela.

McDonald’s is a fast-food chain offering a variety of products, including rice meals,

beverages, and desserts. George Yang, the McDonaldman of the Philippines,

graduated from the Wharton School of Finance in the University of Pennsylvania.

He was able to acquire the franchise of McDonald’s here in the Philippines on year

1981. From then on, McDonald’s has grown to become one of the country’s leading

fast food chains with more than 500 restaurants nationwide. With President and

Chief Executive Officer Kenneth S. Yang, son of George Yang, at the helm,

McDonald’s is now a multibillion-Peso company that continues to serve Filipinos

all over the country. On year 2016, McDonald’s Philippines reported a net profit of

P1.2 Billion which is a 70% growth from the previous year.

2. 7-Eleven at C.J. Santos Cor. Maysan Rd. 7-Eleven is an American-Japanese

international chain of convenience stores, headquartered in Irving, Texas, that Field Code Changed
Field Code Changed
operates, franchises, and licenses some 56,600 stores in 18 countries. The chain

was known as Tote'm Stores until renamed in 1946. Its parent company, Seven-

Eleven Japan Co., Ltd., is located in Chiyoda, Tokyo. Seven-Eleven Japan is held Field Code Changed

Field Code Changed

by the Seven & I Holdings Company. In the Philippines, 7-Eleven is run by the
Field Code Changed
 Philippine Seven Corporation (PSC). Its first store, located in Quezon City, opened Field Code Changed

in 1984. In 2000, President Chain Store Corporation (PCSC) of Taiwan, also a Field Code Changed
Field Code Changed
licensee of 7-Eleven, purchased the majority shares of PSC and thus formed a

strategic alliance for the convenience store industry within the area. At the end of

2015, there were 1,602 7-Eleven stores, up 25 percent from 1,282 stores in end-

2014. As of 2017, there are 2000+ 7-Eleven stores all over The Philippines. During

2016, 7-Eleven reported a net income of P1.18 Billion which is a 16.6% growth

from the previous year.

3. Jollibee, specifically the branch located at the Ground Floor of SM Valenzuela. In

1975, Tony Tan Caktiong and his family opened a Magnolia Ice Cream parlor Field Code Changed
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in Cubao, Quezon City which is credited as the first Jollibee outlet. The Magnolia
Field Code Changed

outlets operated by Tan's family began offering hotmeals and sandwiches upon Field Code Changed

request from the customers which the family found out to be more popular than the

franchise' ice cream. In 1978, the family decided to cancel the Magnolia franchise

and converted the ice cream parlors they operated into fast food

outlets. Management consultant Manuel C. Lumba advised the family of the move.

The company that would be managing the chain of fast food, Jollibee Foods

Corporation, was incorporated on January 1978. By the end of that year, there

were 7 branches in Metro Manila. The first franchised outlet of Jollibee opened

in Santa Cruz, Manila in 1979. Since then, Jollibee has continuously recorded Field Code Changed

growth, establishing itself as a market superpower. On 2016, it tallied P6.14 Billion

net income, posting a 24.6% growth rate.

1.2 SWOT Analysis

Strengths

 The unique and innovative fusion of ice cream and Brazo de Mercedes will attract

potential customers since it will give a different taste and experience for them.

 The location of the business stall is ideal to reach the target market.

 The product will be available at a reasonable price.

 The work force and other personnel are highly trained and knowledgeable in the

operation of the business.

 Being able to create bond and having harmonious relationship with its customers.

 Brazo de Sorbetes is the first of its kind in the market.

 Effectivity of the measures taken in avoiding the increase in cost of ingredients.

 Research and development team were very efficient and effective in finding ways

to improve their service and products.

 The product’s brand name is attractive to the customer.The unique fusion of brazo

de mercedes in the product attracts potential customers since gives a different

taste and experience for them.

 The location of the business stall is ideal to reach the target market.

 The product is available at a reasonable price.

 The work force and other personnel are highly trained and knowledgeable in the

operation of the business.

 Brazo de Sorbetes is the first of its kind in the market.

 Management’s decision making skills and effectivity of the measures taken to

avoid anticipated increase in cost of raw materials.

  The partners and staff’s research and development efforts provide efficient and

effective ways to improve their service and products.

Weaknesses

 The business needs to spend more on marketing and give away samples to

introduce the product to the target market.

 Lack of business experience of the partners.

 The combination of the two desserts contains higher sugar content which does not

appeal to the taste of health-conscious individuals.

 Unestablished brand name leading to a difficulty in penetrating the market.

 The product is not a staple need so people with limited disposable income do not

feel the need to try such food.

 To introduce the product to the target market, the business will have to spend more

on marketing and give away samples.

 Lack of business experience.

 The product contains more sugar content which may not attract health-conscious

individuals.

 Unestablished brand name leading to a difficulty in penetrating the market.

 The product is not a staple need so people with limited disposable income will not

feel the need to try such food.

Opportunities

 According to Asian Development Bank, the Philippine economy continued to

perform strongly in the first half of 2017. GDP grew by 6.4% year on year in the
 first half of 2017, moderating from a 7.0% pace in the same period last year but in

line with the average 6.3% annual expansion since 2010. This indicates a high

disposable income for Filipino workers so the capacity of spending is high.

 Companies such as Jollibee, McDonalds and 7/Eleven give less emphasis on their

ice cream products, therefore, customers tend to buy their other main products

which the company can use as an opportunity to penetrate the consumers.

 The continuous advancement of technology may become a tool for the business

in improving the services and quality of the product thus, will arise for new varieties.

 The company could take advantage of the expected growth of ice cream

consumption in the Philippines (Registered growth is at a Compound Annual

Growth Rate (CAGR) by 5.7% during 2017-2021 based on the data provided by

the Statista Inc.)

 Based on “Consumer and Market Insights: Ice Cream Market in The Philippines”,

large proportion of young consumers will drive the demand for consumer packaged

goods most especially in the case of ice cream.

 Ice cream consumption is an impulse buying.

Threats

 Some of the target customers’ first impression of the product may not be as

pleased as expected.

 Existing competitors may cause an adverse effect on profitability once this product

enters the market.

  Natural calamities and economic and political instability may affect the profitability

of the shop.

 Changes and unpredictability of the customers’ tastes and preferences may also

affect the sales of this project.

 Starting up businesses are not usually patronized by consumers if there is no

effective advertising strategy that will be done.

 The upcoming tax reform may have an adverse effect on the disposable income

of consumers.Some of the target customers’ first impression of the starting up

business and product may not be as pleased as expected.

 The competitors, especially DQ and Ice Cream House, have already established

a branding in the market. Thus, this project will find difficulty in penetrating the ice

cream and cupcake market.

 Existing competitors may cause an adverse effect on profitability once this product

enters the market.

 Health conscious individuals may not try to purchase the product and give adverse

comment to the product, thus decreasing the level of sales.

 Natural calamities and economic and political instability may affect the profitability

of the shop.

 Changes and unpredictability of the customers’ tastes and preferences may also

affect the sales of this project.

4.

1.3 Market Segment

 Market segmentation is used by the proponents as a marketing strategy which

involved the division of the total market into smaller, relatively homogenous groups and

then designing and implementing strategies to target them. The researchers were able

to do a more thorough and accurate study of the prospective consumers and quantify

consumer trends and other things which can affect the operation of the business. The

following are the market segmentation and its analysis to come up to a more accurate

target market.

Geographical Segment

The principal branch and office of this business is a two-storey building located at

#7 C.J Santos St. Brgy. Malinta, Valenzuela City near Valenzuela City People’s Park with

a total barangay population of approximately 14,650 residents. The said particular area

will help the researchers serve a wide demographic base of consumers in a local territory.

Demographic Segment

The researchers chose the residents of Brgy. Malinta to be the target consumers

of the market considering the age, income level, occupation, and marital status. The

residents’ age ranges from 10-64 years old. The age bracket helps the researchers adjust

to the anticipated needs and expectation of the age group. It will also help them target

their consumer more accurately.

Psychographic Segment
o Over the years, consumers have become more open towards trying new products

that enter the market. Such behavior can be seen in the food industry where people are

not just after the taste anymore but also on presentation, price, health concerns, and even

the overall atmosphere of the place where they would buy the product. Based on the

survey the proponents have conducted, majority of the respondents responded positively

if they have tasted ice cream and if they are willing to if they have not. They consume ice

cream whenever they are stressed, craving, during hot weather, and occasions and

celebrations. Based on the Hitchhikers Guide to the Customer, an online article about

market segmentation, consumers’ different personality traits, values, attitudes, interests,

and lifestyles as consumers will help the researchers determine how the product meets

the needs of the segment and how will they tailor their product to meet those needs.

Market segmentation is a marketing strategy which involves the division of the total

market into smaller, relatively homogenous groups and then designing and implementing

strategies to target them. It allows the researchers to do a more thorough and accurate

study of the prospective consumers and quantify consumer trends and other things which

can affect the operation of the business. The following are the market segmentation and

its analysis to come up to a more accurate target market.

Geographical Segment

The business will be a 1-storey building located at #7 C.J Santos St. Brgy. Malinta,

Valenzuela City near Valenzuela City People’s Park with a total barangay population of

49,745 residents. The said particular area will help the researchers serve a wide

demographic base of consumers in a local territory.

Demographic Segment
 The researchers chose the residents of Brgy. Malinta to be the target market

considering the age, income level, occupation, and marital status. The residents’ age

range from 10-64 years old. The age bracket will help the researchers adjust to the

anticipated needs and expectation of the age group. It will also help them target their

consumer more accurately.

Behavioral Segment

Over the years, consumers have become more open towards trying new products

that enter the market. Such behavior can be seen in the food industry where people are

not just after the taste anymore but also on presentation, price, health concerns, and even

the overall atmosphere of the place where they would buy the product. Based on the

survey the proponents have conducted, majority of the respondents responded positively

if they have tasted ice cream and if they are willing to if they have not. They consume ice

cream whenever they are stressed, craving, during hot weather, and occasions and

celebrations. How they act as consumers will help the researchers determine how the

product meets the needs of the segment and how will they tailor their product to meet

those needs.

1.31.4 Target Market

The target market of Brazo de Sorbetes would be residents of Barangay Malinta

whose ages range from 10 to 64 years old. The area is one of the most populated

barangays in Valenzuela in which the business is located with a current population of

38000.
The target markets for Brazo de Sorbetes are the residents of Barangay Malinta. There

would be no distinction as to gender since it is a food product, but the business focuses

mainly to people whose ages range from 15 to 30 years old.

The proponents targeted this particular market because they believed that the

product will be most preferred from ages 15 to 30, where most of them are born from the

90’s. As they formulate and consider the age bracket, the proponents consider that 15

years old will be the youngest since are considered as part of the millennial generation

while 30 is the eldest since the proponents believed that in this age, they do have the

capability to buy the product with less concern on its cost and health effects since they

are more financially stable and less health conscious as compared to a higher age group.

Additionally, inside this age bracket include the age of group of millennial who integrates

social media as an essential part of their lives. In this way, the business expansionary

goals would be achieved since it mainly focused on advertising the product through the

use of social media.

The proponents also erect their business in Barangay Malinta since the area is

one of the most populated barangays in Valenzuela City in which the business is

located with a current age-adjusted population of 14,650.