CHAPTER 2

MARKET STUDY

Marketing is a system of business activities designed to plan, price,

promote and distribute want-satisfying goods and services to present and
potential customers. It is considered as the lifeblood of every business
transactions because it is a strategic way on how to cope up to the needs and
wants of the costumers, finding opportunities regarding it, introduce and market
the product, achieve customer’s loyalty and patronage. This aspect includes the
following topics: demands, supply, demand and supply gap analysis, marketing
programs and the projected sales.
A. MARKET DESCRIPTION

The Camarines Norte is coined by their constituents as brown out capital

of the Philippines because of the frequent brown outs in the said province. The
town of Daet, having one of the twelve municipalities of the said province
experienced an almost weekly brown out due to shortage of power supply,
maintenance, typhoons and other related reasons.

The proponents will use the household population of Daet, Camarines

Norte as the primary target market of the proposed business. People get irritated
when they experiencing brown out especially during night time because of
hotness and mosquito bites. Some people have already owned a generator to at
least give light and power to electric fans. However, majority of the households in
Daet, Camarines Norte do not have generator to use during brown out.

The consumption pattern of the household of Daet, Camarines Norte

depends greatly on the demand of the product. When one product is new,
households tends to avail to experience them but they also consider the cost. By
that, the proponents of the solar-powered generator think that providing the
market with a new variety of generator can make the market curious and
purchase to make their lives better during brown outs.
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The Market
The proponent will the population of households in the municipality of
Daet, Camarines Norte as the primary market of the proposed business. The
users of generators in Daet are generally those businesses and commercial
establishments. In order for the household to have lightings during brown out, the
proponents will offer the solar-powered generator to them.

The Size
The size of the market of the proposed market is relatively large as it
compares to other sizes of population of households in remaining municipalities
of Camarines Norte not to mention the municipality of Labo. As of 2018, the total
households in the municipality of Daet has a total population of 25, 132. This
data is based on the Philippine Statistics Authority (PSA).

Geographical Description
The proposed business will be located in the heart of the province of
Camarines Norte. Daet, being the capital of the Camarines Norte and one of the
twelve municipalities of the said province, is a first class municipality. It is said to
be the gateway to Bicolandia. It is located in the Region V. Daet is consisted of
twenty five (25) barangays and has a total land area of 17.76 sq.m or 46.00km 2.
The climate type in this town is tropical rainforest in which in a span of one year it
is raining during the months of June to December, which sometimes extends until
February, will affect the production of the products of the proponents. Daet is
surrounded by bodies of water in which make this geographical feature suitable
for the proposed business.

Age Group
Since the target market of the proposed business is the households of
Daet, Camarines Norte, and the age group will be the age of all the members of
the household.
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B. DEMAND ANALYSIS
It is very essential to know the demand of the products in order to
answer the customer needs and wants. Knowing the demand will help us to
determine the trend for the proposed product. Analyzing the demand
thoroughly will give the projection of the total number of quantities of each
product that we are going to produce daily, weekly, monthly and annually. To
determine the feasibility of the proposed business, demand analysis must be
taken into consideration whether there is still market for the proposed
business.

The annual increase of demand for the years 2016 – 2025 is based on
the annual population growth rate from 2010-2015 by 1.7%. The annual
projected demand was obtained by multiplying the market acceptability which
is 1 to target population and to the frequency of agreement. Based from the
obtained demand, it was distributed again to every product in order to
determine its demand.
Table 2.1

Historical Total Number of Household of Daet, Camarines Norte

Year 2016-2020

Year Number of Households

2016 23,867
2017 24,487
2018 25, 132
2019 25,577
2020 26,030
Source: Philippine Statistics Authority (PSA)
Table 2.1 shows the number of households from years 2016-2020 in the
municipality of Daet, Camarines Norte with an average increase of 1.7%
annually.
To determine the demand of the proposed business, the proponents
conducted survey. However, since it is not advisable to survey all the number
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of households, the proponents used samples only using the Slovin’s Formula
of:

Where:

n= Sample Size N=Total Number of Households

E2=Margin of Error

n= N___

1+N(e)2

Applying the rule of substitution, to get the sample size the formula would
be:
n= 26,030__
1 + 26,030 (5%)2
n= 394
The sample size used by the proponents is 394. Meaning out of 26,030,
only 394 number of households were surveyed. The answer of the 394 shall
is the representative of the 26,030.

TABLE 2.2

HISTORICAL DEMAND FOR GENERATOR

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45% of Average Annual Total

Population are Consumption Demand
Year Population
buying
generator
(pcs) (pcs)
2016 23,867 10,740 1 10,740
2017 24,487 11,019 1 11,019
2018 25,132 11,309 1 11,309
2019 25,577 11,510 1 11,510
2020 26,030 11,714 1 11,714

Table 2.2 shows the historical demand of households who buys generator for the
years 2016-2020

Table 2.3

Projected Total Number of Household of Daet, Camarines Norte

Year 2021-2025
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Year Population
2021 26,490
2022 26,959
2023 27,436
2024 27,922
2025 28,416
Source: Philippine Statistics Authority (PSA)

Table 2.3 shows the projected population of household in Daet, Camarines Norte
for the years 2021-2025 with an average increase of 1.7% annually.

Table 2.4
PROJECTED DEMAND FOR GENERATOR

45% of Average Annual

Total Population Total Demand
Year Consumption
Population are buying
generator
(pcs) (pcs)
2021 26,490 11,921 1 11,921
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2022 26,959 12,132 1 12,132

2023 27,436 12,346 1 12,346
2024 27,922 12,565 1 12,565
2025 28,416 12,787 1 12,787

Table 2.4 shows the projected demand of household who will buy generator for
the years 2021-2025.

TABLE 2.5

PROJECTED DEMAND FOR SOLAR POWERED GENERATOR

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45% of 67% who will Average Annual

Population buy solar- Total Demand
Year Consumption
are buying powered
generator generator

(pcs) (pcs)
2021 11,921 7,987 1 7,987
2022 12,132 8,128 1 8,128
2023 12,346 8,272 1 8,272
2024 12,565 8,419 1 8,419
2025 12,787 8,567 1 8,567

Table 2.5 shows the projected demand of households who will buy solar powered
generator in the proposed business for the years 2021-2025.

C. SUPPLY ANALYSIS

In this supply analysis, the proponents identified the sales capacity of

competitors and the sales capacity of proposed business. Competitors usually
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exist in a business industry. They sell the products that is commonly the same or
the so-called direct competitor of the proposed business. The following are the
list of competitors in Daet, Camarines Norte that sells “Generator” in the market.
The identity of the competitors is hidden for confidentiality purposes.
Table 2.6

Historical Supply of Generator

Competitors 2016 2017 2018 2019 2020

(pcs) (pcs) (pcs) (pcs) (pcs)

Seller 1 15 16 15 17 20
Seller 2 12 14 15 15 18
Seller 3 8 9 9 9 12
TOTAL 35 39 39 41 50

Table 2.6 shows the historical supply of generator for the years 2016-
2020. In order to get the projected supply, the proponents used the horizontal
analysis: Current year minus Base year divided by number of years which is 5.

50-35=15/5=3 units
The 3 represents the possible increase in sales in units for the years 2021-2025
which is presented in table number 2.7.

TABLE 2.7
PROJECTED COMPETITOR’S SUPPLY FOR GENERATOR

2021 2022 2023 2024 2025

(pcs) (pcs) (pcs) (pcs) (pcs)

TOTAL 53 56 59 62 65
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Table 2.7 shows the total projected supply of generator for years 2021-2025. To
compute for the succeeding years, the proponents, as computed in the
paragraph above, it uses the 3 units to get the projected supply for the next five
years.

D. DEMAND-SUPPLY ANALYSIS

Determination of market share is necessary in a business. Without a

market share, business may be unsuccessful. This is achieved if the demand
from the target market is not year satisfied by the supply from the
competitors.

Table 2.8
Demand-Supply Analysis
Demand Supply Demand Capacity Market
Year
(pcs) (pcs) Gap (pcs) Share
2021 11,921 53 11,868 84 0.71%
2022 12,132 56 12,076 88 0.73%
2023 12,346 59 12,287 93 0.76%
2024 12,565 62 12,503 97 0.78%
2025 12,787 65 12,722 102 0.80%

Table 2.8 shows the demand-supply analysis of generator for the years 2021-
2025. Demand gap is computed by deducting the supply from the demand.
Market share is computed by dividing the total capacity of the business to the
demand gap and multiply it by 100%. Capacity will increase by 5% annually.

Table 2.9
Production Capacity
2021 2022 2023 2024 2025
84 88 93 97 102
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Table 2.9 shows the production capacity of the proposed business. It is

computed by multiplying the monthly production of 7 by 12 months which is 84
annually and will increase by 5% annually.

E. PRICE STUDY

The business will use a cost-plus pricing strategy. Meaning the cost of
production will be added by a mark up to attain the selling price of the solar-
powered generator. However, if there is a government agency which
regulating the selling price of this kind of equipment, the proponents will follow
but will also take into consideration the other factors so that the business will
not incur loss.

F. FACTORS AFFECTING THE MARKET

There are different factors affecting the market and these factors may
dictate whether the business will survive or not in a congested market in
today’s generation:
1. Competitors-Competition in the market will not or cannot be eliminated.
In order to succeed, one must outbid or at least level the playing field.
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The solar-powered generator has many competitors but through

innovations that the proponents did, it might succeed.
2. Economic factors-Sometimes economic factor does not favor some
products or services. In order to overcome this economic factor, the
proponents will devise a plan that will make the product appealing and
affordable to the market.
3. Social Media-Nowadays, mass media communication has been
everywhere, if your business do good or not, they will post it and talk it
on social media. Take note that ass media communication should be
consider because most of the people believe what they read and saw
coming from social media sites.
4. Environmental Factors-Solar-powered generator will provide benefits
to the environment because it will not use any kind of gasoline to run. It
will use convertible energy to provide electricity to the households. This
is an environmental-friendly product which the proponent will be
patronized by the market.
5. Political and legal factors-Politics are everywhere, but the legality of a
business should be followed. A business who is operating in a legal
way can succeed because they comply with the different rules and
regulations set by the government.
6. Climate-This is the intriguing factor that the proponents consider.
Climate directly affects the sales of the solar-power generator. During
typhoons and brownouts, the solar-powered generator will be a big yes
for the household because they still have electricity even the climate is
unfavorable.
G. MARKETING PROGRAM
Target Market
The target market used by the proponents is the household of Daet,
Camarines Norte. It is the better to use the household because they are
the ones who will be benefited from this product.
Product Mix
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The business will offer only one kind of product which is the solar-
powered generator. There are no other products to be offered and
therefore product mix is not yet consider. However, in the future, when the
business expand, other solar-powered products can be considered
making it for the proponents to consider the product mix.

Pricing Strategy
Pricing the proposed products is hard. It will always entail high
costs because it is a generator. However, the proponents will make sure
that the price to be set will be a win-win price for both the users and the
business. The price to be set will be set to protect the business in incurring
loss and likewise the price to be set will be affordable to the target market.
Again, if there is a government agency which regulating the selling
price of this kind of equipment, the proponents will follow but will also take
into consideration the other factors so that the business will not incur loss.

Marketing Strategy
In the marketing strategy, the four (4) P’s of marketing must be
addressed so that the success of the business will be fluid.

Place
Channel of Distribution
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Solar-Powered
Customers
Generator

Figure 2.0
The distribution channel shows that the solar-powered generator will
directly be offered to the ultimate consumers.

People
The target place is Daet Camarines Norte and the proponents
decided to use the number of households as the target market because
generators are bought for the family consumption. It is wise for the
proponents to use the households because they are the ultimate
consumers of proposed product.

Product
The proposed product is the solar-powered generator. It is the first
type of generator which uses solar panel as materials to give electricity to
be consumed by the target market. It is timely because it can provide an
alternative to those generators who are noisy and consuming large
amount of gasoline. Here, in this product, a household needed only
sunlight to have an electricity.

Price
Pricing must be carefully studied. Moreover, the price should be
competitive enough to outbid the competition and to be able the users to
purchase it.

Promotion
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Nowadays, if you have good promotion, your business will prosper.

Having the right promotion will also bring the business into success. The
proposed business will used advertising strategy and other promotional
strategy applicable to the business.

Advertising Strategy
In order to promote the business, advertising is a must. The
applicable advertising strategies in the proposed business are:
1. Through Flyers and Printed Ads.
This advertising strategy is very common yet effective. The cost is
less because it only requires printable materials.

Figure 2.3
Flyers
2. Online advertising
One of the new types of advertising. The proposed business will
create a Facebook page in order for the people to know about the
business, its products and its quality.
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Figure 2.4
Official Facebook Page
3. Word of Mouth Advertisement
The most successful kind of advertisement is the word of mouth.
People will spread news about the business and its products hand
to hand and this will make the business known to the public.

Business Logo
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Figure 2.5
Business Logo