CHAPTER 2

MARKET STUDY

This chapter seeks to determine the size, nature and growth of total demand
for the service; description and price and value of service; supply situation and
nature of competition; factors affecting the market; and the appropriate marketing
program and strategy for the business.

A. MARKET DESCRIPTION
Coco Plus Enterprise specializes in hand sanitation product, which are often
classified as a subcategory of numerous other larger industries, such as
disinfectants, personal care and infection prevention. The Coco Plus Enterprise
will be established in the municipality of Daet, Camarines Norte. The said
location will be the chosen target market since this municipality is the capital of
the province of Camarines Norte wherein there many business activities are
done and this is the center of economic activities. Aside from that, the said target
market has a household population which is the demographics of the proposed
business. According to National Statistics Office (NSO), the households in Daet
is one of the towns in the province that has high population density with 26,490 in
year 2020, and a 1.7% growth rate yearly, meaning there will be also possible
market in the said location.

The chosen market will be the household because the product that will be
manufactured by the business possibly will be suitable, the coco hand sanitizer
will be appropriate to the households since the product will be available in 500 ml
size bottle which is good to the family in the selected market.

The proponents planned and decided to form this kind of business in this year
2020, in respond to the current trend and issue regarding the Covid-19
pandemic. The proponents considered the relevance to the current trend.
 On the part of Coco Plus Enterprise, the proponents saw a great opportunity to
offer hand sanitizer product not just for earning money, but also to help society
particularly in Daet to be safe for everyone and also to contribute to the
healthcare system. The target population which is the households may be also
aware in future about the health and safety.
B. DEMAND
The products of the projected business will not be possible if the demand were
not considered because this will reflect to the consumer’s desire to purchase the
particular products of the proposed business and the willingness to buy the said
product, that is why the demand is one of the most crucial part of establishing a
business. It also involves identification and analysis of demand, estimation of the
past, present and the projection for the future demand. In the part of the
enterprise, demand is the total quantity of hand sanitizer demanded across all
the consumers in market for a given good.

Demand of the products of the project business “Coco Plus Enterprise” can best
identify through market research. The proponents of the said business conducted
a statistical survey using stratified random sampling, wherein the overall
population of households were partitioned and divided into subpopulations. This
subpopulation is the number of households in each Barangays in the target
market which is the municipality of Daet, Camarines Norte. In this municipality,
there are twenty-five (25) Barangays that were considered. The overall
population in year 2020 in the total Barangay is 26,490 based from the National
Statistics Office (NSO) latest survey.

The market projection of this business is based on the surveys through

questionnaires conducted and other related information gathered from the
company. The total population of the target market was measured through
identifying the households in the municipality of Daet. The proponents used
Slovin’s formula to calculate the representation of population, wherein 394
households in municipality are the considered as sample size. The confidence
 level that were taken from the population used is 95% with 5% margin of error.
Because of new normal situation, during the survey, the proponents used both
online and physical tools to reach the target population. In online method, google
forms application was used and in physical approach, the proponents visited
selected households in the Barangays located in the said market.

Table 2.0
Historical Household Population

Target Year
Market 2016 2017 2018 2019 2020
Municipality
23,867 24,487 25,132 25,577 26,030
of Daet
Source: Municipal Planning and Development Office (MPDO) Daet

Table 2.1 shows the number of populations of households in Daet, Camarines Norte
from year 2016-2020. The figure above is based on the data Municipal Planning and
Development Office (MPDO) Daet. It was said to be increased in 1.7% yearly based
from historical data provided by the agency.

Table 2.0
Projected Population
Target Year
Market 2021 2022 2023 2024 2025
Municipality
26,490 26,959 27,436 27,922 28,416
of Daet
Source: Municipal Planning and Development Office (MPDO) Daet

Table 2.2 shows the total target population of the proponents for the next five (5) years.
The figure above is based on the five (5) year computation and projection of Municipal
Planning and Development Office (MPDO) Daet.

Table
 Historical Demand for Hand Sanitizer

92% of target Average

Total population are Annual Total Demand
Year
Population buying hand Consumption (pcs)
sanitizer (pcs)
2016 23,867 21,958 30 658,729
2017 24,487 22,528 30 675,841
2018 25,132 23,121 30 693,643
2019 25,577 23,531 30 705,925
2020 26,030 23,948 30 718,428

The above figure were the results of the survey and conducted by the proponents. The
average annual consumption was derived by considering the annual purchase of hand
sanitizers buyer in the said target market. Total demand can be computed as average
annual consumption multiplied by the population that is willing to buy the product. Based
on the survey conducted by the proponents, ninety-two percent of the population in the
municipality are buying hand sanitizer.

Table
Projected Demand for Hand Sanitizer
 92% of target Average
Total population are Annual Total Demand
Year
Population buying hand Consumption (pcs)
sanitizer (pcs)
2021 26,490 24,371 30 731,124
2022 26,959 24,802 30 744,068
2023 27,436 25,241 30 757,234
2024 27,922 25,688 30 770,647
2025 28,416 26,143 30 784,282
Note: Data are based on survey and computation of the proponents.

According to survey results, demand will increase yearly. The total demand was
computed by multiplying the average annual consumption of hand sanitizer. The rate of
household population of 1.7% in the municipality of Daet was based on the projection
provided by Department Trade and Industry. Through this information, the probable total
number of customers of the firm will increase annually.

Table
Projected Demand for Coco Hand Sanitizer
 92% of 93% from
target the target Average
Total
Total population population Annual
Year Demand
Population are buying will buy Consumption
(pcs)
hand Coco Hand (pcs)
sanitizer Sanitizer
2021 26,490 24,371 21,446 25 536,158
2022 26,959 24,802 21,826 25 545,650
2023 27,436 25,241 22,212 25 555,305
2024 27,922 25,688 22,606 25 565,141
2025 28,416 26,143 23,006 25 575,140

The table above shows the five (5) year demand projection for the product coco hand
sanitizer of the proposed business in the target. Giving to the results, demand of will
increase annually. The production of coco hand sanitizer of the prospect business will
be based on this information as it will increase five percent (5%) annually to handle the
increasing demand of the product. The average annual consumption is derived by
considering the frequency of buying of the household population.

C. SUPPLY
The competitors in the target market which is the Municipality of Daet must be
considered particularly regarding the number of quantities they were producing
and selling because this may affect the proposed business because it is an
 evaluation of existing supply conditions towards bridging the level of supply and
the level of demand of the proposed project output.
Table
COMPETITOR'S SUPPLY ANALYSIS FOR COMPETITORS

Volume (ml)
Name of Competitors Size Available
Daily Monthly Yearly
Grocery Store
SM Hypermarket 220 ml, 330ml and 500 ml 20 600 7,200
Novo Superstore 220 ml, 330ml and 500 ml 25 750 9,000
LCC-Market Plus 220 ml, 330ml and 500 ml 15 450 5,400
HP Supermarket 220 ml, 330ml and 500 ml 15 450 5,400
HP Hypermarket 220 ml, 330ml and 500 ml 10 300 3,600
Gemaglen 220 ml, 330ml and 500 ml 10 300 3,600
Estrellas' Store 220 ml, 330ml and 500 ml 15 450 5,400
I.P Bombase 220 ml, 330ml and 500 ml 25 750 9,000
Sanitary store 220 ml, 330ml and 500 ml 20 600 7,200
Convenient Store
7 Eleven (Near Daet Elem.) 220 ml, 330ml and 500 ml 10 300 3,600
7 Eleven (Near Public Market) 220 ml, 330ml and 500 ml 15 450 5,400
7 Eleven (Vinzons Ave.) 220 ml, 330ml and 500 ml 20 600 7,200
7 Eleven (F. Pimentel Ave.) 220 ml, 330ml and 500 ml 20 600 7,200
Mini Stop 220 ml, 330ml and 500 ml 25 750 9,000
San Miguel Food Ave/ Treats 220 ml, 330ml and 500 ml 25 750 9,000
HP Convenient Store 220 ml, 330ml and 500 ml 25 750 9,000
Drug Stores
Mercury Drug 220 ml, 330ml and 500 ml 30 900 10,800
South Star Drug (Bagasbas Road) 220 ml, 330ml and 500 ml 30 900 10,800
South Star Drug (F. Pimentel Ave.) 220 ml, 330ml and 500 ml 20 600 7,200
South Star Drug (Vinzons Ave.) 220 ml, 330ml and 500 ml 20 600 7,200
Fem Drug 220 ml, 330ml and 500 ml 20 600 7,200
Mercury Drug (Vinzons Ave.) 220 ml, 330ml and 500 ml 15 450 5,400
Generics Pharmacy 220 ml, 330ml and 500 ml 15 450 5,400
Cabrera's Drug Store 220 ml, 330ml and 500 ml 10 300 3,600
Jelaine's Pharmacy 220 ml, 330ml and 500 ml 20 600 7,200
St. Magdalene's Pharmacy 220 ml, 330ml and 500 ml 20 600 7,200
Medlife Pharma 220 ml, 330ml and 500 ml 20 600 7,200
Daet Drug 220 ml, 330ml and 500 ml 20 600 7,200
Botika Sto. Rosario 220 ml, 330ml and 500 ml 10 300 3,600
Daet Doctors Pharmacy 220 ml, 330ml and 500 ml 10 300 3,600
Total 555 16,650 199,800
Table shows the supply of competitors of Coco Plus Sanitizer from different businesses in municipality of Daet. These
data were based from survey conducted by the proponents of the project.

Table
PROJECTED COMPETITOR'S SUPPLY FOR COMPETITORS

Year
Name of Competitors Increase per
year 2021 2022 2023 2024 2025
 Grocery Store
SM Hypermarket 2% 7,200 7,344 7,491 7,641 7,794
Novo Superstore 5% 9,000 9,450 9,923 10,419 10,940
LCC-Market Plus 5% 5,400 5,670 5,954 6,251 6,564
HP Supermarket 5% 5,400 5,670 5,954 6,251 6,564
HP Hypermarket 5% 3,600 3,780 3,969 4,167 4,376
Gemaglen 5% 3,600 3,780 3,969 4,167 4,376
Estrellas' Store 5% 5,400 5,670 5,954 6,251 6,564
I.P Bombase 5% 9,000 9,450 9,923 10,419 10,940
Sanitary store 5% 7,200 7,560 7,938 8,335 8,752
Convenient Store
7 Eleven (Near Daet Elem.) 2% 3,600 3,672 3,745 3,820 3,897
7 Eleven (Near Public
Market) 2% 5,400 5,508 5,618 5,731 5,845
7 Eleven (Vinzons Ave.) 2% 7,200 7,344 7,491 7,641 7,794
7 Eleven (F. Pimentel Ave.) 2% 7,200 7,344 7,491 7,641 7,794
Mini Stop 2% 9,000 9,180 9,364 9,551 9,742
Sn Miguel Food Ave 2% 9,000 9,180 9,364 9,551 9,742
HP Convenient Store 5% 9,000 9,450 9,923 10,419 10,940
Drug Stores
Mercury Drug 10% 10,800 11,880 12,474 13,098 13,753
South Star Drug (Bagasbas
Road) 5% 10,800 11,340 11,907 12,502 13,127
South Star Drug (F. Pimentel
Ave.) 5% 7,200 7,560 7,938 8,335 8,752
South Star Drug (Vinzons
Ave.) 5% 7,200 7,560 7,938 8,335 8,752
Fem Drug 5% 7,200 7,560 7,938 8,335 8,752
Mercury Drug (Vinzons Ave.) 10% 5,400 5,940 6,237 6,549 6,876
Generics Pharmacy 5% 5,400 5,670 5,954 6,251 6,564
Cabrera's Drug Store 5% 3,600 3,780 3,969 4,167 4,376
Jelaine's Pharmacy 5% 7,200 7,560 7,938 8,335 8,752
St. Magdalene's Pharmacy 5% 7,200 7,560 7,938 8,335 8,752
Medlife Pharma 5% 7,200 7,560 7,938 8,335 8,752
Daet Drug 5% 7,200 7,560 7,938 8,335 8,752
Botika Sto. Rosario 5% 3,600 3,780 3,969 4,167 4,376
Daet Doctors Pharmacy 5% 3,600 3,780 3,969 4,167 4,376
Total 106,200 110,052 114,067 118,254 122,619

Table above are the number of projected supply of competitors within five (5) years, from 2021 to 2025.
These competitors were asked through survey and interview about their sales and production capacity.
Based from this data, ten percent (10%) was the highest among the given businesses above about their
estimation for the increase of their sales. This data helps the proponents on how the proposed business
engaged in the market were the competitors are existing. The movement and inclination of supply for
these competitors were properly measured.
Table
Production Capacity

Siz Volume (pcs)

Product
e Daily Weekly Monthly Annually
 Coco 500
50 300 1,200 14,400
Sanitizer ml
Total 50 300 1,200 14,400

Table 2.8 shows the production capacity of the proposed business for the Coco hand
sanitizer. By considering the labor, financial, equipment and material resources, and
measuring the survey results, the business will be able to supply fifty (50) made coco
sanitizer daily.

Table
Projected Production Capacity

Volume (pcs)
Product Size
2021 2022 2023 2024 2025
Coco
500 ml 14,400 15,120 15,876 16,670 17,503
Sanitizer
Total 14,400 15,120 15,876 16,670 17,503

Table shows the projected production capacity (pcs) for the Coco Hand Sanitizer of the
business from year 2021-2025. As a projection by the proponents, the business will
increase their production as well as the sales by only five percent (5%) per year for the
product Coco Hand Sanitizer as an assumption of the proponents.

D. DEMAND AND SUPPLY ANALYSIS

Demand and Supply Analysis is the determination of the total quantity of
products that are available in the market. This is also the determination of the
market share or the suggested percentage where the business should be
entered. After calculating the demand and supply for the proposed project, the
next phase is to compare these two factors to determine whether there is a
market for the service to be offered. The propose project which is the Coco Plus
Enterprise shows that there is a market because the demand is greater than
supply.

Table 2.14
DEMAND AND SUPPLY GAP

Year Demand (Pcs) Supply (Pcs) Demand Gap (Pcs) Market Share
202
731,124 106,200 624,924 2.30%
1
202
744,068 110,052 634,016 2.38%
2
202
757,234 114,067 643,166 2.47%
3
202
770,647 118,254 652,393 2.56%
4
202
784,282 122,619 661,662 2.65%
5

Note: Data are based on information gathered by the proponents and through
computation with the results.

The table shows the demand and supply gap of the product Coco Hand
Sanitizer. The demand and supply gap were derived from subtracting the
projected supply from projected demand and the market share was computed by
dividing the total number of items sold per year or the production capacity.
Discussing to results, in the first year of operation, the Coco Plus Enterprise
product will have 2.30% market share, considering the increasing demand and
supply of the competitors. The proponents measured the increasing market
percentage without considering that there will be no other competitors that will be
exist in future.
E. PRICING STUDY
The most appropriate pricing strategy for the introduction of Coco Hand Sanitizer
is a skimming approach. By analyzing the recent trends within the disinfectants
industry, one will quickly notice the hand sanitation market is currently very
profitable due to the recent Corona Virus pandemic, more commonly referred to
as Covid-19. The Covid-19 pandemic outbreak has greatly increased consumer
demand for sickness prevention products, and while many companies are
focusing on individual customers, there remains a large market of households
seeking to protect their members of family through bulk purchasing. A skimming
pricing approach allows Coco Hand Sanitizer to take advantage of the current
increased awareness about personal hygiene and the demand for more complete
sanitation within public workspaces. This all sums up to the simple fact that
people are willing to pay for products which make them feel safe as Covid-19
continues to spread and as cold season draws nearer. As the needs of
consumers for protection is satisfied, pricing will have to decrease with the falling
demand; however, health issues are always developing and the trend for
personal hygiene will again grow with the discovery of a new pandemic.

F. FACTORS AFFECTING THE MARKET

Government Regulation and Laws

During this pandemic, there are laws that are being implemented such as no
hoarding and overpricing for the important health and sanitation products of this
current situation. This means that laws are unpredictable. Local changes in the
laws can have a direct impact on the business if the product Coco Sanitizer
becomes highly regulated or outlawed. Government regulations such as those
that affect the environment or communication are beyond the control and could
have a direct impact on the proposed business.
Weather Conditions
Weather conditions purview of controllable business factors. In addition to the
direct impact a typhoon may have on the ability to open at any given time,
widespread weather events often carry a substantial effect to a wide range of
businesses.

Trends and Technology

While the business may spend a good part of their profits on marketing in the
hopes of favorably influencing trends, some are beyond their control. An increase
in technology use by their customers may be built into their strategic planning,
but business may not have planned for the widespread use of social media that
could affect their business. Customers who become advocates for a cause or
decide to boycott a certain business practice can start a trend that could
seriously affect your business if you're on the wrong side of the trend.

Customer Preference
The target customer base may change suddenly or slowly over a period of time.
The changing makeup of the competitors that attracts more customers. Cultural
implications of a changing customer base may affect the business negatively or
positively depending on your ability to meet the needs of changing
demographics.
G. MARKETING PROGRAM
1. Product Strategy
Coco Hand Sanitizer’s main purpose is to eliminate germs on used primarily
in professional and office settings, such as hospitals, schools and offices.
That is why, the target market of the proposed business is the household
population. Currently, the main concern on many members of family’s minds
within these households is the health and safety of themselves. With the
Covid-19 pandemic in Camarines Norte, the disease is on everyone’s mind.
This being said, Coco Hand Sanitizer will have a life cycle much like a fad,
without the shortly lived maturity stage. The idea behind this life cycle is that
the customers will quickly gain awareness to the proposed product due to its
disinfecting attributes and its utilization and practicality in work environments
we plan to market to.

Also, the product will require slight to no learning stage, and due to the drive
to stay ahead of the competition, the proponents plan on continuous
innovation being our customer’s primary learning patterns. Once the customer
uses the Coco Hand Sanitizer for the first time, they will be able to continue
using the product without much difficulty or having to learn new practices or
process.

This being said, the marketing product plan will focus on Coco Hand Sanitizer
disinfecting attributes. As a subsidiary to Coco Sanitizer, the slogan or tagline
“Imagine A Touchable World” will be utilized and applied to advertising
campaigns. This will be especially useful during the introduction stage of our
product. The name brand will help to gain a potential customer’s attention, but
the product differentiation marketing that will be included will help them to
realize the benefits Coco Hand Sanitizer can offer.
 Figure
Sample Product Packaging
 Figure
Sample Advertising
Because Coco Hand Sanitizer will not use television advertising to the masses as
a way to reach our customers, but a more direct and personal approach, they will
be able to focus on the future possibilities of a healthier environment and how it
will benefit the particular buyer on a very personal level. Coco Plus Enterprise will
use more factual information during the introduction stage instead of statistical
analysis.

2. Placement Strategy
Direct selling will be the strategy of the business. The proposed business will directly
reach the consumers, as the business will offer their products straight to the
customer. The Coco Plus Enterprise will concentrate to execute their services in
Daet, Camarines Norte, the target market of the business will be the household
population that has a capability to afford the products offered by the Coco Plus
Enterprise

When the Coco Plus Enterprise uses direct distribution, Coco Enterprise will
interact directly with the customers beyond making a sale. The business has
a more conferred interest in their contentment, the business can provide
better customer support, including decreased wait times for customers to get
an answer, better product knowledge, and more sympathetic responses to
complaints. When the business sells direct to customers, the business has
more control over how products are displayed, promoted, delivered and
returned. When the proposed business put their product in a retail store, the
business is at the kindness of the retailer, which has other products to
manage, promote and sell.

COCO PLUS
ENTERPRISE
 HOUSEHOLDS

Figure
Distribution Channel

3. Promotion Strategy
Promotion of Coco Plus Enterprise refers to the methods that will use to
advertise and sell their products and services. Promotional methods include
the following:
1. Direct Communication
2. Internet and Online Advertising
3. Print Ads such as Coupons
4. Special Campaign / Offers

A way of getting the customers involved in the promotion process is to

incorporate advertisements on the packaging of the business. When a
consumer purchases a Coco Hand Sanitizer, the packaging could have a
clever slogan such as “Do you know how many people have touched this
box? A slogan such as this one makes the consumer think about what kind of
germs and makes them grateful for purchasing the product that’s inside that
package.

This is a good way for Coco Plus Enterprise to get their name out and it helps
to explain the purpose of the Coco Hand Sanitizer. Using direct coupons
allows for the awareness of the new products to be spread throughout the
market. Sending direct mail gives a sense of importance to the consumer.
Coupons give loyal customers opportunities to purchase these products at a
very cheap price.

Another idea that would encourage the consumer to purchase more Coco
Hand Sanitizer products would be to offer a special. This allows the costumer
to take advantage of these deals and purchase more of the products for a
cheaper price. Today, the average consumer would not have any doubt in
their mind about purchasing this product and its safety. If anything, they will
buy in bulk to stock up for pandemic season and the constant threat of the
Covid-19.

The media that will be taken advantage of in promoting these products focus
on the internet. This is focused on the most due to the fact that most
consumers look towards the news on the internet to find the most information
about today’s growing pandemic. The media will help the promotion of the
product in a very big way. This health scare has frightened many consumers
and has encouraged them to take as many health precautions as possible.
Promoting the Coco Hand Sanitizer with not only the media but with
magazines, direct mail, coupons, conventions, and packaging, Coco Hand
Sanitizer should see the sales of these helpful products increase drastically.
 Figure
Sample Product Logo

4. Pricing Strategy
The Coco Plus Enterprise will be using pricing skimming. The use of
skimming during the introduction of Coco Hand Sanitizer is very beneficial to
the company as it helps aggrandize the product through the initial
development of revenues. These early figures can be used to subsidize
unforeseen costs, increase production to meet backorders, or can be directly
channeled to profits. There was a lot of safety in forecasting sales, pricing and
the costs which will be incurred during production. The allocation of costs was
the variable in calculating profits. The cost estimates used where based off of
total market figures and the percentage of total sales controlled by Coco
Hand Sanitizer. Estimating fixed cost was a challenge as it this number is
likely to be higher during the beginning years and decrease as the years
continued; however, the numerous resource which the business already
possess may prove to decrease initial costs and help with the allocation of
assets.

Many fixed costs are constant, and most of the costs incurred during the early
stages of beginning production would be financed and spread out over an
extended period of time.

Because of this, a constant fixed cost makes most sense to use in forecasting
profits. Additionally, with concern to costs, a high variable cost margin was
used to compensate for possible shortcomings in the estimated fixed costs
and under stocking which would likely result in increased manufacturing
products with a lower contribution margin than originally planned.

Even with these safely chosen numbers, Coco Hand Sanitizer will show
impressive profits in the market. The price is effective in attracting customers
to keep a large quantity in stock and market the product at attractive prices,
but at the same time, sales are generating a large profit with a reasonable
breakeven point.