Jhon Carlo Recaña

STEM 12 Apollo

What I have learned so far?

Data Available:
▣ 485 families with an average 6members/family
▣ Only 465 families eat rice
▣ They consume an ave. of 2.5 kilo of rice per day
▣ There are 4 other retailers in the area and they have equal market shares of 20% each
▣ The other 10% of market is buying in bulk (per sack) in grocery stores.
▣ The average net profit per kilo is P10.

The objective of Ms. Arellano in the first year is to capture the 22% of the market by
implementing marketing strategies in pricing (reduced markup of 2.50 pesos) and promotion
(free delivery of rice for 5 kilos and up).
How big is the market size and the market size profit and what could be the potential market
share of the four (4) other rice retailers and Ms. Arellano’s rice retail business?
SOLUTIONS:
1. Market size of Rice = No. of fam. who eat rice x Ave. consumption per annum
Market size = 465 families x 2.5 kilo per day x 365 days
424, 312.50 kilos of rice
Market Size Profit = 424, 312.5 kilos x 10
P4,243,125 per annum

2. Potential Market Share = Market size profit x estimated market share

= 4,243,125 pesos x 20%
= 848,625.00 pesos

3. Reduce P 2.50 on Mark-Up

Potential Market Share = Market Size x Ave. Net Profit x Estimated Market Share
Potential Market Share = 424,312.5 kilos of rice x (P10-P2.50) x 22%

=424,312.5 kilos of rice x P7.5 x 22%

Potential Market Share/profit= P700, 115.63