Chapter II

Market Analysis

This chapter would show the different products that the proposed

business would offer. This would also show the pricing of the products, the

promotion strategy and even the target place of the business itself.

2.1 Products/Services

"Servicing" is a transaction through which value is provided by a

combination of products and services in which the satisfaction of

customer needs is achieved either by selling the function of the product

rather than the product itself, or by increasing the service component of

a product offer. The concept is based on the idea that what customers

want from products is not necessarily ownership, but rather the function

or satisfaction that the product provides or the service the product can

deliver.

2.1.1 Description/Specification of Product

The table provides information the products the proposed

business is offering.
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TABLE 1
PRODUCT DESCRIPTION
PRODUCTS DESCRIPTION IMAGE
Caf Latte A caf latte, or latte for short, is an
(Hot/ Iced) espresso based drink with steamed
milk and micro-foam added to the
coffee. This coffee is much sweeter
compared to an espresso due to the
steamed milk.
Caf Mocha is based on espresso and hot milk, but
(Hot/ Iced) with added chocolate, typically in the
form of sweet cocoa powder, although
many varieties use chocolate syrup.

Choc (Hot/ also known as hot cocoa, drinking

Iced) chocolate or just cocoa is
a heated beverage consisting of
shaved chocolate, melted chocolate
or cocoa powder, heated milk or water,
and often sugar.
Espresso strong black coffee made by forcing
(Hot/ Iced) steam through ground coffee beans.

Caramel latte Mouth-watering flavors perfectly

(Hot/ Iced) paired: sweet caramel sauce, deep-
roasted espresso and freshly steamed
milk.
Mocha chiller is a refreshing combination of
(iced/ chocolate and coffee that is perfect for
blended) a summer morning treat. Serve over
ice and top with whipped cream.
Caramel blended coffee and caramel taste
chiller (iced/
blended)
Choco Chiller
(iced/blended)
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Chicken is a sandwich which typically consists

Sandwich of a boneless, skinless breast
of chicken served between slices of
bread, on a bun, or on a roll. Variations
include the chicken burger
or chicken on a bun, hot chicken,
and chicken salad sandwich.
Bacon is a sandwich of cooked back bacon
Sandwich between bread that is usually spread
with butter, and may be seasoned with
ketchup or brown sauce. It is generally
served hot.
Club also called a clubhouse sandwich, is a
Sandwich sandwich of occasionally toasted
bread, sliced cooked poultry, fried
bacon, lettuce, tomato, and
mayonnaise.
Cookies is a small, flat, sweet, baked good,
usually containing flour, eggs, sugar,
and either butter, cooking oil or
another oil or fat. It may include other
ingredients such
as raisins, oats, chocolate chips or
nuts.
Cupcakes a small cake baked in a cup-shaped
container and typically iced

The table above deliberately presents the menu of the proposed

business which is the Green Life Garden Caf.

2.2 Market Research Analysis

This section explains and discusses the established market, the market size

and trends, the competition and projections in estimating the proposed

business market share.

2.2.1 Target Market

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The researcher chose students from Ramon Magsaysay

Memorial Colleges, Holy Trinity College and Notre Dame Dadiangas

University as its target market, professionals and blue-collar workers

who are fond of coffee shops.

2.2.2 Market Size and Trends

Based on the data given by the head of the university registrar

of Notre Dame of Dadiangas, registrar of Ramon Magsaysay

Colleges and the VP for Academics in Holy Trinity has a total

population of 13,855 for the school year 2016-2017 second

semester. And according to the interview of the researcher to some

business interest located near the target location of the proposed

business such as banks and other large establishment, there are

total working personnel both professionals and blue- collar workers

of 467 as of today. And the City Hall with the largest number of

employees- 3,291 to be exact. Below is the computation of the total

market size.

Computation:
Total

Ramon Magsaysay Memorial Colleges (RMMC) 6,899

Holy Trinity College (HTC) 3,328
Notre Dame of Dadiangas College 3,628
Business interest (Banks & other establishment) 467
City Hall 3,291
Total 17,613
Total Number of Respondents 100
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Out of 17,613 total populations of respondents, the researchers selected

one hundred (100) respondents or samples through Slovins formula.

Survey questionnaires have given to each respondent to gather

necessary data and to formulate hypothesis. The sampling was

conducted at the colleges of Ramon Magsaysay Memorial Colleges

(RMMC), Holy Trinity College (HTC), Notre Dame of Dadiangas

Universities (NDDU); City Hall and in some business establishment near

the target location of the business.

Table 2 shows the businesss target market. It is a specific group of

consumers at which the business aims its products or services.

Table 2
Business Target Market
PARTICULARS TOTAL
Total Population 17,613
Percentage of Coffee-goers Respondents(80/100) 80%
Market Size 14,090
Less: Margin of Errors (10%) 1,409
Adjusted Market Size 12,681

In the table, the researcher used the data gathered from the inquiry

of the total population of the target market which of total 17,613 people.

According to Slovins formula, the sample size of the target market

of this proposed business is to survey 100 students and working

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individuals near the target location of the business. But of this figure, 20

people said No to the first question of our survey questionnaire so I

deduct it from the number of respondents which resulted to 80 coffee-

goers. So the 80% is the rate of those who usually goes to coffee shops.

The researcher chose 10% margin of error thinking that it is

conservative enough to cover the errors in computing the market of the

proposed Green Life Garden Caf.

2.2.3 Competition

Competition occurs when two or more organizations act

independently to supply their products to the same group of consumers.

In competition, we have this two terms we called, direct

competition by which businesses are selling products or services that are

essentially the same and the indirect competition which means the

conflict between vendors whose products or services are not the same

but that could satisfy the same consumer need.

In coffee shops business in General Santos City which is the line

of the proposed business the researcher is currently studying there are

so many existing players in this industry. During the survey and gathering

of data that was conducted by the researcher, only twenty two coffee

shop names were found on the list but there are actually forty three

operating business active in the social media in the same line including
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those in the hotels, malls and different parts of the city. But the

researcher focused in the existing players near the target market and

location.

The threat for a stiff competition between businesses stated above

and substitutes should be considered in establishing short and long-term

strategies of the proposed project. These considerations may include

factors that will contribute to the success of Green Life Garden Caf such

as high quality of services, affordable price, approachable and friendly

staff, relaxing ambiances of the business environment and the location.

2.2.4 Demand

Demand is an economic principle that describes a consumer's

desire and willingness to pay a price for a specific good or service

The total demand of the product is computed by target market size

10,779 multiplied by the average frequency in a year of 60.49 to arrive at

the total demand number of transaction.

Table 3
Total Demands for the Proposed Business
PARTICULARS TOTAL
Business Target Market 12,681
Percentage of Willing Respondents (68/80) 85%
Market Size 10,778
Multiplied by Average Frequency in a year 60.49
Demand in Number of Transaction 652,013
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Table 4 is computed to measure the demand for the proposed

business.

The next table summarizes the total frequency in a year.

Table 4
Average Frequency
Number of
Rate or Frequency Total
Particulars Willing
Percent (%) in a Year Frequency
Respondents
Everyday 3 0.044117647 360 15.8824
Once a
Week 12 0.176470588 52 9.17647
Twice a
Week 13 0.191176471 104 19.8824
Thrice a
Week 5 0.073529412 156 11.4706
Once a
Month 22 0.323529412 12 3.88235
Once a
Year 13 0.191176471 1 0.19118
TOTAL 68 100 - 60.4853

In getting the rate, total respondents in a particular frequency is

divided to the total number of respondents. Then whatever the rate is, it

will be multiplied to the number of days in a year he/she visits and avail

the products of the business to get the frequency and add all individual

frequency to get the total to be used in calculating the total demand.

It shows that 3 out of 68 willing respondents will avail the product in

the store daily. This is then multiplied by 360 days to get the average

total number of persons in a year that would become daily customers.

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The remaining items will is computed based on the procedures stated

above.

2.2.5 Supply

Based on the data gathered from the nearest existing players in

the target market, the researcher have calculated the total supply through

the computation of supply from dining- in customers and customers who

prefer take out.

For Dining-in customers, we get first the average hour of stay of

the coffee- goers that were surveyed during the gathering of data. Next to

that is to divide the average hour to the total numbers of operating hours

of each of this existing player and then multiply to the twenty five (75%)

of the number of customer per hour of every business establishment

based on the survey and interview. The percentage is based on the

gathered questionnaires which tell that out of the 68 willing respondents,

25% prefer take out and the 75% prefer dining in. The total is then

multiplied to the number of days of operation in a year. And the result will

be the total supply that caters the total demand of dine-in consumers.
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Table 5
Total Supply of Competitors for Dine-in
Player Hours of Ave. time of No. of customer Supply of
operation/ Stay a Day per hour coffee shop
day (hour) per day
Coffee Lover 15 1.4 8 x 75%
64
Coy's Coffee 14 1.4 11 x 75%
83
Post Coffee 14 1.4 9 x 75%
68
Coffee 14 1.4 11 x 75%
Studio 83
Coffee Bank 16 1.4 6 x 75%
51
Starbucks 14.5 1.4 14 x 75%
109
Bo's Coffee 12 1.4 12 x 75%
77
Green Leaf 14 1.4 9 x 75%
68
The Coffee
Bean and 14 1.4 10 x 75%
75
Tea Leaf
J.co 12 1.4 15 x 75%
58
Emoji 10 1.4 9 x 75%
58
Paper Town 12 1.4 8 x 75%
51
Caf Amoree 11 1.4 7 x 75%
41
TOTAL
886
Multiply by: 360 days

Total Supply 318,960

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For the customers who prefer take out, the computation would be

the operating hours of every establishment times the 25% of the

surveyed number of customers per hour of the competitors.

Table 6
Total Supply of Competitors for Dine-in
Player Hours of No. of Supply of coffee
operation/ customer shop per day
day per hour
Coffee Lover 15 8 x 25% 30
Coy's Coffee 14 11 x 25% 39
Post Coffee 14 9 x 25% 32
Coffee Studio 14 11 x 25% 39
Coffee Bank 16 6 x 25% 24
Starbucks 14.5 14 x 25% 51
Bo's Coffee 12 12 x 25% 36
Green Leaf 14 9 x 25% 32
The Coffee Bean and Tea Leaf 14 10 x 25% 35
J.co 12 15 x 25% 53
Emoji 10 9 x 25% 23
Paper Town 12 8 x 25% 24
Caf Amoree 11 7 x 25% 19
TOTAL 437
Multiply by: 360 days
157,320
Total Supply

The total supply from the competitors is the sum of the supply from

the customers who sits for dine when availing the beverages and the

supply from the take out purchase of customers which is 476,280.

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The following table presents how did the researcher computed the

average time of the stay of the coffee-goers to these specific coffee

shops.

Table 7

Average Time of Stay

particulars x no. of
Particulars Respondents
respondents

20 minutes 3 60 min. or 1 hr

30 minutes 12 360min. Or 6 hrs

1 hour 38 38 hrs

2 hours 16 32 hrs

3 hours 11 33 hrs

TOTAL 80 110 hours

The total number of hours is then divided by the total number of

respondents to get the average time. And that is why we have here in the

following table 1.40 hour. It is by 110 hours divided by 80 respondents.

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In getting the available market, the computation is to deduct the

supply of the existing players from the total demand computed above.

Table 8

Demand and Supply Analysis

Total Demand for Proposed Business 652,013

Less: Supply from Competitors 476,280

Free Market for Proposed Business 175,733

Less: Supply of Proposed Business 38,880

Free Market for Coffee Shops 136,853

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2.2.6 Estimated Market Share

Market share is the portion of the total demand in the market that

can be catered and will acquire the proposed business products and

services.

Table 9

Practical Capacity of Green Life Garden Caf (Dine-in)

Number of Operating Hours 9 am- 9 pm 12

Divided by: Average time to prepare the product 6.7 min

No. of products served per day 108

Multiplied by: 360 days 360

Estimated Annual Capacity 38,880

The researcher computed the average time to prepare each of the

products of the proposed business. To compute the capacity of the

business, the researcher converted the operating hours to minutes and

then divided to the average time to prepare the products. It is then

multiplied to 360 days to come up to the annual capacity that the

proposed business may produce for the demand from of the consumers.
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The figure below presents the share of the existing players in the

industry; the share of the proposed business and the free market.

Figure 2

Estimated Market Share

21%

Competitors

Green Life Garden Caf

6%
FREE MARKET SHARE
73%

The graph represents the visual presentation of the shares of the competitors,

Green Life Garden Cafe for the easier and faster understanding of the figures that are

presented in the tables above.

2.3 Marketing Strategy

This portion of the study discusses the Green Life Garden Caf sales and

distribution and pricing strategy to be implemented considering the competitors to

be used in reaching the prospective customers.

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2.3.1 Sales and Distribution

The unique aspects of our business include individual

product selection, quality assurance, and high-quality full service

distribution. Our strategy is to focus 100% of our efforts on the

market for espresso supplies. By focusing all of our effort and energy

on this particular area, we expect to quickly develop and maintain a

leadership position. The Coffee Warehouse's key personnel will stay

in contact with our customers, and will be able to respond to

changes in this market much faster than our competitors. We will do

this by providing a box for comments and feedbacks of the

customers to be place in the coffee shop. Through this we will learn

to find more ways to strategies and fulfill satisfaction of the

customers.

The Coffee Warehouse will offer the best, most highly

personalized service in the marketplace. Being a small, owner-

operated company, we intend to use this to our advantage to be

absolutely certain that every one of our customers receive excellent

service. We will go out of our way to make sure that our customers

know that they truly matter to us. Sales reps and in-house personnel

who deal with customers will be carefully trained and given wide

latitude for insuring that customers are always satisfied.

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2.3.2 Pricing Strategy

Cost plus Pricing

Cost plus pricing is a cost-based method for setting the prices

of goods and services. Under this approach, the direct material cost,

direct labor cost, and overhead costs for a product are added up and

added to a markup percentage (to create a profit margin) in order to

derive the price of the product.

Competitive Pricing

is setting the price of a product or service based on what the

competition is charging. This pricing method is used more often by

businesses selling similar products, since services can vary from

business to business, while the attributes of a product remain

similar.

2.3.3 Promotion Strategy

We plan to spend moderately on advertising and promotion.

We intend to advertise in a social networking site such as facebook

and twitter. We will do have flyers and leaflets to promote our

business.

Customer target groups are various types such as student,

blue-collar employees, young professionals and etc. especially

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student usually use internet therefore wireless zone at proposed

business can attract customers.