Ateneo de Manila University

John Gokongwei School of Management

Project Information Cataloging System (PICS)
Class Project Information and Cover Sheet
Name of Student/s: (Surname, Firstname, MI) School Year: 2018-2019 Sem：2
Subject Code: MKT199G
Cabrera, Noel R.
Course Name: SPECIAL TOPICS IN
Cua, Bradley A.
MARKETING: BUSINESS DEVELOPMENT
Umeran, Dave C.
LAB 2
Teacher(s):

(Information below this line and in this

column for use by Faculty &/or PICS staff
only.)
Grade: Call Number:
Project Title: Business Development Paper Part Functional Area:
2

Client: DAC Farms Comments:

Industry Category: Agriculture/Retail

Abstract

The purpose of the paper is to show the business plan of DAC Farms and to present which direction
the company plans to take in the following months after graduation.

Author(s)’ Recommended Keywords

Mushroom, DAC Farms, Retail, Fries, Burger
Business Background

D.A.C. Farms is an agricultural company that sells its products directly to consumers. It
operates under the brand name: Shroom Station to sound more appealing to consumers. The
product line is currently composed of mushroom fries and mushroom burgers. The mushroom
fries are offered with a variety of dips, ranch, cheese, and spicy mayo, and the mushroom
burger is offered with a choice of spread as well. We offer a house sauce, mayonnaise, and
ranch as well. There is also an option of a meal option which is composed of a burger and half a
serving of fries.

Business Report

Finance

*See financial Statements in the Appendices

Sales

As of April 15, 2019, the company has garnered 230,500 pesos of total sales.
The average daily sales generated is at Php 6,300 with 75% of the sales being gross
profit. The high gross ratio allows the business to quickly cover the cost of rent and
labor.

Liquidity

In terms of liquidity, the business has a surplus of cash and other current assets
in order to cover potential liabilities. As of April 15, 2019, the business has Php 142,000
cash in the bank. The company plans to use said cash for investment in a permanent
stall by August 2019.

Unexpected High Farm Costs Affects Net Income and Asset Turnover

The business initially planned the establishment of a farm in order to cut down
production costs of its products. According to initial forecasts, the cost of mushrooms
grown in an in-house facility will only be at 60 pesos per kilo in comparison to the
prevailing market price of mushrooms which is at 180 pesos per kilo. Unfortunately, the
real cost of our farm grown mushrooms exceeded the forecasted costs by 90 pesos. As
of the moment, management is still determining the cause of such high cost whether if
this is a result of operational inefficiencies or not. But as things stand, it is currently being
considered for the business to close its farming operations in the foreseeable future.

In addition, the high investment on the purchase of assets for the farm has
consequently lowered the asset turnover of our business to only 0.82. If management
decides on the discontinuing of its farming operations, then it will be necessary for the
business to sell its agricultural plant assets as said assets will be unnecessary.
Issue on Depreciation

Due to the agricultural assets of the company. Depreciation was unusually high.
The highest contributor of this is the fruiting bags. Said asset has a shelf life of only 4
months and must be disposed of afterwards. As a result, the company has to write off
50,100 pesos worth of fruiting bags as depreciation.

Marketing Strategy

a. Target Market
i. Complete demographic profile
Based on the number of returning customers, the target market of DAC
Farms are people who are class A-B and aged between 18-50 years old.

ii. Other significant customer characteristics

In addition to what was stated above, other significant customers include
vegans, people who like to workout and people who are looking for a light healthy
snack.
b. Customers motivation to buy
At first, the primary motivation for customers in buying our product is sheer
curiosity. The product is new in the market and therefore the motivation for first time
customers would be to try out the product for the sake of novelty. Motivation for return
customers on the other hand (which is 45% of our initial customers) can be classified
into 2 types. First motivator for return customers would be the taste of the fries.
According to 70% of return customers interviewed, the taste of the mushroom fries in
addition to the complimentary sauces served is the reason why they come back and buy
another batch of mushroom fries. The health benefits of the product is only secondary to
this group of return customers. On the other hand, the second motivator for return
customers would be the healthy nature of the product. Oyster mushrooms are low-
calorie and high protein fungus in comparison to potatoes which has high calories and
cholesterol. To 30% of return customers interviewed, this is their primary motivator for
buying. Within this group of customers are vegans (10% of this segment) whose other
motivation is to buy a food product that has no meat-based ingredients in it.

c. Market Size and Trends

i. How large is the target market?

 According to the Robert Wood Johnson Foundation, our product falls
under the category of “Better For You” (BFY). It is defined as “no-, low- and
reduced-calorie items, such as flavored waters or diet sodas, as well as products
that generally are perceived to be healthier, such as yogurts and whole-grain
cereals. ”1 Current market data from Euromonitors puts the total Health and
Wellness sales in 2017 at 217,350.4. While the BFY category was able to reach
6,254.1 in sales in the same year.
ii. Is it growing or shrinking? How fast?

1
“Better-for-You Foods.” RWJF, 7 Sept. 2017, www.rwjf.org/en/library/research/2011/10/better-for-you-
foods.html.
 Current market projections are looking at a 14.5% increase in the BFY
category and a 23% overall increase in the Health and Wellness products. This
consistent raise can be attributed to the push of the government against sugary
foods and drink, and the Department of Health, through the National Nutrition
Council campaigns for a more healthy diet amongst Filipinos. An insight by Dr.
Maria Luisa Chua Delayco, an assistant professor in Marketing at De La Salle
University, stated that “When I go to the supermarket these days I often see
people reading the back labels of the food products they are about to purchase,
checking if the ingredients are organic or synthetic...This behavior is also
becoming more evident among mothers, like me, who, while doing their weekly
grocery shopping, also educate their children about the need to check the
product label and spot ingredients that are unsafe to eat.”2

Distribution strategy
i. Channels of distribution used
The main distribution channels of DAC Farms are currently bazaars,
weekend markets, and food stalls outside of churches during Sunday mass.

ii. Sales techniques and incentives

In order to attract customers, DAC Farms offers free samples to
customers. These free samples also include free taste of dips being offered by
the business. The other method to attract customers DAC Farms uses is by
frying the fries in the area itself so that customers may be attracted by the smell
of the fries cooking.

2
Delayco, Luisa. “Has the Market Become More Health Conscious?” The Manila Times Online, 23 Jan.
2017, www.manilatimes.net/market-become-health-conscious/308429/.
 f. Advertising and promotions
i. Media Used – reader, viewer, listener profiles
The form of media used by DAC Farms for advertising and promotions
are social media, and print. In both forms of media, red accents are used in order
to evoke customer interest and hunger. The text content is straightforward
highlighting the benefits of our products
ii. Media Costs
In terms of costing, no money was spent in developing the company’s
social media presence. However, the company did spend money on printing
promotions and advertisements. Below is the breakdown of expenses on print
advertisements
Item Cost

Tarpaulin (3x5 ft) Php 545

Roll-up Tarpaulin Php 1980

A4 printing + Lamination Php 250

● Operations

a. Form of Ownership
The form of ownership the business is registered as a partnership.
b. Company structure
D.A.C. Farms is structured around the three current partners. All major decisions
have to be approved by two out of the three partners. All matters regarding legal affairs
are headed by Noel. While all logistics concerns are headed by Bradley, and all
marketing needs are done by dave.
c. Decision making authority
All major decisions have to be approved by two out of the three partners. Major
decisions have to be decided on by in person meetings. While minor and miscellaneous
activities can be decided upon using the groups facebook messenger chat. However if
immediate action is necessary, each partner is assumed to have the capacity and
capability to be able to make the best decision for the partnership.

● Description of Management Team

a. Key Managers and Employees
i. Their backgrounds
Key Managers
● Manuel Cabrera - Chief Executive Officer
○ Most senior officer, in charge of all legal affairs and major
corporate decisions.
○ 4 BS Legal Management
● Bradley Cua - Chief Operating Officer
○ Reports daily to the CEO in regards to harvests and logistical
needs for selling operations. During selling operation days, COO
reports to the CFO total units sold, updated inventory, and
 necessary actions needed to ensure the next day of operations
will run smoothly.
○ 4 BS Legal Management
● Dave Umeran - Chief Financial Officer
○ Reports to the CEO every after sales day regards with starting
and ending cash. Updates sales and expenses trackers when
necessary.
○ 4 BS Legal Management

Employees
● N/A
ii. Experience, skills and know-how they bring to the company
● Manuel Cabrera - Chief Executive Officer
○ Agriculture experience working under family company.
○ Investing experience gained from being under Ateneo MECO.
● Bradley Cua - Chief Operating Officer
○ Logistical experience in Ateneo Lex and Ateneo Assembly
○ Facilitates the transfer of materials from storage to the needed
areas of operations.
● Dave Umeran - Chief Financial Officer
○ Experience in Ateneo Lex’s Treasury Department
○ Worked on Financial Feasibility studies for Kasagana-Ka Mutual
Benefit Inc. in preparation of the business’s expansion plan
b. Resumes of key managers and employees (See Appendix)

Business Lowlights/Highlights

● Highlights
○ Total sales as of April 15, 2019: 230,500 PHP
○ Highest sales date: 8290 PHP
○ Average sales per selling day: 6300 PHP
● Lowlights
○ Consecutive losses in more developed bazaars (Greenfield, LGV, and
UPTC)
○ Advance degradation of fruiting bags during the third month of harvesting
○ Lack of operations during January

Learnings

The following are the key learnings that the business has encountered during the course of its
operations.
● There is a necessity to assess the location for weekend markets whether it fits our target
market or not
● There is a need to reconsider whether to continue agricultural operations or not
● Better controls in terms of inventory tracking and cash tracking is necessary
● There is a need to look for permanent selling spaces to make the business model
feasible
Future Plans

As a result of its learnings, the business has considered the following plans:
● Expansion to permanent locations
○ First location will be in Ateneo De Manila Rizal Library
● Increasing Number of Active Partners from 3 to 5
○ To Ease Management Constraints
● Increasing Product lines to rice meals
Appendices:

D.A.C Farms
Income Statement
For Period Ended April 15, 2019

Sales ₱ 230,500.00
Sale of Assets ₱ 500.00

Less: Cost of Goods Sold ₱ 46,100.00

Gross Profit ₱ 184,900.00

Operating Expenses
Labor Expenses
Rent Expenses
Spoilage Expenses
Utilities Expense
Depreciation Expense
Admin Expenses
Marketing Expenses
Total Operating Expenses
₱ 7,700.00
₱ 35,925.00
₱ 6,380.00
₱ 4,000.00
₱ 55,712.50
₱ 10,000.00 0.318726339
₱ 6,250.00
₱ 125,967.50 0.857092393

Net Income ₱ 58,932.50

 D.A.C Farms
Statement of Cash Flow
February 28, 2019
Operating Activities
₱
Net Income 58,932.50
-₱
Increase in Inventory 20,000.00
Adjustment to reconcile ₱
Acccumulated Depreciation 55,712.50
₱
Net Cash from Operating Activities 94,645.00

Investing Activities
-₱
Purchase of Assets 162,350.00
-₱
Net Cash From Investing Activities 162,350.00

Financing Activities
₱
Investment by Owners 210,000.00
₱
Net Cash from Financing Activities 210,000.00

₱
Net Increase in Cash 142,295.00
Cash at the beginning of the ₱
Period -
₱
Cash at February 28, 2019 142,295.00