CHAPTER 1
MARKET STUDY
Introduction
The feasibility aimed to discover the market depiction of modern furniture, the
demand and supply analysis to project sale absorption and annual revenues of the
product. The factors which significantly affect the market condition were also
considered. This part will include the most suitable marketing strategies, as well as the
channel of distribution of the product.
This required the study of potential computation and preliminary development
plans to define marketing feasibility in terms of potential market share, marketing
constraints and opportunities and projected absorption rate pricing ranges. This
feasibility component provides the basis for definitive recommendations on development
of potential, development strategy and a cost effective marketing and sales strategy.
The project study focused on feasibility of establishing an economic easy to use
product. The product will be named as Alchemic Table. The researchers will be used
the raw material in producing the product will provide comfort to the user. Part of the
aim of the company’s establishment is to give new design that will be economically used
to offer the industry with a cost-effective alchemic table. Quality is in conformance to the
standards in the market. The people nowadays are seeking for a convenient use
additional things for their everyday life such in picnics and outings. These alchemic
table is easy to use, and the cost are effective.
Market Desciption
Modern Furniture Company that offers product is made from wooden table with
attached adjustable chair. The Alchemic table with will be marketed locally, city of
Batangas. The business is design to meet up and satisfy one of the need of households
for their outings. The target market consumers are the households and commercial
establishments because of the growing needs of table with adjustable chair.
Demand Analysis
Demand is the quantity of goods and services that people are willing to buy at a
given price. The market demand for a product is the total volume of goods that would be
bought by a defined customer group. In a defined geographical area, in a defined time
period, in defined marketing under a defined marketing program. Knowing the needs
and wants of the customer and their willingness to purchase the product are the key
factors that would indicate the service of the business. The quantity of the products
including its good service is one factor that affects the demand for the product.
The demand for the furniture business is assumed to increase with the increasing
number of the target. The researchers gathered information of the household population
data in Batangas city. Please refer to the appendices for details. The sampling sizes of
population were determined from the household population record of Batangas City.
Historical Demand
Our company aims to supply the city category to which the factory is located,
Diversion Road, Batangas City, which is part of Batangas City, with a total numbers of
354,160, which the proponents found out the range who is the highest users of furniture.
This will provide a good staging point for the next plans for the company to scale up
production to a profitable business.
Table 1: Historical Population in Batangas City
YEAR BASED ON HISTORICAL NUMBER OF
HOUSEHOLD POPULATION
2008 61,347
2009 62,856
2010 64,402
2011 63,311
2012 64,658
2013 71,511
2014 73,275
2015 74,831
2016 76,312
2017 77,793
Source:https://www.batangascity.gov.ph/web/about-the-city/city-
profile/socioeconomic-physical-profile
Table 1 shows a continuous increase of households in Batangas City from the
year 2008-2017.
Figure 1: Historical Demand for Alchemic Table
Figure 1 shows the increasing demand for alchemic table. An accumulated growth of
16,446 demand of number of household was reviewed from the year 2008 up to 2017.
The main factor of the increasing of demand is because of increasing population in
Batangas City. This goes to show the opportunity that the researchers find to be
advantageous as the study is conducted. It will be expected that in the years to come,
more demands of electric extension will mark the business’s progress.
Major Consumers of the Product
Nowadays the newly design innovate products hook the people around the
globe. Due to the diverse of benefits, furniture has become the part of millennial users.
Its number of users is expanding at the highest speed and according to recent survey
conducted by the researchers. The product is alchemic that gives comfort to the users.
For the researchers the major consumers of the product are people or households that
reside within the Batangas City area.
Projected Demand
From the historical data, the projected demand was calculated using Statistical
Straight Line to forecast the production for the coming years. Projected demand will
help the group in knowing the scope of the market that needs response.
Table 2.Projected Demand of Number of Household in Batangas City
YEAR Demand (Number of Household)
2019 80,066
2020 82,073
2021 84,079
2022 86,085
2023 88,093
2024 90,099
2025 92,106
2026 94,113
2027 96,119
2028 98,126
Table 2 shows presents the expected demand values from year 2019 – 2028. The
increasing demand makes it possible for the business to have an imminent growth as
shown on the table given. As projected from the table, it will be a great opportunity for
the group to enter the market with confidence that it will be recognized and that the
product will be well appreciated by the consumers.
For computation of Projected Demand of Number of Household using Statistical
Straight Line Method, see Appendix 1.
Figure 2. Projected Demand of Number of Household
Figure 2 shows the graphical representation of increase in trend of projected
demand for the year 2019 – 2028. A projected demand was computed using Statistical
Straight Line Method and became the basis for the succeeding years. This is a ten-year
projection for the demand of alchemic table.
Computations of Projected Demand of Alchemic Table using Statistical Straight
Line can be seen Appendix 2.
Target Market of the Product
The target market of the Modern Furniture Company are the households
located within the Batangas City area. Since our product can be used as a picnic table,
it is a perfect choice for them to use during picnics and vacations because it offers them
efficiency and comfort.
Supply Analysis
Supply is the quantity of a certain product that is offered for sale at a certain price
at a given place and time. It is a detailed review of the inputs and outputs of a process
that is employed to assess how available quantity of a product is affected by changes in
demand, input factors and production techniques. Supply analysis is often used by
manufacturing business managers to make key policy decision since it gives insight into
shift in production are likely to influence market supply.
Historical Supply
The proponents obtained the needed information through the internet which they
have used in computing the supply in the previous years, before the distribution of the
proposed product in the market starts.
Table 3.Historical Supply for Alchemic Table
Historical Years Supply
(per wooden table)
2008 18,696
2009 18,744
2010 19,080
2011 19,212
2012 19,800
2013 21,000
2014 23,648
2015 24,112
2016 24,928
2017 25,600
Presented in Table 3 are the historical supply values from survey in furniture
establishments in Batangas City for the year 2008-2017 .In the year 2008, 18,696
wooden table supply values where gathered. A supply of 48 was increased a year after
and was then grew up to 6,904 supply value in the year 2017. This drives the
prospective of entering the target market with full enthusiasm.
Figure 3. Historical Supply Graph
Figure 3 shows the clear historical supply of wooden table. From the years 2008–
2017, there is an increasing supply of wooden table.
Major Producers of the Product
There are many types of picnic tables available in the country today which
is used by different people wherein they can bring or hold it easily for their outing and
can put in their terrace area as well. The table below shows the major producers:
Table 4. Major Producers of Tables
Major Producers of Picnic tables
THE COMPETITORS
1 .Hopkins 6. Merax Pine Wood
2. Rectangular Shaped Wooden picnic 7. Expanded Metal Round
table
3. Acelife Folding Table 8.Lifetime Picnic kid’s Table
4. Furniture Bowman 9.Artist Hand aluminum folding picnic table
5. Round Metal Picnic 10. Acasio wood Picnic Table
Source:https://toptenreviewpro.com/best-picnic-tables/
Projected Supply
The table below shows the projected supply of Alchemic Table consumption
based on the computed supply using the Statistical Straight Line Method until year
2026. The researchers used the Statistical Straight Line Method, because among the
four (4) methods it yields the least standard deviation.
Table 5.Projected Supply of Alchemic Table
Projected Years Projected Supply of Alchemic Table/
piece
2019 26,318
2020 27,198
2021 28,077
2022 28,956
2023 29,836
2024 30,715
2025 31,595
2026 32,474
2027 33,353
2028 34,233
Table 5. shows the projected supply of alchemic table for the years 2019-2028. It can
be noticed that there is also an increasing supply of alchemic table for the years 2019-
2028
.
Figure 4. Projected Supply of Alchemic Table
Figure 4 shows the 10 year projected supply of Alchemic Table. The projected
supply increases due to increasing historical data which were the source of computation
using the Statistical Straight Line method. The increased projection of supply could be
attributed to high market demand and the capacity of country’s production output.
Demand Supply Gap Analysis
Analyzing the demand and supply of sockets is important in determining the
available market share which the proposed project can capture to ensure the sales of its
production output.
The comparison of presented demand together with the supply data collected in
Batangas City area is an evidence of market advantage for this study. The demand
supply-gap shows the great opportunity for Modern Furniture Company to produce a
reasonable product with the expected growth of demand of Alchemic Table in the
market.
DEMAND SUPPLY DEMAND / Estimated
YEAR (number of (alchemic SUPPLY Market
household) table/pc) GAP Share
2019 80,066 26,318 53,748 3.65%
2020 82,073 27,198 54,875 3.65%
2021 84,079 28,077 56,002 3.65%
2022 86,085 28,956 57,129 3.65%
2023 88,093 29,836 58,257 3.65%
2024 90,099 30,715 59,384 3.65%
2025 92,106 31,595 60,511 3.65%
2026 94,113 32,474 61,639 3.65%
2027 96,119 33,353 62,766 3.65%
2028 98,126 34,233 63,893 3.65%
Pricing
The Company Incorporated aims to offer products on a reasonable price. It will
consider various aspects that in some instances affect the flow, labor cost and material
cost involved in alchemic table furniture. Aside from quality, the price has always been
given consideration by consumer in terms of purchasing goods. From the view point of
the bussiness, price is the major determinant of the market share on the degree of
profitability. Furniture Industries will base the unit price by adding the total cost of direct
labor , indirect labor and materials. In addition, mark-up cost and VAT are also
computed.
Selling price of the product is computed below:
Manufacturing Cost per Unit ₱12,073.00
Add: Mark-Up ₱12,073.00 x 40% = ₱4,829.2 @45%
Add: 12% VAT ₱12,073.00 x 12% = ₱1,448.8 @12%
Unit Selling Price Php18,351.00
Indirect Labor Per day
Production supervisor
salaries ₱750
Raw Materials Price General Manager ₱1,650
Cushion ₱280 Secretary ₱440
Mahogany ₱120 Quality assurance salaries ₱715
Marine Plywood ₱1,300 Janitor ₱350
Good Lumber ₱180 Driver ₱400
Acacia ₱150 Sales Representative ₱600
Bisagra ₱12 Marketing Staff ₱505
Pornika ₱850 Purchasing Staff ₱487
Rugby ₱80 Warehouse Personnel ₱470
Varnish ₱100 HR Personnel ₱630
Artificial Color ₱65 Security Guard ₱350
Stick Wheel ₱59 Accountant ₱600
Nurse ₱480
Total Raw Materials ₱3,196
Total ₱8,427
Direct Labor Per day
Production
Operators ₱450
Total ₱450
Total Manufacturing Cost = ₱3,196 + ₱8,427 + ₱450
= ₱12,073.00
Production Capacity
Number of Workers 8 persons
Production Capacity per Day 8 pieces
Working Hours per Day 8 hours
Working Days per Year 245 days
Working days (2019)
Timeframe Number of Working Days
January 1 - 31 23
February 1 - 28 20
March 1 - 31 21
April 1 – 30 22
May 1 – 31 23
June 1 – 30 20
July 1 – 31 23
August 1 – 31 22
September 1 – 30 21
October 1 – 31 23
November 1 – 30 21
December 1 – 31 22
261
Total 2019 Calendar Year Working Days
Regular Holidays
New Year's Day — January 1 (Tuesday) Chinese New Year — February 5
Araw ng Kagitingan — April 9 (Tuesday) (Tuesday)
Maundy Thursday — April 18 EDSA People Power Revolution
Good Friday — April 19 Anniversary — February 25 (Monday)
Labor Day — May 1 (Wednesday) Black Saturday — April 20
Independence Day — June 12 Ninoy Aquino Day — August 21
(Wednesday) (Wednesday)
National Heroes Day — August 26 All Saints' Day — November 1 (Friday)
(Monday) Feast of the Immaculate Conception of
Bonifacio Day — November 30 Mary — December 8 (Sunday)
(Saturday) Last Day of the Year — December 31
Christmas Day — December 25 (Tuesday)
(Wednesday)
All Souls' Day — November 2 (Saturday)
Rizal Day — December 30 (Monday)
Christmas Eve — December 24 (Tuesday
Special (Non-Working) Days
Working days - Holidays = Working days per year
261 days - 16 days = 245 days
Annual Production Capacity (2019)
= Production Capacity per day x Working days per year
= 8 pieces x 245 days
= 1,960 pieces per year
Market Share = (Production Capacity / Gap) x 100%
= (1,960 / 53,748) x 100%
= 3.65%
To clearly understand Production Capacity computations, see Appendix 3.
Market Share
The proportion of the total market that a new business could reasonably expect
to have is known as the market share. Market share increases can allow a company to
achieve greater scale in its operations and improve profitability. It is the key for a
sustainable business growth with competitiveness. In order to establish the company
with success, it should be taken into consideration that a corporation or business
requires building a market share with great strategies for profitability and effectiveness.
The researchers are very particular on the market share that the proposed study
can achieve in the market. They carefully analyzed the demand or supply gap with the
production capacity that their company offers in order to get recognized by in their target
market.
Figure 5. Market Share
Figure 5 shows the 4% potential share of the Modern Furniture Company in
supplying alchemic table in accordance with others suppliers in the market which is
96%. The potential share of Modern Furniture Company comes from the production
capacity given it is a startup company. The humble beginning marks the consistent aim
of the company to be competitive in the market. On the other hand, the incorporators
will be doing their best in orders to increase their market share through strategies plans
and methods in the years to come.
Marketing Strategies
Being a new entrant, price and quality will generally create a vital role in
determining of the desired position in the target market industry. Affordability and quality
of the proposed product will served as its competing edge over the existing competitors.
A good marketing strategy should take into consideration to make the business
successful. The plan should be based on clear objectives. A number of techniques will
then be employed to make sure that the marketing plan is effectively delivered. The
effectiveness of the marketing strategy could be gauged, if not measured by the
company’s level of input against the output or sale volume, and degree of consumer
satisfaction. Marketing techniques are the tools used by the proponents. The
proponents identify the most appropriate techniques to employ in order to make profits.
This marketing technique includes public relations, direct marketing and sales
promotion. Before we develop marketing strategy that would be suits in our business,
we should need to have a clear idea for the business plan and the position to be hold in
the market. In dealing with that strategy, we can start analysing the long term and short
term of business objectives and figure out the marketing activity and process or price.
With so many promotional channels and methods to choose from, developing a
marketing strategy can seem like an overwhelming task. However a marketing strategy
is about much more than your promotional tactics.
Marketing Mix
It is inevitable that marketing program be constructed to carry out the firms
marketing objectives. This part focus on the marketing mix, namely – Product, Place,
Price and Promotion. The strategies will be further elaborated along the discussion.
Product Strategy
This foldable picnic table is made of the combination of marine plywood, acacia
and good lumber. It will be fully furnished and durable. The company’s objective is to
support the growing population to give the comfort to the consumers. To produce useful
product and to offer the industry with a good a cost-effective foldable picnic table. It will
be used for household that they can used during family day.
Place Strategy
The proposed company will be located in Diversion Road, Batangas City, which it
is accessible to all such as the consumers, markets and where the supply of raw
materials will come from.
Advertising and Promotion
To promote the product, advertising through website, social media such as
facebook and instagram and print ads like tarpaulin and flyers will be used in marketing
the product. These are the most effective means to attain consumer mileage and to
increase the strength processing plant awareness. Structure of website and social
media account will be utilized to post online advertisement, and to receive comments
and suggestions from its buyers. It will also be a tool to allow customers to place their
orders online. This kind of promotion is advisable and cheap because they are less
expensive and practical compared to other printed or television advertisements.
Factors Affecting the Market
There are several factors that affects the identity and status of the company. The
following are:
Competitors - for the company’s improvement, they must know other company’s
product as well. The company should modify their marketing plan so that they have
a strategic advantage over their competitors while not losing sight of their own
marketing objectives.
Economic Factors - the state of the current economy can have an effect on
marketing, since it is related to consumer spending. Your marketing campaign,
product offerings, and pricing must take into account the current economic cycle to
be successful.
Nature of Demand - having permanent demand would have a larger size of the
market. On the contrary, if the demand is limited to a particular area then it would
have the small size of the market.
Government Policies - the production process and the product itself must comply
with the government policies especially with segregating waste made by the
manufacturing company. There should be a permit that is legible and factual for the
government agencies to allow legal productions.
Factors Affecting the Price
Price is the only element of marketing mix that helps in generating income. Therefore, a
marketer should adopt a well-planned approach for pricing decisions. The marketer
should know the factors that influence the pricing decisions before setting the price of a
product.
To make a defined price of the product it should have the following:
Cost in Manufacturing the Product - One of the factors that is depending on how
product was made. Including manufacturing facilities that is heavily a great basis
for deciding for the best price for as certain product. The cost of the product is
related to its input and includes money that was spent on the innovation of the
product.
Demand of the Product – Dictates the demand law that states “as the price of the
product increase, the quantity of the demand decrease and vice versa.” Prices
may be affected by Supply and Demand.
Life cycle of the Product – To be able for gaining a huge profit the product must
have a quality of rarity that is fresh from the eyes of the consumer and if possible
no other rigid competitions. The manufacturing company may be at ease of
changing the price and earn more benefits.
Profit of the Product – Companies Crucial factor to maintain its accuracy. The
product price must be on the ideal state that helps and leads a company for
achieving the desired profit required.
Competitors in the market – The Company might need an outstanding
performance when it comes for customer services. It may lead to the highest
peak for competitions. Affects prices significantly. The organization matches the
prices with the competitors and adjusts the prices more or less than the
competitors. The organization also assesses that how the competitors respond to
changes in the prices.
Distribution Channels- Implies a pathway through which the final products of
manufacturers reach the end users. If the distribution channel is large, price of
the product will be high and if the distribution channel is short, the price of the
product will be low. Thus, these are the major factors that influence the pricing
decisions.
Promotional Strategy – Before establishing the price of the product, Promotional
strategy is recommended for finalizing Product Cost.
Selling the Product – The Price of the Product changes on how it was sold.
Depending on the process or services the product encountered.
Channel of Distribution
Distribution channels in marketing are the key element of the entire marketing
strategy. A distribution channel helps to enlarge the company reach and grow income. It
is the path through which the product being offered from the company to the customers.
A distribution channel can be as short as direct transaction from the company to the
clients or may include several interconnected intermediaries along the way such as
wholesalers, distributors, agents and retailers. Each intermediary receives items at one
pricing point and moves it to the next higher pricing point until it reaches the final
customers.
In this proposed product, the companies based on their distribution of products in
different stages; considering the best process of distribution that will both benefits the
manufacturers and the customers. This proposed business on defines Distribution
Channels as the path through which goods and services travel from the manufacturer to
the consumer.
MODERN FURNITURE
COMPANY
SASH FACTORY
CUSTOMERS
AND
HOUSEHOLDS
Figure 6. Channels of Distribution
Figure 6 illustrates the downward flow of goods from producers to consumers. This is
what Modern Furniture Company foresees as the best channels to gain profit and
continuous growth of the company.
