marketing thesis 14-34(revised 23.03)

8/3/2019 Marketing Thesis 14-34(Revised 23.03)

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MUNDO ECO BagsCompany

alternative in shopping or plastic bags. It is companys own advocacy to build this kind of

business as support in protecting the environment.

The company will have its won warehouse located at the manufacturing site. It is the

place wherein the finished goods are stored prior to its delivery in the market. The warehouse

department consists of warehouse clerks who will be responsible for monitoring and keeping

record of the products as its physical existence. The company will acquire delivery truck as a

mode of transporting the products to its customers in order to provide a quick and efficient

means of distributions. Before the time of the actual delivery, the quality control supervisor

inspects the products to ensure that they are properly coned and final approval shall be first given

MARKET AREA

To enable the economical use of the companys resources and to generate sufficient sales

that will result or yield on expected high profit, it is our major concern as entrepreneur to

determine our market area. MUND Eco Bags Company, producer of non-woven polypropylene

(PP) bags, intends to target different business establishments of NCR as their market area of

distribution. The reason is that, NCR is a region that produces huge amount of plastic wastes

amounted to 7,417 metric tons a day based on the report released by Eco Waste Coalition.

CHANNELS OF DISTRIBUTION

The distribution of non-woven PP bags has a simple structure. The products will be

coming from our plant that will be then delivered directly to prospective customers to our target

market area. Our company will be the one who will pass the product directly to the customers.


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This format has the advantage of minimizing the cost of acquisition of our product by the end

users.

Our sales agents will be responsible in negotiating our product to potential customers.

They will persuade the wholesalers to try our product. After the transactions have been

confirmed, our product will be delivered to them.

The terms of sale will be 2/10, n/30. This means that the lcient can avail of 2% dsicousnt

uon payent withn 10 days. The firm requires 50% downpayjent in every purchase and the

balance withi 30 days. The credit limit of each custmer will be strictly followed so as to monitor

the credit status and to prevent too much debt maturity.

MAJOR USERS

Products sold in different supermarkets, RTW outlets, utility stores, bookstores that use

plastic bags as their packaging. In line with the current drive to do away with plastics to

eliminate pollutants, this study is proposed at replacing these plastic bags with a more durableand reusable bags.

The target market/consumers of the eco-friendly bags are the business establishments

such as supermarkets like Macro, Uniwide, RTW stores like RRJ Store, Triumph, French Toss,

MUNDO E-BAGS

CUSTOMERS


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Otto shoes, and even bookstores like Rex bookstores within the National Capital Region.The

products, though are not limited to them as users, but also for individuals who wish to avail of

these products either for personal use or for giveaways who may need it in bulk or big orders.

.


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ANALYSIS OF PAST AND PRESENT DEMAND AND SUPPLY

HISTORICAL DEMAND

There were no actual historical data for the demand of non-woven polypropylene bags.

To provide basis for the demand of the product in the market, the researchers conducted a survey

to establish the data, which will be the basis in projecting the future demands, as well as having

the historical ones. These survey respondents were qualified as to users, willing to use and non-

users. The random sampling method had been used through telephone to survey the respondents.

The researchers have considered the users as the basis for present demand. Users were

easier to quantify since they could give a concrete and clear view of the demand.

Table 1Summary of Household Population within National Capital Region (NCR)

Year Number of Household

2000 2,132,0002003 2,293,0002006 2,362,0002007 2,416,0002008 2,454,000

The table above shows the summary of the household population within the National

Capital Region. In the year 2000, there were about 2, 132, 000 households in the metro. The

number increased in 2003 with a surveyed 2, 2093, 000 households. With the advent of 2006, the

number of households totaled at 2, 362, 000. By 2007, there were about 2, 416, 000 households


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and by 2008, the number of households in the NCR reached at 2, 454, 000. Hence, it can be

gleaned from the data that there is a steady increase in the household population in NCR for the

past 7 years. This maybe due to the fact that more and more families from the provinces are

migrating in the city to seek greener pastures or looks for high-paying jobs. The bottom-line is,

with the increase in the population, more and more people will be expected to use bags as an

integral part of their everyday lives.

In analysis of the data in Table 1, the researchers were able to get the 38.33 rate of

increase in the household population in NCR as can be synthesis from 2000 to 2008. Hence, the

following table shows the projected number of households that will populate the NCR for the

next five years.

Table 2Projected Household Population within National Capital Region (NCR)

from 2009 to 2013

It can be gleaned from Table 2 that in 2009, it is expected that 2, 492, 000 families or

household will live in NCR. Come 2010, this number will increase to 2, 531, 000. By 2011 and

2012, the number of household will reach 2, 569, 000 and 2, 607, 000 respectively. Finally, by2013, the projected household population in NCR will hit 2, 646, 000 families. From the data

above, one can easily notice that there is a steady increase of household population in Metro


2009 2,492,0002010 2,531,0002011 2,569,0002012 2,607,0002013 2,646,000


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Manila. This is a reality that also predicted to happen to other metropolitan cities around the

Philippines and in the world due to unabated migration from the outskirts of the country.

In synthesizing the data provided by the National Statistics Office (NSO), it shows that

for the past years, there is a steady increase in household population in NCR due mainly to

migration from the provinces. The trend is expected to continue within the next five years as

more and more families are predicted to settle in Manila. With the increase in population, there

will be an increase in demand for services and products. Hence, NCR has remained its position

as one of the most profitable market areas for those who would like to engage in business. This

advantageous characteristic of Manila is well-defined; hence, the company will use this

competitive edge to introduce its products. It is expected that with proper advertisements and

effective market strategies, the company will able to take advantage of the growing population of

NCR for at least the next five years.

Result of the Survey

1. To establish a basis in assessing the present demand of non-woven Polypropylene bags in

the NCR, the group conducted a survey to know the percentage of household users and

non-users of non-woven Polypropylene bags in the metro. Table 3 which follows presents

the result of the survey.

Table 3Percentage of Household Users and Non-Users of Non-Woven Polypropylene

Bags in the National Capital Region (NCR)


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The table 3 shows that there were about 400 respondents who were pooled in the survey

to determine the number of users and non-users of non-woven Polypropylene bags in the NCR.

From among the 400 surveyed families, 283 families or 70.75% answered that they do

not use non-woven Polypropylene bags while 117 or 29.25% answered in the affirmative. The

survey only shows that when translated into a macro perspective view of the whole NCR, a

substantial one-fourth of the total household population of the city uses non-woven

Polypropylene bags. This is a large in numbers and by the fact that many people from the

provinces are coming to NCR everyday to transact business or buy goods and services in the

establishments located within the city. These are undocumented clients which can be still be

eyed as additional prospective clients or customers of the Mundo Eco Bags Company.

2. For the group to know the average number of bags per household, a survey of number of

bags being used by the 117 families who use non-woven Polypropylene bags was

likewise conducted. The following table shows the results of the survey:

Table 4Average Number of Non-Woven Polypropylene Bags Being Used per

Household in the National Capital Region (NCR)

Users Non-users

Total No. ofrespondents

400 400

No. of Respondents 117 283Percentage 29.25% 70.75%


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The table 4 shows that there were about 280 bags being used by the 117 families who

answered positively that they are using non-woven Polypropylene bags or about 2.39%. By

getting the average of the number of bags per household, it yielded that there is an average of 3

bags being used per household.

3. For the group to know the total demand of bags in NCR for the year 2008, the total

number of households in 2008 provided by the NSO and the data from Table 4 was used.

Table 5 shows the results of the computation:

Table 5

Demands of Non-Woven Polypropylene Bags in theNational Capital Region (NCR) for 2008

The table 5 shows that there were about 29.25% of 2,454,000 households in the NCR in2008 or about 717,795 are using non-woven PP bags. Each family used at least three (3) bags

which yielded a total of 2,153,385 bags for the year 2008. It also shows that there are 33.92%

from the non-users are willing to purchase the bag.

Users

Total no. Users of Non-

Woven PP bags117

Total no. of bags 280Average bag per household 2.39 3 bags / household

Year 2008

Percentage of users 29.25%Total No. of Household (in

2008)2,454,000

Total No. of users 717,795Average bag / user 3 bags / user

Total Demand of bags 2,153,385 bags


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From the survey conducted by the group, it shows that there is a demand of about

2,153,385 non-woven Polypropylene bags for the year 2008 in the whole NCR. This is based on

the number of bags being used by each household from among the 117 users from the 400

families employed in the survey. However, this data is still partial in a critical look at it because

the data are derived only from households of NCR. The survey didnt deal with the households

outside the metro who engage in business or buy goods and services in the city. The researchers

admit that it will be very hard to conduct a survey on these groups of customers since they vary

from day to day or from one establishment to another. The total demands of non-woven

Polypropylene bags for the year 2008 manifest that there is a huge amount of bags that can are

needed and used by the consuming public (refers only to Metro Manila households and delimited

to households outside the province who use bags in buying goods and services from business

establishments in the NCR).

From the standpoint of the researchers, the market area is somehow profitable. This

assumption is based on the number of households in the NCR that continues to increase from

2008 until 2013 from data provided by the NSO. From these expected increase in household

numbers the next five years, the demand for non-woven Polypropylene bags will likely increase.

This scenario opens a very advantageous position for the company to open this business and

introduce the products among the consuming public of the NCR.

PROJECTED DEMAND

Based on the data gathered from the National Statistics Office, the total numbers of

households within the National capital Region were 2,132,000 for the year 2000, 2,932,000 for


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year 2003 and 2,362,000 for the year 2006. Due to financial constraints NSO cannot conduct

census yearly so they perform it every three years.

To project the population in a yearly basis, the researchers have used linear regression in

order to project the population growth yearly. The projected population is multiplied by

percentage of users of non-woven bag to obtain the projected demand. The following table

shows the projected demand of non-woven Polypropylene bags in the NCR using the data

obtained from Table 5.

Table 5Projected Demands of Non-Woven Polypropylene Bags in the

National Capital Region from 2009-2013

Table 5 shows that in 2009, there is a projected demand of 2,187,608 non-woven

Polypropylene bags. In 2010, an increase to 2,220,953 non-woven Polypropylene bags is

expected. By 2011, about 2,254,298 non-woven Polypropylene bags are predicted to be needed

by the consuming public. In 2012, NCR will need 2,287,643 non-woven Polypropylene bags.

Finally, in 2013, non-woven Polypropylene bags totaling to 2,321,865 pieces are expected to be

used by the people from NCR.

The data in Table 5 utilized the projected population of NCR per household as revealed

in Table 2. The projected household populations were multiplied each by 117 household who

agreed that they use non-woven Polypropylene bags based on the survey as revealed in Table 3.

Year Demand

2009 2,187,6082010 2,220,9532011 2,254,2982012 2,287,6432013 2,321,865


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Generally, there is an increasing demand for non-woven Polypropylene bags from 2008

to 2013 (as represented graphically in Figure 1) due to the fact that there is a projected increase

in the number of household populations in the NCR on the same span of years based on the

population growth rate provided by the NSO. Hence, it can be assumed that with the increase in

population and demands in non-woven Polypropylene bags, the market area, that is the National

capital region, is a highly profitable market area for the company to start its business on the

production and selling of the said product.

Producing companies have to take environmental issues into account when designing and

producing products and services. Non-woven Polypropylene bags, which will be produced by the

Mundo Eco Bags Company, enters a market where it competes with other materials as well as

recycled material from other companies or firms specializing on the same products. On this

market, the group assumes that a balance between demand and supply of the different materials

is obtained through variations in the price. An increased demand of bags from the distribution

systems should then result in a price reduction. This, in turn, should result in an increased use of

the non-woven Polypropylene bags and/or a reduced use of material from other systems. If the

use is affected the most depends on which activity is most sensitive to changes in the price. The

non-woven Polypropylene bags can be calculated through the use of estimates of the sensitivity

to price changes - i.e., the price elasticity of demand and supply on the market for recycled

material.

Projected Household Population within National Capital Region (NCR)

from 2009 to 2013


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Figure 1Projected Demands of Non-Woven Polypropylene Bags in the

National Capital Region from 2009-2013

HISTORICAL SUPPLY

The historical supply of this study was based from two sources. The local supply and the

import supply of non-woven PP bags in the Philippines. For the local, the plant capacity of the

existing manufacturer of polypropylene bags here in the Philippines.Presently, there is only one major producer of polypropylene bags in the Philippines. This

is the Green Leaf Eco Bags Company which started only last August 2007. The said


2009 2,492,0002010 2,531,000

2011 2,569,0002012 2,607,0002013 2,646,000

2,100,000

2,150,000

2,200,000

2,250,000

2,300,000

2,350,000

2009 2010 2011 2012 2013

DEMAND

DEMAND


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manufacturer was kind enough to give the group a certified true copy of their production

schedules, which served as the basis of getting supply.

The data for the importation of non-woven PP bags was gathered from the National

Statistics Office. The importation of non woven PP bags starting from January, 2004 up to

August, 2008.

Table 6 shows the import of non-woven Polypropylene bag in the Philippines. The

source of data is from National Statistics Office.

Table 6Importof Non-Woven Polypropylene Bags in the Philippines

It can be gleaned from the table that in 2004, there were 15,202 non-wovenPolypropylene bags imported by the country. In 2005, there were 415,126 bags imported almost

1000% increase the previous year. By 2006, 143,246 bags were imported which registered a

decrease in demand. In 2007, non-woven Polypropylene bags totaling to 807,224 was imported,

a sudden increase in the supply. Finally, in 2008, there was drop in supply as 74,645 bags were

only imported.

The table shows that there is an unstable market for non-woven Polypropylene bags from

2004 to 2008. The see-saw number of non-woven Polypropylene bags imported from 2004 to

2008 is due to the increasing and decreasing demand of bags from the consuming public. In

astute scrutiny of Table 6, it can be noticed that once the import of bags increases heavily as

Year Supply

2004 15,2022005 415,1262006 143,2462007 807,2242008 74,645


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compared from the previous year, the number of imports for the succeeding year usually goes

down. In 2005, there was a huger increase of imports as compared to 2004 imports. The

following year (2006), the number of imports fell down heavily and increased again on a very

high number in 2007. In the following year (2008), the number of imports went down.

Green Leaf Eco Manufacturing

Customers Monthly Supply of Bag from Green Leaf Eco Manufacturing

Customers Demand per month


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Modern Outlet 5,000

Groceries 10,000

Companies 10,000

Schools 500

Others 200

Figure 2Customers Monthly Supply of Bag from Green Leaf Eco Manufacturing

In Figure 1, it is shown that the largest customers of Green Leaf Eco Manufacturing are

the groceries and company which both obtained 78% of the total production. The second largest

customers are the modern outlets with 19.45% share in the produced bags. This was followed by

the schools other customers that doesnt fall in the category given with 1.95% and 0.78%

respectively.

19.45%

38.91%

1.95%

38.91%0.78% Customer

Modern Outlet

Groceries

Schools

Company

Others


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The data in the figure will be very useful for Mundo Eco bags Company to determine the

group of customers that must be given focus in introducing the products. The most of the

customers of Green Leaf Eco Manufacturing came from groceries and companies. Hence,

Mundo Eco Bags Company will likewise intensify its campaign on these potential customers. It

shall also concentrate on other customers like modern outlets and schools.

Production of Green Leaf Bags Sorted by Type

Figure 3

Since the Mundo Eco Bags Company will produce tote bags and shopping bags, its main

target of prospective customers will be the small shopping malls or tiange or grocery stores that

Types of Bag Production permonth

Tote bag 2,000

Promotional bag 10,000

Shopping bag 10,000

Canvas bag 10,000

6.25%

31.25%

31.25%

31.25% Types of Bag

Tote bag

Promotional bag

Schools

Company


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cater to the larger population of consumers. Most lucrative areas that can be tapped as possible

market places are the Carriedo, Baclaran, Divisoria, Bambang and Greenhills in San Juan. These

areas sell cheap yet quality products which use bags. Likewise, these are popular places often

visited by many people within the metro and even the nearby provinces and cities.

Figure 3 shows that the Green Leaf Eco Manufacturing Companys largest number of

bags produced are the promotional bags, school bag and bags for company use with 31.25%

production. The smallest produced are tote bags with 6.25% production.

The data on Figure 3 is basically a reaction on the data gleaned in Figure 2. Since the

companys largest group of customers are companies and groceries, so the produced bags are

company bags for that matter.

With the help of the data above, the Mundo Eco Bags Company will produced the kind of

bags after it has identified the target customers and necessary demands were made between the

company and the customers. Hence, identification of the potential customers for the companys

bags must top the list of priorities before the kind of bags that needed to be produced could be

identified.

On the hand, Table 8 shows the supply of non-woven Polypropylene bags in the

Philippines. It must be noted that the data for local supply is based on the information given by

Green Leaf Eco Company while the importation data are provided by the National Statistics

Office.

Table 8Supply of Non-Woven Polypropylene Bags in the Philippines


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It can be gleaned from the table that no entries for local supply were provided by the

Green Leaf Eco Company from 2004 to 2006. On the other hand, data from National Statistics

Office ranges from 2004 to 2008 (as of August 2008).

To graphically present the supply of non-woven Polypropylene bags in the Philippines,

Figure 4 shows that graph:

Figure 4Supply of Non-Woven Polypropylene Bags in the Philippines

Year Local Import Total

2004 -- 15,202 15,2022005 -- 415,126 415,126

2006 -- 143,246 143,2462007 40,000 807,224 847,224

2008 (August) 80,000 74,645 154,645

0

200000

400000

600000

800000

1000000

Import

Local


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Data from Table 8 and Figure 4 shows that the supply of non-woven Polypropylene bags

in the Philippines is unstable. The see-saw number of non-woven Polypropylene bags imported

from 2004 to 2008 is due to the increasing and decreasing demand of bags from the consuming

public. This is due to the potential changes of consumption that causes major impact in the

industry.

Table 8Forecasted Demand and Supply of Non-Woven Polypropylene Bags in the Philippines

Table 8 shows the forecasted demand and supply of non-woven Polypropylene bags in

the Philippines from 2009 to 2013.

As to demand, there will be 2,187,608 bags needed in 2009. When 2010 comes,

2,220,953 bags will be needed. In 2012, there will be 2,287,643 bags that are expected to be

demanded. Finally in 2013, a total of 2,321,865 will be needed.

As to the supply of the bags, 527,695 bags will be produced in 2009. On the other hand,

612,738 bags will be generated in 2010. When 2011 comes, there will be 697,780 bags needed.

By 2012 and 2013, there will be 782,823 and 867,866 bags respectively that will be generated.

Year Demand Supply

2009 2,187,608 527,695

2010 2,220,953 612,738

2011 2,254,298 697,780

2012 2,287,643 782,823

2013 2,321,865 867,866


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According to the trends in the plastic industry, there is an increasing demand of 10%

every year due to the increasing number of business establishments that needed bags in selling

their products. On the other hand, in projection of the unstable supply of bags from the past 5

years as revealed in Table 8, the supply will somehow increase by the annual production of the

proposed company.

Table 9 shows the market share of the Mundo Eco Bags Company in reference to the

projected demand and projected supply of non-woven Polypropylene bags in the Philippines

from 2009 to 2013.

Table 9Market Share

It can be gleaned from the table that there is an 1% increase in every year from 2009 to

2013. For the year 2009, the approximate percentage of available supply of non-woven

Polypropylene bags is pegged at 10%.

In analysis of the gap between the projected demand and projected supply, there is a

positive difference for the next five years. The positive difference between the demand and the

Year Projected DemandProjected

Supply

Target Market

Share

2009 2,187,608 527,695 10%

2010 2,220,953 612,738 11%

2011 2,254,298 697,780 12%

2012 2,287,643 782,823 13%

2013 2,321,865 867,866 14%


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supply gap indicates an affirmative market share of non--woven Polypropylene bags in the

market. This is a clear indication that the company being proposed will thrive. Moreover, the

approximate percentage of available supply of non-woven Polypropylene bags for the next five

years is increasing. This is projected because the supply of bags will increase by the companys

production.

Table 10 shows the projected sales volume of Mundo Eco Bags Company from 2009 to

2013.

Table 10Projected Sales Volume of Mundo Eco Bags Company from 2009 to 2013

It can be seen from the tables that in 2009 the projected sales volume was 168,000 bags.

At 2010, 178,000 bags will be produced. For 2011, the production of bag will increase up to

188,000 bags. By 2012 and 2013, there will be 197,000 and 205,000 bags respectively that will

be produced.

Table 11 shows the monthly production of non-woven polypropylene bags for the year

2009.

Year Projected Sales Volume

2009168,000

2010178,000

2011 188,000

2012197,000

2013205,000


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Table 11Monthly Production of Non-Woven Polypropylene Bags for the Year 2009

It can be gleaned for the table that 14,000 bags will be produced per month for the whole

year or a total of 168,000 bags in the first year. The basis for monthly productions was from the

smallest yearly target production.

MARKETING PROGRAMS

The company will start the product promotions in advertising in a free ads website. As

a new player, it will start the marketing program to the medium scale supermarkets within NCR

through translating to them the advocacy of the company and telling them the benefits they will

get from the product.

Moreover, the company will also post advertisements in newspapers to promote the

design and uses of the product. Print media which houses a larger number of readers can have a

full knowledge of the company and its products. The name of the commissioned news paper

Year Volume of Sales (PCS)January 14,000February 14,000March 14,000April 14,000May 14,000June 14,000July 14,000

August 14,000September 14,000

October 14,000

November 14,000December 14,000TOTAL 168,000


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company will be the Philippine Daily Inquirer. The dimension of ads will be 4 x 30 ccm which

cost Php 63,360.00 for twice appearance.

Furthermore, the company will also adopt the market penetration strategy, that is, it will

introduce the product through direct or personal selling to different prospective custnmers in

order to capture the increase in the expected market share. The company will proviude sample

products for trial and conduct presentation of product to prospective customers. Presentation will

be done after all necessary permission and appointments were set and properly arrange by the

prospective clients. To do this, the company will hire sales representative who will be

responsible in negotiating our product to potential customers.

marketing thesis 14-34(revised 23.03)

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