MARKET ASPECT

CHAPTER 1

MARKET STUDY

I. MARKET DESCRIPTION

Foss Coffee will focus its marketing activities on reaching the University students and

faculty, people working in offices located close to the coffee shop and on sophisticated

teenagers. Since coffee consumption is universal across different income categories

and proximity to the University Belt campuses will provide access to the targeted

customer audience. It will also cater to people who want to get their daily cup of great-

tasting coffee. Such customers vary in ages, the location of our proposed business is at

Upper ground floor of SM City Manila near Pizza Hut. The lease contract has an option

of renewal for three years at a fixed rate that Foss Coffee will execute depending on the

financial strength of its business, although the location is close to the University campus

means that most of its clientele will be college students and faculty members. Our

market study shows that these are discerning customers that gravitate towards better

tasting coffee. Furthermore, a lot of college students are pulling off all nighters for their

exams and they need caffeine to keep them awake and this will provide a unique

possibility for building a loyal client base.

II. DEMAND

The demand is based on the population of the university students, faculty members

and office workers in the vicinity of Ermita, Manila in the National Capital Region.

This is for a five (5) year period beginning 2010 to 2014.

YEAR HISTORICAL POPULATION2011 20000

2012 30000

2013 40000

2014 50000

2015 60000

There is no available data about the demand of coffee services for the past

years. Therefore, the proponents used assume what the demand was for last five years.

The total projected demand for the past next three years is presented below.

YEAR INCREASE (DECREASE) PROJECTED DEMAND2016 5900 25900

2017 4100 34100

2018 5600 45600

COMPUTATION:

METHOD USED

Arithmetic Straight-line Yc= a + Yi-1

Where

A = (Yn-Yc) / (N-1) = (2800-1000)/(5-1) = 450

Yc= Initial Value (first year)

Yn= Final Value (last year)

N= Number of years

Yi= Value for the year past

2016 2017 20180

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

DEMAND

DEMAND

III. SUPPLY

Currently, there exist 33 competitors in the vicinity of Ermita, Manila. They have

maximum 15,000 customers per year.

SUPPLY FIGURES DATA

YEAR NUMBER OF COFFEE SHOPS AND STALLS

2011 10

2012 16

2013 22

2014 28

2015 33

Computation

Method Used

Arithmetic Straight-line Yc= a + Yi-1

Where

A = (Yn-Yc) / (N-1) = (33-10)/(5-1) = 5.75

Yc= Initial Value (first year)

Yn= Final Value (last year)

N= Number of years

Yi= Value for the year past

PROJECTED SUPPLY FIGURES

YEAR INCREASE (DECREASE)

TOTAL PROJECTED

SUPPLY

2016 4.6 14.6

2017 4.6 20.6

2018 4.6 26.6

2016 2017 20180

5

10

15

20

25

30

SUPPLY ANALYSIS

SUPPLY ANALYSIS

IV. DEMAND SUPPLY ANALYSIS

Based on statistical data gathered it is proven that there is still a number of demands

for unsatisfied clients of which even in the inclusion of that company the demand is

high. Therefore it is very evident that the current demand cannot be satisfied by the

present supply.

YEAR DEMAND SUPPLY D-S GAP

PERCENT

UNSATISFIED

(Past)

2011 1360 14.6 990 1.0

2012 1860 20.6 14 0.99

2013 2360 26.6 1978 .989

2014 2860 32.6 2472 .98888

2015 3160 37.6 2767 .9882143

(Projected)

2016 1360 14.6 1345.4 .9892647

2017 1860 20.6 1893.4 .9889247

2018 2360 26.6 2333.4 .9887288

V. GENERAL MARKETING PRACTICES

Foss Coffee will seek accreditation from Department of Trade and Industry, Bureau of

Internal Revenue for taxes, Intellectual Property Office of the Philippines for the

trademark. Foss Coffee will also get updates and reviews and other useful information

for better business operation. Foss Coffee will follow all the rules and regulations and

will comply with the standards set by these organizations and agencies to ensure the

proper operation of the business. As to operation and security, the Foss Coffee will

secure its necessary requirements such as Mayor’s permit, sanitary permit and building

permit.

Foss Coffee will focus its marketing activities on reaching the University students and

faculty, people working in offices located close to the university belt and on

sophisticated teenagers.

Our market research shows that these are the customer groups that are most likely to

buy gourmet coffee products. Since gourmet coffee consumption is universal across

different income categories and mostly depends on the proximity to the University

campus will provide access to the targeted customer audience. Foss Coffee's marketing

strategy will be concentrate at getting customers to spend more and come back more

often. Establishing a loyal customer base is of a paramount importance since such

customer core will not only generate most of the sales but also will provide favourable

referrals.

The competition comes from several different sources: Coffee Shops and Tea shops however, none of them have the mission to aspire and give the customers a unique blend of coffee drinks that customer can truly enjoy, affordability and product consistencies.

Foss Coffee will consider some factors in quoting the price. Hence, we will assure to

quote the customer at a reasonable price. In order to build up its client base, Foss

Coffee will use banners and fliers and utilize customer referrals. At the same time,

customer retention programs will be used to make sure the customers are coming back

and spending more at the coffee stall.

VI. PROPOSED MARKETING PROGRAM

Coffee consumption has shown a steady 2.5% growth rate in the Philippines over the

last decade. In 1994, total sales of coffee were approximately $7.5 billion with iced

coffee representing 33% (or $2.5 billion) of that. The retail coffee industry is flourishing

in the National Capital Region. The local climate, with a long rainy season, is very

conducive for the consumption of hot non-alcoholic beverages. At the same time, hot

dry summers drive people into cafes to order iced drinks. Further, coffee has really

become a part of the lifestyle in the Philippines. Its discerning coffee drinkers are in

favour of well-prepared, strong coffee-based beverages, which they can consume

immediately. The general trend toward quality among Filipino consumers definitely

plays an important role in the recent growth in iced coffee. Philippine coffee

consumption has shown steady growth, with gourmet coffee having the strongest

growth. Coffee drinkers in the Pacific are among the most demanding ones.

Additionally, such factors as desire for small indulgencies, for something more exotic

and unique provide a good selling opportunity for coffee stalls. Foss Coffee will strive to

build a loyal customer base by offering a great tasting coffee located close to the

bustling University belt in Manila.

Foss Coffee will appeal to the university students residing within the vicinity of the

university belt, the faculty members, office workers who desire a sophisticated great

tasting coffee and other teenagers who want to experience a unique taste of coffee.

Members of this market dine out frequently, approximately three times or more this

week. The market segment is made up of students between ages of 15 and 45.

Foss Coffee baristas will handle the sales transactions. To speed up the customer

service, at least two employees will be servicing clients--while one employee will be

preparing the customer's order. Foss Coffee will use banners and fliers, utilize customer

referrals. At the same time, customer retention programs will be used to make sure the

customers are coming back and spending more at the coffee bar.

Foss Coffee continues to innovate its product mix to capture more of the market this

component of the product mix focuses on what the business offers to customers. At

present, the following are the main categories of Foss Coffee products: Ice blended

Coffee with 9 different choices of flavour and Ice Blended Cream with 8 different

choices of flavour. This product mix is a result of business innovation. The company

also has an ongoing product innovation process that aims to offer new products to

attract and keep more customers. The company offers most of its products through

Foss Coffee cart stall. This component of the marketing mix determines the venues at

which customers can access the products. 

The coffees are priced to give us an attractive margin while at the same time offering

value to the consumer. Foss Coffee does not utilize coupons and discounts because we

believe that most valuable customer demographic of daily coffee consumers is not

influence by discount programs or coupons.

Foss Coffee will promotes its products mainly through advertising. This component of

the marketing mix refers to the communication strategies used to disseminate

information about the firm and its products. Foss Coffee will advertise by giving flyers,

appear regularly on popular social media sites, such as facebook compared to

traditional print advertising, this cost effective tactic will allow the business to reach

prospects in a highly targeted way. Foss Coffee will also develop a simple website

which will provide basic information about the business and the menu. Foss coffee will

also promote by giving flyers within the vicinity of the University Campuses.

The product will undergo channels of distribution. It will be in three level; Manufacturer –

Retailer – Consumer. Our product ingredients and other supplies will be delivered by

the manufacturer to us (Retailer) then we will then sell this to our customers.

VII. Projected Sales

Our coffees are affordable with a price Php 55 pesos for all kinds of flavours of your

choice .The following are the Main categories of our product. On the upper part stated in

the picture is Ice blended coffee with 9 different flavours and each of these coffee

beverages is based on a shot of espresso which is prepared in the espresso machine

by forcing heated water through ground coffee at high pressure. Such espresso shots

are combined with steamed milk and/or other additives like cocoa, caramel, etc., to

prepare the espresso-based beverages and in the lower part of the picture are Ice

blended cream with 8 different flavours filled with whip cream and a minimum shot of

caffeine.

Sales Projection

PRODUCT YEAR 1

DESCRIPTION UNIT UNIT PRIC

E

Total QUANTITIES TO BE

SOLD

UNIT PRIC

E

SALES REVENUE

Espresso 1500 25 ₱ 37,500.00 1000 55 ₱ 55,000.00

Dark Mocha 2300 25 ₱ 57,500.00 1800 55 ₱ 99,000.00

Java Chips 2000 25 ₱ 50,000.00 2000 55 ₱ 110,000.00

Caramel Macchiato

2300 25 ₱ 57,500.00 2000 55 ₱ 110,000.00

White Choco Oreo

2000 25 ₱ 50,000.00 1800 55 ₱ 99,000.00

Coffee Jelly 2800 25 ₱ 70,000.00 1500 55 ₱ 82,500.00

Chocolate Mint 1000 25 ₱ 25,000.00 500 55 ₱ 27,500.00

Cookies and Cream

1800 25 ₱ 45,000.00 1500 55 ₱ 82,500.00

Black Forest 2200 25 ₱ 55,000.00 2000 55 ₱ 110,000.00

Chocolate 2200 25 ₱ 55,000.00 2000 55 ₱ 110,000.00

Vanilla 1200 25 ₱ 30,000.00 1000 55 ₱ 55,000.00

Vanilla Oreo 2100 25 ₱ 52,500.00 2000 55 ₱ 110,000.00

Chocolate Cream Chips

2500 25 ₱ 62,500.00 2200 55 ₱ 121,000.00

Strawberry and Cream

2200 25 ₱ 55,000.00 2000 55 ₱ 110,000.00

Blueberries and Cream

2200 25 ₱ 55,000.00 2000 55 ₱ 110,000.00

Mixberries and Cream

800 25 ₱ 20,000.00 600 55 ₱ 33,000.00

TOTAL 31100 400 ₱ 777,500.00 25900 880 ₱ 1,424,500.00

YEAR 2

DESCRIPTION UNIT UNIT PRIC

E

TOTAL QUANTITIES TO

BE SOLD

UNIT PRIC

E

SALES REVENUE

Espresso2500

25 ₱ 62,500.00

2300 55 ₱ 126,500.00

Dark Mocha2500

25 ₱ 62,500.00

2300 55 ₱ 126,500.00

Java Chips2500

25 ₱ 62,500.00

2200 55 ₱ 121,000.00

Caramel Macchiato 2500

25 ₱ 62,500.00

2300 55 ₱ 126,500.00

White Choco Oreo 2200

25 ₱ 55,000.00

2000 55 ₱ 110,000.00

Coffee Jelly2300

25 ₱ 57,500.00

2000 55 ₱ 110,000.00

Chocolate Mint2000

25 ₱ 50,000.00

1800 55 ₱ 99,000.00

Cookies and Cream 2500

25 ₱ 62,500.00

2000 55 ₱ 110,000.00

Black Forest2800

25 ₱ 70,000.00

2500 55 ₱ 137,500.00

Chocolate2800

25 ₱ 70,000.00

2500 55 ₱ 137,500.00

Vanilla2000

25 ₱ 50,000.00

1500 55 ₱ 82,500.00

Vanilla Oreo2500

25 ₱ 62,500.00

2300 55 ₱ 126,500.00

Chocolate Cream Chips 2300

25 ₱ 57,500.00

2100 55 ₱ 115,500.00

Strawberry and Cream 2500

25 ₱ 62,500.00

2200 55 ₱ 121,000.00

Blueberries and Cream 2800

25 ₱ 70,000.00

2200 55 ₱ 121,000.00

Mixberries and Cream 2000

25 ₱ 50,000.00

1900 55 ₱ 104,500.00

TOTAL 38700   ₱ 967,500.00

34100   ₱1,875,500.00

PRODUCT YEAR 3DESCRIPTIO

NUNIT UNIT

PRICE

TOTAL QUANTITIES TO BE

SOLD

UNIT PRIC

E

SALES REVENUE

Espresso3300

25 ₱ 82,500.00

3000 55 ₱ 165,000.00

Dark Mocha3300

25 ₱ 82,500.00

3000 55 ₱ 165,000.00

Java Chips3000

25 ₱ 75,000.00

2800 55 ₱ 154,000.00

Caramel Macchiato 3000

25 ₱ 75,000.00

2800 55 ₱ 154,000.00

White Choco Oreo 3000

25 ₱ 75,000.00

2800 55 ₱ 154,000.00

Coffee Jelly3000

25 ₱ 75,000.00

2800 55 ₱ 154,000.00

Chocolate Mint 3000

25 ₱ 75,000.00

2900 55 ₱ 159,500.00

Cookies and Cream 3000

25 ₱ 75,000.00

2800 55 ₱ 154,000.00

Black Forest3000

25 ₱ 75,000.00

2900 55 ₱ 159,500.00

Chocolate3300

25 ₱ 82,500.00

3000 55 ₱ 165,000.00

Vanilla3000

25 ₱ 75,000.00

2800 55 ₱ 154,000.00

Vanilla Oreo3000

25 ₱ 75,000.00

2800 55 ₱ 154,000.00

Chocolate Cream Chips

3000

25 ₱ 75,000.00

2800 55 ₱ 154,000.00

Strawberry and Cream 3000

25 ₱ 75,000.00

2800 55 ₱ 154,000.00

Blueberries and Cream 3000

25 ₱ 75,000.00

2800 55 ₱ 154,000.00

Mixberries and Cream 3000

25 ₱ 75,000.00

2800 55 ₱ 154,000.00

TOTAL 48900

  ₱1,222,500.00

45600   ₱2,508,000.00

Our sales forecast assumes no change in cost of prices, which is reasonable

assumption for the last few years. Proximity to the University campus will dictate certain

sales seasonality with revenues slightly decreasing during the school vacation periods.

The chart and table below outline our projected sales forecast for the next three years.

YEAR 1 YEAR 2 YEAR 30

200000

400000

600000

800000

1000000

1200000

1400000

1600000

1800000

2000000

YEAR 3YEAR 2YEAR 1

VIII. SYSTEM AND FORMS DESIGN

Some marketing forms and records that will be used are Sales Invoice; this

document contains the date of sale and information – quantity, description and price

– about the goods sold. Delivery Receipt; this document is the record of the

franchisor and delivered supplies and ingredients to our stall this contains the date

of the delivery and information – quantity, unit, unit price and amount – of the goods

delivered to us. Receiving Receipt; this document is our record

SALES INVOICE FORM

FOSS COFFEETIN 143-777-888 VAT

NO. 0613SOLD TO:DATE OF PURCHASE:

QUANTITY UNIT AMOUNT

RECEIVING RECEIPT FORM

FOSS COFFEEReceive from:Date:

RECEIVING RECEIPTQUANTITY UNIT UNIT PRICE AMOUNT

DELIVERY RECEIPT FORM: