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 greattasting 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
2011
2012
2013
2014
2015

HISTORICAL POPULATION
20000
30000
40000
50000
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
2016
2017
2018

INCREASE (DECREASE)
5900
4100
5600

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

PROJECTED DEMAND
25900
34100
45600

DEMAND
50000
45000
40000
35000
30000

DEMAND

25000
20000
15000
10000
5000
0
2016

III.

2017

2018

SUPPLY

Currently, there exist 33 competitors in the vicinity of Ermita, Manila. They have
maximum 15,000 customers per year.

SUPPLY FIGURES DATA

Computation

YEAR

NUMBER OF COFFEE SHOPS AND

2011
2012
2013
2014
2015

STALLS
10
16
22
28
33

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

TOTAL PROJECTED
YEAR
2016
2017
2018

INCREASE (DECREASE)
4.6
4.6
4.6

SUPPLY
14.6
20.6
26.6

SUPPLY ANALYSIS
30
25
20

SUPPLY ANALYSIS

15
10
5
0
2016

IV.

2017

2018

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.

PERCENT
YEAR

DEMAND

SUPPLY

D-S GAP

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

UNSATISFIED

(Past)

2015

3160

37.6

2767

.9882143

2016

1360

14.6

1345.4

.9892647

2017

1860

20.6

1893.4

.9889247

2018

2360

26.6

2333.4

.9887288

(Projected)

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 Mayors 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
1500

UNIT
PRIC
E
25

Espresso

Total
37,500.00

QUANTITI
ES TO BE
SOLD
1000

UNIT
PRIC
E
55

Dark Mocha

2300

25

57,500.00

1800

55

Java Chips

2000

25

50,000.00

2000

55

Caramel
Macchiato
White Choco
Oreo
Coffee Jelly

2300

25

57,500.00

2000

55

2000

25

50,000.00

1800

55

2800

25

70,000.00

1500

55

Chocolate Mint

1000

25

25,000.00

500

55

Cookies and
Cream
Black Forest

1800

25

45,000.00

1500

55

2200

25

55,000.00

2000

55

Chocolate

2200

25

55,000.00

2000

55

Vanilla

1200

25

30,000.00

1000

55

Vanilla Oreo

2100

25

52,500.00

2000

55

Chocolate Cream
Chips
Strawberry and
Cream
Blueberries and
Cream
Mixberries and
Cream
TOTAL

2500

25

62,500.00

2200

55

2200

25

55,000.00

2000

55

2200

25

55,000.00

2000

55

800

25

20,000.00

600

55

31100

400

777,500.00

25900

880

SALES
REVENUE

55,000.00

99,000.00

110,000.00

110,000.00

99,000.00

82,500.00

27,500.00

82,500.00

110,000.00

110,000.00

55,000.00

110,000.00

121,000.00

110,000.00

110,000.00

33,000.00

1,424,500.00

YEAR 2
DESCRIPTION

UNIT

UNIT
PRIC
E

TOTAL

QUANTIT UNIT
IES TO
PRIC
BE SOLD
E

SALES
REVENUE

Espresso

25
2500

Dark Mocha

25
2500

Java Chips

25
2500

Caramel
Macchiato
White Choco
Oreo
Coffee Jelly

25
2500
25
2200
25
2300

Chocolate Mint

25
2000

Cookies and
Cream
Black Forest

25
2500
25
2800

Chocolate

25
2800

Vanilla

25
2000

Vanilla Oreo

25
2500

Chocolate
Cream Chips
Strawberry and
Cream
Blueberries and
Cream
Mixberries and
Cream
TOTAL

25
2300
25
2500
25
2800
25
2000
38700

PRODUCT
DESCRIPTIO
N

UNIT

Espresso

3300

UNIT
PRIC
E
25

62,500.00

62,500.00

62,500.00

62,500.00

55,000.00

57,500.00

50,000.00

62,500.00

70,000.00

70,000.00

50,000.00

62,500.00

57,500.00

62,500.00

70,000.00

50,000.00

967,500.00

TOTAL

2300

55

126,500.00

2300

55

126,500.00

2200

55

121,000.00

2300

55

126,500.00

2000

55

110,000.00

2000

55

110,000.00

1800

55

2000

55

110,000.00

2500

55

137,500.00

2500

55

137,500.00

1500

55

2300

55

126,500.00

2100

55

115,500.00

2200

55

121,000.00

2200

55

121,000.00

1900

55

104,500.00

82,500.00

1,875,500.00

34100

YEAR 3
QUANTITIE
S TO BE
SOLD
3000

99,000.00

UNIT
PRIC
E
55

SALES
REVENUE

Dark Mocha

25
3300

Java Chips

25
3000

Caramel
Macchiato
White Choco
Oreo
Coffee Jelly

25
3000
25
3000
25
3000

Chocolate
Mint
Cookies and
Cream
Black Forest

25
3000
25
3000
25
3000

Chocolate

25
3300

Vanilla

25
3000

Vanilla Oreo

25
3000

Chocolate
Cream Chips

25
3000

Strawberry
and Cream
Blueberries
and Cream
Mixberries
and Cream
TOTAL

25
3000
25
3000
25
3000
4890
0

82,500.00

82,500.00

75,000.00

75,000.00

75,000.00

75,000.00

75,000.00

75,000.00

75,000.00

82,500.00

75,000.00

75,000.00

75,000.00

75,000.00

75,000.00

75,000.00
1,222,500.
00

3000

55

2800

55

2800

55

2800

55

2800

55

2900

55

2800

55

2900

55

3000

55

2800

55

2800

55

2800

55

2800

55

2800

55

2800

55

45600

165,000.00

165,000.00

154,000.00

154,000.00

154,000.00

154,000.00

159,500.00

154,000.00

159,500.00

165,000.00

154,000.00

154,000.00

154,000.00

154,000.00

154,000.00

154,000.00
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 .

6000000
5000000
4000000

YEAR 3
YEAR 2

3000000

YEAR 1
2000000
1000000
0
YEAR 1

VIII.

YEAR 2

YEAR 3

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

RECEIVING RECEIPT FORM

DELIVERY RECEIPT FORM: