POLYTECHNICUNIVERSITYOFTHEPHILIPPINES

EFFECTS OF EXPANSION OF CONVENIENCE STORES IN

BARANGAYS IN RODRIGUEZ RIZAL

An Undergraduate Thesis
Presented to the College of Accountancy and Finance
Polytechnic University of the Philippines
Sta. Mesa, Manila

In Partial Fulfillment of the Requirements for the Degree

Bachelor of Science in Accountancy

by

ARRIOLA, ALWIN
FELIX, JEFFERSON
LLABRES, LEO TROY
MAQUILING, JAMES ROBERT
SIDA, EMMANUEL

September 2018
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Chapter 1

THE PROBLEM AND ITS BACKGROUND

Introduction

Convenience stores are popping up everywhere in the country. And there’s a

good reason why – more Filipinos are buying at convenience stores, which are

typically open 24 hours.

Convenience stores are small retail stores that stocks a range of everyday items

such as groceries, snack foods, soft-drinks, tobacco products, over-the-counter drugs,

toiletries, newspapers, magazines, and etc. Convenience stores are typically located

alongside a busy road, in an urban area, near a railway, or in a transport terminals, but

nowadays, convenience stores can also be seen in rural areas, providing products

and services that previously was only accessible in urban areas. These expansions

provided changes in communities encompassing the convenience stores.

Background of the Study

A convenience store first opened on 1927 in Dallas after an operator realizes

customers sometimes need bread, milk, and other things after grocery stores close.

Eventually, concept spreads to other company locations and convenience stores

spread out to other parts of United States, then to the world.

Focusing in the Philippines, there are major convenience stores emerged

throughout the years, and these are 7-Eleven, Ministop, Lawson, and AlfaMart.
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In 1984, Philippine Seven Corporation (PSC) opened its first store, 7 – Eleven,

and became the pioneer of convenience store in the Philippines. Store numbers are

predicted to reach 2000 outlets in the next couple of years and some suggest the

expansion over the next decade could see 10,000 7-Eleven stores adorning the retail

landscape. MiniStop followed after 16 years on August 2000 and established 100

stores within 4 years. As of 2016, it has now reached the 500 store mark. Other

competitors are AlphaMart (AlfaMart), a convenience store originated from Jakarta,

Indonesia and was brought here through SM Group, and Lawsons, which sits second

place behind 7 –Eleven in Japan and operated by Puregold.

Nowadays, along with the constructions of tall buildings, convenience stores

start to pop-up on every corner, offering convenience and accessibility to passers-by

and stop-and-shop commuters. These are more favored by the Filipino people

especially with its feature of being open 24/7, or 24 hours a day and 7 days a week.

According to Kantar Worldpanel, there has been a 45% increase in convenience store

purchases from January 2014 to January 2015, and indicates that these are the

fastest growing retail channel in the country.

Moreover, the establishments of convenience stores seem to be the cause for

the changes in nearby communities’ way of living in rural or provincial areas, like Rizal.

The researchers therefore aims to know the effects of the expansion of convenience

stores: like 7- Eleven, MiniStop, Lawson, and AlphaMart, in barangays in Rodriguez,

Rizal.
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Theoretical Framework

This particular study is based on the theories Relationship, Hierarchy of Needs,

and Theory of Urbanization.

Relationship Marketing — according to Morgan, is establishing, developing, and

maintaining successful relational exchanges, constitutes a major shift in marketing

theory and practice. After conceptualizing relationship marketing and its ten forms, the

authors theorize that successful relationship marketing requires relationship

commitment and trust. Relationship Marketing needs to have a high level of trust, a

long-term relationship orientation, intensive information exchange, and a high level of

mutual cooperation.

A prime aim of relationship marketing can be said to that of locking in high-value

customers through identifying customers, serving their needs sensibly, using

customer information tactically and overcoming customer dissatisfaction. In

relationship marketing, managing customer expectations and their experience of

dealing with a company focuses as much on the emotional experience as on rational

customer satisfaction and encourages feedback of information.

One of the aims of relationship marketing is to create customer satisfaction.

Cayabat (2016) argue that the concept of customer satisfaction has gained

importance in the last decade. It is argued that customer satisfaction leads to

customer loyalty and loyalty in turn leads to more profitability, increase market share

and growth for the business. Customer satisfaction increases sales of the company,

moreover satisfied customers are fewer prices sensitive and they are willing to pay a
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higher price as compared to the competitors. In addition, a company’s future human

capital performance is also affected by customer satisfaction.

Maslow’s Theory of Human Motivation identified five ascending levels of goal

attainment. The resulting hierarchy he then published went as follows: Physiological

Needs; Safety Needs; Love and Belonging Needs; Esteem Needs; and lastly, Self-

Actualization Needs. Maslow argued that these levels explained humans’ needs and

motivators; once our base physiological needs — like air, food, shelter, and sleep —

are fulfilled, we move on to the next level in the pyramid chart until we eventually

reach Self-Actualization.

Customers can be linked on the 2 layers of the hierarchy, in the physiological

and safety.

Physiological needs are the physical requirements for human survival, such as

food, water, clothing, shelter, etc. If these requirements are not met, the human body

cannot function properly and will ultimately fail. Physiological needs are thought to be

the most important; they should be met first. This is the first and basic need on the

hierarchy of needs. Without them, the other needs cannot follow up. Needs are the

basic reason or the minimum requirements consumers look in a product or service. It

must be addressed first or else satisfaction of motivation wants becomes irrelevant.

Once a person's physiological needs are relatively satisfied, their safety needs

take precedence and dominate behavior. People have a basic need for security, such

as the need to feel safe and free from harm. In the absence of economic safety – due

to economic crisis and lack of work opportunities – these safety needs manifest
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themselves in ways such as a preference for job security, grievance procedures for

protecting the individual from unilateral authority, savings accounts, insurance

policies, disability accommodations, etc. Safety and security needs are about keeping

us safe from harm. These include shelter job security, health, and safe environments.

If a person does not feel safe in an environment, they will seek to find safety before

they attempt to meet any higher level of survival, but the need for safety is not as

important as basic physiological needs.

Theory of Urbanization implies agglomeration of people and firms, which

reduces production costs. Convenience stores is included in the firms that expands

their reach towards rural areas and make their products accessible. This also gives

chance for firms to share a network of information. More numbers of producers and

suppliers also lowers costs and increases variety through competition and

specialization. The presence of these signifies development in the communities where

the firms are located. Urbanization also gives way for entrepreneurs to make more

profits as customer’s population density increases in line with the increasing number

of firms.
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Conceptual Framework

INPUT PROCESS OUTPUT

Profile of the Profile of respondents
Respondents – determined
Customers and Nearby
Residents
Level of accessibility,
convenience, and
 Age satisfaction of
 Sex expansion of
 Frequency of Going convenience stores
 Intention Presentation, analysis, assessed
 Commonly Bought and interpretation of
Items data gathered through
 Amount Spent questionnaires Effects identified

Aspects of Improved access to

establishment of products and services,
convenience stores wide variety of products,
convenient services,
 Accessibility and high overall
 Convenience satisfaction of
 Satisfaction customers throughout
Rodriguez

This framework illustrates the processes that this paper went through. The input-

process-output flow was used by the proponent to present the conceptual research

model.

The input comprises the profile of respondent-customers and residence their

opinions toward the establishment of convenience stores in their barangays. The

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profile of the respondent-customer and residence was determined in terms of age,

sex, frequency of going, intention, commonly bought items, and amount spent. While

the effect of establishment of convenience stores in barangays were assessed as to

the three aspects, namely, accessibility, convenience, and satisfaction.

The data gathered through the questionnaire were analyzed and interpreted.

The study is expected to determine the profile of respondents, assess the effects of

establishment of convenience stores in barangays in Rodriguez Rizal, and determine

the effects shown.

The continuous flow of the arrow from the input to the process, and from the

process to the output boxes represents the relation of the variables from one another.

The output of the study is dependent on the process taken, while the course of action

has been developed based from the input of the study.

Statement of the Problem

The researchers aimed to determine the effect of expansion of convenience

stores in barangays in Rodriguez Rizal. Additionally, it seeks to answer the following

questions:

1. What is the profile of the respondent in terms of the following aspects?

1.1 Age

1.2 Sex

1.3 Frequency of Going

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1.4 Intention

1.5 Commonly Bought Items

1.6 Amount Spent

2. How do the respondents assess the effect of expansion of convenience stores in

barangays in Rodriguez Rizal in terms of the following aspects?

2.1 Accessibility

2.2 Convenience

2.3 Satisfaction

3. Is there a significant difference on the assessment of the effect of expansion of

convenience stores in barangays in Rodriguez Rizal when respondents are

grouped according to their profile?

Hypothesis

There is significant difference on the assessment of the effect of the expansion

of convenience stores in barangays in Rodriguez Rizal when respondents are

grouped according to their profile.

Scope and Limitation

The study aims to assess the effects of the expansion of convenience stores in

Rodriguez, Rizal in terms of accessibility, affordability and satisfaction.

This includes access to present convenience stores in the area, how frequent

the customers go the convenience store and their sense of safety whenever going or
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buying, needs and wants of the customers, variety of items offered and services

provided by the stores, affordability of prices of goods and services, and satisfaction

of customers.

The respondents are 400 customers from barangays in Rodriguez, Rizal where

nearby convenience stores can be located.

The population are residents residing in Rodriguez, Rizal.

The convenience stores included will only be the brands stated in our

background.

The period of the study occurred from August to September of year 2018.

Significance of the Study

Businessmen are expected to benefit from this study through knowing the

effects of expansion of convenience stores in rural areas such as Rodriguez, Rizal.

This will hint the preference of the customers which the researchers believe to be

crucial in pursuing a business venture and in knowing what to address most when

attending the customers’ needs and wants.

This study can also assist students that will seek factors to make a viable

business within rural areas.

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Definition of Terms

Accessibility - The extent to which a consumer or user can obtain a good or service

at the time it is needed and the ease with which a facility or location can be reached

from other locations.

Business Expansion - A business strategy in which growth is obtained by

increasing the number of stores in which customers can buy a company's products

and services.

Business motivation - Comes from the enjoyment of the work itself and/or from the

desire to achieve certain goals

Channels of distribution - Are the different paths that goods pass through in

moving from the producer to the consumer

Consumer - The person who uses the product or services

Consumerism - The belief that the purchase of material goods and professional

services will result in psychological happiness, personal fulfillment and social regard.

Continuity marketing - is a method of providing goods or services to consumers

that relies on direct marketing and continues into perpetuity

Convenience - The state of being able to proceed with something with little effort or

difficulty.
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Convenience store - Retail firm that located in residential neighborhoods because it

appeals to consumers who want to shop when other stores are closed; Small retail

business that stocks a range of everyday items such as groceries, snack foods,

confectionery, soft drinks, tobacco products, over-the-counter drugs, toiletries,

newspapers, and magazines.

Customer Expectations - The total perceived benefits a customer expects from a

company's product or service Customer Service

Customer - The person who buys or rents products or services

Demand - Is the quantity of a good or service that consumers and businesses are

willing and able to buy at a given price in a given time period.

Descriptive research - Involves the description, recording, analysis, and

interpretation of the present nature, composition or processes of phenomena

Effect – A change that is a result or consequence of an action or other cause.

Hedonic needs - needs for luxury purposes, which are desirable objects that allow

the consumer to feel pleasure, fun, and enjoyment from buying the product.

Needs - Are the basic reason or the minimum requirements consumers look in a

product or service.

Physiological needs - Are the physical requirements for human survival, such as

food, water, clothing, shelter, etc.

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Place utility - Is when making a product available in a location convenient for

customers.

Price - Is an integral part of the retail marketing mix. It is the factor, which is the

source of revenue for the retailer. It also communicates the image of the retail store

to the customers.

Relationship Marketing - Establishing, developing, and maintaining successful

relational exchanges with a customer.

Retail marketing - Include all function or activities involved in selling (or renting)

goods and services to end-users, including households, individual s, and others who

are purchasing goods and services for final consumptions

Retailer - Is an entity that sells goods such as clothing, groceries, or cars directly to

consumers through various distribution channels with the goal of earning a profit

Safety - Is a concept that is concerned with achieving a positive state of well-being

among people within social and physical environments.

Satisfaction - Fulfillment of one's wishes, expectations, or needs, or the pleasure

Supply - Is a fundamental economic concept that describes the total amount of a

specific good or service that is available to consumers.

Target Market - A particular group of consumers at which a product or service is

aimed.
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Time utility - Is when making a product available when consumers want to purchase

it.

Trade - Generally includes any activity carried on for the production of income from

selling goods or performing services.

Utilitarian needs - Needs purchased for their practical uses and are based on the

consumer's needs.

Urbanization - The process of making an area more urban.

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Chapter 2

REVIEW OF RELATED LITERATURE AND STUDIES

The relevant materials on the subject of the study are presented in this chapter.

Both local and foreign sources were obtained that made this undertaking properly

directed and strengthened. The synopsis of the gathered data will also be provided in

the later part of this chapter.

Foreign Literature

(ACCESSIBILITY)
Place utility is when making a product available in a location convenient for

customers, the flow of goods through different distribution channels from producer to

consumer from the place of abundant to the place or where they are needed creates

place utility according to (Whalley A. 2010). Location decisions are important to retail

outlets because it affects the demand for their products/services (Co. H 2017). The

location must be easily accessible and provide the customer with a feeling of safety

(Gordon K. 2017). Small outlets located near residential areas offer much

convenience. The entire process of creating or procuring a product or serve needed

by the consumer and ensuring that it reaches the place where a consumer can buy it,

is integral to the existence of any retail organization. The first factor to be taken into

consideration is the demand for the product and the target market. Who is this product

meant for and what the value proposition for the consumer is. Retailers are keenly
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interested in the size of the population, its geographical distribution, density, mobility

trends, age distribution and social ethnic and religious structure. Retail firms, will have

to continuously measure the changes - qualitative as well as quantitative - that are

taking place in the population structure. To avoid negative consequences brought on

by active consumer groups, a retailer must communicate with consumers, anticipate

problems, respond to complaints and make sure that the firm operates properly

(Kalyanaraman, Sivasundaram, Jaffer Subramaniam 2013).

New data analytics tools and techniques have emerged to help businesses

understand existing customers and locate potentially new customers (McHaney R.

2016). Number of good substitutes. Demand is elastic for a product with many good

substitutes (Fajardo F. R. 2011). Companies may make products, but customers do

not buy products. Customers buy solutions to their problems. They buy benefits or,

better said, they buy the expectation of benefits (Buttle F. 2009). People will not focus

on higher level needs until their basic needs have been fulfilled. Human needs may

be physical in nature such as the need for foods and water. People have a basic need

for security, such as the need to feel safe and free from harm (McCarthy B.

2016).

(CONVENIENCE)

Time utility is when making a product available when consumers want to

purchase it according to (Whalley A. 2010). An individual is free to act in isolation,

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and he is free to engage in acts of exchange with other individuals whenever he and

some other individuals both perceive the opportunity of mutual benefit through trade

(Kirzner I. 2007). Consumers decide upon purchases on the basis of judgements

about the values offered by suppliers (McGraw-Hill Education 2012). Consumers are

motivated by utilitarian and hedonic needs typically shop in a more deliberate and

efficient manner (Weitz B., Grewal D. 2012). If the prices are too high, only a few

buyers purchase and if the prices are low, several buyers purchase. (Joshi M. 2012).

Convenience products are relatively inexpensive. Frequently purchased items for

which buyers exert only minimal purchasing efforts. The buyer spend little time

planning the purchase or comparing available brands or sellers. Even a buyer who

prefers a specific brand will readily choose a substitute if the preferred is not

conveniently available (Ferrel O.C., Niininen O., Lukas B., Schembri S., Pride W.

2014). Many consumers seek benefits that small stores often provide better than large

stores. For instance, some people seek high levels of shopping convenience. The

success of any retail operation is largely based on the retailer’s ability to provide the

right goods to the consumer, at the right place, at the right time and at the right price.

Price is an integral part of the retail marketing mix. It is the factor, which is the source

of revenue for the retailer. The price of the merchandise also communicates the

image of the retail store to the customers. Various factors like the target market; store

policies, competition and the economic conditions need to be taken into consideration

while arriving at the price of a product. The stores policies and the images to be

created also influence the pricing of a product. Retailers who want to

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create a prestige image may opt for a higher pricing policy, while the retailer who

wants to penetrate the market, may decide to offer a value for money proposition. A

small store’s highly motivated owner manager and customer-oriented sales staff may

surpass a large store on this important shopping dimension.These entities called

voluntary chains or franchise systems - give members some of the advantages of

large stores, such as specialized management, buying power and a well-known name

(Kalyanaraman, Sivasundaram, Jaffer Subramaniam 2013). Buyers tend to reduce

their purchases as price increases, and tend to increase their purchases whenever

price falls.These are logical reactions to price changes.However, such reactions vary

in accordance with the nature of the products and the particular needs of the buyer.

Price increase in proportion to income.If the price increase has very little effect on the

income or budget of the buyers, demand is inelastic (Fajardo F.R. 2011).

(SATISFACTION)
According to (Fenner B. Hill S. 2010) Consumerism can be understood as the

belief that the purchase of material goods and professional services will result in

psychological happiness, personal fulfilment and social regard.

Customer satisfaction is a pleasurable fulfilment response. Dissatisfaction is an

unpleasurable fulfilment response. The experience, or some part thereof ’component

of the definition suggests that the satisfaction evaluation can be directed at any or all

elements of the customer’s experience. This can include product, service, process
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and any other components of the customer experience according to (Buttle F. 2009).

It agreed that it is normal for people to have needs that are both partly satisfied and at

the same time unsatisfied and that a person‘s behavior is mostly motivated by the

most important needs at a given time (Blascova M. Grazulis V. 2009). In the

developed world, more and more customers seem to want some degree of choice and

variety if not totally bespoke products or services (Macbeth D. 2015). Consumers

decide upon purchases on the basis of judgements about the values offered by

suppliers. Once a product has been bought, customer satisfaction depends upon its

perceived performance compared to the buyer’s expectations. Customer satisfaction

occurs when perceived performance matches or exceeds expectations (McGraw-Hill

Education 2012). Customer satisfaction depends on the product’s perceived

performance relative to a buyer’s expectations. If the product’s performance falls short

of expectations, the customer is dissatisfied. If performance matches expectations,

the customer is satisfied. If performance exceeds expectations, the customer is highly

satisfied or delighted (Kotler P. 2011). Higher customer Satisfaction leads to higher

customer revenue and higher customer costs at the same time, and thus customer

profits remain unaffected. There is obviously a tradeoff and lead to the question of

probability(Yu 2007).And therefore management conclude that surveys have become

a common tool for many companies to learn more about their customers and

ultimately improve their satisfaction with the company and its products (Geller, 2008).
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Local literature
(ACCESSIBILITY)
According to (Go J. 2010), needs are the basic reason or the minimum

requirements consumers look in a product or service. Needs must be addressed first

or else satisfaction of motivation wants becomes irrelevant. When these

products/services address trends in customers’ lifestyles and preferences better that

its substitutes, they can become the top brands in their respective classes.

(CONVENIENCE)
Business organization gains such a competitive advantage when it is able to

offer a greater value or utility than competitor (Salvador S. 2010). . Business

organization gains such a competitive advantage when it is able to offer a wide variety

of products and services, and greater value or utility than competitor and also a low-

priced brand may satisfy a physiological need of a consumer. It is imperative that a

firm understands the costs associated with satisfying needs and wants.

Otherwise, simply satisfying all customer’s needs and wants without dues

consideration to costs will result in a losing operation(Go J. 2010).

(SATISFACTION)
Human wants are unlimited, insatiable, and innumerable. They are infinite and

may only limited by people’s imagination. People are never satisfied. Wants arise one

after another (Payumo C., Ronan J., Maniego N., Camba A. 2014). Customers are not

necessarily motivated to buy a product simply because the products meet their
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basic needs. There must be customer satisfaction and consistent repeat purchases.

The concept of continuity marketing reflects customer loyalty, a reliable way of

evaluating customer’s satisfaction. So in order to satisfy consumers, marketers must

convert needs and wants into product or service features that provide benefits sought

by their consumers. After the needs are satisfied, the challenge is in the satisfaction

of want and expectations, which are the motivating factors for consumers to

purchase. (Go J. 2010).

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