9

2. Uses of the Services

In the Philippines, businesses are mandated to

have their audited financial statements as a

requirement to the Bureau of Internal Revenue and

filing of their income tax return. Also, audited

financial statements are needed in securing a bank

loan. Therefore, Dinah & Fred Auditing Services shall

conveniently offer to its clients auditing services as

to cater their needs.

3. Major Users of the service

The major users of this service will be Small-

Medium Enterprises (SMEs) located in the City of San

Fernando La Union. According to lawphil.net, SMEs

means any business activity or enterprise engaged in

industry, agri-business and/or services, whether

single proprietorship, cooperative, partnership or

corporation whose total assets, inclusive of those

arising from loans but exclusive of the land on which

the particular business entity’s office, plant and

equipment are situated, must have value by asset size

and number of employees. From the Local Economic and

 10

Business Development Office in the City of San

Fernando, small business shall have an asset size of

Php 100,000- Php 999,000 or number of employees from

1-10 while medium enterprises have an asset size of

Php1,000,000-Php4,999,000 or 11-50 number of

employees.

4. Geographical Areas of Dispersion

One of the vital parts a business has to consider

is its proper location. There were several factors

taken into consideration in the selection of the

proper location for Dinah & Fred Auditing services.

First, since the target clients of the business are

Small-Medium Enterprises of San Fernando, La Union,

accessibility is considered in the city located at 2nd

floor, room 301 of DNCP Building, above Villarica

Pawnshop, City of San Fernando.

B. Demand Analysis

The researchers gathered the historical

population of Small-Medium Enterprises in the City of

San Fernando, La Union’s Local Economic and Business

Development Office shown in Appendix C.1.

 11

Using the Slovin’s formula, a total number of 355

respondents that represented the population of Small-

Medium Enterprises was derived. Questionnaires were

prepared and floated to these SME-respondents. (See

Appendix C.3.)

The average consumption rate was derived from the

number of respondents who answered how often they

avail auditing services which is annually equivalent

to one (1).

The computed historical demand in table 1 shall

be used in the determination of the best applicable

method for the demand projections. (See Appendix C.4.)

Table 1

HISTORICAL DEMAND OF SMALL-MEDIUM ENTERPRISES

Average
Year Historical Annual Consumption Historical
Population Consumption Rate Demand

2012 2,302 1 57.18% 1,316

2013 2,348 1 57.18% 1,343
2014 2,536 1 57.18% 1,450
2015 2,770 1 57.18% 1,584
2016 3,192 1 57.18% 1,825
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Table 2 shows the projected demand of Dinah &

Fred Auditing Services using the Statistical Parabolic

Method because it has the lowest Standard Deviation.

(See Appendix C.7.)

Table 2

PROJECTED DEMAND OF DINAH & FRED AUDITING SERVICES

Year Projected Demand

2018 3,364
2019 3,912
2020 4,526
2021 5,204
2022 5,948

C. Supply Analysis

At present, Dinah & Fred Auditing Services has 8

direct competitors in the City of San Fernando, La Union.

Table 3 shows list of auditing firms.

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Table 3

LIST OF AUDITING FIRMS OF SAN FERNANDO, LA UNION

Name of Competitor Address

Deleña, Gil Gen. Luna St., San Fernando

City, La Union
Del Rosario, Felix Carlatan, San Fernando City, La

Union
Galvan, Nellie San Fernando City, La Union
Licup, Erlindo Catbangen, San Fernando City,

La Union
Licup, Nazareno Catbangen, San Fernando City,

La Union
Purugganan, Jocelyn Rizal Avenue, San Fernando

City, La Union
Reyes, Rosabel Ilocanos Sur, San Fernando

City, La Union
Viloria-Cacas, Tricia Poro, San Fernando City, La

Union

Source: City of San Fernando, La Union Bureau of Internal

Revenue
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Table 4 shows the historical supply of auditing

services by the competitors of the proposed business.

The annual supply is based on the monthly transactions

by direct competitors and which sum for each year was

derived through an interview being conducted. (See

Appendix D.1.)

Table 4

HISTORICAL SUPPLY OF COMPETITORS (CLIENTS)

Year Historical Supply

2012 344
2013 360
2014 390
2015 434
2016 448

Table 5 shows the projected supply of Dinah &

Fred Auditing Services using the Statistical Parabolic

Method because it has the lowest Standard Deviation.

(See Appendix D.2.)

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Table 5

TOTAL PROJECTED SUPPLY OF DINAH & FRED FOR AUDITING

SERVICES

Year Projected Supply

2018 589
2019 626
2020 665
2021 705
2022 747

D. Demand-Supply Analysis

There is an unsatisfied demand as shown in Table 7.

Only 54 clients for 2018 or equivalent of 1.95% of the

unsatisfied demand shall be catered by Dinah & Fred

Auditing Services. Table 6 shows the market share of

the proposed business for the next years. (See

Appendix E.)

Table 6

MARKET SHARE

Market
Projected Projected Unsatisfied Share
Year
Demand Supply Demand
% Clients
2018 3,364 589 2,775 1.95% 54
2019 3,912 626 3,286 1.73% 57
2020 4,526 665 3,861 1.55% 60
2021 5,204 705 4,499 1.40% 63
2022 5,948 747 5,201 1.27% 66
 16

E. Price Study

The competitors located in the City of San Fernando

La Union offer a competitive market price.

Table 7 shows the price list of competitors. Five

out of eight (Deleña, Gil, Del Rosario, Felix, Licup,

Nazareno, Viloria, Tricia, and Licup, Erlindo) were

not able to disclosed such information because it was

deemed confidential.

Table 7

PRICE LIST
Competitors Price per Auditing fee (Php)
Galvan, Nellie 40,000-50,000
Purugganan, Jocelyn 40,000-50,000
Reyes, Rosabel 40,000-50,000

Table 8

PRICE OF DINAH & FRED AUDITING SERVICES

Service Fixed Price (Php)
Audit of Financial
Statements and Issuance 35,000
of auditor`s note

The researchers used competitive-based pricing.

The price has an inclusion of audited financial

statements and issuance of auditor’s note. A rate of

 17

Php 35,000 for new clients and a 10% discount price

that is equivalent to Php 31, 500 shall be given to

repeating clients.

F. Factors Affecting the Market

1. Competitors

The considered competitors of Dinah & Fred

auditing services are the suppliers of the same said

service in the City of San Fernando, La Union. They

serve as competitors because they provide the same

service to the similar target market. The

competitors have an edge to the proposed business

because they have already been established and as a

result, it may affect the market share.

2. Population

Due to the growing population of Small Medium

Enterprises, there will be an increase to the number

of businesses needing auditing services. Thus, it

may affect the demand of the business.

3. Increase in consumption patterns

As population of Small Medium Enterprises rises

each year, the demand for the service will increase

 18

as the number of clients increase. Therefore, there

is also a need of increase in manpower to cater the

unsatisfied demand of the customers.

4. Economic Condition

A country with strong economy has an effect on

the auditing industry. Businesses are affected when

it goes down, hence, decreasing the number of

clients.

G. Marketing Program

1. Service

Dinah & Fred Auditing services will be offering

quality and reliable auditing services to Small-

Medium Enterprises in the City of San Fernando, La

Union with a price lower than the competitors; a

discount of 10% is given to repeat clients. Both

partners are Certified Public Accountants and

serving auditing service will supplement the needs

of clients to assure them that their businesses are

running in accordance with the information they are

receiving.
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2. Price

The researchers will be using competitive-based

pricing as to decide a reasonable price for the

auditing service. Gaining knowledge from

competitor’s pricing is a way.

3. Place

Dinah & Fred Auditing Services will distribute

the service to Small-Medium Enterprises. The service

will be conducted in the office of the proposed

business.

4. Promotional Strategies

The proposed business will establish its name

through word of mouth and letters informing SMEs

about Dinah & Fred Auditing Services. (See Appendix

B for the promotional letter.)