PUREGOLD

1. EXECUTIVE SUMMARY
-Puregold Price Club Inc.
Puregold Price Club, Inc. engages in the business of trading goods such as consumer products,
which include canned goods, house wares, toiletries, dry goods, food products. It operates through the
following retail formats and store brands: Hypermarkets, Supermarkets, Discounters, S & R Membership
Shopping, and Parco Supermarkets. The Hypermarkets retail format known as Puregold Price Club are
located in major commercial centers, which offers food and non-food products. The Supermarkets retail
format operates through Puregold Junior are located in residential areas, which offer a higher proportion of
food to non-food products. The Discounter is a small store format known as Puregold Extra, which offers a
limited number of goods at lower prices. The S & R Membership Shopping store brand is a retailer with a
membership shopping concept that offers imported brand name products. The Parco Supermarkets store
brands are located in residential a community that caters both consumers and resellers. The company was
founded on September 8, 1998 and is headquartered in Manila, Philippines.
2. MARKETING OBJECTIVES (mission)
2.1 Mission
-Our Mission is to Provide Products, Services and Business Opportunities to Every Filipino Family. We
Establish Lasting Relationship with Our Suppliers and Business Partners. We Strive to Promote the
Personal and Professional Development of our Employees. We Commit Profitable Results to the
Stockholders.

2.2 Goals
-“We still have a lot more to go to expand our footprint. We’re not all over the nation yet. Our footprint in
Visayas and Mindanao is relatively nothing compared to our competitors there. Within the Greater Manila Area, we can
say we already have a lot of Puregold stores but when you go to Visayas and Mindanao, that’s where the opportunity
is,” he said.The company plans to end the year with 294 stores across its entire portfolio which includes Puregold, NE
Bodega and Budgetlane Supermarket.

3. MARKETING REVIEW (Situation Analysis)

3.1 Industry Analysis

-Puregold and stock-market analysis
ONE of the best-performing issues on the Philippine Stock Exchange (PSE) in the last two-and-a-half years has been retailer Puregold Price Club Inc.
The company listed on the PSE in the fourth quarter of 2011 and first traded at about P12 to P15 per share.
Since 2011 earnings-per-share growth has been good, rising from P0.77 to P1.43 in 2013. The hard-asset value of the company has increased by more than
double, and sales per share are 35 percent higher than in 2011.
The price went almost continuously higher through 2012, and reached P40 in February 2013. Since then, it has traded between P35 and P45. Puregold is a
large company with a market capitalization (the total share value of the company) of about P100 billion.
Stock-market investors received a rude awakening when, on August 14, the company announced that its net income dropped 6.6 percent to P1.66 billion in
the first half of 2014 from P1.77 billion in the same period last year. The stock price fell 5.95 percent, closing at P39.50. The sell-off continued last Friday, with
the price closing at P36.05, down another 8.73 percent.
We could spend a lot of time in looking through corporate data with fancy spreadsheets to arrive at the conclusion that Puregold’s stock price should really be
P45 per share, or maybe P25 or even P95. But the No. 1 stock-market rule that many “experts” refuse to acknowledge is this: “You cannot fight the tape.” That
means, in spite of all the arguments about corporate value, the price is what it is and you must accept that.
Fundamental stock analysis, or the valuation of stock price against corporate value, is probably just as valuable a tool for market investing as any other,
including examining the entrails of dead chickens under a full moon. However, the biggest mistake that one can make in using this method is not selling when
the fundamentals change. If you bought the stock because earnings were going up, then you must sell when earnings are not growing.
Here is a silly example: You own a restaurant and want to hire a new chef. One candidate has great credentials, including a degree from a top culinary school
and many “Chef of the Year” awards. The new chef’s first night in the kitchen is marked by several customer complaints about the food. Within a week,
business is way down. But how can that be, you ask yourself as you recheck the chef’s impressive resumé. Regardless of what happened in the past, the fact is,
your new chef’s food is terrible now. Do you assume that this is a glitch and wait for an improvement, or do you terminate your relationship with the chef
today?
I do not use any fundamental analysis for the stock market. I examine and only use price movement or technical analysis.
In my weekly PSE Strategy Guide on July 11, this is what I said about Puregold when the price was P43.70 and the cut-loss price was P41: “Must hold current
level, or trend will turn negative. Speculative buying opportunity for move to P48.” A week later I wrote: “Trend is negative for move to P40. No buying
opportunity until trend turns to the upside and is confirmed” when Puregold was P41.50.
Again, on July 25, with Puregold at P42.80: “Holding at P41.50 level, but volume is very low. Speculative buying opportunity for move to P45.”
On August 1 the price went down to P41.40, just above the cut-loss. “Holding at P41.50 level, but volume is very low. Cannot seem to build any upside
momentum. No buying opportunity until break/hold of P43.50 on higher volume.” After a week of trading, the price was still at P41.40, and I said again:
“Holding at P41.50 level, but volume is still low. No buying opportunity until break/hold of P43.50 on higher volume.”
“Speculative buying opportunity” means just that; there is a higher degree of risk than most investors might want to take. But under no circumstances do you
want to let the price go below the cut-loss support area, in this case at P41.
The advantage of technical analysis is that you use unambiguous numbers in making your buy-and-sell decisions. This requires less interpretation and much
less thinking about what to do next.
3.2 SWOT Analysis
STRENGTHS

 Customer Loyalty (Pure Gold price club Inc.)

When given a choice, customers are loyal to Pure Gold price club Inc. Instead of targeting all customers, Pure
Gold price club inc. only needs to target new customers in order to grow their business

 Brand Name (Pure Gold price club Inc.)

A strong brand name is a major strength of Pure Gold price club inc.. This gives Pure Gold price club inc. the
ability to charge higher prices for their products because consumers place additional value in the brand… … "Brand Name (Pure Gold
Price Club Inc.)" has a significant impact, so an analyst should put more weight into it. "Brand Name (Pure Gold Price Club Inc.)" will
have a long-term positive impact on the this entity, which adds to its value. This statements will have a short-term positive impact on
this entity, which adds to its value. This qualitative factor will lead to a decrease in costs. This statement will lead to an increase in
profits for this entity. "Brand Name (Pure Gold Price Club Inc.)" is a difficult qualitative factor to defend, so competing institutions will
have an easy time overcoming it.

 Technology (Pure Gold price club Inc.)

Superior technology allows Pure Gold price club inc. to better meet the needs of their customers in ways that
competitors can’t imitate… … "Technology (Pure Gold Price Club Inc.)" has a significant impact, so an analyst should put more weight
into it. This statements will have a short-term positive impact on this entity, which adds to its value. This qualitative factor will lead to a
decrease in costs. This statement will lead to an increase in profits for this entity.
WEAKNESSES

 Customer Service (Pure Gold price club Inc.)

Weak customer service hurts Pure Gold price club inc.’s reputation and causes customers to flee to competitors,
who are more respondent… … "Customer Service (Pure Gold Price Club Inc.)" has a significant impact, so an analyst should put more
weight into it. "Customer Service (Pure Gold Price Club Inc.)" will have a long-term negative impact on this entity, which subtracts from
the entity's value. This qualitative factor will lead to an increase in costs.

OPPORTUNITIES

 New Products (Pure Gold price club Inc.)

New products can help Pure Gold price club inc. to expand their business and diversity their customer base… …
This statements will have a short-term positive impact on this entity, which adds to its value. This qualitative factor will lead to a
decrease in costs. This statement will lead to an increase in profits for this entity.

 New Markets (Pure Gold price club Inc.)

New markets allow Pure Gold price club inc. to expand their business and diversify their portfolio of products
and services "New Markets (Pure Gold Price Club Inc.)" has a significant impact, so an analyst should put more weight into it. "New
Markets (Pure Gold Price Club Inc.)" will have a long-term positive impact on the this entity, which adds to its value. This statements will
have a short-term positive impact on this entity, which adds to its value. This qualitative factor will lead to a decrease in costs. This
statement will lead to an increase in profits for this entity. "New Markets (Pure Gold Price Club Inc.)" is a difficult qualitative factor to
defend, so competing institutions will have an easy time overcoming it.

 New Services (Pure Gold price club Inc.)

New services help Pure Gold price club inc. to better meet their customer’s needs. These services can
expand Pure Gold price club inc.’s business and diversify their customer base… … "New Services (Pure Gold Price Club Inc.)" has a
significant impact, so an analyst should put more weight into it. "New Services (Pure Gold Price Club Inc.)" will have a long-term
positive impact on the this entity, which adds to its value. This statements will have a short-term positive impact on this entity, which
adds to its value. This qualitative factor will lead to a decrease in costs. This statement will lead to an increase in profits for this entity.
THREATS

 Volatile Costs (Pure Gold price club Inc.)

Volatile costs mean Pure Gold price club inc. has to plan for scenarios where costs skyrocket. Cautious planning
leads to development delays that can negatively affect Pure Gold price club inc.… … "Volatile Costs (Pure Gold Price Club Inc.)" has
a significant impact, so an analyst should put more weight into it. "Volatile Costs (Pure Gold Price Club Inc.)" will have a long-term
negative impact on this entity, which subtracts from the entity's value. This statements will have a short-term negative impact on this
entity, which subtracts from its value. This qualitative factor will lead to an increase in costs. This statement will lead to a decrease in
profits.

 Change in Tastes (Pure Gold price club Inc.)

Consumers can change their tastes very quickly. Pure Gold price club inc. depends on knowing which goods
and services consumers want… … "Change In Tastes (Pure Gold Price Club Inc.)" has a significant impact, so an analyst should put
more weight into it. "Change In Tastes (Pure Gold Price Club Inc.)" will have a long-term negative impact on this entity, which subtracts
from the entity's value. This statements will have a short-term negative impact on this entity, which subtracts from its value. This
qualitative factor will lead to an increase in costs. This statement will lead to a decrease in profits. "Change In Tastes (Pure Gold Price
Club Inc.)" is an easy qualitative factor to overcome, so the investment will not have to spend much time trying to overcome this issue.

4. Marketing Strategy

PUREGOLD’S STRATEGY
A review of one of the Nation’s ingenious business tactics.

Being one of the country’s biggest supermarket chains, Puregold certainly knows how to take advantage of the market. As
what I’ve read in “The PHILIPPINE STAR” business section, B-12, dated May 10 2012, the company is using the
common sari-sari store as a leverage. 800,000 is the estimated number of sari-sari stores present in the country, creating
the lion’s share in the country’s retail industry. As I see it, this is one of the best strategy there is, creating an alliance with
the small players instead of trying to eliminate them. Here in Legazpi City, small sari-sari store owners are fuming by the
entry of the LCC & JY chains of convenient stores. They see it as a grave threat to their financial existence, as this
convenient stores offer a wide array of cheaper products. Local consumers would rather purchase their groceries and
supplies in these convenient stores instead of the sari-sari ones. This kind of business strategy is financially worth doing
but morally unstable as this creates bad impressions from most small-medium retail entrepreneurs. It’s a double edged
sword; it signifies a growth in the local economy but creates tension in the local retail society.
Going back to the topic at hand, Puregold’s strategy of aligning itself with the sari-sari store owners, establishes a strong
financial certainty. It already has a program called “Aling Puring”, with this, sari-sari store owners have access to
Puregold’s huge product inventory-most probably at a discount. Now, with this, small entrepreneurs would source their
goods in Puregold, eliminating in one way or another, Puregold’s competition.Although this strategy may apply to most
areas and in some others it may not (of course due to the geographical location), it still creates a great leverage as a
whole.This strategy creates the, as I call it, “Spring of Wealth”… where revenue keeps flowing, just like water on a
spring. I have to hand it to them; their marketing department sure knows how to do their work!