CHAPTER II

Market Study

This chapter discusses the market study of Dancalan Cocoa Farm and Processing. This

study includes the demand, supply, demand-supply gap analysis, market share analysis and

marketing strategies.

General Objective

This market study aims to determine the marketability of the products to be produced in

Dancalan Cocoa Farm and Processing in Guinayangan, Quezon.

Specific Objective

It also seeks to determine the following specific objectives:

1. To identify the possible demand and supply of the cocoa powder and tablea.

2. To identify the factors that could affect the demand and supply of the products.

3. To know the nature and extent of competition and also the strength and

weaknesses of the competitors.

4. To develop an appropriate marketing strategies for the service.

A. Demand

People seek utility maximization, which is the satisfaction they derive from using a

service for a given period of time while paying the lowest price. The demand for a given service

is determined by consumer purchasing behaviour, which involves consumer preferences,

intentions, and decisions.

A.1. Past Demand

Source: Department of Agriculture

Demand (mt)
12.000

11.000
11.087
10.000
10.116
9.000

8.000
8.266 8.204
7.983
7.000 7.708

6.000
2013 2014 2015 2016 2017 2018

Figure 2.1 Historical Demands of Cacao Products in Quezon

The past demand of this study was based on demand recorded by the Department of

Agriculture from 2013 to 2018. The figure shows that there is a 7.23% increase in demand of

cacao products in 2014 compared to the demand in 2013 but, it decreases by 3.54% in the

following year 2015. From 2015, the demand of cacao products for years 2016, 2017, and 2018

increased by 2.76%, 23.31%, 9.60%, respectively. The rapid increase in demand of cacao

products for the last two years was because of the introduction of cacao in other uses such as

cosmetics, skin care, and hair care products.

Year Consumption (MT) % Increase/Decrease

2013 7.708 -
2014 8.266 7.23
2015 7.983 -3.54
2016 8.204 2.69
2017 10.116 23.31
2018 11.087 9.60

Table 2.1 Historical Demand of Cacao Products in Quezon

 The table shows the past demand of cacao products recorded by the Department of

Agriculture from 2013 to 2018 and the percentage of increase or decrease of demand every year.

A.2. Projected Demand

Projection of demand is a technique for estimation of probable demand for a service in the

future. It is based on the analysis of past demand for the service in the present market condition.

Forecasted Demand (mt)

16.000

15.000
15.046
14.000 14.399
13.000 13.751
13.103
12.000 12.456
11.808
11.000
11.161
10.000
2019.000 2020.000 2021.000 2022.000 2023.000 2024.000 2025.000

Figure 2.2 Forecasted Demands of Cacao Products in Quezon

Figure 2.2 illustrates the projected demand for a cacao product in Guinayangan, Quezon

using linear trend forecasting. Linear trend forecasting is used to impose a line of best fit to time

series historical data (Harvey, 1989; McGuigan et al., 2011). It is a simplistic forecasting

technique that can be used to predict demand (McGuigan et al., 2011), and is an example of a

time series forecasting model. The projected demand for cacao products was computed based on the

past demand for the product. It is evident that the demand for the cacao products is increasing.

YEAR DEMAND (MT) % Increase/Decrease

2019 11.16 1.00
2020 11.81 5.50
2021 12.46 5.22
2022 13.10 4.89
 2023 13.75 4.73
2024 14.40 4.51
2025 15.05 4.32

Table 2.2 Forecasted Demands of Cacao Products in Quezon

The table shows the projected demand of cacao products using the recorded demand by

the Department of Agriculture from 2013 to 2018 and the percentage of increase or decrease of

demand every year.

A.3. Market Segmentation

Market segmentation is the process of dividing a market of potential customers into

groups, or segments, based on different characteristics. The segments created are composed of

consumers who will respond similarly to marketing strategies and who share traits such as

similar interests, needs, or locations (TrackMaven, 2005).

The market segments of Dancalan Cocoa Farm and Processing includes:

1. The market being supported by Provincial Agriculturist of Quezon.

2. Local bakeshop and restaurants in Quezon Province.

Secondary Priorities for targeting includes:

Group Markets – group of potential market/customers to which a company wants to sell

its services.

1. Public markets could be a market as the household members often bought the

necessary needs in public market. Also, public market is the first place to go when

looking for such products.

2. Schools could also be the target market as they offer food services for the students

inside the campus to secure the safety of the foods being offered for the students.
 Also, food services in schools are required to prepare healthy foods in which such

products can be used.

3. Pasalubong Centers could be a target market as their offer town made products to

the tourists and residents.

4. Terminals and Bus Stop Stores could be a target market as the demand of tourist is

high through passengers from different parts of the country to stop and rests.

1. Negosyo Centers
a. Lucena City
b. Gumaca
c. Lopez
2. Grocery Stores
a. Victorina Store
b. Puring Rosita Grocery
c. Bany Grocery Mart
3. Restaurants in Quezon
a. Lolo Ompo
b. Rospan Hotel and Resto
c. Daph’s
d. Zeny’s
e. Cotijo de Palsabangon
5. School Canteens
a. PUP
c. Jerusalem School
d. Guinayangan National High School
7. Pasalubong Center
8. Public Markets

Table 2.3 Secondary Priority of Market for Cacao Products in Quezon

B. Supply

Supply is a fundamental economic concept that describes the total amount of a specific

good or service that is available to consumers. This relates closely to the demand for a good
 or service at a specific price; all else being equal, the supply provided by producers will rise

if the price rises because all firms look to maximize profits.

B.1. Past Supply

Supply (mt)
10.000
9.000
8.000 8.823

7.000 7.882
7.412 7.444 7.485
6.000
5.000
4.000
4.438
3.000
2.000
2013 2014 2015 2016 2017 2018

Figure 2.3 Historical Supply of Cacao Products in Quezon

Figure 2.3 illustrates the historical supply of cacao products in Quezon for the last six

years. It evidently shows that the supply of cacao products in Quezon in the year 2014 increases

by 19.03% from the production in 2013. However, the supply drops by 49.30% in the following

year. The cause of sudden decrease in the supply was the natural calamities like typhoon that hits

the Quezon Province from 2014 to 2015. This greatly affects the cacao farms in the Quezon

which leads to lower amount of harvests of cacao beans. In 2016, the supply increases by

67.73% and so as to the following years. The increase of cacao production in 2017 and 2018

were 0.55% and 5.30%, respectively.

Year Total Supply (MT) % Increase/Decrease

2013 7.412 -
2014 8.823 19.03
2015 4.438 -49.30
 2016 7.444 67.73
2017 7.485 0.55
2018 7.882 5.30

Table 2.4 Historical Supply of Cacao Products in Quezon

The table shows the supply of cacao products in Quezon. The data was from the records

of the Department of Agriculture of production of cacao in the Quezon for the last five years.

B.2. Projected Supply

Projection of supply is a technique for estimation of probable supply for a service in the

future. It is based on the analysis of past supply for the service in the present market condition.

Forecasted Supply (MT)

7.650
7.600
7.550
7.500
7.450
7.400
7.350
7.300
7.250
2019 2020 2021 2022 2023 2024 2025

Figure 2.4 Forecasted Supply of Cacao Products in Quezon

Figure 2.4 illustrates the projected supply for a cacao product in Quezon using linear trend

forecasting. Linear trend forecasting is used to impose a line of best fit to time series historical

data (Harvey, 1989; McGuigan et al., 2011). It is a simplistic forecasting technique that can be

used to predict demand (McGuigan et al., 2011), and is an example of a time series forecasting

model. The projected demand supply for cacao products was computed based on the past supply for

the product. It is evident that the supply for the cacao products is increasing.
 YEAR DEMAND (MT) % Increase/Decrease
2019 7.38 -6.37
2020 7.42 0.54
2021 7.46 0.54
2022 7.50 0.54
2023 7.53 0.40
2024 7.57 0.53
2025 7.61 0.53

Table 2.5 Forecasted Supply of Cacao Products in Quezon

The table shows the projected supply of cacao products using the recorded supply by the

Department of Agriculture from 2013 to 2018 and the percentage of increase or decrease of

demand every year.

B.3. Competitors Analysis

The competitors are the businesses which offer the same product but vary in cost, quality,

appearance and availability of the products.

Province Processor Product

Cavite Delfa’s Food Products Tablea
Alfonso Tablea Producer’s Cooperative Tablea
4 Master Tablea Tablea
D. L. Polong Enterprise Tablea
Delfa’s Food Products Tablea
Jun’s Natures Vegetarian Foods Center Cocoa
Batangas Green Options Agricultural & Environmental Business Tablea
Center
Sandoval Chocolate (Rhese&Dhel Gen. Mdse.) Tablea, Cocoa
JO-EDS Homemade Tabliya Tablea
Jesu & Keannus Native Chocolate Tabliya Tablea
Café Pure Cacao Chocolate Tablea
 Napeñas Chocolates Tablea
Melissa's Chocolate Tablea
Jose Recinto Tablea
Fely Gadil Tablea

Table 2.6 Competitors of Cacao Production

In CALABARZON region, there are many prevailing producers of tablea and cocoa

powder such as the list in Table 2.6. All the producer of cocoa products in the region will serve

as the competitor of Dancalan Cocoa Farm and Processing. The market shares of theses

businesses’ are already established and has been patronizing by the public for a long time. But

Dancalan Cocoa Farm and Processing will strive hard to enter the market place by introducing a

quality tablea and cocoa powder.

C. Demand-Supply Gap Analysis

To know the volume of the unsatisfied demand of the cacao products, the demand and supply

gap analysis was applied. Using the projected industrial demand and supply from the year 2019

up to 2025, the researcher was able to compute of the unsatisfied demand or the lack of supply of

the cookie-goods. The demand represents the market of cacao products in Quezon.
 Demand-Supply Gap
16.00
14.00
12.00
10.00
8.00
6.00
4.00
2.00
0.00
2019 2020 2021 2022 2023 2024 2025

Demand Supply Unsatisfied Demand

Figure 2.5 Demand-Supply Gap of Cacao Products in Quezon

The figure shows the unsatisfied demand of cacao products in Quezon for the next seven

years. This clearly shows that the demand and supply are increasing, but the unsatisfied was also

increasing. It is because the percentage of increase in the supply is less than the percentage

increase in demand. The greater percentage of increase in demand was due to the fast growing

population of Quezon.

DEMAND SUPPLY PERCENTAGE SUPPLY UNSATISFIED

YEAR
(MT) (MT) (%) DEMAND (MT)
2019 11.16 7.38 66.13 3.78
2020 11.81 7.42 62.83 4.39
2021 12.46 7.46 59.87 5.00
2022 13.10 7.50 57.25 5.61
2023 13.75 7.53 54.76 6.22
2024 14.40 7.57 52.60 6.83
2025 15.05 7.61 50.56 7.43

Table 2.7 Demand-Supply Gap of Cacao Products in Quezon

The table shows the Demand and Supply Gap on cacao products in Quezon for the next

seven years.
 D. Market Share Analysis

Previously, the demand and supply gap analysis has shown the unsatisfied demand and

the projection of the lack of supply of cacao products for the next seven years. For find out the

market share of Dancalan Cocoa Farm and Processing, the unsatisfied demand and the market

demand from the survey will be used.

UNSATISFIED DEMAND CAPACITY TO Market Share

YEAR
(MT) SUPPLY (MT) (%)
2019 3.78 7.60 201.11
2020 4.39 8.55 194.84

2021 5.00 9.50 190.09

2022 5.61 10.45 186.38

2023 6.22 11.40 183.39

2024 6.83 12.35 180.94

2025 7.43 13.30 178.89

Table 2.8 Market Share Percentage of Cacao Products

With the increasing unsatisfied demand for cacao products, Dancalan Cacao Farm and

Processing will have a market share of 201.11% in 2019, 194.84% in 2020, 190.09%, 186.38%,

183.39%, 108.94% and 178.89% in the next five years. Although the market share of the

company was decreasing, the company was aiming to maintain a 100% market share.

D.1. Projected Sales

Packs Sales per

Year Capacity Total Sale
Produced Pack
TABLEA
Pack of 100 grams 76,000 6,460,000.00
2019 7600000 Pack of 500 grams 15,200 5,122,400.00 15,549,600.00
Pack of 1000 grams 7,600 3,967,200.00
2020 8550000 Pack of 100 grams 85,500 7,267,500.00 17,493,300.00
 Pack of 500 grams 17,100 5,762,700.00
Pack of 1000 grams 8,550 4,463,100.00
Pack of 100 grams 95,000 8,075,000.00
2021 9500000 Pack of 500 grams 19,000 6,403,000.00 19,437,000.00
Pack of 1000 grams 9,500 4,959,000.00
Pack of 100 grams 104,500 8,882,500.00
2022 10450000 Pack of 500 grams 20,900 7,043,300.00 21,380,700.00
Pack of 1000 grams 10,450 5,454,900.00
Pack of 100 grams 114,000 9,690,000.00
2023 11400000 Pack of 500 grams 22,800 7,683,600.00 23,324,400.00
Pack of 1000 grams 11,400 5,950,800.00
Pack of 100 grams 123,500 10,497,500.00
2024 12350000 Pack of 500 grams 24,700 8,323,900.00 25,268,100.00
Pack of 1000 grams 12,350 6,446,700.00
Pack of 100 grams 133,000 11,305,000.00
2025 13300000 Pack of 500 grams 26,600 8,964,200.00 27,211,800.00
Pack of 1000 grams 13,300 6,942,600.00
COCOA POWDER
Pack of 100 grams 76,000 6,080,000.00
2019 7600000 Pack of 500 grams 15,200 3,876,000.00 13,376,000.00
Pack of 1000 grams 7,600 3,420,000.00
Pack of 100 grams 85,500 6,840,000.00
2020 8550000 Pack of 500 grams 17,100 4,360,500.00 15,048,000.00
Pack of 1000 grams 8,550 3,847,500.00
Pack of 100 grams 95,000 7,600,000.00
2021 9500000 Pack of 500 grams 19,000 4,845,000.00 16,720,000.00
Pack of 1000 grams 9,500 4,275,000.00
Pack of 100 grams 104,500 8,360,000.00
2022 10450000 Pack of 500 grams 20,900 5,329,500.00 18,392,000.00
Pack of 1000 grams 10,450 4,702,500.00
Pack of 100 grams 114,000 9,120,000.00
2023 11400000 Pack of 500 grams 22,800 5,814,000.00 20,064,000.00
Pack of 1000 grams 11,400 5,130,000.00
Pack of 100 grams 123,500 9,880,000.00
2024 12350000 Pack of 500 grams 24,700 6,298,500.00 21,736,000.00
Pack of 1000 grams 12,350 5,557,500.00
Pack of 100 grams 133,000 10,640,000.00
2025 13300000 23,408,000.00
Pack of 500 grams 26,600 6,783,000.00
 Pack of 1000 grams 13,300 5,985,000.00

Table 2.9 Project Sales of Cocoa Powder and Tablea

The table 2.9 illustrates the projected sales of Dancalan Cocoa Farm and Processing for

the next five years. The business shows increasing sales for the years 2019 to 2025 for both

tablea and cocoa powder. The sales were computed using the price and the number of packs that

can be produce in accordance with the capacity of the business.

Year Total Sales per pack Total Sales

Pack of 100 grams 12,540,000.00
2019 Pack of 500 grams 8,998,400.00 28,925,600.00
Pack of 1000 grams 7,387,200.00
Pack of 100 grams 14,107,500.00
2020 Pack of 500 grams 10,123,200.00 32,541,300.00
Pack of 1000 grams 8,310,600.00
Pack of 100 grams 15,675,000.00
2021 Pack of 500 grams 11,248,000.00 36,157,000.00
Pack of 1000 grams 9,234,000.00
Pack of 100 grams 17,242,500.00
2022 Pack of 500 grams 12,372,800.00 39,772,700.00
Pack of 1000 grams 10,157,400.00
Pack of 100 grams 18,810,000.00
2023 Pack of 500 grams 13,497,600.00 43,388,400.00
Pack of 1000 grams 11,080,800.00
Pack of 100 grams 20,377,500.00
2024 Pack of 500 grams 14,622,400.00 47,004,100.00
Pack of 1000 grams 12,004,200.00
Pack of 100 grams 21,945,000.00
2025 Pack of 500 grams 15,747,200.00 50,619,800.00
Pack of 1000 grams 12,927,600.00

Table 2.10 Combined Projected Sales of Tablea and Cocoa Powder

 The table above shows the combination of sales of tablea and cocoa powder from 2019

to 2025. The combined sales of tablea and cocoa powder show an increasing trend. It is due to

the increasing capacity of the business and increasing demand for the product.

E. Marketing Strategies

E.1. Product Strategies

Dancalan Cocoa Farm and Processing will provide a high quality, fresh-made tablea and

cocoa powders to the customers. The customers have the options to buy the product per pack of

100 grams, 500 grams, and 1000 grams.

According to an e-commerce marketing expert and writer, Eric Leuenberger, in his article

“The Impact of Color in Consumer Buying” colors provide visual appeal and influence buyer

behavior. Accordingly, green color symbolizes the growth, harmony, freshness, fertility, and

environment while brown is a warm color that stimulates the appetite. That is why the logo of the

business will utilize those colors to symbolize the growth and harmony on the cacao farmers,

freshness and fertility of the products, and the care for the environment. On the other hand,

brown will symbolizes that the products are consumables for the consumers. In addition, the

product will have a tagline of “A Bean for a Farmers Grain”.

E.2. Place Strategies

The target of Dancalan Cocoa Farm and Processing is to cater the demand for cocoa

powder and tables in Quezon and aims to be a trademark in the province. The business will be

situated in Barangay Dancalan Caimawan, Guinayangan, Quezon. It is convenient for the plant

to be located at this point because of the agricultural lands that are suited for cacao farming and

the manufacturing expenses and overheads are relatively lower compared to other towns.
 For its distribution strategy, the project will make use of mix distribution channels.

Wholesalers and/or distributors, and retailers will be mixed in order to reach more market despite

the expansion of the product’s geographic dispersion. However, there will be no outlets or

physical store, the business aims to directly deliver products to stores, bakeshops, and

restaurants.

E.3. Pricing Strategies

Based on the cacao products in the market, it comes in different weights and in different

prices. Some are in the high end price and some are in and affordable price.

Price (Php)
Cacao Product (Tablea)
Market Dancalan Cocoa Farm and Processing
100 grams 90.00 85.00
500 grams 355.00 337.00
1000 grams 550.00 522.00

Table 2.11 Pricing Strategy of Dancalan Cocoa Farm and Processing for Tablea
As shown in the table, Dancalan Cocoa Farm and Processing will lower the price of

tablea by 5% to capture the market. Also, there will be a corresponding discount for wholesaler

and bulk orders.

Price (Php)
Cacao Product (Cocoa Powder)
Market Dancalan Cocoa Farm and Processing
100 grams 80.00 80.00
500 grams 255.00 255.00
1000 grams 475.00 450.00

Table 2.12 Pricing Strategy of Dancalan Cocoa Farm and Processing for Cocoa Powder
As shown in the table, Dancalan Cocoa Farm and Processing will follow the market price

for the 100 grams and 500 grams cocoa powder which is Php80 and Php250, respectively. On the
other hand, the price of 1000 grams or 1 kilogram cocoa powder will be lowered by 5%. Also,

there will be a corresponding discount for wholesaler and bulk orders.

E.4. Promotion Strategies

People of any age adored eating foods with chocolates flavors, it is so popular and love

by the market. There are a lot of cocoa production in the province, but the company with the

most appealing promotional strategy get most of the customer since people tends to purchase

known brands.

E.4.1. Posters

Promotional posters and advertisement will be posted across the region from the different

cities of the different provinces.

E.4.2. Website

Dancalan Cocoa Farm and Processing will mainly advertise the cocoa product through

the social media such as Facebook, Twitter, and Instragram where the customers can inquire

about the business and transactions.

E.4.3. Flyers

The company will also invest in flyers to further advertise the product. It will include

details and tagline about the company and products. It will be disseminated to retail stores,

public markets, restaurants, schools, bakeshops, and other establishments that can cater the

distribution of the products.