03 Final Marketing Appraisal - Target Market

III. Target Market PantSaloon targets college students of University of the Philippines - Diliman, Ateneo de Manila University and Miriam College and residents of pre-selected communities, belonging to the 15-24 age group. This group, based on the survey conducted (See Appendix 2), are very much willing to have their jeans custom-made and are willing to pay as much as Php 1000 just to get one. This will be discussed on further in Targeting section of the study. In order to forecast the demand of our product, the size of the target market should be defined first, using the formula: TM

=

CS + (KR x AG)

Where: TM

= target market

CP

= college student population from UP, AdMU and Miriam College

KR

= residential population of pre-selected areas near Katipunan

AG

= percentage of population between 15 to 24

The total population from the three academic institutions, UP-Diliman, Ateneo and Miriam College, were gathered and summed up to 25,378. The group also determined the average annual growth rate of population in forecasting their population in the next ten years.

Table 6 | Population and Growth Rate of Targeted Schools

School AdMU – College Dept. Miriam College UP - Diliman TOTAL

Population 8,437 3,982 12, 959 25,378

Growth Rate 1.83% 1.22% 2.03%

On the other hand, the group has pre-determined the residential population which EALA will target according to their area of residence. This stratification has to do

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also with their buying power as exemplified by their resident’s ability to stay in areas with high land value. The following information pertains to the communities and their respective population that the group has qualified for PantSaloon's target market: Table 7 | Population of Targeted Locality

Locality Pansol Teacher’s Village Loyola Heights

Population 18,968 25,643 15,344

Blue Ridge A& B Xavierville White Plains TOTAL

3,450 10,989 2,010 76,404

According to the 2000 Census of Population and Housing - Reports by Highly Urbanized City, 21% of the total Quezon City population is comprised of male and females aged 15-24. Thus, giving EALA a 16,045 young adult population for its target market.

This figure was adjusted for the years 2006-2016 based on the

National Statistic’s Office’s historical data telling that the annual population growth rate in Quezon City is 1.92% Table 8 | Projected Population for the next ten years

Y ear 2 006 2 007 2 008 2 009 2 010 2 011 2 012

Residential Population

Age Of Between 1524

Collegiate Population

Target Market

76,404

16,045

25,378

41,423

77,871

16,353

25,844

42,197

79,366

16,667

26,319

42,986

80,890

16,987

26,803

43,790

82,443

17,313

27,295

44,608

84,026

17,645

27,797

45,442

85,639

17,984

28,309

46,293

2

2 013 2 014 2 015 2 016

87,283

18,330

28,830

47,160

88,959

18,681

29,361

48,042

90,667

19,040

29,902

48,942

92,408

19,406

30,453

49,859

A. Market Demand and Demand Forecast Market demand refers to the amount (in units/peso) that potential buyers from the target market would likely consume or render our service. It represents the projected market share of PantSaloon based on the estimated acceptability rate of the product to the target market. Hence the formula used to calculate the market demand is: MD

=

AMAR

x

TM

x

CR

Where: MD AMAR

= =

market demand adjusted market acceptability rate

TM

=

target market

CR

=

consumption rate

AMAR is computed by: AMAR

=

MAR

x

Conservative rate

Where: MAR

=

number of willing buyers / sample size

The Market Acceptability Rate (MAR) is reflected in the survey results where 81.91% answered yes to the question of whether or not they are willing to have their pants custom-made (see Appendix). Conservative rate of 95% was used to accommodate a 5% sampling error. However, it is not safe to assume that the MAR result would

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actually buy the products. Table 3.2 presents the computation for market demand for pants using an annual consumption rate of 4. The consumption rate figure was based from the professional opinion of the owner/manager of Viktor Jeans. To further substantiate this claim, EALA conducted a convenient sampling of 50 individuals within the target market through a phone interview. Results showed that young adults and students usually buy 4 to 6 pants annually. Hence, for a more realistic estimate of PantSaloon’s demand, EALA considered using the conservative value of 4. Table 9 | Market Demand and Demand Forecast

Y ear 2 006 2 007 2 008 2 009 2 010 2 011 2 012 2 013 2 014 2 015 2 016

A MAR 77.81 % 77.81 % 77.81 % 77.81 % 77.81 % 77.81 % 77.81 % 77.81 % 77.81 % 77.81 % 77.81 %

Target Market

Potential Buyers

Consumpti on Rate

Annual Demand

Monthly Demand

41,423

32,231

4

128,925

10,744

42,197

32,833

4

131,334

10,944

42,986

33,447

4

133,790

11,149

43,790

34,073

4

136,292

11,358

44,608

34,709

4

138,838

11,570

45,442

35,358

4

141,434

11,786

46,293

36,021

4

144,082

12,007

47,160

36,695

4

146,781

12,232

48,042

37,381

4

149,526

12,460

48,942

38,082

4

152,327

12,694

49,859

38,795

4

155,181

12,932

B. Supply Analysis PantSaloon’s material supply consists of garments and other sewing elements offered by fabric distributors within Metro Manila. The total supply can be derived from the annual average production capacity of the garment industry for 2005 as

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taken from data gathered from the Department of Trade and Industry (See Appendix 6). However, this figure comprises all the sectors (children, male, female) of the garment industry and so must be adjusted to extrapolate the specific supply for PantSaloon. In order to achieve that, the formula used is Market Supply =

PC x RP x PT x GR

Where: PC = annual average production capacity of garment industry RP = rate of young adults and students who dissatisfaction in fitting jeans PT = percentage of target market (Target market / NCR population) GR = growth rate of supply The rate of students and young adults who encountered problems in buying clothes were taken from the survey conducted, who answered yes in question whether or not they are satisfied with the currently available jeans in the market. The production capacity is adjusted with this rate so as to capture the supply of garments usually bought by the target group who do not find the perfect fit of jeans/pants. The next table presents the adjustment of the production capacity for the base year. Table 10 | Adjustments of Production Capacity for the base year

Annual Supply for Trousers/Pants

19,439,180

Percentage of Dissatisfaction

19.55%

Total Supply for the Base Year

3,800,359.69

However, according to the Monthly Integrated Survey of Selected Industries, the Volume of Production Index for wearing apparels registered a negative growth rate of 4.6% in 2003 (See Appendix). Annual supply projection is then adjusted using this value, assuming that its rate would remain constant. A declining growth would

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then be observed as an industrial occurrence issue mentioned in the environment analysis The proportion of the target market to the population is also used as an adjustment rate to as to capture the supply that is only intended for our target market. Table 11 shows the computation of the market supply for the 10-year projection, adjusted both through the percentage of target market and the growth rate. Table 11 | Market supply for the 10-year projection

Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Supply

Target Market

NCR Population

Annual Supply

41,423

9,932,560

15,849.12

42,197

10,037,845

16,710.81

42,986

10,144,246

17,619.57

43,790

10,251,775

18,577.86

44,608

10,360,444

19,587.81

45,442

10,470,265

20,652.99

46,293

10,581,250

21,776.75

47,160

10,693,411

22,961.70

48,042

10,806,761

24,210.50

48,942

10,921,313

25,528.00

49,859

11,037,079

26,917.27

3,800,359. 69 3,975,176. 24 4,158,034. 34 4,349,303. 92 4,549,371. 90 4,758,643. 01 4,977,540. 59 5,206,507. 46 5,446,006. 80 5,696,523. 11 5,958,563. 17

C. Demand-Supply Analysis Upon computing separately the demand and supply, the analysis of one in comparison to the other produces the gap that PantSaloon aims to address. This difference would be the driving force of the existence and growth of the business as it presents the degree of the demand for the proposed product. Comparing the

6

market demand and the market supply estimates, we could compute an average of 113,075 potential demands in units that PantSaloon hopes to supply. Table 12 | Demand-Supply Analysis

Year

Total Demand

Total Supply

2006

128,925

15,849.12

Demand-Supply Difference 113,075.88

2007

131,334

16,710.81

114,623.19

2008

133,790

17,619.57

116,170.43

2009

136,292

18,577.86

117,714.14

2010

138,838

19,587.81

119,250.19

2011

141,434

20,652.99

120,781.01

2012

144,082

21,776.75

122,305.25

2013

146,781

22,961.70

123,819.30

2014

149,526

24,210.50

125,315.50

2015

152,327

25,528.00

126,799.00

2016

155,181

26,917.27

128,263.73

We cannot however, entirely accommodate all the demand-supply differences projected. Being a relatively new entrant in the industry, PantSaloon aims to gain a market share of at least 0.5% in its first year of establishment. As the business progress, EALA Inc. targets to gradually carve bigger market share in the industry as we expand our product lines, services and capacity throughout the course of the company’s operations. D. Market Share Market share represents the portion of the market that PantSaloon will hold. This would represent the viable capability of the business in the industry as well as it shows how strong PantSaloon will be in the market, given the present supply in the market and the demand that the business caters to. Market share is computed through this formula:

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Market Share

=

PantSaloon Ave. Monthly Production Capacity Monthly Market demand

PantSaloon’s average monthly production capacity shall be divided with the total market demand for pants/trousers taken from their 2006’s projected demands respectively. Hence, this would reflect the fraction that PantSaloon aims to provide in proportion with the total demand in the introductory phase of its venture. The production capacity came from industry standards that we took from the professionals who are in pant-customization business. According to Ms. Bea dela Cruz, store manager of Clement Garments in Recto, Manila, a business venture can accommodate 30 job orders for jeans in a day. Throughout the month, PantSaloon is capable of producing 900 job orders. Substituting the formula, a 9.55% market share was computed as: Market Share = 900 / 9422.99 Over the years, PantSaloon would strive to aim for the bigger share in the “pie” as the business gradually creates its niche in the market. Strong promotional efforts will be continuously done as the company tries to expand its reach to its target market. Branches will also be opened at an annual rate starting from the 3rd year. New products will be offered for customization like shirts and jackets in the fifth year of the business. By doing so, and by assuming a fairly good economic flow in the industry, PantSaloon is thereby guaranteed to make its mark in the business.

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