En Cima Market Study

Market feasibility Study

Table of Contents

I. II.

……………………………………………………………3 A. Executive Summary ……………………………………………………4 Environmental Analysis ……………………………………………………7 Introduction

……………………………………………………7 7 …………………………………………………………

A. Macro-environment 1. Political

8

… 2. Economic …

10 ………………………………………………………… 12

3. Socio-cultural …………………………………………………....

13

4. Technological ……………………………………………………

13

……………………………………………………17 21 1. The Garments Industry ………………………………………… 24 …

B. Micro-environment

2. Clothing and Footwear Retailing …

26 ………………………………… 28

3. Competitor Profiling ……………………………………………

31

……………………………………………………………33 A. Demand Analysis ……………………………………………………33 B. Supply Analysis ……………………………………………………33

III.

Target Market

IV.

C. Market Share ……………………………………………………………34 Segmenting Targeting, and Positioning ……………………………………34 ……………………………………………………………34 1. Geographic …………………………………………………… 36 2. Demographic …………………………………………………… 36

A. Segmenting

……………………………………………………………36 2.2 Income ……………………………………………………39 2.1 Age

42

………

En Cima, Incorporated

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Market feasibility Study

2.3 Race …………………………………………………………… 3. Psychographic …………………………………………………… 3.1 Lifestyle ……………………………………………………

V.

VI. VII.

B. Targeting

……………………………………………………………

C. Positioning

……………………………………………………………

45 …………………………………………………………… 45 A. Product …………………………………………………………… 49 B. Price …………………………………………………………………… 50 C. Place …………………………………………………………………… 56 D. Promotions …………………………………………………………… 62 Endnotes …………………………………………………………………… 66 Appendix …………………………………………………………………… Marketing Mix

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Market feasibility Study

Introduction En Cima (On Top), Inc. is comprised of nine UP graduates, all from the College of Business Administration. Unsatisfied with the idea of working for others, they all decided to be entrepreneurs to become their own bosses. Seeing the opportunity found in the nature of the country’s retailing industry and after conducting series of strategic market skimming, En Cima was able to grasp a relatively potential business of providing specialized clothing apparels for the Filipino women. It has been observed that currently, predominant stores in the market offer clothes that are patterned according to Caucasian sizes. The idea therefore lies in addressing this relevant matter concerning the plight of the average Filipina. The typical Pinay is petite. En Cima defines petite as a term describing short height, notwithstanding other body structure criteria. According to surveys and research, Filipina women would often find dissatisfaction in shopping for their clothes as they would always encounter problems with regard the length of pants and sleeves of the apparels they bought. Analyzing this situation, En Cima came up with Lilliput, a brand that aims to offer products that would somehow respond to these common yet untapped needs of the true-blue Pinay fashionista. Lilliput would then be established as a boutique for women, that offers chic, En Cima, Incorporated

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Market feasibility Study

sleek, timeless, and naturally fashionable apparels specially designed to complement petite bodies. The very first branch will be launched at Shoppesville, Greenhills, where the target market coming from the middle to upscale classes frequently shop for clothes. The store will cater to college students and young professionals within the ages of 20 to 29. During the first years of operation, the product will initially offer casual and formal blouse, pants, shirts, and skirts – items where our customers frequently encounter size-related difficulties. The quality and prices shall be at par with other leading apparel brands. In the long run, Lilliput shall strive for the bigger share in the market by opening branches, franchises, and consignments to various department stores and boutiques. Gradually, Lilliput is projected to create its niche in the market, thereby guaranteeing that the business will surely make its mark in the industry.

Executive Summary To fully assess the feasibility of the business idea of a fashion boutique shop for petite women, En Cima, Inc. has made two key environmental analyses: the macro- and microenvironment analysis. The macro-environment analysis takes into the account the political situation under the Philippine government; the economic environment, which mentioned pertinent economic indicators that are relevant to the analysis of the market and described the current economic situation in the country; the cultural environment, which took note of important socio-cultural demographics to better understand the target market; and the technological environment, which listed capabilities that the local garments industry has as of the moment. On the other hand, the micro-environmental analysis focused on the garments industry in which the group wishes to enter. The analysis discussed the developments and issues in the local garments industry. In addition, as part of the micro-environmental analysis, En Cima considered the retail trade in the Philippines as well as possible competitors within the industry. There are several key players in the garment industry that are the closest competitors of Lilliput. En Cima, Incorporated

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Market feasibility Study

These are indirect competition whose brands do not only cater to petite-sized women alone. Among the competitors considered were: Kamiseta, Bayo, Folded & Hung, Lee, Plains & Prints and Penshoppe. Lilliput came up with its target market by multiplying the female population of NCR by the percent of the population belonging to the upper and middle class. Furthermore, to qualify with the height criterion of our market, the percentage of the female population age 20-29 standing within the height range of 4'10" - 5'3" will also be extrapolated. The figures projected through stated annual growth rates within 10 years would then be used to calculate the demand forecast of Lilliput. Market demand refers to the amount that potential buyers from the target market would likely consume or buy from our products. Lilliput's demand has been computed by adjusting an acceptability rate from the targeted market. Moreover, to get the monthly and annual demand, the consumption rates for both the top and bottom clothing lines were multiplied to their projected consumption rates respectively. Lilliput's supply has been derived from the annual average production capacity of the garment industry for 2005. However, to carve the proportion that would represent our target market, the volume has been adjusted by getting the percentage of the target market. To be more distinct, the fraction of women who encountered length problems in buying their clothes was also multiplied so as to get the projected supply for the business. Reconciling both the Demand and Supply, a considerably high gap has been observed thereby giving an impression that there really is a need for the services of this new venture. Market share for Lilliput has been estimated to be at 1.11% or approximately P25,317,764 in terms of peso revenues in the introductory phase of the business.

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Market feasibility Study

Nevertheless, promotional activities and strategic expansion objectives would enable Lilliput to gradually carve bigger part of the market throughout its operations. Segmenting, targeting, and positioning are critical factors in shaping the success of any business plan. In the Philippines, the market could be segmented in many ways – geographic, demographic, psychographic, and behavioral. Lilliput segmented the market geographically according to cities, specifically the ones in the National Capital Region. For demographic segmentation Lilliput’s market will be grouped according to age, income and race.

Psychographic segmentation further divides the market base into

factors such as social class, lifestyle, and personality. Lilliput is a clothing boutique specially designed for (1) women who are (2) petite, between the (3) age of 20 and 29 years old, particularly those in the (4) Class B and C bracket in (5) Greater Manila Area. In addition, Lilliput will be positioned as a clothing boutique for women that offers chic, sleek, timeless, and naturally fashionable apparels specially designed to complement petite bodies. En Cima, Inc., understands the problem that Filipino women face, hence, the reason of coming up with the idea of Lilliput. Its clothing line is geared towards addressing the usual problems that petite women always encounter. Thus, the cuts, sizes and dimensions that shall make up the apparels will accordingly be tailored in order to give the target market the right fit, form, and proportions that match their body frames. Since, the world of fashion is relatively fast paced, Lilliput has to constantly search for the latest trends on the web, magazines, and catalogues, and should also be keen in observing how prominent fashion figures project themselves through the clothes they wear. Cleaner, discreet, and vibrant colors and shades shall characterize the apparels that the store will offer. High quality materials similar to those used by established boutiques utilized. En Cima also plotted the different strategies with regard to the

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Market feasibility Study

expansion of its product line throughout the life of the boutique – from introduction to maturity. As a specialty store, Lilliput will set a higher premium on all prices. It will be more or less at par with our potential competitors such as Kamiseta, Bayo, and Freeway. In addition, Lilliput will be located in average but not too congested malls, such as Robinsons, Glorietta, and SM Megamall where the prices of items are not intimidating to scare off potential customers. Eventually, during the maturity stage the business is planning to expand its operations outside the Metro. En Cima came up with short term and long-term promotional activities and goals to aggressively advertise the brand and its products. To begin with, good relationships with various media publications and broadcast networks shall be established. This will allow Lilliput to increase customer awareness of its products. Eventually, the company will launch a campaign featuring a famous personality as the brand’s image model.

Environmental Analysis To fully assess the feasibility of the business idea of a fashion boutique shop for petite women, En Cima has made two key environmental analyses: macro- and microenvironment analysis. The macro-environment analysis takes into the account the political situation under the Philippine government; the economic environment, which mentioned pertinent economic indicators that are relevant to the analysis of the market and described the current economic situation in the country; the cultural environment, which took note of important socio-cultural demographics to better understand the target market; and the technological environment, which listed capabilities that the local garments industry has as of the moment. On the other hand, the micro-environmental analysis focused on the garments industry in which the group wishes to enter. The analysis discussed the developments and issues in the local garments industry. In addition, as part of the micro-environmental analysis, the group considered the retail trade in the Philippines as well as possible competitors within the industry.

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Market feasibility Study

A. Macro-Environment Analysis Political Environment The country is currently facing political instability as the president faces charges of alleged election fraud and corruption charges against her and her family as well as the Supreme Court’s freezing of an expanded sales tax, and the resignation of the president’s economic team. Such political crisis negatively affects the profitability of the country’s businesses due to a weaker peso, rating outlook downgrades and higher interest rates. If debt levels continue to decrease and higher foreign reserves were maintained, there would be no major negative effect on business profitability.1 In the meantime, the country’s political crisis has brought international credit rating companies to downgrade the country’s debt payment credit ratings and also affected Asian Development Bank to threaten the country with suspension of loans if fiscal and other reforms remain stagnant if the political crisis would not be resolved. The Supreme Court’s postponement of the implementation of the new value-added tax, which was the core of the government’s fiscal reform agenda to reduce the country’s budget deficit, proves to be a major impediment for the said program. Presently, credit rating firms have rated the country’s long-term foreign and local currency ratings at “BB” and “BB+,” respectively. They have also rated the country’s short-term foreign currency at “B” and country ceiling at “BB.” *Stronger peso at 52 The political crisis may not just negatively affect the country’s economic performance, but may also damage the confidence of the consumers and investors as well as hinder the developments in the financial markets. Ultimately, the political crisis only serves to aggravate the country’s external variability to global trends such as growth moderation, rising interest rates and oil prices. 2

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Market feasibility Study

Economic environment The country is currently suffering from a weaker economic base as a direct result of the political instability, which has resulted in higher interest rates, low credit ratings, and other performance risks as the value of peso continues to grow weaker. These further on result in a steady increase in the unemployment rate of Filipinos. The lack of local job opportunities has also increased the trend of “brain drain” as more and more Filipinos seek jobs abroad. However, a robust growth in the economy is being anticipated though it would be moving at a slower pace than that achieved in the previous year. A positive outlook is also being projected from the growth in the performance of major industry players last 2004. The service sector, particularly that of telecommunications and trade continues to lead in providing potential industry growth and development. (Cayetano: 2005) Major Economic Indicators :: GNP. Gross National Product at current prices amounted to 5195.9 billion Pesos, experiencing a 0.2% increase from last year. The growth rate of GNP for this year [2005] has been estimated at 5.2-5.8% and has been forecasted to be at 6.5 to 7.1% increase. 3 Real GNP for the first quarter of this year was pegged at 4.7% while in the first quarter of last year, real GNP was at 6.4%. 4 :: Personal Consumption Expenditure5. Personal consumption expenditure is currently 72.9% of GNP, a decrease from last year’s 73%, experiencing an annual change of 5.8%. :: GDP. Gross Domestic Product at constant 1985 prices amounted to Php1148 billion, experiencing a 1.5% increase from last year and has been expected to grow approximately by 5.5% this year. The expected growth in GDP in 2005 can be attributed

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Market feasibility Study

to the growth in personal consumption, the recovery in government spending and also the strong demand for export products.6 :: Wage Rate. New minimum wage rates took effect this June of 2005. The minimum wage rate for the workers in the National Capital Region was Php325 per hour, whereas the workers outside the NCR earn from a range of 180 pesos to 225 pesos per hour.7 :: Inflation. The inflation rate for this year is pegged at 5.6%. The increase in inflation rate can be attributed to the increase in services as well as the higher prices recorded in food, beverages and tobacco, fuel, light and water and other miscellaneous items.8 :: Foreign Exchange Rate. As of August this year, the Peso closed at little less than 56 to the dollar. If the political situation slowly stabilizes, the country can experience a lift in the peso. Factors that can strengthen the peso include political stability, income remittances from OFWs, inflows from portfolio investments, and proceeds from government bond sale.9 Socio-Cultural Environment Demographics :: Population. Population in the Philippines is increasing at a 1.84% growth rate and is now currently pegged at 87.9 million Filipinos. The highest concentration of people is found in the NCR, Southern Tagalog, Central Luzon, and Western Visayas. The age structure of the population is divided into three brackets. The first one is from 014 years old, which include 35.4% of the population. The second bracket of ages 15 to 64 comprises of 60.6% of the population. The third age bracket, which is composed of Filipinos 65 years old and above, covers only 4%. The median age for males is 21.77 years whereas for females, it is only 22.8 years.

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Market feasibility Study

Based on the 2000 Census of Population and Housing taken by NSO, it was found that there were more men composing the population with 50.4% than women with 49.6%. From 1995 to 2000, the sex ratio was pegged at 101.4 :: Labor Force. The total number of individuals within working age (15 years old and over) is equivalent to 54,194,000, of which 64.8% participates in the labor force. The employment rate in the country is currently 91.7%, an increase from last year, whereas the average unemployment rate is currently 8.3%, increasing at a 0.3% rate. Almost half (49%) of the total unemployed individuals in the Philippines are aged 15-24 years old. The underemployment rate is currently 26.1%. According to the NSO’s Labor Force Survey, men and women comprise 61 and 39% of the 2002 labor force, respectively. In addition, it was found that women had a 51.7% labor participation rate while men participated in the labor force at a rate of 80.8%. The Survey also showed that, in 2002, the 89.9% of the total labor force were employed. Employment rate for women was 89.9% whereas men’s employment rate was at 89.9%. In terms of major occupation groups, majority of professionals, clerks and officials and special-interest organizations, corporate executives, managers, managing proprietors and supervisors were women. On the other hand, majority of plant and machine operators and assemblers, farmers, foresters and fishers, and tradespersons were men. In terms of major industry groups, more women belonged in the education, health and social work, and wholesale and retail trade industries while more men were found to be dominant in the construction, transportation, storage and communication, and fishing industries. Consumption and Expenditure According to NSO, average income and expenditure has shown an increasing trend as of 2003. The target market of the business, which is NCR, was one of the top three regions in terms of average income. The other two were CALABARZON and

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Market feasibility Study

Central Luzon. These top three regions posted estimates of income that were higher than the average income of 148,757 pesos in 2003. The annual average saving as of 2003 showed a downward trend. However, on the average, Filipino families in all regions earned more than they spent, as stated in NSO’s 2003 Family Income and Expenditure Survey results. In 2003, families located in NCR showed the biggest annual saving of 46,923 pesos. In 2004, personal consumption grew at a rate of 5.8% due to double-digit growth of income remittances. In the first quarter of 2005, there appeared a decrease in personal consumption expenditure, which can be attributed to higher prices of goods and services. There was a slowdown in growth for food, beverages, clothing and footwear, household furnishings, household operations, and miscellaneous expenditures as well as fuel, light and water due to low electricity consumption. On the other hand, expenditures on transportation and communication increased due to rise in road and railway ridership and mobile phone usage.

Technological Environment :: Industrialization. The manufacturing, along with the closely associated activities in the clothing and garment production, continues to be one of the driving forces of industrialization the world over. The clothing industries have fought to maintain their share of the total value that is created throughout the series of apparel design, manufacturing and distribution. 10 :: Automation. At present, technology in the garment industry here in the Philippines consists mainly of automation of the processes. These include the automated designing of the patterns as well as that of fabric laying and cutting. Electronically controlled mechanisms are also used for stitch formation and fabric feeding for the basic sewing machines. The last of the processes include automated machines and devices for pressing

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Market feasibility Study

the clothes.11 In addition, current developments in machineries include designs which enable fast adjustments of equipment from one style to another thus eliminating the non-productive handling of fabrics and garments. In the process, quality is thus being improved.12 :: Other developments. The Garments and Textile Board of the Philippines has recently installed an Electronic Data Interchange (EDI) system to reduce processing time to help improve production and delivery lead-time. It allows garment manufacturers-exporters (GMEs) to transact with GTEB electronically. The costs associated with implementation of EDI include the costs for acquiring the software and the hardware themselves, training and ongoing costs such as Value-Added Network (VAN) charges, maintenance and support costs.13 In addition, the leading companies in the industry have started to acquire CAD/CAM techniques, “Quick Response” and Just in Time” philosophies to allow more flexible manufacturing.

B. Microenvironment Analysis The Garments Industry14 The Philippine local garment industry started as a cottage industry in the late 1940’s. The pioneers are engaged in dressmaking, tailoring as well as subcontracting activities for the Americans. The golden years of the garment industry was in the 1970’s, during which the Philippines was considered to be a nice and attractive place to buy or manufacture apparels. This continued on for about ten more years, which then catapulted many garment manufacturers as leaders in the export business. During the 1980’s, the government implemented the structural adjustments program (SAP) as trade policies shifted from trade protectionism to trade liberalization. The program opened doors for foreign companies to increase their investments as well as En Cima, Incorporated

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Market feasibility Study

encouraged the local manufacturers to tap into the potential of the industry. What made the local garment industry a viable investment for foreign companies was the high quality of the Filipino labor force – highly trainable, industrious, and highly literate.

The local garment industry is currently involved in the production of men’s, women’s, children’s, and infant’s wear, gloves, undergarments, stockings and socks, neckwear and other apparel. Subcontracting activities include performing embroidery and sewing services (i.e. printing, dyeing, knitting, laundry, finishing, pattern-making and design-making). In addition, it is the country’s leading employer of the manufacturing sector, with industrial relations no longer an issue, and with minimal labor problems. Through the help of Garments/Textile Industry Tripartite Council Board, industrial relations are continuously being improved upon. The government also has provided different means to adapt to the changing HR needs of workers in the garments industry. Such actions that would help make the industry more competitive, and thus, improve the HR scenario, include productivity enhancements like skills upgrading, productivity-based wages, trade facilitation, market/product development and financing assistance. 15 As of the 18th of July this year (2005), accounting for 6% of total export receipts were the articles of apparel and clothing accessories. This was the country’s second top earner which garnered almost $192.9 million in revenues or a 7.4% increase from last year’s $179.6 million. The industry for articles of apparel and clothing accessories is the country’s second biggest dollar earner albeit it experienced a decline of 4.0% in terms of value of production index. However, it experienced a gain of 27.5% in volume net sales from last year. The improvement in the performance of garments exports can be attributed to the shift towards higher value-added items due to the improvement also in the high-end premium categories. According to Garments and Textile Exports Board (GTEB) Executive Director Serafin Juliano, the growth of the local garments industry stems from the country’s En Cima, Incorporated

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Market feasibility Study

advantages and its improving competencies in moving up the value chain. Improved performance is also a result of cost-effective manufacturing and logistics systems as well as increased store sales locally made premium products. The current implementation of the quota-free scheme resulted in the shift of brand market and product mix combinations of garments exports as well as enabling the garments manufacturers to align its sourcing strategies with local capabilities, product design specifications, and consumer preferences. Despite the stiffer competition resulting from the abolition of the quota system, the local garments industry will benefit from the freedom to source with the most efficient suppliers at the lowest costs and with the shortest cycle times. Other Issues Threats to the local garments industry include high power and labor costs and smuggling of imported clothes that were undervalued and can be sold at very cheap prices. Cheap imported second-hand clothes define ukay-ukay and its proliferation serves to damage the local garments industry that cannot compete with such low prices, and also incurs losses for the government. As of 2002, demand for ukay-ukay clothes was 4%. For 2003, we could only conclude that the demand must have risen due to higher prices of clothing. In addition, 4% of the demand also attributed to preference for foreign brands over local ones. It was said that the root of this was the inability of local manufacturers to compete with foreign brands in terms of quality. One reason for such a trend includes the inclination of local producers to set aside quality products for export while bringing poorer ones to the local market. Garment manufacturers in the country would want to take hold of the relatively higher payments foreign markets offer, as a result, more focus is thus being employed in the quality of the apparels they produce for exports. In the long run, this particular action increases the tendency for local consumers to patronize foreign brands due to the lack of quality for local brands. Another reason for the local consumers’ preference for imported used clothes is the lower price. Legally imported second-hand clothes have lower prices than local

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Market feasibility Study

brands because of the lower labor cost and the modernized facilities that other textile and clothing manufacturing countries have.16 Relevant Industry Indicators :: Customer Price Index. The consumer price index (which is a measurement of the changes in the price level of goods and services that most people buy for their day-to-day consumption) increased from last year to 129.4 overall, gaining 9.1 points. In the National Capital Region, the consumer price index also increased to 131.4, a gain of 10.2 points, whereas for areas outside NCR, the customer price index is128.6, a gain of 8.8 points. Monthly, the consumer price index for the clothing commodity group shows an upward trend.17 :: Clothing Inflation Rate. The clothing inflation rate for this year is 3.6 while it was 2.7 as of last year. The clothing inflation rate experiences a year-on-year change of 0.9%.18

.

Comparison with other industries in terms of revenues

Source: Board of Investments of the Philippines

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Market feasibility Study

:: Major Product Classifications. The major products produced in the local garments industries include garments, non-garments and textile products. As of March 2004, garments accounted for 88% of the product share in total exports. Nongarments, which include luggage, home textile furnishings, tents, nets, industrial clothing, has 7% of the total share. The remaining 5% share of total export sales is composed of textile products such as fabrics, yarns and fibers.19 Political Developments in the Garments and Textile Industry20 The government is working with the private sectors of the garments and textile industry in launching investment missions that would establish strategic alliances with foreign partners and attract investments in apparel, textile and production of accessories. Through the introduction of ASEAN Free Trade Agreement and the World Trade Organization (WTO), opportunities for investments are presented as a result of tariff reduction and the phasing out of quotas with low demand as well as the growth for remaining quotas of products that are import-sensitive. Such developments would reduce the industry’s production costs and also minimize smuggling, which is one threat to the industry. To enhance investments in the industry, the government offers incentives such as income tax holidays, additional deduction for incremental labor expenses during the first five years from registration of the company, tax and duty exemption from taxes and duties on selected imported spare parts, unrestricted use of consigned equipment, employment of foreign nationals, simplified customs procedures, access to bonded manufacturing warehouses, tax credit for taxes and duties paid on raw materials used for the exported products. To improve the industrial relations in the industry, the Garments and Textile Industry Tripartite Council Board was revived to serve as a venue for resolving issues and any conflicts. Unwarranted industrial action or harassment is put off through this forum. According to Philippine Exporters Confederation, Inc. problems regarding industrial relations are very minimal within the industry through the help of the Council Board. 21 En Cima, Incorporated

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Market feasibility Study

Clothing and Footwear Retailing in the Philippines 22 Consumer expenditure on both clothing and footwear amounts to 73.3 billion pesos in 2002. A 12.9% increase is estimated for 2003 which will result in spending of P82.8 billion in this sector. Spending on these items increased by 40.3% over the review period. Filipinos in general has strict fashion sense and invests much of their money on clothing and footwear. The Filipino upper and middle-income classes are known to be more fashion-conscious as compared to other Asian countries. The average purchasing power is low but the income gaps across socio-economic classes are wide which then allows the middle and upper income classes to be fashionable. Men’s wear increased by 32.8% in expenditure while the women’s and children’s wear increased by 47.2%. Men’s and boy’s wear expenditure amounted to about 28.3 billion pesos in 2002 and nearly 33.0 billion soon after, estimating around 37.6 billion pesos in the succeeding years. On the other hand, expenditure on women’s, girl’s and children’s wear amounted to 32.6 billion pesos in 2002 and increased to 36.8 billion pesos the following year. Table 2.1

Consumer Expenditure on Clothing nd Footwear 1999-2003 (in billion pesos) 1999 2000 2001 2002

2003

Clothing - Men's and Boy's Wear - Women's, Girl's and Children's Wear Footwear

53.3 28.3 25.0 5.8

57.1 30.7 26.4 5.9

61.2 31.6 29.6 6.8

65.6 33.0 32.6 7.7

74.4 37.6 36.8 8.4

TOTAL

59.0

63.0

68.0

73.3

82.8

Source: 1999-2002 Euromonitor; 2003 Euromonitor estimates

Sales by outlet type23 En Cima, Incorporated

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Market feasibility Study

A total of 77 billion pesos was the total turnover of clothing and footwear retailers in 2002, which estimated a total of 86 billion pesos in 2003, an 11.7% increase. Sales in 2003 increased by 36.5% from the 1999 sales of 63 billion pesos. Clothing and footwear specialists are able to hold their ground against mixed retailers. Majority of this is ready-to-wear which is the major merchandise carried by department stores and variety stores. Since there is this perception that these merchandises, especially house brands, are mass-produced, Filipinos would usually buy from specialty shops for more choices and exclusive styles. This is because there is a clothing shop that caters to every Filipino’s taste in fashion, style and age group. Clothing and footwear specialists also abound in shopping malls and tiangges. Many of these specialists have concessions in department stores as well for these are proven venues that still attract the most people. They maintain these concessions even with their existing own separate outlets. Local shops such as Bench, Penshoppe, Bayo are able to complete well with foreign brands such as Giordano, Gap and Guess. Flea markets also abound clothing specialists who has their own retail outlets at the same time. The Greenhills bargain center, which started the “tiangge” fad, has stall owners who still operate their permanent outlets at the same area. Many of them also have their branches in other shopping malls and strip malls. “Tiangges” allow them to reach to more clientele who would still prefer to shop in areas near them rather than going to their outlets.

Specialists considered multiples or private retail companies operating in 10 or more branches are benefiting from the expansion of shopping malls in Metro Manila and other key areas nationwide. Sales of multiples have increased by 46.4% over the period, from 7.6 billion pesos in 1999 to 11.2 billion pesos in 2003. Multiples still remain as a minority which constitutes only 13% of the total retail sales of specialists in this sector. Many multiples enjoy success at present which all started out as independents.

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Market feasibility Study

Small independent shops are expanding their operations through franchising or forming an informal buying group. These are areas especially those outside the Metro Manila which contributes to the increase of sales by the affiliated retailers and franchised retailers. There are still non-affiliated independents who cater to the Class CDE market and are present in areas which named stores are not able to reach. Sales of independents have increased by 35% in about five years from 55.4 billion pesos in 1999 to 74.8 billion pesos in 2003.

Retail Sales by Type of Outet: % Growth 1999-2003 1999/2003 2002/2003 Clothing and Footwear Specialists - Multiples 47.4 12.0 - Independents 35.0 11.6 TOTAL 36.5 11.7 Table 2.2

Source: Euromonitor

Retail Distribution24 Department stores and variety stores (Mixed retailers) dominate the sales of men’s and boy’s wear and children’s wear. This is because there are much fewer clothing and apparel specialists who cater to their market as compared to the female wear. In this sense, women have more choices especially when it comes to apparel specialty shops. About 56.6% of the total sales of women’s and girls’ wear were sold through specialists while around 40.4% were sold through mixed retailers. Still, there are few clothing and footwear specialists that can be considered as multiples. They contribute to only about 10% of the total sales for this sector. This means that there is still room for a major chain to enter this retail sector which could carry the men, women and children’s merchandises.

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Market feasibility Study

Retail Distribution of Clothing/Footwear Retailers' Core Products 2003 (% value) Mens/Boys Womens/ Childrens Footwear Fashion wear girls wear wear Accessories Clothing/Footwear Specialists - Multiples 1.5 7.6 -8.0 -- Affiliated 21.9 25.3 32.0 18.2 3.8 - Independents 18.9 23.7 1.3 26.5 8.7 Department stores 42.0 32.3 52.0 32.0 67.0 Variety Stores 13.5 8.1 9.0 12.1 9.5 Others 2.2 3.0 2.7 3.2 11.0 TOTAL 100.0 100.0 100.0 100.0 100.0 Table 2.3

Source: Euromonitor estimates based on Department of Trade and Industry; trade press and industryassociations

Leading retailer market shares25 In 2002, the six leading specialist retailers (Stores Specialists, Zenco Sales, Surplus Marketing, Suyen Corp., Golden ABC, & Cinderella Marketing) were estimated to have a combined market share of 7.5% in the clothing and footwear sector. Slight increase in 2003 by 7.8% was foreseen. This is because only three of these will exceed sales by 1 billion pesos. This sector is loosely organized by mixed retailers like SM and Robinsons Department Stores. Although the market shares of mixed retailers and specialists are almost the same, the large number of specialists from whom customers can choose seems to prevent any major specialist from becoming dominant in the market.

Leading Clothing and Footwear Retailers Market Shares 2002-2003 (% value) 2002 2003 Stores Specialist 2.1 2.2 Zenco Sales 1.6 2.0 Surplus Marketing 1.4 1.4 Suyen Corp. 0.8 0.8 Golden ABC 0.8 0.8 Cinderella Marketing 0.7 0.7 Others 92.5 92.2 TOTAL 100.0 100.0 Table 2.4

Sources: Euromonitor estimates, 2003

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Market feasibility Study

Competitors :: Key figures. For 1999, in the country, the number of manufacturers of ready-made garments is estimated at 669,000 Total revenues were 36,263,620,000 pesos while total costs were 22,186,435,000 pesos. There were 96,000 custom tailoring/dressmaking establishments, with total revenues of 2,120,806,000 pesos and costs of 1,302,192,000 pesos. Manufacturers of wearing apparel and others amounted to 166,000 with revenues of 11,901,402,000 pesos and costs of 6,900,571,000 pesos. In the National Capital Region, manufacturers of ready-made garments were estimated at 336,000 with revenues of 21,316,798,000 pesos and costs of 12,587,928,000 pesos. Custom tailoring and dressmaking establishments were estimated to be 40,000 in this area, with total revenues of 895,567,000 pesos and total costs of 710,274,000 pesos. The number of manufacturers of wearing apparel and others were estimated at 74,000, with total revenues of 4,869,894,000 pesos and total costs of 2,548,604,000 pesos.26 There are several key players in the garment industry that are the closest competitors of Lilliput. These are indirect competition whose brands don’t only cater to petite-sized women alone. :: Kamiseta. Kamiseta targets girls between the ages of 16 and 34. It positions itself as the boutique that caters to the hip, youthful and active women of today. They go by the slogan “It’s fun being a girl”. Its catchphrase projects the cool, casual and classics of clothing.27 :: Bayo. Bayo is reflects a clean, classic image that then caters to the needs of women who embodies the laid-back, casual lifestyle and has the preference for stylish yet classic apparels.28

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Market feasibility Study

:: Plains & Prints. Plains & Prints is a fast growing brand of women's apparel, intimate wear, shoes, bags, accessories and fragrances. Their target market is composed of college students, young working women and young homemakers. These stylish and very busy women need clothes that will carry them through their day. They want to exude both confidence and femininity. Their products must pass strict quality control standards and are made from high quality materials and their designs are simply unique and come in a variety of colors. Their competitive advantage is that they constantly innovate.29 :: Penshoppe. Penshoppe ventured into the garment industry with a vision to be the teen’s casual clothing statement. It regularly provides a variety of styles to choose from and constantly updates its collection. Its collections of clothes, accessories and personal care products are affordable and provide great value for customers' money. 30 :: Lee. Lee Jeans is for young male and female, 14 –25 years old whose passion is denim. They are fashion and brand conscious, early adopters but not trendsetters. They are unpretentious, sociable and open-minded. They shop in middle to upper tier distribution. Lee Pipes, on the other hand, is for young male and female, 10-18 years old who are into active sports like basketball, skateboarding, BMX–riding. They are fashion conscious, positive and optimistic. They come from the middle and affluent market. :: Folded & Hung. F&H is for the modern, fresh and individualistic personas in our time. They go for well-designed products that can be described as classic, edgy and “with an attitude”. Their products include imported products and designs as well as locally manufactured apparel. 31 :: Others. There are other existing popular brand names in the clothing industry that can be considered as potential competitors for Lilliput. These are Petite Monde, Freeway, Pink Soda, Herbench32, Human, YRYS and Genevieve Gozum.

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Market feasibility Study

Target Market Lilliput targets petite Filipino women of ages 20-29 who belong to classes B and C. These females, based on the survey conducted (See Appendix 2), are said to be impulsive buyers of clothes, and usually spend at most 3,000 pesos monthly for their clothing needs. 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 = FP x C x H Where:

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Market feasibility Study

TM

= target market

FP

= female population in NCR within the age of 20-29

C

= percentage of population belonging to upper and middle class

H

= percentage of population with height below 5’4 from ages 20-29

Population of females from ages 20-29 is 1,090,604 as taken from the year 2000 census (see Appendix 5). This figure was adjusted for the years 2005-2015 based on the National Statistic’s Office’s projected annual geometric population growth rate shown below. Year

Growth Rate

2000 – 2005

2.05%

2005 – 2010

1.94

2010 – 2015

1.81

2015 – 2020

1.63

The upper and middle socio-economic segment comprises 23% of the entire Philippine population as established by the Social Weather Station for 2004. Moreover, a rate of 0.74% shall be used in order to determine the annual growth of the said classes based on 1991 statistics from NSO. The percentage of population with height below 5’4 belonging to the target age group was computed using the formula: H

=

Total Target Height

1

Total Sample Population The total target height pertains to the number of females within the height range of 4’10” - 5’3 from the total sample population of 1,000 female patients taken from the records of the University of the Philippines Health Service. This sample is deemed to provide a

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Market feasibility Study

relatively good representation of the population of the country since the university has a heterogeneous mix of students, faculties, and employees coming from the different regional localities. Hence, plotting the figures: H =

841

= 0.841 or 84.1%

1000 According to the Sixth National Nutrition Survey (2003) conducted by the Food and Nutrition Research Institute (FNRI) of the Department of Science and Technology, the mean height of adult females within the age group of 20-39 in the country is about 151.76cm or approximately 5 feet. This further supports the resulting 84.1% of females falling within the target height range. The percentage derived is above the average hence this proves that there is a considerable market base for demand. Target Market Computation FP x C x H = TM Female Income Class Height % Target Market Pop'n (NCR) % 1,207,071 23.00% 84.10% 233,484 1,230,489 23.17% 84.10% 239,775 1,254,361 23.34% 84.10% 246,236 1,278,696 23.51% 84.10% 252,870 1,303,503 23.69% 84.10% 259,684 1,328,791 23.86% 84.10% 266,680 1,352,843 24.04% 84.10% 273,517 1,377,330 24.22% 84.10% 280,528 1,402,260 24.40% 84.10% 287,719 1,427,641 24.58% 84.10% 295,094 1,453,482 24.76% 84.10% 302,659 Table 3.1

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

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Market feasibility Study

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 buy from our products. It represents the projected market share of Lilliput 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

=

market demand

AMAR

=

adjusted market acceptability rate

TM

=

target market

CR

=

consumption rate

AMAR is computed by: AMAR = MAR x Conservative rate Where:

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Market feasibility Study

MAR

=

number of willing buyers q sample size

The Market Acceptability Rate (MAR) is reflected in the survey results where 79.25% answered yes to the question of whether they are willing to buy or not from the suggested boutique (see Appendix 2). Conservative rate of 95% was used to accommodate a 5% sampling error. However, it is not safe to assume that the MAR result would actually buy the products. Table 3.2 presents the computation for market demand for tops using an annual consumption rate of 18 tops, while Table 3.3 presents the computation for market demand for bottoms using an annual consumption rate of 3. The consumption rate figures were based from the professional opinion of the marketing manager of Plains and Prints. To further substantiate this claim, En Cima conducted a convenient sampling of 50 individuals within the target market through a phone interview. Results showed that women usually buy 18 to 20 tops and 3 to 4 bottoms annually. Hence, for a more realistic estimate of Lilliput’s demand, En Cima considered using the conservative values of 18 and 3 units for tops and bottoms, respectively. Table 3.2

Market Demand Computation for Tops (in units)

Year

AMAR

Target Market

Potential Buyers

Consumption Rate (Annual)

Annual Demand

Monthly Demand

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

75.29% 75.29% 75.29% 75.29% 75.29% 75.29% 75.29% 75.29% 75.29% 75.29% 75.29%

233,484 239,775 246,236 252,870 259,684 266,680 273,517 280,528 287,719 295,094 302,659

175,790 180,527 185,391 190,386 195,516 200,783 205,931 211,210 216,624 222,176 227,872

18 18 18 18 18 18 18 18 18 18 18

3,164,222 3,249,479 3,337,040 3,426,945 3,519,290 3,614,101 3,706,757 3,801,772 3,899,225 3,999,173 4,101,695

263,685 270,790 278,087 285,579 293,274 301,175 308,896 316,814 324,935 333,264 341,808

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Market feasibility Study

Table 3.3

Year

AMAR

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

75.29% 75.29% 75.29% 75.29% 75.29% 75.29% 75.29% 75.29% 75.29% 75.29% 75.29%

Market Demand Computation for Bottoms (in units) Consumption Potential Annual Target Market Rate Buyers Demand (Annual) 233,484 175,791 3 527,373 239,775 180,527 3 541,581 246,236 185,392 3 556,176 252,870 190,386 3 571,158 259,684 195,517 3 586,551 266,680 200,784 3 602,352 273,517 205,931 3 617,793 280,528 211,210 3 633,630 287,719 216,624 3 649,872 295,094 222,177 3 666,531 302,659 227,872 3 683,616

Monthly Demand 43,948 45,132 46,348 47,597 48,879 50,196 51,483 52,803 54,156 55,544 56,968

Supply Analysis Lilliput’s supply consists of garments produced by subcontractors within Metro Manila which are designed and tailored specifically for the targeted market. The total supply can be derived from the annual average production capacity of the garment industry for 2005 as 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 Lilliput. 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 female who encountered problems in buying their clothes PT = percentage of target market

=

Target market NCR population

i

GR = growth rate of supply

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Market feasibility Study

The rate of females who encountered problems in buying clothes were taken from the survey conducted, who answered yes in question number seven (see Appendix 2). The production capacity is adjusted with this rate so as to capture the supply of garments usually bought by females who do not find the perfect fit of clothes. Table 3.4 presents the adjustment of the production capacity for the base year. Supply Computation Annual % Problems Supply

Table 3.4

Bottoms: Trousers Skirts Total Tops: Shirts Blouses Dresses Total

Supply

19,439,180 67,093,558

66.50% 66.50%

12,927,055 44,617,216 57,544,271

27,777,488 15,600,249 14,131,967

11.25% 11.25% 11.25%

3,124,967 1,755,028 1,589,846 6,469,842

Total Supply

64,014,112

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 3). Annual supply projection is then adjusted using this value, assuming that its rate would remain constant.

A declining growth would then be

observed because as mentioned in the environment analysis, more and more manufacturing companies are relocating their plants in China and Taiwan, where the cost of labor is relatively cheaper than in the country. 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 3.5 shows the computation of the market supply for the 10-year projection, adjusted both through the percentage of target market and the growth rate.

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Market feasibility Study

Adjusted Supply Target Market Supply / NCR Pop'n 64,014,112 2.12% 61,069,462 2.14% 58,260,266 2.16% 55,580,293 2.17% 53,023,599 2.19% 50,584,513 2.20% 48,257,625 2.22% 46,037,774 2.24% 43,920,036 2.25% 41,899,714 2.27% 39,972,327 2.29% Table 3.5

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

Annual Supply 1,359,585 1,306,643 1,255,765 1,206,863 1,159,870 1,114,701 1,071,298 1,029,580 989,487 950,955 913,926

Demand-Supply Analysis Upon computing separately the demand and supply, the analysis of one in comparison to the other produces the gap that Lilliput 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 market demand and the market supply estimates, we could compute an average of 9,852,998 potential demands in units that Lilliput hopes to supply. Table 3.7

Demand-Supply Gap

Year

Total Demand

Total Supply

Demand-Supply Difference

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

3,691,595 3,791,060 3,893,216 3,998,103 4,105,841 4,216,453 4,324,550 4,435,402 4,549,097 4,665,704 4,785,311

1,359,585 1,306,643 1,255,765 1,206,863 1,159,870 1,114,701 1,071,298 1,029,580 989,487 950,955 913,926

2,332,009 2,484,417 2,637,451 2,791,240 2,945,970 3,101,752 3,253,252 3,405,822 3,559,610 3,714,749 3,871,385

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Market feasibility Study

We cannot however, entirely accommodate all the demand-supply differences projected. Being a relatively new entrant in the industry, Lilliput aims to gain a market share of at least 0.5% in its first year of establishment. As the business progress, En Cima targets to gradually carve bigger market share in the industry as we expand our outlets and capacity throughout the course of the company’s operations. Market Share Market share represents the portion of the market that Lilliput will hold. This would represent the viable capability of the business in the industry as well as it shows how strong Lilliput 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:

Market Share =

Lilliput’s Ave. Monthly Production Capacity (tops and bottoms)_ Monthly Market demand (tops and bottoms)

Lilliput’s average monthly production capacity shall be divided with the total market demand for tops and bottoms taken from their 2006’s projected demands respectively. Hence, this would reflect the fraction that Lilliput aims to provide in proportion with the total demand in the introductory phase of its venture. The production capacity amount was computed using the targeted number of designs for tops and bottoms that Lilliput plans to manufacture in the start of the business. Items shall be supplied in the boutique monthly which would contain approximately 20 designs with 120 units each for tops (blouses, shirts, and dresses), while bottoms (pants and skirts) would come in 10 styles with 100 each.

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Market feasibility Study

Substituting the formula, a 1.11% market share was computed as:

Market Share

=

2,400 + 1,000

a

263, 685 + 43,948 =

0.0111 or 1.11%

In terms of peso revenues, Lilliput is projected to obtain P25,317,764 market share in its first year of operations (see Appendix 7).

Over the years, Lilliput 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 be opened at an annual rate starting from the 3rd year, and in the long run, Lilliput will be open for franchises and consignments to various department stores and boutiques. By doing so, and by assuming a fairly good economic flow in the industry, Lilliput is thereby guaranteed to make its mark in the business.

Segmenting, Targeting, & Positioning En Cima, Incorporated

33

Market feasibility Study

Segmenting, targeting, and positioning are critical factors in shaping the success of any business plan. They are initial steps in determining competitive advantage that’s why they must be carefully studied, planned, and evaluated. This involves selecting the appropriate market segment that will be targeted and then positioning the product in a manner that is most effective in capturing this target market. Lilliput is a clothing boutique specifically intended for women who are petite or short in height. This market base must be further divided into smaller segments to capture a specific market. Segmenting Market segmentation involves selecting the group of people who will be most receptive to the products offered at Lilliput. In the Philippines, the market could be segmented in many ways – geographic, demographic, psychographic, and behavioral. It is very important to group the market according to their distinct needs, characteristics, interests, and values because this will greatly influence their response and attitude towards Lilliput. 1. Geographic Geographic segmentation involves dividing the market into regions, provinces, cities, and districts. In the case of Lilliput, it is more practical to group the market according to cities, specifically the ones in the National Capital Region, i.e. Las Pinas, Manila, Makati, Mandaluyong, Marikina, Muntinlupa, Paranaque, Pasig, Valenzuela, Kalookan, Malabon, Navotas, Pasay, Pateros, Quezon City, San Juan, and Taguig. This geographic segmentation is very important because it is a critical factor in determining the location of the boutique. Lilliput must have a strategic location that would make it accessible to the target market.

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Market feasibility Study

2. Demographic The market could be further segmented on the basis of different demographic factors like age, sex, height, income, class, gender, family size, family life cycle, occupation, religion, education, nationality, and etc. Lilliput’s market will be grouped according to the following: a. Age Filipinos are generally fashionable but different age groups have distinct needs, wants, sense of style and purchasing power. These varying characteristics have an effect on how the market responds to the products offered in Lilliput. Women were actually segmented according to the following divisions: (1) 14 years old and below- children and young teens; (2) 15-19 years old – high school and college students; (3) 20-24 years old – young professionals; (4) 25-29 years old – career women; and (5) 30 years old and above – career and family oriented women. b. Income The consumer’s level of income is an important factor in the profiling of Lilliput’s market because it provides an effective indicator that would reflect the buying power and spending habits of the women for whom the products are made for. Accordingly, the social class through which specific income groups are categorized has been identified. Dr. Ana Maria Tabunda, Dean of the UP School of Statistics, provided an identification of the range of income figures that would link a person’s monthly family income to the class he/she belongs to.

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Market feasibility Study

•

Class A: Php 100,001 – above This is the affluent segment of society. Price is not an issue since they have very high purchasing power. They can afford to purchase luxury items and are very brand conscious. These consumers have high brand loyalty and are inclined to experience the finer things in life.

•

Class B: Php 70,001 – 100,000 This group is concerned with price as long as it is reasonable and quality of the item is not compromised. They usually do their grocery shopping at least once a week. They have a specific budget when shopping for clothing and are very much concerned with the latest trends.

•

Upper Class C: Php 50,001 – 70,000 They are very price conscious when it comes to buying items. They usually plan when to buy items because they want the best value for their money. They buy clothes only when they need them.

•

Lower Class C: Php 30,001 – 50,000 These are individuals who put quality as an important consideration so they want to get the most out of their money. There is a high degree of price sensitivity and is a major consideration in their buying decision.

•

Class D: Php 7,001 – 30,000 This segment usually buys items only when the need arises. Price is a major consideration in deciding what to purchase.

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Market feasibility Study

•

Class E: 7,000 - below This is the poorest segment of the market who barely has excess money to spend on. Shopping for clothing is not a priority since a big portion of their income is allotted for basic necessities like food and shelter.

c. Race Race is an important factor to consider in segmenting the market of Lilliput. Different races vary in their body structure and built. Caucasian women have more robust bodies as compared to their Asian counterparts. Lilliput apparels are specifically designed for Asian women, particularly Filipinos, who are generally small in height and structure. 3. Psychographic Psychographic segmentation further divides the market base into factors such as social class, lifestyle, and personality. Even though people belong to the same demographic groups, they have varied psychographic characteristics. These are important because they have strong influence on the person’s image, values, preferences, interests, and etc. a. Lifestyle Lifestyle is defined as a person’s way of life which covers the individual’s activities, interests and opinions. The lifestyle greatly affects the way consumers spend their income. This way of segmentation encompasses the individual’s social class, income and personality. Ms. Christine Santos, Marketing Manager of Plains and Prints, mentioned in an interview conducted by En Cima that the lifestyle and

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Market feasibility Study

priorities of people differ from age to age. She stated that it could be divided into different subgroups, with each age group having a distinct characteristic from other age groups. To further validate the information, the group also consulted Dr. Josefina N. Natividad of the UP Department of Sociology who made minor modifications to make sure that the data are sound and acceptable. •

14 years old and below This age group is generally composed of children and young teens who are not yet conscious about fashion. This is primarily because their everyday attire involves school uniforms or basic apparels. They also have limited buying power since their allowance is just enough for their expenses in school and they are still very dependent on their parents who buy their clothes. Children and teens within this age bracket also rely on hand-me-down apparels from older siblings or relatives.

•

15 – 19 years old Women from this age bracket are mostly teenagers in High School or College whose priorities are focused on their education and active social lives. A bandwagon behavior is prevalent in this group. Cliques and “barkadas” are a common thing in campus and people are identified with the group of people they hang out with. Their lifestyle and behavior is greatly influenced by the trends dictated by society, media, and the people around them. They always want to follow the “in” thing in fashion, music, electronic gadgets, etc.

•

20 – 24 years old Graduating college students and young professionals comprise this segment of the market. Their priorities in life are basically concentrated on their personal needs, wants, and pleasures because they don’t have any dependents who rely on them for financial support. Women in this age bracket are in a transitional En Cima, Incorporated

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Market feasibility Study

stage from being an easygoing schoolgirl into a budding career woman. In the early stage of their professional lives, they are in a search for the right career path to take as they move from one job to another. But they still manage to maintain a balance between their aspiration of being recognized in their chosen professions and their active social lives. These women are still fashion conscious but are now more inclined to formal or corporate designs. •

25 – 29 yrs old Women at this stage have already established a clear direction for their careers and have more or less found the company that they want to grow with. This is the time when they start being promoted to higher positions in the organization. Their years of experience and career status enable them to gain higher purchasing power. But this is also the time when women start changing their priorities in life. They tend to become more future-oriented and more inclined into saving. However, they still maintain an active social life and still invest on their looks and appearance because it is during this stage that women start searching for serious partners that could potentially lead to lifetime relationships. According to Dr. Natividad, this is actually the age bracket where most women enter into marriage.

•

30 years old and above Women in this age bracket already hold key management positions in the company. At the same time, they also perform a very important role in the family as a wife and a mother. These women have to juggle both their professional and personal life that’s why they start gaining a new perspective and a new set of priorities to focus on. These women now have children to support and provide for. That is why they tend to become less self-centered and more focused on their family, especially their children.

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Market feasibility Study

Market Targeting Market targeting is the process of evaluating and selecting segments of the market that Lilliput will target and focus on. There are different things to consider in selecting the target market: Is this segment large enough to result to a profitable venture for Lilliput? Are the products offered at Lilliput suitable to their needs and interests? Who are the competitors for this market segment? After assessing all the segments and answering these questions, it is now time to select the market with the greatest potential. Lilliput is a clothing boutique specially designed for (1) women who are (2) petite, between the (3) age of 20 and 29 years old, particularly those in the (4) Class B and C bracket in (5) Greater Manila Area. Women are generally good shoppers. That is why they are a good market for any type of boutique. They are very much into following the latest fashion trends and they enjoy going to the mall to shop for clothes, shoes, bags, accessories, and etc. Another interesting fact about women is that they are always willing to try something new. This is why a new entrant in the clothing industry like Lilliput will not have much difficulty in penetrating and capturing its target market. The idea of launching a new boutique would in fact thrill them. Some women even consider shopping as a skill that they love to master. They are very particular with the type of clothes they purchase. Women know their bodies very well and they are very conscious about their best and worst physical attributes. They want clothes that will enhance their best features and conceal their insecurities. And this is what Lilliput is offering to women who are petite. According to the Webster’s New Riverside University Dictionary, petite is an adjective commonly used to describe women who are small, slender, and trim. But for the sake of this marketing study, the group made minor modifications to its definition in order to provide a specific term that would characterize the market segment that Lilliput will target. Therefore, this study would define the word petite as an adjective synonymous

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Market feasibility Study

to the word short, which means having little height.33 The group opted not to use the term short due to its negative connotation. Petite is a more acceptable and politically correct term to describe people who are relatively “underheight”. This market study would not limit the word petite as a description for women who are small in terms of height and body frame. The term petite would describe short women of different body sizes - slim, medium-sized, and plump. Lilliput is tapping the market of petite women, specifically those who are between 4’10” and 5’3” in height. En Cima established this qualification because survey results showed that respondents within the said range were the ones who usually encounter problems with the length of their pants and skirts. They represent 66.5% of the total sample population that has been analyzed (see Appendix 2). Moreover, 79.25% would go with the idea of a clothing store specially designed for petite women. There is a good potential for this segment since most Filipinos are relatively short. According to the Sixth National Nutrition Survey, an average adult Filipina within the age bracket of 20-39 stands 151.76 cm or 5’ in height. The research conducted at the UP Infirmary also revealed that 84.14 % of females between the age of 16 and 40 years old fall within the 4’10” and 5’3” height bracket. This information was drawn by tallying the height from medical records of 1000 randomly picked female patients in the UP Health Service. En Cima believes that the information gathered from the records could serve as a good representation of the entire female population because of the diversity of students, faculties, and employees in the university. The considerable percentage of women who qualify within the established height bracket supports the idea that the market segment for petite women is substantially large. This segment is a good target since this is still an untapped market in the clothing industry. Lilliput is distinct from other boutiques since the apparels are specially tailored to suit the needs of petite women. A variety of clothing shops are available in the market but the sizes of items offered are typically based on American or European standards. And even boutiques like Petit Monde, Penshoppe, and

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Market feasibility Study

Bench that are intended for Asian market, rarely have clothes with the appropriate designs, cuts, and sizes that will suit petite women. Women aging between 20 and 29 years old consist of students and professionals. This age bracket could actually be divided into two subgroups: (1) 20-24 years old – college students and young professionals; and (2) 25-29 years old – career women. These subgroups differ in their interests and priorities; however, they also share some common needs and characteristics. These two age groups, taken collectively, make up the age segment that Lilliput is targeting. It should be noted that the buying behavior of women between the age of 20-24 years old and 25-29 years old differ to some extent. The former, characterized as those within the transitional stage from university life to that of a professional one, might still be dependent and limited to their allowances or to some meager earnings from initial job positions for their shopping expenses. On the other hand, the latter, since they are relatively stable enough and are earning their own money, they are now more capable of buying whatever they desire. But despite this difference in their buying behavior, what most women in this age bracket share in common is their independence and “passion for fashion”. What is meant by independent is that they don’t have anyone to support and provide for. A bulk of their allowance and salary are splurged for their own pleasure, benefit, and vanity. In addition to that, they are also a good market for Lilliput because women at this age have a natural flare for fashion and style. They always follow the latest trends and fads. Their active social lives require them to always have the appropriate outfit for different types of occasions. People in this age group actually use their fashion sense as an expression of their mood, attitude, and status. In terms of social classes, Lilliput will be targeting those who belong to Class B and Class C. Just like any other specialty stores, the items in Lilliput would be valued at a relatively higher but reasonable price range. This pricing strategy is due to the fact that the boutique offers specially designed clothes appropriate for petite bodies. The Class B and C segment of the market is an ideal target because they will most likely respond positively to Lilliput’s pricing strategy. The price of a product is an important

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Market feasibility Study

consideration in their buying decision, but other than that, they also give high regard to quality, design, and the fit of clothing. There is always a tradeoff between price and all these other factors but people in this class bracket would be willing to pay more, for a product with superior quality, fashionable design, and proper fit. At the same time, they are also not like the Class A segment who is very loyal to branded and signature clothes. People in the Class B and C bracket would be open to the idea of trying new clothing boutiques like Lilliput. Geographically speaking, Lilliput would be targeting petite women in the National Capital Region. But the focus is mainly on the Greater Manila Area where the population is generally comprised of people in the Class B and C bracket. This would include people residing in Manila, Quezon City, Pasig, Makati, Mandaluyong, and San Juan. Selecting the geographical market segment to target is very crucial to the business because it helps in identifying the strategic location of the store. These cities were actually chosen because of the lifestyle and traffic of people in these areas. Manila, Quezon City, Pasig, Makati, Mandaluyong, and San Juan are highly urbanized and populated places. The Census of Population and Housing conducted by the National Statistics Office in 2000 revealed that there are 90 males for every 100 females between the age of 15 and 29 years old residing in the National Capital Region. This only shows that there is really a great potential for Lilliput in these cities. Positioning Positioning Statement: Lilliput will be established as a clothing boutique for women that offers chic, sleek, timeless, and naturally fashionable apparels specially designed to complement petite bodies. Lilliput is a specialized clothing boutique for women who are petite, specifically those who are between 4’10” and 5’3” in height. As mentioned earlier, the classification

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for petite will not be limited to women who are small in height with trimmed bodies. This term would apply to women with different figures, whether slender, curvy, or round. The group originally planned to emphasize the boutique’s specialization on clothes with shorter dimensions for women who are relatively “underheight”. But after realizing that this kind of positioning may send a negative impression for women who are “short”, the group decided to position Lilliput as a specialty store for petite that focused on specially designed clothes with appropriate styles, patterns, and cuts that could highlight assets and conceal insecurities of petite bodies. An interview with Ms. Christine Santos, Marketing Manager of Plains and Prints, made the group aware of the disadvantages of emphasizing Lilliput’s concentration on clothes with shorter dimensions or tailored measurements. The boutique’s image as a specialty store for petite could result to negative reactions from those who are “underheight” because it gives them the feeling that they are not normal or regular just like other people who don’t need “specialized apparels” to get clothes that fit them well. Ms. Santos stressed that there is no problem labeling Lilliput as a specialty store as long as petite women would be presented with an interesting and appealing image. This is why Lilliput will emphasize the designs, styles, patterns, and cuts of clothing that are specifically tailored to complement the body of women who are petite. This specialized image establishes Lilliput’s competitive advantage over other clothing boutiques like Kamiseta, Bayo, Petit Monde, etc. Lilliput is particularly focusing on the needs and interests of women who are petite. Its selling point is mainly on the customized apparels that are intended to enhance the form and dimensions of petite bodies to gain a more physically appealing look. It is a known fact that the level of confidence of a woman is improved when she knows she looks good. But most fashionable and trendy clothes in the market are designed to suit the body of models, and when petite women wear these items, they don’t get the effect or look that they want. Lilliput would like petite women to overcome their insecurities about their height and make them realize that there is really nothing wrong with being short because there are a lot of clothing designs suitable for their body type. These specially designed clothes

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offered at Lilliput are intended to make women feel confident and comfortable about the clothes they wear and the way they look. Lilliput also focuses on chic, sleek, timeless, and naturally fashionable designs of clothes. The group wants the boutique to be recognized for the classic style of its apparels. The items offered will be something that would look good and fashionable even when years have already passed. According to Ms. Christine Santos, the trend in fashion is constantly reinventing itself but it always has a touch of the old one. There must always be balance between the latest trend and the classic style. Lilliput promotes fashion that makes a person standout without being excessively trendy and styles that catches attention without exerting too much effort. This is achieved through designs that are edgy but low profile, simple but elegant, trendy but timeless. Women want beauty that is within--- beauty that is not noticed only because of make up or artificial products. When it comes to fashion, women also want something that is simply and naturally fashionable. They don’t want clothes that only have great designs; they actually want clothes that look great when they wear it. There is no sense in wearing something that only looks good on the mannequin, or models, or other people, but not on you. It is really important for a woman to wear clothes that complement her body and this is why Lilliput offers apparels that are specifically designed to suit the bodies of petite women.

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Product

As can be observed, majority of the brands in the market offer clothes that reflect Caucasian frames characterized by relatively larger sizes and measurements. This has become a pressing concern for most of the Filipino women as they would always spend difficult times finding apparels that would fit right. Although alterations could be done to repair the clothes’ dimensions, more often than not, the process can possibly ruin the style or design of the product. En Cima, Inc. was able to understand the problem that Filipina women face hence the reason of coming up with the idea of Lilliput, a brand that will provide clothes that would suit and enhance the height and physical attributes of the typical Pinay. Lilliput’s clothing line is geared towards addressing the usual problems that petite Filipino women always come across with. Thus, the cuts, sizes and dimensions that shall make up our apparels will accordingly be tailored in order to give our target market the right fit, the right form, and the right proportions that match their body frames. Moreover, our designers and fashion consultants will create trendy collections and will also regularly update the design and style of our products thereby conceiving a uniquely stylish boutique that perfectly matches the Filipina woman.

Features

•

Theme The world of fashion moves in a relatively fast paced tract that we need to continuously

plan and innovate in order to keep up with the present and forthcoming trends. Consequently, Lilliput fashion shall exert efforts in providing clothing lines that are appropriate to the current fashion themes. The group therefore has to constantly search for the latest trends on the web, magazines, and catalogues, and should also be keen in observing how prominent fashion figures project themselves through the clothes they wear. In addition, we will seek advices

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from fashion enthusiasts and hire in-house designers who will assist us in keeping up with the current fashion statements.

According to fashion experts, the “lady-like” theme is the mood of the moment, which is exactly what Lilliput is trying to project in its clothing line. Moreover, based from various fashion forecasts, the year 2005 up to the first quarter of 2006, the eclectic ethnic-bohemian style, the botanical (“return to nature”), and the volume (layers) looks will be expected to be seen in the limelight.

Lilliput will introduce the latest fashion craze and keep up with the latest designs by having quarterly or monthly themes, depending on the forecasted demand and clamor of fashion aficionados.

•

Colors

Cleaner, discreet, and vibrant colors and shades shall characterize the apparels that the store will offer. Imagine a lot of pastel rainbow and candy colors such as icy aquamarine and powdery blue, lavender lilacs, rose pink to pale pink, various hue of greens, yellow sunshine, carrot orange to tribal earthy tones such as tangerine, light acids to soft browns. Basic black and whites will still be present to go well with corporate functions and sexy outfits for evening wears, as these basic colors continue to be strong attributes in many women's wardrobes.

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•

Fabrics

For the tops, the materials often used in high quality-oriented similar boutiques come in knitted or weaved cotton, rayon, and wool. A little bit of lace, silk and chiffon materials will be added to other items for a sultrier and sexier look. For the bottoms, a significant amount of denim will be utilized. Cotton and other similar lightweight fabrics for tops will be used as well in more formal slacks, comfort khakis and skirts.

•

Product Line Introduction (1stand 2nd years of operation) The initial product line will be consisted of 50% bottoms for instance, regular denim jeans; slacks; casual and formal skirts; and the other 50% for the tops which includes baby tees, tank tops, blouses, cardigans, and blazers. Other latest fad for each season (e.g. boleros or cropped jacket) will be supplemented as well in limited editions. Lilliput will have tag lines such as Stand-out for our jeans and Sleek and chic for the tops. Growth (3rd to 5th years of operations) Full body casual and semi-formal dress will comprise the new set of the product line by year 3. A new product line of intimate wear such as underwear and nightgowns specially tailored to the Filipina size shall be offered at Lilliput’s fourth year of business. In addition, basic footwear such as slippers and sandals will be introduced during the fifth year of operations. These items will be outsourced but will carry the Lilliput brand.

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Maturity (6th to 10th years of operations) On its sixth year, stilettos, pumps, and snickers as well shall be added to the store shelves. Lilliput’s signature perfume and colognes will be introduced on the seventh year of operations. Hair and body accessories will also be launched by the eighth year. A basic cosmetic line consistently keeping up with the clothing line’s theme will also be expected to be released by the ninth to tenth year of operations. •

Augmented Products Aside from the stylish clothing line, Lilliput will also hire friendly and accommodating

trained boutique personnel so as to make the customer’s experience with our store as something to remember and repeat. Today, people are much more concerned with the environment and Lilliput understands that. Thus, our store will only utilize stylish reusable paper bags and not the plastic ones in order to contribute to this cause. Customers do patronize companies that operate with a heart. In recognizing our responsibility to society, this is not to be done for promotions alone but also for the greater good of the community. Also, Lilliput will have spacious fitting rooms for comfort. This is also needed so customers can appreciate the beauty of the product that our store has to offer. Often times, lady buyers do not come alone. They have companions like friends, husbands, or boyfriends with them that is why Lilliput plans to have a waiting area composed of mini sofa and beanbags. Waiting should not be a problem anymore especially for the guys. For security purposes, a bag counter will be put up. The security guard will take the bags of the people who will go inside the store for safekeeping. Almost all major shops accept credit cards and this will be the same for our store. Lilliput understands the hesitance of some shoppers in bringing a lot of money for shopping. Added to that, to make the experience very relaxing and worthwhile, we will also play in-store soothing music. Plus, surround mirrors will be put up on the walls so potential customers can know right away if the product looks good on them without having to fit the clothes. Promo

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giveaways such as poster, pocket calendar, key chains will be given to buyers so they can remember our store all the time.

Price Prices are set according to the positioning and image of the brand. Items at Lilliput will cater to the needs and interests of women in the Class B and C bracket. Survey results have shown that 54.58% of the total respondents are willing to pay 300 to 500 pesos for tops and 38. 17% on the other hand, are willing to pay 750 to 1000 pesos for bottoms (refer to Appendix 2). However, En Cima decided to extend the prices of the more elaborate clothing items like blazers to a maximum of P1,000 or more while the more stylish bottoms can reach up to a price of P1,500 and above depending on the intricacy of the design. These price ranges more or less on par with our potential competitors such as Kamiseta, Bayo, and Freeway. The said clothing boutiques are the most frequently visited stores by most of the respondents. Since Lilliput is a specialty store, we can set a higher premium in all prices. Mark-up percentages will start at 150% to 300% of the variable costs that will include direct fabric materials and outsourced manufacturing labor. Average labor cost for plain tops start at P150 and P250 for the bottoms. The assumed costs are at minimum orders of 30 and 150 pieces for tops and bottoms respectively, with different sizes already. Appliquès and other design materials for the clothes are excluded from the basic manufacturing cost. PRICE LIST (for the initial product line only) STAND-OUT Bottoms

SLEEK and CHIC Tops

•

Regular Jeans and Capri Pants

Php 750 – 995

•

Baby tees & Tank Tops

Php 299 – 579

•

Stylish / Chic Jeans

Php 889 – 1,559

•

Stylish / Chic Blouses

Php 439 – 749

•

Stylish Skirts

Php 350 – 889

•

Cardigans (Knitted Blazers)

Php 500 – 989

•

Formal and Pencil Skirts

Php 469 – 995

•

Cropped Jackets & Boleros

Php 750 –

•

Slacks

Php 789 – 1,799

1,129 •

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Formal Blazer

50850 – Php

Market feasibility Study

Place In Metro Manila, business districts such as Makati, Ortigas and Alabang have retail shops catering to both the upper and middle-income markets. Upscale shops featuring imported brand names are usually aggregated in malls that are smaller than those by SM and Robinsons. An example is Power Plant Mall located in Rockwell area. Nevertheless, the group decided to have Lilliput located in average but not too congested malls, such as Robinsons, Glorietta, and SM Megamall where the prices of items are not intimidating to scare off customers. The friendly prices entice all people from different income classes. The malls’ access to MRT trains and commuter buses has drawn large crowds daily. Eventually, during the maturity stage the group is planning to expand its operations outside the Metro perhaps, in Alabang Town Center. Also, the group is eyeing on the possible opening of an additional branch to the much-awaited Mall of Asia. The mall is said to have an exclusive accessibility to those who have their own cars, a very attractive class included in the group’s target market. In the latter part of the maturity stage, the group will offer franchise opportunities to potential entrepreneurs in the province. This will only hold true provided they will locate it in malls catering to similar markets in order to protect the brand image. Introduction stage Greenhills Shopping Center34 Mall Profile Little Hong Kong, this is how people describe Greenhills Shopping Complex. Unsurprisingly, it is a common favorite among bargain-hunters and around-the-clock shoppers. The mall has 1,400 mini stores and more than 2,000 merchants. The size of the mall is a whopping 16-hectares. Greenhills shopping center is located in San Juan, Metro Manila. It has always been the perfect destination for all ages of shoppers looking for an assortment of retail items. It is just 20 minutes away from Ninoy Aquino International airport and of most hotels.

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Greenhills mall offers a wide variety of items such as jewelry, food, textiles, computers, and cellular phones, among others. The people who shop at Greenhills are composed of the whole market spectrum because its variety of product choices, ranging from the A to D market. An estimate of 80,000 people troop to Greenhills daily during weekdays and 90,000 on weekends. During the Christmas season the figure can reach to 130,000. Recently, Ortigas & Co. gave Greenhills a facelift to solidify its position as the number one retail area for value shopping and to further increase its market share. In the 1990s up to early 2000, the Greenhills shopping center was at its lowest due to its physical features. Facilities like the comfort rooms were deteriorating and the facades of the buildings were not as beautiful as before. Around P200 million was invested at the end of 2002. That amount was entirely for the renovation of the cinemas, comfort rooms, tiangge areas and the Manila Bank arcade among others By the end of 2003, the construction of a multilevel parking area, a new Muslim prayer area, music bars, a gym, additional cinemas, and a jewelry center were all started. Uni-Mart Supermarket was made into a multi-purpose retail supermarket. While the upper level of UniMart is being reserved for outlets of signature brands and the lower level will still house the grocery but will be bigger in size and more modern in appearance. To accommodate their customers, a multilevel parking area will be built so as to have less difficulty in finding parking spaces, especially during weekends and the holiday season. It was estimated that around P130 million to P140 million alone would have to be spent for the parking area and it will be constructed across the office center fronting Connecticut Street. The merchants of Greenhills are a mix of different races namely Muslims, Filipinos, Chinese, and Chinese-Filipinos, among others.

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In seven to ten years time, Greenhills will be seen as the 21st century Binondo, an area where Chinese-Filipinos live and do business all at the same as area. This is what the partnership management envisions. Greenhills will then be marketed as a place where one can do almost everything like work, live, play, do business and shop at the same time, once the developments have been completely realized. Rationale for Choosing Greenhills En Cima, Inc. chose to primarily locate Lilliput in Greenhills Shoppesville because of the high traffic of shoppers going there as well as the availability of the necessary utilities for business operations such as electricity and telephone lines. Security services and ample parking spaces are also provided. Moreover, Greenhills mall gives shoppers a one-stop shopping experience. Since shoppers come from the lower class A to upper C, we could easily capture our target market. Likewise, specialty shops such as Plains&Prints, Kamiseta, Bayo and Folded&Hung has set their initial boutiques in Shoppesville and has successfully established their brands there. We are also expecting to obtain a strong foothold of our market just like during the said shops’ early beginnings in Greenhills. In addition, the leasing fees in Greenhills are also much cheaper, just perfect for starting entrepreneurs compared to other leading malls such as SM Robinson malls. However, the long-term plan of the group would include the expansion of Lilliput into other malls if the demand from other parts of NCR shows potential. Initially, Lilliput will be located on the second level of Shoppesville where most of the apparel boutiques are found. The best space that the group can lease is at the left corner in front of the entrance, which is currently occupied by a boutique shop called Babo (see Appendix 8). Its current location is the perfect spot for attracting arriving customers. In addition, the space is medium sized, measuring 25 square meters. Plus, it is enclosed by glass walls that are completely appropriate for the proposed boutique shop. Leasing fee is currently estimated at P55,000 a month exclusive of utility fees – a cost that is reasonable considering its strategic location. Below is the process for leasing a space in Greenhills Shopping Center:

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1.

Accomplish the Tenant Application Form in typewritten form or use block letter in dark ink.

2.

Submit the following requirements: •

Store/concept, merchandising method and target market description

•

List of merchandise/service offering and price range

3.

Forward applications to: GREENHILLS SHOPPING CENTER Regular Leasing Department 2/F Officenter, Greenhills Shopping Center San Juan, Metro Manila, Philippines (zip code)

Growth Stage During the third to fifth year of operation, Lilliput will be continuously expanding at a rate of one additional store per year. The chosen malls are Robinsons Galleria, SM Megamall, and SM Mall of Asia respectively. These three perfectly capture the target market of the store. Moreover, a lot of buyers flock there regularly to do their shopping. SM Mall of Asia Although the Mall of Asia is not yet open, it shows great potential because of its size and growing popularity. The owner boasts the mall will be the largest one in all of Asia. With a land area of 19.5hectares and a gross floor area of 454,000 square meters, it will surely attract customers not only from the local scene but also from other parts of the world. Its planned opening date is on December 2005. The specific location is at SM Central Business Park I, En Cima, Incorporated

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Island A, Bay City, Pasay City. It is an area located beside a church known for wealthy churchgoers. The place is only accessible to car owners, which gives exclusivity to the location. Robinsons Galleria Robinsons Galleria is located at the heart of the Ortigas business center. The mall stands just in front of the EDSA Shrine where relevant historical landmarks have been held. It has a wide array of stores, boutiques, and restaurants and a department store that provides certain imported and local brands alike. Currently, Robinson’s Galleria has renovated its cinemas to provide better movie experience to its customers. Moreover, it has also expanded and created the East Wing phase of the mall so as to contain more shops that would entice businesses and shoppers alike. Aside from being a shopping haven for the relatively upscale class, Robinson’s Galleria has its theme park, Dreamscape, for the kids to enjoy as well. SM Megamall SM Megamall opened last June 1991. Currently, it is the largest mall in the country. It has a land area of 10.5 hectares and a gross floor area of 331, 679 square meters. The malls anchors include SM Department Store, SM Cinemas, SM Supermarket, SM Food Court, SM Bowling Center, Megatrade Hall, and SM Ice Skating Rink. While its junior anchors are Cinderella, Ace Hardware, Our Home, Toy Kingdom, National Bookstore, Surplus Shop, Watson's. The exact address of SM Megamall is EDSA Corner Julia Vargas Avenue, Ortigas Business District, Mandaluyong City, and Metro Manila. Furthermore, it is located near Ortigas business district where consumers with spending capability work. Also, it serves as a hub for shoppers from all walks of life.35

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Maturity Stage Beyond the sixth years of operations, the store will continue expanding to other relatively urbane malls such as Gateway and Glorietta. The group will also consider locating to other parts of the Metro such as Alabang Town Center in the South. During the maturity stage of the business, when Lilliput has already established its brand to its market, the En Cima, Inc. will now be open for franchise. To preserve the image of the brand, the group will only allow the franchisees to have their franchise stores in the malls with similar positioning as the malls we have chosen in the Metro Gateway 36 Mall Profile In constructing the mall, some of the best architectural and urban planning consultants were hired. It is part of the plan in making Araneta Center as the premier commercial place in Quezon City. One of the most respected architectural agencies in the United States, RTKL International, brought in their expertise to come up with a leisure and entertainment complex like no other. One of its central features is that Gateway is the only mall in the world that connects to a coliseum and two mass transport systems namely the MRT3 and the LRT2. The size of the mall is 100,000 square meters of gross building area. It carries an estimated 170 food and retail stores. The mall also has 10 modernized movie theaters, a centralized ticketing facility and skylight. “The Oasis” is a 450 square meter, four level openair indoor gardens that opens to the sky. The Gateway has three entry points to the mall and three loading and unloading bays for public transportation units for commuters as well as private vehicles. This will effectively provide a better traffic flow. The mall has three-levels of basement parking that can accommodate 600 vehicles.

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The Gateway takes care of disabled mall goers by having handicappedfriendly facilities. It has 32 escalators, 10 elevators, one car lift and ramps for handicapped people and also for heavy baggage. “Cyber offices” is a seven-storey office tower located in Gateway. It will be equipped with advanced telecommunication facilities and information technology in order to beat the competition.

Promotion Short-term Promotional Activities and Goals For the first two years of the business operation, the company will aggressively advertise the brand and products (See Appendix 8). As much as possible, En Cima chooses to find ways of doing the necessary promotions without having to pay too much. The company cannot afford to engage in costly advertising efforts in our first years hence, product offers and gift certificates shall be done to promote the business instead. Goals for the first three months: •

Establish Greenhills shoppers’ awareness of the store’s existence

•

Attract initial customers to enter the store, window-shop, and actually buy Lilliput products

•

Have the “first buyers” spread the good news (word-of-mouth advertisement) The store will be opening on January 1, 2006. Since the store will be strategically

located in front of one of the main entrances in the mall, there is no need to hang a tarpaulin informing the people about the opening of the store. The crucial part however, is getting the shoppers to immediately notice the store. To better establish and protect the image of the store, there will be no direct advertising efforts such as distributing fliers and the like. The interior

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design of the boutique itself will serve as an initial “come in” advertisement. Yelloworange, warm lighting shall be used in place of the usual white halogen light to enhance the color of the clothes and project a classy ambience. Experts also said that this kind of lighting makes one more stunning because the natural color of the skin is yellowish. What's more, each rack display will be reminiscent of art pieces and clothes will be strategically arranged in such a way that colors and shades blend perfectly well. Instead of the usual side hang procedure of displaying clothes; the presentation will utilize the front hang procedure where clothes are directly facing the customer at eye level. The hottest items of the season will be highlighted through mannequin displays. Framed posters carrying the brand name will be placed around the store featuring petite, non-celebrity models wearing our signature clothes. The objective is for the customers to have an idea of the nature of Lilliput products. What a better way to win over window shoppers and actually convert them to actual buyers! Fashion involves seduction of the senses. Like some of the other famous specialty stores, En Cima will create a certain signature scent of the store so that customers or even window-shoppers can have a recall of the so-called “Lilliput scent”. Furthermore, the boutique staff will also wear noticeably stylish ‘uniforms’ that will keep on changing every season depending on the theme. The store will be akin to a fashion museum where everybody will feel beautiful and sophisticated by just entering the store. Goals for the second quarter of year 1: •

Make noise, have the media press notice the Lilliput brand

•

Encourage repeat buying by giving special privileges

•

Begin to establish brand equity

•

Attract prospective loyal customers

•

A ribbon-cutting ceremony will be held after the first six months of operations. Media press from fashion magazine publications will be invited. TV shows such as F and Feel at

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Home will also be invited to cover the program. Instead of having the owners and local officials, a famous celebrity will do the ribbon cutting. Membership cards will also be launched and will be given to customers starting from the day of the ribbon-cutting ceremony to win their loyalty. These cards will grant special privileges and freebies to those who can accumulate P10,000 receipts worth of purchases in a year from the date of membership. Moreover, the cards will carry relevant customer information that can be incorporated in our database. This information will also serve as our forecasting tool for future purchases. Goals for the second half of year 1: •

Start establishing relationships with the print ad media

•

Develop further the equity and image of the Lilliput brand At this stage, Lilliput will begin to implement aggressive marketing efforts by

sponsoring photo shoots of leading magazines for teens and yuppies. The initial product line will be seen in the glossy pages of Summit media publications, which include Seventeen and Cosmopolitan magazines and Metro’s Chalk magazine. The said photo shoot will feature the season’s “must haves”. According to the Marketing Manager of a leading clothing brand, En Cima Inc. can have the products advertised in this way for free! All we have to do is have the fashion editors notice the Lilliput brand and promote its products. Lilliput will also offer gift certificates that will either serve as an advertisement fee or prizes for the magazine’s mini contests. This way, no direct cash outlay will be involved. In addition, the store will begin to offer limited editions of about 10 to 20 pieces of certain items, part of which will be given to famous celebrities and other personalities who are regularly doing modeling stints in the magazines stated. They will eventually serve as the shop’s sort of “free” endorsers. Hopefully by this time, Lilliput will be seen regularly in the monthly issue of the said magazines. Many are already doing this. It was observed that

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exclusivity and scarcity of a fashion item particularly when seen on models, increases its desirability especially to the fashionistas among others. Goals for the second year of the operations: •

Participate in the online, radio, and TV advertising campaign

•

Update the customers and non-customers alike about what’s happening in the Lilliput boutique

•

Establish personal relationships with the customers The Lilliput website will be developed to further inform the consumers about updates

on the latest items and discounts the store will be offering. The website will also feature a web page for customer feedbacks, suggestions, and requests. It will continuously be updated and redesigned to jive with the season’s theme. Store profile, brand advertising, and pictures and prices of the latest items will be featured as well. The website will be also featured and linked to the Greenhills Shopping Center’s website. There are TV shows that offer free guest appearances of promising entrepreneurs or exposure of newly established stores. Examples are Breakfast Supersize and F! of Studio 23 and Feel at Home of ABS-CBN. Lilliput will grab the following opportunities in exchange for gift certificates or membership cards. In addition, we will offer sponsorship deals for contests of radio stations such as RX 93.1, Magic 89.9, and 99.5 RT. Again, the store will offer gift certificates in exchange for very quick but frequent on-air advertisement practically for free! The prevailing rate for radio advertisement per frequency is P3, 000. Young professionals working in offices as well as college students staying in dormitories often seek entertainment through listening to the radio. The said radio stations are the ones frequently listened to by the group’s target market.

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Medium-term Promotional Activities and Goals Goals for the third year of operations: •

Induce repeat buying behavior among customers

•

Shift from taking on sponsorship deals to being regular advertiser in premier magazines By this time, the group will now have the ability to pay for an entire advertising page

on glossy magazines. Moreover, the group will now invest in publicity on prime spots in the malls for a minimum of P60,000 per month. The price will still depend on the scale and location of the poster. The advertising contract is for a minimum of two years excluding the materials. The group though, could regularly update or change the posters within the period of the contract Goals for the fourth year of operations: •

Gain stronger customer loyalty

•

Have regular customers anticipate for the store’s latest offers During the holiday and off-peak seasons (January-February), the store will offer

discounts through big sales. Also, giveaways such as pocket calendars and posters will be added inside the paper bag. Beginning this year, various freebies will be offered for particular items purchased. Goals for the fifth year of operations: •

Foster good relationships with other companies

•

To continuously capture a larger share of the market

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Lilliput themed stickers will be given for the purchase of clothing items and stylish Lilliput key chains will be attached to paper bags for every purchase of Lilliput footwear. End-of-season inventory sales will also be expected during the year to get rid of the old stocks of items from the previous season. The group will also now invest in more expensive billboards strategically located around busy roads such as EDSA. Eventually, Lilliput will expand into other geographical markets and this kind of campaign will help capture a larger market share. Long-term Promotional Activities and Goals Goals for the sixth to ten years of operations: •

Choose a famous personality model that will best represent the brand image

•

Have the customers’ trust, appreciation and have them look up to the Lilliput brand

•

Achieve a total nationwide awareness of the brand In the long term, Lilliput will co-sponsor events such as concerts and parties to establish

a strong relationship with big companies such as ABS-CBN, Summit Media, etc. Hopefully, through this relationship, we will be able to hire a famous personality who will be the new Lilliput’s image model. The new model will be the one who will be seen in print ads and billboards. Lilliput, in addition, will sponsor certain celebrities and they will serve as the primary endorsers of the product in order to establish the brand name in the whole country. Lilliput will hold events such as fashion shows to showcase the latest additions in the product line. Billboards located outside Metro Manila will now be used to further establish nationwide awareness.

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End Notes

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1

“Philippine Political Crisis Could Hurt Business Profitability.” [Online] Available http://en.ce.cn/World/biz/200507/14/t20050714_4189155.shtml, July 14, 2005. 2

“Rating Firms’ Outlook on RP Turns Negative.” [Online] Available http://www.bworld.com.ph/BW071205/topstory.php, August 2005. 3

“Quickstat – July 2005.” [Online] Available

http://www.census.gov.ph/data/quickstat/index.html, July 2005. 4

“Economy at a Glance.” [Online] Available http://www.senate.gov.ph/publications/AG%202005-07%20-%20Economy.pdf. July 2005 5

“Selected Economic and Financial Indicators.” [Online] Available http://www.bsp.gov.ph/statistics/sefi/sefip1_files/filelist.xml, August 2005. 6

“Selected Economic and Financial Indicators.” [Online] Available http://www.bsp.gov.ph/statistics/sefi/sefip1_files/filelist.xml, August 2005. 7

“Labor News.” [Online] Available. http://www.philippinebusiness.com.ph

8

“Philippines.” [Online] Available www.imercer.com/globalcontent/surveys/GCPR_sample%20pages.pdf, August 2005. 9

“Worst Over For Philippine Debt, Says Poll; Peso, Stocks Up.” [Online] Available http://money.inq7.net/topstories/view_topstories.php?yyyy=2005&mon=07&dd=19&file=1, July 19, 2005. 10

Byrne, Chris. “The Impact of New Technology in the Clothing Industry: Outlook to 2000” [Paper]

11

“Clothing Engineering.” [Online] Available http://www.fs.uni-mb.si/en/study/ects/IP%20-%20Clothing%20engineering.pdf 12

Dueñas-Caparas, Ma. Teresa. “State of Competition in the Wholesale and Retail Sector” [Paper]

13

“Electronic Data Interchange – A Management Overview.” [Online] Available http://66.102.7.104/search?q=cache:JAUTozWtU_4J:www.unece.org/trade/untdid/download/r1222.pdf+GTEBNet+EDI+co sts+OR+fee&hl=en&client=firefox-a. August 2005 14

“The Philippine Garments and Textile Industry Profile (as of March 2004).” [.pdf file sent by Garments and Textile Export Board c/o Jennelyn Gatuz] August 2005 15

I-Transporte, Aletha. “IR/HR Implications in the Garments Industry.” [Online] Available www.fu-berlin.de/iira2003/papers/track_3/Workshop_3_2_Trasporte.pdf. August 2005. 16

Bacalla, Tess B. “Gov’t Fails to Stem Flow of Smuggled Goods.” [Online] Available http://www.manilatimes.net/others/special/2004/oct/25/20041025spe1.html, October 25, 2004. 17

“Summary Inflation Report: Consumer Price Index.” [Online] Available http://www.census.gov.ph/data/pressrelease/2005/cp0506tx.html July 5, 2005. 18

“Economic Statistics.” [Online] Available http://www.philippinebusiness.com.ph/economic_stats/economy.htm, August 2005.

19

“The Philippine Garments and Textile Industry Profile (as of March 2004).” [.pdf file sent by Garments and Textile Export Board c/o Jennelyn Gatuz] August 2005 20

“The Philippine Garments and Textile Industry Profile (as of March 2004).” [.pdf file sent by Garments and Textile Export Board c/o Jennelyn Gatuz] August 2005 21

“Dressing Up For Success.” [Online] Available http://www.philexport.ph/garments.html. August 2005. 22

Euromonitor, Retail Industry in the Philippines. 2003 p.150 Philippine Retail Association (PRA) Library 23

Ibid. p. 152

24

Ibid. p. 153

25

Ibid. p. 155

26

Industry Statistics

27

Kamiseta’s Official Web Site: http://www.kamiseta.com.ph

28

Bayo’s Official Website: http:’’www.bayo.com.ph

29

Plains and Prints’ Official Website: http://www.plainsandprints.com

30

Penshoppe’s Official Website: http://www.penshoppe.com

31

Folded and Hung’s Official Website: http://www.foldedandhung.com.ph

32

Bench’s Official Website: www.benchtm.com

33

petite. Webster’s New Riverside University Dictionary. 1988. Houghton Mifflin Company. p.879 34

Greenhills’ Official Website: http://www.greenhills.com.ph

35

SM Prime’s Official Website: http://www.smprime.com.ph

36

Gateway Mall’s Official Website: http://gatewaymall.com.ph/news/news4.php

Other References “2003 Family Income and Expenditure Survey.” [Online] Available http://www.census.gov.ph/data/sectordata/fie03frtx.html, February 4, 2005. “Gross National Product & Gross Domestic Product by Expenditure Shares.” [Online] Available http://www.nscb.gov.ph/sna/2005/1stQ2005/2005pce1.asp, First Quarter 2005. Manuzon, Maricar. “What’s In Store.” [Online Available] http://www.philippinebusiness.com.ph/archives/magazine/vol8-2001/8-2/agenda.htm, August 2005.

“Monthly Consumer Price Index for All Income Households in the Philippines by Commodity Group (July 2004-July 2005).” [Online] Available http://www.census.gov.ph/data/sectordata/2005/cp050701r.htm, August 2005. “Dressing Up The World.” [Online] Available http://www.philexport.ph/garments.html, August 2005. “Consumer Manufactures: Garments.” [Online] Available http://tradelinephil.dti.gov.ph/betp/Garments. August 2005. “National Accounts.” [Online] Available http://www.census.gov.ph/data/nationalaccounts/index.html, First Quarter 2005 “Philippines: Population Expected To Reach 100 Million Filipinos in 14 Years.” [Online] Available http://www.census.gov.ph/data/pressrelease/2002/pr02178tx.html, October 16, 2002. Woo, Arthur. “Philippines Economic Outlook.” [Online] Available http://bworldonline.com/Downloads/2005/OF_PhilippinesEcoOutlook.ppt, April 2005. Rule, Rube Bloom C. “Recapturing the Local Garment Market.” [Online] Available http://www.cyberdyaryo.com/opinion/op2002_0403_01.htm, April 3, 2002. “People of The Philippines.” [Online] Available http://infotut.com/geography/Philippines/People/, August 2005 “Asian Development Outlook 2004.” [Online] Available http://www.adb.org/Documents/Books/ADO/2004/phi.asp, August 2005. Paderanga, Jr., Cayetano. “Philippines.” [Online] Available www.asiapacificbusiness.ca/peo/outlook2005/philippines_05.pdf, August 2005. Tuazon, Bobby. “The Philippines’ Chronic Financial Crisis and the People’s Struggle.” [Online] Available http://www.bulatlat.com/news/4-40/4-40-chronic.html, November 7-13, 2004. “MasterIndex™ of Retail Forecasts Continued Robust Retail Sales Growth Across Asia/Pacific.” [Online] Available www.pata.org/patasite/fileadmin/aacrisis/MasterIndexRetail_Jan_final.doc, February 4, 2005.

Other Sources: Sixth National Nutrition Survey: Philippines, 2003 Food and Nutrition Research Institute (FNRI) Department of Science and Technology (DOST) Results of the April 2005 Labor Force Survey in the Philippines Income and Employment Statistics Division, Household Statistics Department National Statistics Office Monthly Integrated Survey of Selected Industries National Statistics Office Library Ludwig, Susan. Petite Style NAL Penguin Inc. College of Home Economics Library

Mrs. Alice Arellano Records Section Head UP Infirmary Ms. Lilibeth Patalen, Food and Nutrition Research Institute DOST Compound, Bicutan [Personal Interview] Ms. Christine Santos Marketing Manager Plains&Prints Apparel [Personal Interview] Department of Trade and Industry 385 Industry and Investments Bldg. Sen Gil Puyat Avenue, Makati City National Statistics Office Income Employment Division Solicarel Bldg. 1, Ramon Magsaysay Blvd. Sta. Mesa Manila 2000 Family Income and Expenditure Survey International Survey of Households Bulletin Series No. 109 2000 Census Of Philippine Business and Industry 2003 Philippine Statistical Yearbook National Statistical Coordination Board