CHAPTER 2

MARKET STUDY

Market study is the most significant part of the whole Project Feasibility Study. It

discusses the feasibility of the proposed project through determining the needs and

wants of the market and then matching it with the appropriate products and services that

will satisfy those needs. A careful analysis of the demand and supply of the product is

significant because the resulting information will be used to foretell the feasibility and

profitability of the entire project.

This aspect includes the following topics: demands, supply, demand and supply

analysis, and the marketing strategies.

Objectives

This market study seeks to determine the following specific objectives:

1. The size, the nature, and the growth of total demand of potential market;

2. The description and the price of the product/s to be offered;

3. The supply situation and the nature of competition;

4. The different factors affecting the market of the product; and

5. The appropriate marketing program/strategy that will further improve the

marketability of the business.

Customers

The possible customers for renting the rice mill project of the cooperative are the

farmers residing Pasibi East, Urbiztndo, Pangasinan who would register as members of

the said cooperative.

 The potential customers of the product (rice) by Samahan ng mga Magsasaka ng

Pasibi Cooperative (SMPC) are the wholesalers in the target area which is around San

Carlos and Urbiztondo, Pangasinan. The said area was chosen by the proponents

because it is very accessible and convenient to all the potential customers. San Carlos

also represents the 7.8% of the whole population of Pangasinan and is said to be the

most populous city on the province.

Competitors

Plausible competitors of the cooperative with regards to its project would be the

owners of the rice millers around Urbiztondo, Pangasinan. Moreover, potential

competitors of Samahan ng mga Magsasaka ng Pasibi (SMPC) with regards in

supplyingthe rice would be the other suppliers to the wholesalerswho are operating their

business within the parameter of the chosen location, San Carlos and Urbiztondo,

Pangasinan.

Market Research

The target market of the cooperative is composed of all the farmers of Pasibi

East, Urbiztondo who will register as members of the cooperative to avail the

advantages in renting the rice miller and the rice wholesalers in San Carlos and

Urbiztondo, Pangasinan that are assumed by the members to be potential customers of

the cooperative.

Survey Analysis
Table 1
Distribution of Respondents as to Number of Hectares of Land They Cultivate

Hectares Frequency Percentage

Less than 3 hectares 7 14%
3 to 5 hectares 10 20%
More than 5 hectares 33 66%
TOTAL 50 100%

15
 14%

20%

66%

Less than 3 hectares 3 to 5 hectares More than 5 hectares

Figure 3
Distribution of Respondents as to Number of Hectares of Land They Cultivate

Table 1 and Figure 3 above showed that 14% or 7 do have less than 3 hectares

of land, 20% or 10 have 3 to five hectares while 66% or 33 have more than 5 hectares

out of the 50 respondents.

Table 2
Distribution of Respondents’ Expenses for Fertilizers
Expenses Frequency Percentage
Less than P 2,000 14 28%
P 2,001 to P 5,000 4 8%
P 5,001 to P 10,000 9 18%
More than P 10,000 23 46%
TOTAL 50 100%

Less than P 2,000 P 2,001 to P 5,000

P 5,001 to P 10,000 More than P 10,000

46% 28%

8%
18%

Figure 4
Distribution of Respondents’ Expenses for Fertilizers

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 Table 2 and Figure 4 above showed that 28% or 14 are spending less than

P2,000 for fertilizers, 8% or 4 spend P2,001 to P5,000, 18% or 9 spend P5,001 to

P10,000 while 46% or 23 spend more than P10,000 out of the 50 respondents.

Table 3
Distribution of Respondents’ Expenses for Leasing of Land per Year

Expenses Frequency Percentage

Below P 25,000 36 72%
P 25,001 to P 50,000 3 6%
P 50,001 to P 75,000 7 14%
More than P 75,000 4 8%
TOTAL 50 100%

8%
14%
6%

72%

Below P 25,000 P 25,001 to P 50,000

P 50,001 to P 75,000 More than P 75,000

Figure 5
Distribution of Respondents’ Expenses for Leasing of Land per Year

Table 3 and Figure 5 above showed that 72% or 36 spend no more than P25,000

for the lease of land, 6% or 3 spend P25,001 to P50,000, 14% or 7 spend P50,001 to

P75,000 while 8% or 4 spend more than P75,000 out of the 50 respondents.

Table 4
Distribution of Respondents’ Expenses for Land Irrigation

Expenses Frequency Percentage

Less than P 2,000 8 16%
P 2,001 to P 5,000 32 64%
P 5,001 to P 10,000 7 14%
More than P 10,000 3 6%
TOTAL 50 100%

17
 2%
15% 17%

66%

Less than P 2,000 P 2,001 to P 5,000

P 5,001 to P 10,000 More than P 10,000

Figure 6
Distribution of Respondents’ Expenses for Land Irrigation

Table 4 and Figure 6 above showed that 16% or 8 are spending no more than

P2,000 for land irrigation, 64% or 32 spend P 2,001 to P 5,000, 14% or 7 spend P 5,001

to P 10,000 while 6% or 3 spend more than P10,000 out of the 50 respondents.

Table 5
Distribution of Respondents’ Expenses for Pesticides and Insecticides

Expenses Frequency Percentage

Less than P 2,000 8 16%
P 2,001 to P 5,000 13 26%
P 5,001 to P 10,000 22 44%
More than P 10,000 7 14%
TOTAL 50 100%

14%
18%

50% 44%

Less than P 2,000 P 2,001 to P 5,000

P 5,001 to P 10,000 More than P 10,000

Figure 7
Distribution of Respondents’ Expenses for Pesticides and Insecticides

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 Table 5 and Figure 7 above showed that 16% or 8 are spending no more than

P2,000 for pesticides and/or insecticides, 26% or 13 spend P 2,001 to P 5,000, 44% or

22 spend P 5,001 to P 10,000 while 14% or seven spend more than P10,000 out of the

50 respondents.

Table 6
Distribution of Respondents’ Expenses for Farming Tools and Machineries
Expenses Frequency Percentage
Less than P 2,000 7 14%
P 2,001 to P 5,000 31 62%
P 5,001 to P 10,000 9 18%
More than P 10,000 3 6%
TOTAL 50 100%

6% 14%
18%

62%

Less than P 2,000 P 2,001 to P 5,000

P 5,001 to P 10,000 More than P 10,000

Figure 8
Distribution of Respondents’ Expenses for Farming Tools and Machineries

Table 6 and Figure 8 above showed that 14% or 7 are spending no more than

P2,000 for farming tools and machineries, 62% or 31 spend P 2,001 to P 5,000, 18% or

9 spend P 5,001 to P 10,000 while 6% or 3 spend more than P10,000 out of the 50

respondents.

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 Table 7
Distribution of Respondents’ Expenses for Transportation for
Dispersal of their Harvests

Expenses Frequency Percentage

Less than P 2,000 35 70%
P 2,001 to P 5,000 9 18%
P 5,001 to P 10,000 6 12%
More than P 10,000 0 0%
TOTAL 50 100%

12%
18%

70%

Less than P 2,000 P 2,000 to P 5,000 P 5,001 to P 10,000

Figure 9
Distribution of Respondents’ Expenses for Transportation
for Dispersal of their Harvests

Table X and figure X above showed that 70% or 35 are spending no more than

P2,000 for transportation in dispersing their harvests, 18% or 9 spend P 2,001 to

P 5,000, 12% or 6 spend P 5,001 to P 10,000 while 0% or none of them spends more

than P10,000 out of the 50 respondents

Table 8
Distribution of Respondents as to Amount of their Earnings per Yield

Expenses Frequency Percentage

Below P 25,000 11 22%
P 25,001 to P 50,000 23 46%
P 50,001 to P 75,000 6 12%
More than P 75,000 10 20%
TOTAL 50 100%

20
 20% 22%
12%

46%

Below P 25,000 P 25,001 to P 50,000

P 50,001 to P 75,000 More than P 75,000

Figure 10
Distribution of Respondents as to Amount of their Earnings per Yield

Table 8 and Figure 10 above showed that 22% or 11 are earning no more than

P25,000 per yield, 46% or 23 earn P 25,001 to P 50,000, 12% or 6 earn P 50,001 to P

75,000 while 20% or 10 earn more than P75,000 out of the 50 respondents.

Table 9
Distribution of Respondents as to Number of Sacks
they get per Yield on each Hectare

Cavans Frequency Percentage

Less than 25 cavans 5 10%
26 to 50 cavans 9 18%
51 to 75 cavans 20 40%
76 to 100 cavans 6 12%
101 to 125 cavans 6 12%
More than 125 cavans 4 8%
TOTAL 50 100%

8% 10%
12% 18%
12%

40%

Less than 25 cavans 26 to 50 cavans 51 to 75 cavans

76 to 100 cavans 101 to 125 cavans More than 125 cavans

Figure 11
Distribution of Respondents as to Number of Sacks they get
per Yield on each Hectare

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 Table 9 and Figure 11 above showed that 10% or 5 are getting no more than 25

sacks of rice per yield on each hectare, 18% or 9 get 26 to 50 sacks, 40% or 20 get 51

to 75 sacks, 12% or 6 get 76 to 100 sacks, 12% or 6 get 101 to 125 sacks while 8% or 4

get more than 125 sacks out of the 50 respondents.

Table 10
Distribution of theRespondents’ Encountered Problems in Farming
Problems Frequency Ranking
Irrigation 35 3rd
Rice Seeds 5 7th
Land/Farm 38 2nd
Farming Tools and Machineries 17 5th
Typhoon 28 4th
Rice Milling 42 1st
Transportation for Rice Distribution 6 6th

Transportation for Rice Distribution

Rice Milling

Typhoon

Farming Tools and Machineries

Land/Farm

Rice Seeds

Irrigation

0 5 10 15 20 25 30 35 40 45

Figure 12
Distribution of the Respondents’ Encountered Problems in Farming

Table 10 and Figure 12 showed that among the problems that the respondents

encounter in farming, Rice milling ranked 1st, Land/Farm ranked 2nd, Irrigation ranked 3rd,

Typhoon ranked 4th, Farming Tools and Machineries ranked 5 th, Transportation for Rice

Distribution ranked 6th, and Rice Seeds ranked 7th.

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 Table 11
Distribution of Respondents Who are Interested to be a
Member of the Cooperative
Membership Frequency Percentage
Yes 48 96%
No 2 4%
TOTAL 50 100%

4%
00

96%

Yes No

Figure 13
Distribution of Respondents Who areInterested to be a
Member of the Cooperative

The Table 11 and Figure 13 above showed that majority of the 50 respondents

are interested and willing to become a member of Samahan ng mgaMagsasaka ng

Pasibi Cooperative (SMPC). Specifically, 96% or 48 respondents are interested and the

remaining 4% are not.

Table 12
Distribution of Respondents as to What Amount they can
Contribute for Membership Yearly

Membership Fee Frequency Percentage

Less than P 500 4 8%
P 501 to P 1,000 11 22%
P 1,001- P 1,500 29 58%
More than P 1,500 6 12%
TOTAL 50 100%

23
 12% 8%
22%

58%

Less than P 500 P 501 to P 1,000 P 1,001- P 1,500 More than P 1,500

Figure 14
Distribution of Respondents as to What Amount they can
Contribute for Membership Yearly

Table 12 and Figure 14 showed that majority of the respondents or 58% of them

are willing to contribute P 1,000 to P 1,500 for the membership fee, 22% or 11

respondents are willing to contribute P 501 to P 1,000, 12% of the sample population are

willing to contribute more than P 1,500, and 8% or 4 respondents answered less than P

500.

Table 13
Distribution of Respondents’ Awareness About a Cooperative

Awareness Frequency Percentage

Yes 43 86%
No 7 14%
TOTAL 50 100%

0 0
14%

86%

Yes No

Figure 15
Distribution of Respondents’ Awareness About a Cooperative

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 The Table 13 and the Figure 15 above showed that 86% or 43 respondents are

already familiar to what the objectives of a cooperative are and how a cooperative

works. 14% or 7 respondents are not yet aware to the operations of a cooperative.

Table 14
Distribution of Respondents Who Became a Member of a Cooperative Before

Frequency Percentage
Yes 12 24%
No 38 76%
TOTAL 50 100%

24%

76%

Yes No

Figure 16
Distribution of Respondents Who Became a Member of a Cooperative Before

The table and figure above represent the respondents who became a member of

a cooperative before. Majority of them (specifically 76% of the respondents) have not yet

been a member and the other 24% already became a member.

Table 15
Distribution of Respondents Who are Interested to Lease
Farming Machineries from the Cooperative

Frequency Percentage
Yes 46 92%
No 4 8%
TOTAL 50 100%

25
 8%

92%

Yes No

Figure 17
Distribution of Respondents Who are Interested to Lease
Farming Machineries from the Cooperative

Table 15 and Figure 17 showed that 46 respondents or 92% of the population

are interested to rent farming machineries (e.g rice miller) from the cooperative. The

other 4 respondents are not willing to rent any machineries from the cooperative.

Table 16
Distribution of Respondents Who are Interested to Sell their
Harvested Rice to Cooperative

Frequency Percentage
Yes 42 84%
No 8 16%
TOTAL 50 100%

16%

84%

Yes No

Figure 18
Distribution of Respondents Who are Interested to Sell their
Harvested Rice to Cooperative

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 As shown in the Table 16 and Figure 18 above, 84% of the respondents

represent the majority of the sample population of 50 who are willing to sell their

harvested rice to the cooperative. While 16% or 8 of the respondents are not interested.

Table 17
Distribution of Respondents Who are Interested to Work for the
Cooperative During their Spare Time

Frequency Percentage
Yes 45 95%
No 5 5%
TOTAL 50 100%

5%

95%

Yes No

Figure 19
Distribution of Respondents Who are Interested to Work for the
Cooperative During their Spare Time

The table 17 and the Figure 19 above showed that 95% or 45 respondents are

interested to work for the cooperative during their spare time. While the other 5%

represent the minority of the respondents who are not willing to work for the cooperative.

Table 18
Distribution of Respondents Who are Interested to
Sell the Product of the Cooperative

Frequency Percentage
Yes 43 86%
No 7 14%
TOTAL 50 100%

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 14%

86%

Yes No

Figure 20
Distribution of Respondents Who are Interested to
Sell the Product of the Cooperative

Table 18 and Figure 20 represent the respondents who are willing to sell the

product that the cooperative is selling. 86% of the total respondents are willing to make

transactions to the customers while 14% of them are not interested.

Table 19
Distribution of Respondents Who are Interested to
Attend Seminars Conducted by the Cooperative

Frequency Percentage
Yes 41 82%
No 9 18%
TOTAL 50 100%

18%

82%

Yes No

Figure 21
Distribution of Respondents Who are Interestedto
Attend Seminars Conducted by the Cooperative

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 As shown in the table and the figure above, 82% or 41 of the respondents are

interested to attend seminars that will be organized by the cooperative while the other

18% out of 50 respondents are not interested.

Demand Analysis
Table 20
Projected Annual Demand of Samahan ng mga Magsasaka ng Pasibi

Projected
Target Market Frequency of
Annual
Year Population Acceptability Buying
Demand
(A) (B) (C)
(D= A x B x C)
2017 12 100% 144 1,728
2018 12 100% 144 1,728
2019 12 100% 144 1,728
2020 12 100% 144 1,728
2021 12 100% 144 1,728
A – This is the number of business establishment in San Carlos and Urbiztondo, Pangasinan who
are engaged in selling rice. The constant population is used by the proponents because they
don’t have any basis if there will be additional established business that will be operating.

B – This is the percentage of respondents who are willing to buy rice to SMPC.

C – This is the number of times that all of the customers has made a purchase.

D – This is the product of target population, market acceptability rate and frequency of buying.

The annual projected demand was obtained by multiplying the target population

to market acceptability and to the frequency of buying. As shown in table 20, the total

wholesalers or the targeted customers are buying their supply monthly or 12 times per

year. Based from the obtained demand, it was distributed again to every product in order

to determine its demand.

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Supply Analysis
Table 21
Historical Supply of Competitors in 2016
Competitors Per rice production Per year*
Arcangel Rice & Corn Dealer 560cavans 1,680cavans
Agbuya Rice Dealer 980 cavans 2,940 cavans
Total 1,540cavans 4,620cavans
*Rice production is three (3) times per year

Table 21 showed that the historical supply of Arcangel Rice and Corn Dealer is

1,680cavans per year while Agbuya Rice Dealer has 2,940 cavans per year. The total

annual historical supply of competitors is 4,620 cavans. Arcangel Rice & Corn Dealer

has 2 hectares of land and Agbuya Rice Dealer has 3.5 hectares. Both competitors yield

an average of 280 cavans per hectare.

Table 22
Projected Supply of Competitors
Competitors 2017 2018 2019 2020 2021
Arcangel Rice & Corn Dealer 588 617 648 681 715
Agbuya Rice Dealer 1,029 1,080 1,134 1,191 1,251
Total 1,617 1,697 1,782 1,872 1,966

Table 22 showed that the projected supply of competitors is 1,617cavans in year

2017;1,697in year 2018;1,782in 2019;1,872 in year 2020; and 1,966 in year 2021.

Table 23
Total Projected Supply of Samahan ng mgaMagsasaka ng Pasibi Cooperative

Year Supply
2017 560
2018 588
2019 617
2020 648
2021 681

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 Table 23 showed that the total projected supply of Samahan ng mga Magsasaka

ng Pasibi Cooperative has total of 560cavans in year 2017; 588 in year 2018; 617 in

year 2019; 648 in year 2020; and 681 in year 2021.

Demand-Supply Gap Analysis

Table 24
Demand-Supply Gap Analysis

Projected Projected Demand- Unsatisfied

Year Demand Supply Supply Gap Demand
(D) (F) (K) (L)
2017 1,728 560 1,168 67.59%
2018 1,728 588 1,140 65.97%
2019 1,728 617 1,111 64.29%
2020 1,728 648 1,080 62.50%
2021 1,728 681 1,047 60.59%
K – This is the difference of the projected annual demand and projected annual supply.
L – This is the quotient of the demand-supply gap and projected annual demand.

A. Projected Annual Sales per Cavan of Rice

The projected annual sales per cavan of rice where obtained using the

market share of the company. Annual sales per cavan will increase by 5% each

year due to marketing tactics of the business.

Table 25
Projected Sales per Cavan of Rice

Projected Annual Sales per Cavan of Rice (in PhP)

Year
(O)
2017 924,000
2018 1,115,730
2019 1,347,243.98
2020 1,626,797.10
2021 1,964,357.50

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O –This is the projected market share for 2017calculated considering annual unit price increase
of 5%, annual production growth rate of 15%, and a 50% annual increase in the number of
members.

Marketing Strategy
a. Product Strategy

Product is what the promoters offer to their customers. However, it is not

limited for physical objects. It might be in the form of services which grant customers’

satisfaction. We all know that the provinces of Northern Luzon mainly produce rice.

Based on the research of the proponents, Pasibi East, Urbiztondo can produce more

rice than they can consume which, therefore, they can sell to the market for profit.

b. Place Strategy

Place strategy plays a fundamental role in the marketing mix of a product or

service. Place strategy outlines how and where a company will place its products

and services in an attempt to gain market share and consumer purchases.

San Carlos and 226 Pasibi East, Urbiztondo was chosen by the proponents

because it is accessible to people and convenient to all potential customers and is to

incur a minimal transportation expense. The wholesalers or the target customers are

most likely located within the parameter of the target location.

c. Pricing Strategy

Price refers to the amount of money to be received in exchange of the given

goods or services. It is sensitive when it comes to a lot of factors but must maintain

its reasonableness. Price can be one factor to determine the quality of one’s product.

SMPC is new in the business industry, thus will offer the most reasonable

and affordable price for customers. The prices will be based on the suggested

marketing price, considering the cost pricing strategy, of thirty two pesos and fifteen

32
 centavos (P32.15) per kilogram. The cooperative is a wholesaler, hence, the rice will

be offered at one thousand sixhundred and fifty pesos (P1,650.00) per sack (50

kilograms). The computation would be:

Product cost + period cost + markup = Selling price

d. Promotion Strategy

In marketing, promotion is the activity of informing your customers about your

product or brand, generating sales, and creating brand loyalty. Flyers will be used to

advertise the name of SMPC product. These flyers will be hanged on the gates or

front door of random houses around San Carlos and Urbiztondo.

Figure 22
Sample Flyer for Advertising

The front page of the flyer contains the name of the Cooperative, the logo,

the target market, and the contact number of the cooperative.

The physical appearance (specifically the packaging) and the descriptions of

the product will be seen at the rear page.

33