CHAPTER I

INTRODUCTION

Background of the Study

Creating a new business is a process fraught with difficulty and failure

and many businesses fail to survive. Some fail because of the rapid growth of

similar industries which is a very big challenge to businesses, especially to new

entrants in the business world. For most companies today, the only truly

sustainable advantage comes from out-innovating the competition (James F.

Moore). Out-innovating the competition means having to think out of the box

or thinking ahead of your competitors. There are several factors contributing to

the competition of similar industries like prices, services, place especially the

quality of products. Businesses must continuously innovate in order to survive

competition.

In the past few years, milk tea has been popularized in the country giving

a great idea and opportunity to aspiring entrepreneurs to put up their own

shops. In the rise of these milk tea shops, milk tea lovers have also grown in

number. These demands encouraged entrepreneurs to build more of these

shops. Consequently, the height of competition became very high that

challenged every entrepreneur to be innovative to sustain their market share.

True Blends is one of the first milk tea shops put up in Dagupan, leaving

a mark to its customers, is still thriving in the competitive industry. This shop

serves tea and coffee, but their best seller is milk tea. Despite the increasing

number of milk tea shops, True Blends has seen to withstand competition.

Other shops have considered changing shop names but still fail to survive the

industry.
 This research reports on the findings of a thorough study to establish the

factors and strategies that have led to the survivability of True Blends in the

milk tea industry.

Theoretical Framework

As the businesses continue to emerge, the competition among them also

increases. Because of the competitive environment, survival is at risk. The

same goes to the existing businesses such as milk tea shops, which are

popular nowadays. One of the known milk tea shops here in Pangasinan is the

True BlendsmDagupan. But the bottom line is how this existing business

continues to survive as the number of milk tea shops increases. The business

theories that are relevant to the research study are systems theory, marketing

mix concept-4Ps and complexity theory.

Ludwig von Bertalanffy coined the term systems theory in 1940’s and

furthered by Ross Ashby. Heylighen and Joslyn (1992) added that von

Bertalanffy emphasized that real systems are open to, and interact with, their

environments, and that they can acquire qualitatively new properties

emergence, resulting in continual evolution. Kaine and Cowan (2011) discussed

that systems theory suggests that different components when linked together

are equal to or greater than the sum of their parts and serves well when there

is an understanding of the system as a whole rather than the behavior of

individual components. Systems theory are suitable to business that thriving to

its survival. This theory helps to identify the factors that challenge the business

along the way such as finances, regulatory environments, competition,

marketing options and the likes which are more likely acknowledge by

businesses.
 Martin (2014) the marketing mix concept was popularized by Neil Borden

in his article that was published in 1964. He elaborated the factors of

marketing such as product, planning, price, branding, distribution, display,

packaging, advertising, promotions, personal selling among many others. But it

was cut down by McCarthy into four high level categories: product, price,

promotion and place, which are known as the “4Ps”. Product is either goods or

services that meet the customers need and demand. Price is the actual amount

that the customer pay equivalent to goods or services received. Promotion is

the marketing strategies and techniques used. Place is where distribution is

accessible to its customers. These categories have great impact to attract

customers that help to gain profit which are used to the finances of the

business.

Lastly, complexity theory has been used in the fields of strategic

management and organizational studies. Application areas include

understanding how organizations or firms adapt to their environments and

how they cope with conditions of uncertainty. Organizations have complex

structures in that they are dynamic networks of interactions, and their

relationships are not aggregations of the individual static entities. They are

adaptive; in that the individual and collective behaviors mutates and self-

organizes corresponding to a change-initiating micro-event or collection of

events. Uhl-Bien et al., (2007) justified that this is especially important in the

study of organizations, organizational change, and leadership, where complexity

theory can offer insights into how organizations become more sustainable,

adaptive, and innovative.

Conceptual Framework

Independent Variable
Age: Participant’s Years old

Occupation of Participant

Income of Participants on a monthly basis

Gender: N Female, N Male

Price per cup of Milk tea

Time mostly an individual or participant spend his time on milk tea shops.

Dependent Variable

The quantity demand of milk tea, number of milk tea an individual would likely

to consume or buy within a specific time frame.

Input-Process-Output (IPO)

Input Factors affecting consumer’s buying behavior of selected milk tea

stores

• Personal Influences

• Cultural Influences

• Social influences

• Psychological influences

Process

• Evaluation of Perceived Quality

• Survey through questionnaires.

• Interview the manager of True Blends Dagupan store concerning their

marketing strategy, product strategy, and pricing

 • Give questionnaires to 100 respondents of each selected establishment

• Analyze and interpret the questionnaire based on customer satisfaction

or experience.

Output

• Sustainability of the products are recognized

• Consumer’s buying behavior and preferences is identified

• Product profile that would best capture the needs of the customer is

determined

• Suggestions/ Recommendations for the improvement of products is

realized

Statement of the Problem

The purpose of this study is to determine the survivability of an existing

business, particularly a milk tea shop named True Blends in Dagupan, with

the rapid growth of competition between similar industries.

Therefore, the aims of the study are to:

• Explain the effect of evolving competition in the operations of True

Blends

• Enumerate the different challenges encountered by True Blends in the

rise of similar industries

• Enumerate the strategies incorporated by True Blends to survive

competition

• Identify initiatives adopted by True Blends to improve their product.

Significance of the Study

This study is significant and will contribute to the understanding of the

selected topic to the following:

Entrepreneurs & Businessmen. The study will be significant to

entrepreneurs and businessmen as a guidance and inspiration in the

continuance of their business and provide ideas and techniques to better their

quality of products and/or service.

Future Researchers. To serve as a guidance and a useful reference to

students or researchers that will conduct any related studies.

Scope and Delimitation

The researchers selected one (1) milk tea shop as the basis of this study,

to wit, True Blends Dagupan. The selection of said milk tea shop is brought

about by the fact that it has been operating for years and it has thrived despite

of the increasing competition in the same line of business. The study will focus

on the shop location and design, product development and innovation, and

their marketing strategies.

Limitations are elements that influence the interpretation of study

results (Brutus, Aguinis, & Wassmer, 2013). One limitation was that

researchers could misinterpret findings, creating research bias. Business

owner/s may not provide access to or full disclosure of sensitive information

needed in conducting this study. Participant bias may alter the results of this

research study.

Delimitations are restrictions or boundaries that researchers impose to

the research and analysis process (Bartoska & Subrt, 2012). One delimitation

in conducting this study was the geographical area. This research did not
include industry experts, and executives in other geographic areas. Although

the consequences of this phenomenon affect a broad range of business

throughout the Philippines, the focus of this study was on the competition of

milk tea shops operating in Dagupan City, specifically affecting the

survivability of True Blends Dagupan.