Arellano University

Juan Sumulong campus

(2600 Legarda, Manila)

“Is the Changes of Price in Beverages Detrimental to the

Demand of ABM Students in Arellano University Legarda,

Manila”

A Senior High School

Thesis Presented to the Faculty of the Accountancy,

Business and Management, Au, Manila

In partial fulfilment of

the requirement to the subject, Research project

Authors
ABM5
Campo, Racquel

De lara, Rionett Chelsey

Garboso, Rica Mae

Grio, Meryl

Layson, Karen

Lima, Casey

Sinangote, Atherson

March 20 2018

1
 Approval Sheet

This undergraduate thesis entitled “Is the changes in Price of Beverages

Detrimental to the Demand of ABM Students in Arellano University, Legarda

Manila” is a quantitative research thesis prepared and submitted by Racquel Campo,

Rionett Chelse De lara, Rica Mae Garboso, Meryl Grio, Karen Layson, Casey Lima

and Atherson Sinangote in partial fulfilment of the requirement for the subject

Research Project that has been examined and recommended for approval for oral

examination.

_______________________
Thesis Reader Mr. Regino T. Barcelona III
(Thesis Adviser)

Approved by the Committee on Oral Examination with the grade of ________%

_______________ ____________________
Mr. Mr.
Panel Member Panel Member

2
 Acknowledgement

The researchers would like to acknowledge all the people who helped

to fulfil this research study.

This research would not have been possible without the financial support of

the family of the researchers. The researchers want to acknowledge Mr. Regino

Barcelona III, Our research teacher who has been supportive since from the beginning

of this study until the end. He worked actively to provide the researchers with the

allotted academic time to pursue the goals of this study.

The researchers are grateful to all of those with whom the

researchers have had the pleasure to work during this and other related projects. Each

of the members of the researchers has provided the extensive personal and

professional guidance and taught each other a great deal about descriptive research.

As for the researchers’ teacher, he has taught the researchers more than the

researchers could ever give him credit for this study.

Nobody has been more important to the researchers in the pursuit

of this project that the members of their family. The researchers would like to thank

their parents, whose love and guidance are with the researchers in whatever they

pursue. And to all the respondents who have been answered all the questionnaires that

given to them without them this study would not be successful.

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 Abstract

Different beverages are being consumed by students every day, this

study aspire to know the effect of the changes in price of different beverages on

students. Since students are one of the most number in consuming non-alcoholic

beverages. Sugar sweetened beverages taxes; commonly referred to as soda taxes

have been on governments as a potential policy solution to both a public crisis and a

revenue shortage. Adding a small fee to the price tag of sugar-sweetened beverages on

some beverages most likely contributed to a decline line in their sale. The change in

price of different beverages has a negative effect on the demand of sugar sweetened

beverages. It also has a direct impact in the buying preference of the students; they

often choose which is cheaper than the usual beverages that they buy.

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 TABLE OF CONTENTS

Title Page Number

Title page ------------------------------------------------------------------- 1

Approval Sheet ------------------------------------------------------------ 2

Acknowledgement -------------------------------------------------------- 3

Abstract --------------------------------------------------------------------- 4

Table of Contents --------------------------------------------------------- 5

Introduction ---------------------------------------------------------------- 6

RRL -------------------------------------------------------------------------- 7-15

Statement of the Problem ------------------------------------------------ 16

Significance of the Study ------------------------------------------------ 16

Scope and Delimitations ------------------------------------------------- 17

Conceptual Framework --------------------------------------------------- 17

Theoretical Framework --------------------------------------------------- 17-24

Hypothesis ------------------------------------------------------------------- 24

Definition of Terms--------------------------------------------------------- 24-26

Methodology ---------------------------------------------------------------- 27

Method Use ------------------------------------------------------------------- 27

Research Design -------------------------------------------------------------- 27

Research Instrument ---------------------------------------------------------- 28

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Sampling Technique ---------------------------------------------------------- 28

Results and Discussion------------------------------------------------------ 29

Presentation ------------------------------------------------------------------- 29-32

Analysis ------------------------------------------------------------------------ 29-32

Interpretation ------------------------------------------------------------------- 29-32

Summary ----------------------------------------------------------------------- 33

Conclusion ---------------------------------------------------------------------- 33

Recommendation --------------------------------------------------------------- 34

Bibliography --------------------------------------------------------------------- 35

Appendices------------------------------------------------------------------------ 36-52

Curriculum Vitae------------------------------------------------------------------ 53-61

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 Introduction

Consumers have been consuming non-alcoholic beverages for many centuries

over the globe and the non-alcoholic beverage industry is one of the largest industries

in the world. Moreover, the non-alcoholic beverage is one of the sources of nutrients.

The consumption of beverages (milk, carbonated soft drinks, bottled water, fruit

juices, fruit drinks, coffee, tea, and sports drinks) accounts for 10% for calories, 20%

for calcium, and 70% for vitamin C and people are more sensitive towards food

consumption due to health concerns in recent decades. The increasing awareness

about health in recent years led to the production of healthier food choices. Beverage

producers have started to provide new healthier non-alcoholic beverages like non-diet

carbonated beverages, unsweetened coffee and tea etc., which may significantly

change the consumption patterns of non-alcoholic beverages. A drink or beverage is a

liquid intended for human consumption.

The demand for non-alcoholic beverages is complex and changes over time

with the introduction of new products in the market. Various factors including tastes,

preferences, demography, advertising, temperatures, and convenient availability of

new differentiated products may affect the consumption pattern of these goods

The researchers tackled only those beverages that sells inside the University.

Those beverages are water, soft drinks, milk, coffee and juices. The researchers were

inspired to conduct this study because they were captivated by the immense effect of

the changes of price in beverages that precipitate the demand of students in Arellano

University-Legarda, Manila.

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 Review of Related Literature

One of the most important thing the students consumes with their

daily lives are beverages. Different beverages are being consumed by the students

depending on their wants and needs. Beverages play an important role in the diets of

adolescents because they help to maintain hydration and can provide important

nutrients, such as calcium, vitamin D, and vitamin C (1). However, some beverages,

such as sugar-sweetened beverages (SSBs) (e.g., soda or pop), provide calories with

no beneficial nutrients. Beverage consumption patterns among American youth have

changed over time; however, little is known about differences in consumption of

various beverages by demographic characteristics such as grade in school,

free/reduced price lunch eligibility, and race/ethnicity (2). CDC analysed data from

the 2007–2015 national Youth Risk Behavior Surveys (YRBS) to assess whether the

prevalence of drinking non-diet soda or pop (soda), milk, and 100% fruit juice (juice)

has significantly changed over time among U.S. high school students. During 2007–

2015, daily soda consumption decreased significantly from 33.8% to 20.5%. During

2007–2011, daily milk and juice consumption did not significantly change, but during

2011–2015 daily milk and juice consumption decreased from 44.3% to 37.4% and

from 27.2% to 21.6%, respectively. Although a decrease in daily soda consumption is

a positive change, soda consumption remains high. Although there is not a specific

recommendation for sugar-sweetened beverage consumption, the Dietary Guidelines

for Americans 2015–2020 recommend that U.S. residents reduce sugar-sweetened

beverage and sweet consumption to reduce intake of added sugars to less than 10% of

calories per day. The Dietary Guidelines for Americans 2015–2020 recommend that

persons choose beverages with no added sugars, such as water, in place of sugar-

sweetened beverages, as one strategy for achieving the added sugars recommendation.

8
Adolescents might need additional support in choosing more healthful beverages,

such as low-fat milk, in place of SSBs. The national YRBS is a biennial cross-

sectional, school-based survey that provides representative data on health behaviours

among students in grades 9–12 from public and private schools in the United States.

In each survey, independent samples of students complete an anonymous, self-

administered questionnaire during one class period and record their responses on a

computer-scannable booklet or answer sheet. Participation by schools and students is

voluntary. Study protocols are designed to protect students’ privacy. Detailed

information about the national YRBS methodology has been described previously.

Questions about milk and juice consumption have been included on the national

YRBS questionnaire since 1999; questions about soda consumption were added in

2007.

Therefore, this analysis focuses on beverage consumption during 2007–2015

when sample sizes ranged from 13,583 to 16,410; overall response rates ranged from

60% to 71%. Daily soda and juice consumption were assessed with the questions

“During the past 7 days, how many times did you drink a can, bottle, or glass of soda

or pop, such as Coke, Pepsi, or Sprite? (Do not count diet soda or diet pop)” and

“During the past 7 days, how many times did you drink 100% fruit juices such as

orange juice, apple juice, or grape juice? (Do not counts punch KoolAid, sports

drinks, or other fruit-flavored drinks.)” Response options were “I did not drink soda

or pop during the past 7 days” or “I did not drink 100% fruit juice during the past 7

days,” “1 to 3 times during the past 7 days,” “4 to 6 times during the past 7 days,” “1

time per day,” “2 times per day,” “3 times per day,” or “4 or more times per day.”

Students who selected “1 time per day,” “2 times per day,” “3 times per day,” or “4 or

more times per day” were categorized as daily soda or juice drinkers; all other

9
students were categorized as non-daily soda or juice drinkers. Daily milk consumption

was assessed with the question “During the past 7 days, how many glasses of milk did

you drink? (Count the milk you drank in a glass or cup, from a carton, or with cereal.

Count the half pint of milk served at school as equal to one glass.)” Response options

were “I did not drink milk during the past 7 days,” “1 to 3 glasses during the past 7

days,” “4 to 6 glasses during the past 7 days,” “1 glass per day,” “2 glasses per day,”

“3 glasses per day,” or more glasses per day.” Students who selected “1 glass per

day,” “2 glasses per day,” “3 glasses per day,” or “4 or more glasses per day” were

categorized as daily milk drinkers; all other students were categorized as non-daily

milk drink.

In light of proposals to improve diets by shifting food prices, it

is important to understand how price changes affect demand for various foods. We

reviewed 160 studies on the price elasticity of demand for major food categories to

assess meanelasticities by food category and variations in estimates by study design.

Price elasticities for foods and non-alcoholic beverages ranged from 0.27 to 0.81

(absolute values), with food away from home, soft drinks, juice, and meats being most

responsive to price changes (0.7–0.8). As an example, a 10% increase in soft drink

prices should reduce consumption by 8% to 10%. Studies estimating price effects on

substitutions from unhealthy to healthy food and price responsiveness among at-risk

populations are particularly needed. The price elasticity of demand is a dimensionless

construct referring to the percentage change in purchased quantity or demand with a

1% change in price. It is determined by a multitude of factors: availability of

substitutes, household income, consumer preferences, expected duration of price

change, and the product's share of a household's income.14 When the relative change

in purchased quantity is below the relative change in price, demand is inelastic

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(numerically, the absolute value of price elasticity is below 1.0). In contrast, changes

in demand that exceed the relative price change reflect elastic demand (the absolute

value of price elasticity is above 1.0). For example, when a commodity's purchased

quantity falls by 5% owing to a 10% increase in price, the price elasticity of demand

is −0.5, reflecting inelastic demand. If the same price increase reduces the

commodity's purchased quantity by 15%, demand for the product is elastic (−1.5).

Our review of food price elasticity focused on the effects of price changes on primary

demand (also called commodity or category demand), which is consumer demand for

a category or group of products measured by quantity purchased. By contrast, brand

demand reflects purchases of an individual brand or products. In the case of policy

decisions such as those involving taxation or subsidies, parameters of primary demand

for a category of products (e.g., soft drinks) are necessary to predict the magnitude of

policy-induced changes in consumer demand.

A number of studies have modelled the potential impact of food-related taxes

on health outcomes. While economic theory predicts an inverse relationship between

the price of SSBs and the quantity purchased, and hence consumed, people allocate

their budget between many different foods and beverages based on their relative

prices, making it imperative to consider the inter-relationships between the subject of

the tax (SSB) and other drinks and foods. The net effect of a price increase of SSB on

energy intake is thus ambiguous. For instance, when the price of an SSB increases,

consumers may shift their consumption towards other energy containing beverages,

such as juices, milk-based or alcoholic drinks. If so, daily energy intake might be

unaffected, or even increased. Alternatively, they may shift consumption towards diet

drinks or water, leading to a net reduction in energy intake. Further, the effect of price

increases is likely to be heterogeneous, as price responsiveness will vary across

11
income groups and consumption intensity, with high consumers of SSBs being

potentially less sensitive to price changes.

We distinguish between uncompensated and income-compensated price

elasticity of demand, with the latter assuming that consumers are compensated for

price changes through income changes. We consider both price demand elasticity and

cross-price elasticity of demand for a product. Whereas price elasticity reflects

changes in the purchased quantity of a commodity with changes in that commodity's

price, cross-price elasticity reflects changes in demand for a particular commodity

when prices of other products change. The construct of cross-price elasticity is

important from a policy perspective in that relative shifts in prices through taxation or

subsidies can affect demand for other products not regulated by policies.

Taxing soft-drinks may reduce their purchase, but assessing the impact on

health demands wider consideration on alternative beverage choices. Effects on

alcoholic drinks are of particular concern, as many contain similar or greater amounts

of sugar than soft-drinks and have additional health harms. Changes in consumption

of alcoholic drinks may reinforce or negate the intended effect of price changes for

soft-drinks. An increase in the price of high-sugar drinks leads to an increase in the

purchase of lager, an increase in the price of medium-sugar drinks reduces purchases

of alcoholic drinks, while an increase in the price of diet/low-sugar drinks increases

purchases of beer, cider and wines. Overall, the effects of price rises are greatest in

the low-income group. Increasing the price of soft-drinks may change purchase

patterns for alcohol. Increasing the price of medium-sugar drinks has the potential to

have a multiplier-effect beneficial to health through reducing alcohol purchases, with

the converse for increases in the price of diet-drinks. Although the reasons for such

12
associations cannot be explained from this analysis, requiring further study, the design

of fiscal interventions should now consider these wider potential outcomes.

Many young Filipinos are really into consuming different beverages. It’s a

part of their daily life. In the Philippines, studies examining dietary patterns, food

choices and childhood obesity are largely limited. A single local cross-sectional

observational study intended to determine the association between BMI and food

choices reported an association between BMI and milk and milk products but a lack

of association with other food groups, i.e. sugars and fats, fruits and vegetables and

fiber (Gonzalez-Suarez et al. 2009). However, this study acknowledged the

limitations in its tools and methodologies which could have precluded a clear

understanding of food intake and BMI. Recognizing the relative contribution of

beverages in the diet of children, the present study utilized beverage intake data from

the 7th National Nutrition Survey (NNS) in 2008 to (i) determine the percentage

contribution of selected beverages to mean energy intake/day, (ii) determine the

proportion Filipino pre-school children (6 months to 5 years), school-aged children (6

to 12 years) and adolescents (13 to 19 years) consuming selected beverages, (iii)

estimate their mean intake per day for selected beverages and, (iv) examine the

association between BMI and intake of selected beverages. As to the authors’

knowledge, this the first study to analyse beverage intake in Filipino children and

adolescents, and investigate its relationship with BMI. This study covered beverage

consumption data of Filipino pre-school children, school-aged children and

adolescents from the 7th National Nutrition Survey (Table 1). The percentage

contribution of beverage intake and other food groups to mean energy intake per day

of pre-school children, schoolchildren and adolescents (Figure 2) indicated that, of the

average one-day energy intake of preschool children amounting to 843 kcal, 64%

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(approximately 540 kcal) was from the consumption of cereals and products, 17%

(approximately 143 kcal) from beverage consumption, 9% (approximately 76 kcal)

from intake. The world experienced a dramatic increase in food and fuel prices during

the first half of 2008. According to the Food and Agriculture Organization (FAO

2008), international nominal prices of all major food commodities reached their

highest levels in nearly 50 years, while prices in real terms were highest in nearly 30

years. The FAO food price index1 increased by 53 percent for the first three months

of 2008 compared to the same three months of the previousyear. The current

agricultural market is characterized by the increase in international prices of nearly all

major food and feed commodities. Leading the list of commodities is vegetable oil,

which increased by more than 97.0 percent, and followed by grains, which hiked by

about 87.0 percent.

The price hike is expected to have adverse effects on poverty and is worrisome

precisely because it is expected to hurt the poor the most.

SOME call it a train to a land of progress. Indeed, even government officials

banner the domino effect of positive changes on the lives of Filipinos of the Tax

Reform for Acceleration and Inclusion (Train) bill, which includes the proposed

excise tax on sugar-sweetened beverages (SSBs). For some, However, whatever

course the Train bill would take, imposing tax on SSBs is a bittersweet pill for

industry. So Jesus L. Arranza argues. According to Arranza, chairman of the

Federation of Philippine Industries (FPI), the ripple effects the proposed SSB taxation

would create is contrary to what the government intends to achieve: a pro-rich and

anti-poor measure. INDUSTRY stakeholders estimate a TRAIN law would lead to

higher prices in products with a wide consumer base. Once the proposed additional

tax is applied, a 3-in-1 coffee sachet, currently priced at P5, will be P8; a 1-liter bottle

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of juice concentrate, currently priced at P9, will have a retail price of P30; a 1 liter

bottle of tea, currently priced at P20, will be sold at P30; and carbonated drinks and

tetra-pack of ready-to-drink juice, currently being sold for P15 per liter, will cost P25.

The products covered by the TRAIN, or House Bill 5636, will include all

sweetened juice drinks, sweetened tea, sweetened coffee, all carbonated beverages

with sugar, including those with caloric and noncaloric sweeteners, flavored water,

energy drinks, sports drinks, powdered drinks not classified as milk, juice, tea and

coffee, cereal and grain beverages and even nonalcoholic beverages with sugar.

Arranza says these price hikes would drag down the demand for the affected

commodities that are usually bought by the masses, particularly those in the lower

classes of the society. The upward adjustment in prices, he noted, could result in great

reduction in the income of sari-sari store owners, who are the usual sellers of these

commodities.“As far as the additional tax is concerned, aside from poorer economic

class, its ripple effect is that many people directly and indirectly making income from

all these drinks will suffer,” Arranza told the BusinessMirror.

Philippines - Imposing tax on sugar-sweetened beverages (SSB) like

powdered juice and instant coffee will double their cost and thereby hurt the poorest

of the poor, according to a recent study by the University of Asia and the Pacific. The

report indicated that the proposal of the Department of Finance will increase the price

of juice concentrates by 109 percent, powdered juice by 108.61 percent, and instant

coffee by about 50 percent – staple commodities in a typical Filipino household.

Instant coffee is consumed mostly by workers while powdered concentrates are used

for baon or snacks of the lower-income sector. Philippine Amalgamated Supermarkets

Association president Steven Cua said the proposed SSB tax would have a negative

15
impact on the beverage industry and on the consumers of these products considered as

basic commodities. Lawmakers are concerned that this measure will be anti-poor and

therefore needs revision. “There will be a x effect as these products are basic

components of production,” Deputy speaker Romero Quimbo said of the

comprehensive tax reform program (CTRP). Particular product rather than the

beverage’s total volume.

“The ones who consume these products are ordinary Filipinos who will feel

the pinch of higher cost of products. Like students who is usually dependent on their

school allowance. We might be unfairly targeting the poor,” he said. Angara made the

remark following a hearing on the administration’s proposed tax, a measure that is

supposed to raise over P40 billion in revenues but has been criticized as antipoor,

considering its cost-raising impact not only on popular soft drinks but also on such

staples as instant coffee and powdered juice.

To keep prices low, affordable and predictable, SSB makers have turned to

importing via the Association of Southeast Asian Nations-China Free Trade

Agreement, corn syrup to sweeten their products as an alternative, earning the ire of

the sugar industry. Quimbo said that the increase in other taxes negated and even

offset benefits of the proposed tax reform program for the small workers.

An excise tax on sugar sweetened beverages (SSBs) is being proposed to

reduce consumption of drinks with added sugar that cause adverse health effects.

Taxing SSB is a health measure aimed at influencing consumers to improve their

beverage consumption patterns in order to achieve better health outcomes. The

proposed excise tax will make SSBs more expensive, thus reducing consumption and

encouraging the consumers to shift their purchases to healthier options. The SSB tax

16
may also be a good source of additional revenue for the government which will

compensate for the expected revenue loss from the proposed restructuring of the

personal income tax (PIT) under Package 1 of the Tax Reform for Acceleration and

Inclusion (TRAIN)

Findings from the study confirmed that among sweetened beverages, soft

drinks (cola) are seemingly popular. This particular observation was validated by

findings from other studies. Adair and Popkin (2005) identified soft drinks as a

common energy source for snacks among Filipino children. Soft drinks were listed as

among the affordable and most commonly consumed food item by Filipino children

(6-12 years old) and consequential source of dietary sugar (Yabao et al. 2005). The

Philippine Statistics Authority (PSA) 2015 Family Income and Expenditure Survey

(FIES) shows that 1.3% of total annual family expenditure was spent on non-alcoholic

beverages, i.e., mineral water, soft drinks, fruits and vegetable juices. Families in the

middle income class spent the highest (1.4%), the high income group the second

highest (1.2%) while the lowest income group spent the least (0.9%). (Table 2)

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 Statement of the problem

1. What is the level of changing in price to the demand of ABM

students of Arellano University?

2. How the factor of demand affects the ABM students of Arellano

University?

3. Is there a significant relationship between the variables?

Significance of the Study

This study targets to know if changes of price in beverages affect the demand

of ABM students. Based on the result that the researchers acquired, the research will

be beneficial to the following.

a. Students- as they will be aware how price of beverages changes

b. Beverage Industry- the industry will benefit on the study for they will

be aware on how the customers settle on where to stay so that they can

be more competitive in setting the price of beverages itself to meet the

needs and want of the target market.

c. Retailers and marketers- It is anticipated that the results of this study

will offer retailers and marketers more guidance in reaching the

customers.

d. Future Researchers- as this study may provide more data and

literature that may be used as their future reference for their prospect

study given the information provided. The research study may also

guide them on what research gap on the topic is for them to expound

and clarify.

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 Scope and Delimitations

The study is only designed to conclude if the price of beverages really affects

the demand of ABM students in Arellano University Legarda, Manila. The

respondents are from Grade 11 and Grade 12 ABM students of Arellano University.

Conceptual Framework

• Changes in price of Beverages

• Demand
Input

• Gahering data through survey questionnaires

• Evaluation on the possible solution to solve the identfy problems
Process

• Increased the knowledge of ABM Students about Changes in price

of Beverages and Demand
Output

Theoretical Framework

“Price is the only element in the marketing mix that

produces revenues; all others represent costs,” according to Business Link, a public-

private partnership business support organization. Choosing the right price for product

helps send the correct price-quality signal. Price-signalling occurs when the cost of

something reflects the product’s perceived quality. Whether or not your product is the

19
best quality for the best price, your pricing strategy aims to convince the buyer that is

the case. 1Pricing is cost-based, demand-based or competition-based. In cost-based

pricing, you set prices based purely on production costs and the desired profit without

considering the demand. In demand-based pricing, consumer research helps to

ascertain the acceptable price range, then you can determine profit and cost

requirements within that range. In competition-based pricing, you set your prices

based on your competitors. Depending on customer loyalty, or brand differences, you

might be selling at, above or below market price. A study of pricing strategies

implemented in food and beverage operations that are focused on beverage

operations. This is conducted through literature review and then a real time study of

operations for the Luxor Casino and Hotel. Data over a period of three months is then

analysed to ascertain practical and realistic pricing strategies facing Las Vegas in the

current economy.

As the once famous adage goes, “The most famous law in economics, and the

one economists are most sure of, is the law of demand“—a law which states that the

quantity of a given good purchased has an inverse relationship to its price—i.e.,

higher prices lead to lower quantities demanded, and that lower prices lead to higher

quantities demanded. It is upon this premise that the entire discipline of

microeconomics was built.

The relative responsiveness of the change in quantity demanded (Q) to any

given change in unit price (P) is what is known as the price elasticity of demand, also

referred to as PED or price elasticity. This article will introduce the fundamentals of

price elasticity theory in somewhat lecture style before forcing us out of the classroom

and into an exploration of real-world application, including pricing and promotion

strategy design, how elements of behavioral and consumer psychology complicate the

20
pristineness of the Nobel-winning theory, and a live case using Uber’s surge pricing

model as the perfect example of price elasticity at work.

But first, let’s begin with the basics. To deeply understand price elasticity of

demand, I must take you back to the beginning—to economics’ first principles—and

help you understand the core concept of demand.

Economics 101: Understanding Demand

At its most elemental, demand is the quantity of a given good that a consumer

is willing and able to purchase at every price along a continuum. Both theoretical

economists and business people alike represent and measure demand using

the demand curve, which is formally defined as the graphical representation of the

relationship between price and the quantity demanded at any given point in time.

In a typical representation (such as the one illustrated in Figure 1 above), the

demand curve is drawn with price on the vertical (y) axis and quantity on the

horizontal (x) axis, with the function plotted (the curve) conventionally reflecting a

negative association—i.e., a downward slope—that migrates from left to right.

Analyzing a typical representation further, the point at which the demand

curve crosses the y-axis captures the price at which a customer will purchase zero

units of given product because it is officially too expensive. This indicates the outer

bound of a customer’s willingness to pay. Conversely, the point at which the demand

curve crosses the x-axis captures the maximum quantity a customer is willing to buy

at any price. Or framed differently, the maximum number of units a given firm can

sell assuming it prices its product at zero.

The demand curve is linear in its most basic form and its slope represents the

probable purchase quantities at various prices, calculable using the following formula:

21
 With the abstract concept of demand introduced, we must next understand the

major law and associated factors that govern it.

The Law of Demand

The law of demand states that, ceteris paribus, the quantity demanded of a

given good has an inverse relationship to its price—in other words, that higher prices

lead to lower quantities demanded, and lower prices lead to higher quantities

demanded. Excluding price, there are five other factors that conventionally govern

demand. They are as follows:

1. Price of related goods. Related goods come in the form of either complements;

i.e., goods with a positive cross-elasticity of demand, and thus typically

consumed together (think, cars and petrol), or substitutes; i.e., goods with a

negative cross-elasticity of demand, which are thus easily substitutable for one

another (e.g., bottled vs. tap water). Specifically to the point, a rise in the price

of a complement typically induces a rise in the overall cost of the bundle of

goods, and thus a fall in the quantities demanded of both. Whereas with

substitutes, the opposite effect takes place.

2. Income of buyers. When the income of an individual or the aggregate rises,

individual and aggregate demand rises in line with the product’s marginal

utility function. Marginal utility, in this case, is defined as the additional unit

of satisfaction a consumer gains from consuming one more unit of a given

good; utility which typically diminishes over time and/or with each additional

unit consumed.

3. Tastes or preferences of consumers. Positive changes in the tastes or

preferences in favor of a good (or brand within a good-category), naturally

22
 increases demand, and vice versa. It is for this reason that billions of dollars

are spent annually on branding, advertising, and marketing in an effort to shift

or manipulate tastes, preferences, and the stickiness of customers in favor of a

given firm’s product/brand.

4. Consumer Expectations. Intrinsic to this variable are two other cornerstone

economic principles. The first is the concept of future value, and the second,

the concept of discounting to present value. Explained simply, when

consumers expect that the value of a given product will rise in the future, there

will be a higher willingness to pay for it in the present, thereby inducing

greater demand. This concept exists at the nexus of where even basic

consumer discretionary goods can begin to be considered investments solely

on the basis of perception, consumer psychology, and fashions/trends.

5. Number of buyers in the marketplace. Simply put, holding income per capita

constant, a rise in the aggregate number of addressable consumers, either due

to demographic shifts or improvements in product relevance, will induce

greater demand. The more people exist to consume a product that is relevant,

affordable, and accessible, the higher overall demand, and vice versa.

The Demand Curve Revisited: A Shift in… vs. A Movement along…

At this juncture, it is worth highlighting that, in economics, two different

expressions of change in demandexist. The first is exemplified by a shift in the

demand curve and the second by a movement along it. A shift in the curve can only be

induced by changes in one of the five non-price determinants of demand, as detailed

above and illustrated below in Figure 2.

23
 A movement along the demand curve, on the other hand, only takes place in

response to price changes, inducing a change in quantities demanded but within the

bounds of the demand function/curve. Again, the sensitivity of the change in quantity

demanded to the change in the elected price is what is known as the price elasticity of

demand and what we will delve into next.

Price Elasticity of Demand

The price elasticity of demand (PED) measures the percentage change in

quantity demanded by consumers as a result of a percentage change in price. It is

calculated by dividing the % change in quantity demanded by the % change in price,

represented in the PED ratio.

The elasticity coefficient—i.e., the output of the price elasticity formula—is

almost always negative due to the inverse relationship between quantity demanded

and price (the law of demand). It is worth noting, however, that the negative sign is

traditionally ignored, as the magnitude of the number is typically the sole focus of the

analysis.

Interpreting Elasticity

Demand is considered elastic when a relatively small change in price is

accompanied by a disproportionately larger change in the quantity demanded, and

demand is inelastic when a relatively large change in price is accompanied by a

disproportionately smaller change in the quantity demanded. Outside of these

extremities, unit elasticity refers to any scenario where a change in price is

accompanied by an exact/proportional change in quantity demanded.

Mathematically, demand for a given product is considered relatively elastic

when its elasticity coefficient is greater than one and is considered relatively inelastic

24
when its coefficient is less than one. Finally, demand is said to be unit elastic when

the PED coefficient is exactly one.

The Full Range of Elasticity

According to Thomas Steenburgh and Jill Avery, senior lecturers at the

Darden School of Business and at Harvard Business School, there are five primary

zones of elasticity:

How Do Companies Use Price Elasticity of Demand?

Switching gears somewhat, I would now like to explore the question of how

companies use price elasticity of demand. To answer this effectively, we must again

return to square one and redefine/clarify the function of a firm.

At its most fundamental, the function of a firm is twofold: (1) to create

value for its customers, and (2) to capture value for its stakeholders. Businesses create

value, or at least the perception of value, in their choice of what goods/services to

produce and distribute; and capture value in the form of profits, in their choices of

how to price and what cost structures to adopt. Thus, and more crudely put, it could

be surmised that the core goal of a firm is to maximize profit.

With that settled, our next task is to understand the role of the marketer. We

can probably all agree that their role, alongside other managers within a firm, is to

further the goal of their firm, which we’ve defined as maximizing profit. And given

that costs do not fall under the marketer’s purview, they must accomplish this by

maximizing revenue. Adding a bit more structure to the conversation, a marketer does

this by optimizing what classical business theorists refer to as The Four P’s: Product,

25
Price, Place, and Promotion, where product describes the nature and relative

differentiation of a good/service; price, what a good is sold for; place, where and how

easily a good is accessed; and promotion, the marketing methods used to inform or

persuade the target audience of a good’s merits.

Most specifically, it is the marketer’s job to estimate demand, anticipate the

effect of various possible combinations of prices (price elasticity), and use that data

to inform management on the most suitable pricing and promotion strategies for the

firm and its products, assuming both product and place have been optimized.

The problem with price elasticity theory in the real world is that ceteris

paribus can never hold; said differently, variables in competitive marketplaces can

never be held constant. In reality, firms operate in dynamic, complex, and multivariate

environments, replete with intangible competitive forces that interact with one another

in impossible to predict/quantify ways. The real world, by definition, is imperfect,

fluid, and inexact, not accounting for consumers.

Hypothesis

Ho1, Is there no significant relationship between changes in price of beverages

and factors affecting the demand

Ha1, Is there a significance relationship between changes in price of beverages

and factors affecting the demand

26
 Definition of Terms

BMI (body mass index) - The body mass index (BMI) or Quetelet index is a

value derived from the mass (weight) and height of an individual. The BMI is defined

as the body mass divided by the square of the body height, and is universally

expressed in units of kg/m2, resulting from mass in kilograms and height in metres.

Carton - A light box or container, typically one made of waxed cardboard or

plastic in which drinks or foodstuffs are packaged

Commodity -A raw material or primary agricultural product that can be

bought and sold, such as copper or coffee.

Cross-Price - In economics, the cross elasticity of demand or cross-price

elasticity of demand measures the responsiveness of the quantity demanded for a good

to a change in the price of another good, ceteris paribus.

De-alcoholised - To remove some or all of the alcohol from (beverages):

dealcoholized the white wine.

Demand - In economics, demand is the quantity of a commodity or a service

that people are willing or able to buy at a certain price, per unit of time. The

relationship between price and quantity demanded is also known as demand curve.

Detrimental - Something else has a harmful or damaging effect on it.

Drug ethanol – Ethanol is a volatile, flammable, colourless liquid with a

slight characteristic odor. Ethanol is naturally produced by the fermentation of sugars

by yeasts or via petrochemical processes, and is most commonly consumed as a

popular recreational drug. It also has medical applications as an antiseptic and

disinfectant.

27
 Elasticity - The ability of an object or material to resume its normal shape

after being stretched or compressed; stretchiness.

Eligibility -The state of having the right to do or obtain something through

satisfaction of the appropriate conditions. “Your eligibility for benefits will depend on

your income"

Ethnicity - The fact or state of belonging to a social group that has a common

national or cultural tradition.

Fiscal intervention -By changing the levels of spending and taxation, a

government can directly or indirectly affect the aggregate demand, which is the total

amount of goods and services in an economy. ... Nevertheless, fiscal policy is a type

of intervention that can help to control the direction of an economy.

Heterogeneous - diverse in character or content. “A large and heterogeneous

collection"

Price Hike – a percent of increase in the cost of goods or services. A 10%

price hike means the cost of that particular item has increased by 10%. Also called

price increase.

Protocol - The official procedure or system of rules governing affairs of state

or diplomatic occasions.

Subsidies -A sum of money granted by the government or a public body to

assist an industry or business so that the price of a commodity or service may remain

low or competitive.

Taxation - The levying of tax or money paid as tax.

Worrisome -causing anxiety or concern. “A worrisome problem”

28
 Methodology

In this chapter, the researchers include the method, design, technique and

instrument that the researcher can used as a guide in doing the research. All of that

have a big role in doing the research that researchers conducting.

Method Use

The researchers came up with the descriptive correlational research design as

the type of research that will be used within the whole study. The said design is a

method used to obtain information relating to the current status of an issue or

phenomenon to describe "what exists" within the variables or conditions of the

situation and conduct a survey investigation that describe characteristics of a

population or phenomenon being studied. As widely accepted, the descriptive

correlational method of research is a fact-finding study that involves adequate and

accurate interpretation of findings. Descriptive correlational research describes a

certain present condition. The researcher opted to use this kind of research design

considering the desire to acquire first hand data from the respondents so as to

formulate rational and sound conclusions and recommendations for the study.

Research Design

The researchers used survey because it is a method of collecting information

that is best served to answer the questions and the purposes of the study. The essence

of survey method can be explained as “questioning individuals on a topic or topics

and then describing their responses “The survey research is one in which a group of

people or items is studied by collecting and analysing data from only a few people or

items considered to be representative of the entire

29
 group. In other words, only a part of the population is studied, and findings m

from this are expected to be generalized to the entire

Research Instrument

In research instrument the researchers used Survey to gather all information to

the respondents. The number of respondents is very important to get the result of the

study. The researcher gathered information to answer all the thoughts regarding to the

topic. To conduct survey, researchers conclude decide to give questions to answer by

the ABM students as the respondents. The researchers used survey to have the exact

answer that is needed to the study.

Sampling Technique

The researchers used simple random technique because it is the easiest way to

find a source or respondents, and the sample random is a subset of a statistical

population which each number of the subset has an equal probability of being chosen.

30
 Results and Discussions

This chapter shows the interpretation and analysis of the results gathered from the

respondents and will elaborate more on the findings gathered of this research.

Verbal Interpretation

4.21 – 5.00 Strongly Agree

3.41 – 4.20 Agree

2.61 – 3.40 Undecided

1.31 – 2.60 Disagree

1.00– 1.30 Strongly Disagree

31
Problem I: What is the level of changing in price to the demand of ABM students of

Arellano University?

Table 1:

Level of changes in price of beverages

Changes in Price of Mean Verbal Interpretation

Beverages

1. Buying preference 3.60 Agree

2. Effects of changes 3.33 Agree

in price in
everyday life

3. Changes of price in 3.20 Agree

different beverages

4. Benefits in buying 3.53 Agree

decision

5. Effect of price in 3.50 Agree

different beverages

Total 3.43 Agree

Table 1 unveil the answers of the respondents. The mean of the scores is 3.43

with agree verbal interpretation.

Based on the results of the tally, it shows that there is an immense effect of the

level of changes in price of beverages to the demand of the respondents.

32
Problem II: How the factor of demand affects the ABM students of Arellano

University?

Table 2:

Factors Affecting the Demand

Factors Affecting Demand

of ABM Students Mean Verbal Interpretation

1. Income Level 3.63 Agree

2. Consumer taste and 3.90 Agree

preferences

3. Consumer wants 4.06 Agree

and needs

4. Fashions 3.23 Agree

5. Utility 3.56 Agree

Total 3.67 Agree

Table 2 shows the insight of the respondents about how the factors affect the

demand in buying beverages. The mean of the scores is 3.67 with agree verbal

interpretation.

Based on the results of the tally, it shows that the factors of demand really

affect the demand of respondents in buying beverages.

33
Problem III: Is there a significant relationship between the variables?

Table 3:

Significant Relationship of Variables

Variable Mean Tcom Ttab Interpretation Decision

1. Changes in

price of 3.67

beverages

4.72 1.699 Significant Reject Ho

2. Factors

affecting
3.43
the demand

of ABM

Students

Table 3 reveals that there is a significant relationship of changes in price of

beverages to the factors affecting demand of the respondents. Using the statistical

treatment which is Pearson R the result is shown. Since the value of T

computation is higher than the T tabular, the result is significant. Therefore, the

null hypothesis is rejected and the alternative hypothesis is accepted. It means that

the changes in price of beverages to the demand of the respondents have a

significant relationship.

34
 SUMMARY

After tabulating, interpreting and analysing the data that gathered, the

researchers came up with the following findings:

 Answered the problem presented at the beginning of the research study

 Based on the results that the researchers have gathered there is a

significant relationship between two variables.

 The changes in price of beverages to the demand of the respondents

have a significant relationship

CONCLUSION

 The researchers conclude that the changes in price of beverages

detrimental to the demand of the costumers or respondents.

 The mean of the independent variable is closely enough to the mean of

dependent variable which implies that the changes in price of beverages to the

demand of the respondents.

 The researchers conclude that the changes in price of beverages can

affect the demand in buying preference of the respondents.

 The researchers conclude that there is a significant relationship

between the two variables. The decision of this study is to reject the null hypothesis

and accept the alternative hypothesis.

35
RECOMMENDATION

The researchers recommend this study to the following:

 To the students- this study can be a source of information in their

research that related to the topic of the study. This study also helps the

students to know why the beverages they buy in university are

changing.

 To the costumers- to understand why is the price of beverages

continuously changing as time passes by.

 To the entrepreneurs- it is crucial to the entrepreneurs to have ideas

on how they will handle their decision making regarding changes in

price of beverages that affect their business.

 To the future researchers- they can depend in this study their

thoughts about beverages and can also improve their research by

studying and adapting this research.

 Beverages Industry- it is very important to the beverages industry to

know the changes in price of beverages that it can affect their business

when costumer did not purchase their product.

36
 Bibliography

https://www.cdc.gov/mmwr/volumes/66/wr/mm6604a5.htm

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2804646/

http://jech.bmj.com/content/early/2018/01/11/jech-2017-209791

http://www.philstar.com/business/2017/05/25/1703222/excise-tax-sugar-

sweetened-drinks-hikeprices-140

https://businessmirror.com.ph/tax-on-sugar-sweetened-beverages-stirs-

bittersweet-flavor-forindustry/

http://www.ntrc.gov.ph/images/journal/2017/j20170506a.pdf

37
APPENDICES

38
 APPENDIX A

(CONSENT LETTER)

39
March 2018
Arellano Unversity
2600 Legarda St. Sampaloc, Manila

Sir/Madam:
In partial fulfilment of ABM5 students S.Y. 2017-2018 in the subject “Research
Project” is conducting a research entitled “Is Price Changes in Beverages Detrimental
to the Demand of ABM students in Arellano University.”

We are in the process of gathering data through survey that will be used in our study.
Regarding the issue, we would like to ask your permission to distribute our
questionnaires to some ABM students of AU Legarda that will help us to obtain
information we need in relation to our topic.

We would greatly appreciate your consent at our request.

Thank you for your time and positive action.

Respectfully yours,
The Researchers:
Campo, Racquel I.
De Lara, Chelsey Rionette
Garboso, Rica Mae E.
Grio, Meryl C.
Layson, Karen A.
Lima, Casey G.
Sinangote, Atherson C.

40
Recommended for Approval:

Mr. Regino Barcelona III

Research Project Teacher

Checked by:

Mr. Christian Renegado

Research Project, Team Leader

Approved by:

Mrs. Anavelle O. Gambayan

Principal SHS

41
 APPENDIX B

(SURVEY

QUESTIONNAIRE)

42
 Survey Questionnaire

Name (Optional): Strand/Grade&Section:

Age: Sex:

Stron Agree Un- Dis- Strongly

gly decided Agre Dis
Agree e Agree

(5) (4) (3) (2) (1)

1. The prices of the beverages

affects your buying
preference

2. The changes in price of the

beverages affect your
everyday life.

3. Do you agree in the

changes of price in
different beverages?

4. The decrease of price

benefits in your buying
decision

5. The price affecting on what

kind of beverages you will
buy

43
 Stron Agree Un- Dis Strongly
Factors affecting the demand gly decided agree Dis
Agree agree

(5) (4) (3) (2) (1)

1. Income Level

2. Consumer tastes and

preferences

3. Consumer wants and needs.

4. Fashions

5. Utility

44
 APPENDIX C

(MINUTES OF THE

DEFENSE)

45
 Minutes of the Defense

March 5, 2018 ABM-5 Group 5

 Our title was changed from “The changes of price in beverages that precipitate
the demand of ABM Students in Arellano University Legarda Manila” into “Is
Price Changes in Beverages Detrimental to the Demand of ABM students in
Arellano University.”
 Our statement of the problem was changed from one problem to three
problems.
 The panellists recommended that the words in definition of terms should be in
bold and there are words that should be remove because of the changes on our
research.
 They added some theories that we must append on our theoretical framework.

46
 APPENDIX D

(MEAN OF THE

ANSWERS OF THE

RESPONDENTS)

47
 Respondents Changes in price of Factors Affecting the

beverages (Mean) demand (Mean)

1 2.2 4.6

2 3 4

3 3.2 2.4

4 4.2 3.2

5 2.2 3.4

6 3.6 4.6

7 2.8 2.6

8 4 3.8

9 4 4.2

10 3.6 3.8

11 3.2 4.4

48
12 3.2 4.4

13 4.4 4.4

14 3.4 3.2

15 2.2 2.2

16 3 4

17 4.2 3.8

18 1.4 2

19 3.6 4

20 3.6 4

21 4.2 4.2

22 4 4.2

23 4.2 4.8

49
24 3.4 4.2

25 3.6 4

26 4.2 5

27 3.6 4

28 3.6 4.4

29 4 4.4

30 4 3.8

50
 Curriculum Vitae

Name: Campo, Racquel I.

Birthday: December 24, 1999

Age: 18

Home Address: Blk21 Lot 10 ph 1-B Navotas City

Name of Father: Rolando Acedera Occupation: Wifi installer

Name of Mother: Luzuiminda Campo Occupation: Housewife

Educational Attainment

Elementary School: Kapitbahay Elementary School

Junior High School: Kaunlaran High School

Senior High School: Arellano University

51
Name: Delara, Chelsey M.

Birthday: November 20, 1999

Age: 18

Home Address: 733 Don Quijote St Sampaloc Manila

Name of Father: Mario Jesus De Lara

Occupation: Deceased

Name of Mother: Nenita De Lara

Occupation: Clerk at QC hall of justice

Educational Attainment

Elementary School: Legarda Elem. School

Junior High School: Ramon Magsaysay High School

Senior High School: Arellano University

52
Name: Garboso, Rica Mae E.

Birthday: Aug 20, 2000

Age: 17

Home Address: 819 Hamabar St. Tondo , Manila

Name of Father: Rudy E. Garboso Occupation: Business man

Name of Mother: Evelyn E. Garboso Occupation: Business woman

Educational Attainment

Elementary School: Dr. Jose Rizal Elementary School

Junior High School: Lakan Dula High School

Senior High School: Arellano University

53
Name: Grio, Meryl C.

Birthday: March 13. 2000

Age: 18

Home Address: 847 Quezon Blvd. Sta cruz. Manila

Name of Father: Crisanto A. Grio Occupation: Security Guard

Name of Mother:Muriel C. Grio Occupation: Housewife

Educational Attainment

Elementary School: P. Gomez Elementary School

Junior High School: Cayetano Arellano High School

Senior High School: Arellano University

54
Name: Layson, Karen A.

Birthday: October 30, 2000

Age: 17

Home Address: 279 Osmena st. tondo manila

Name of Father: Paul Emil Layson Occupation: Tricycle driver

Name of Mother: Catherine Arizapa Occupation: Secretary

Educational Attainment

Elementary School: Magat salamat Elementary school.

Junior High School: Dr Juan G. Nolasco High School

Senior High School: Arellano University

55
Name: Lima, Casey G.

Birthday: Sept 11, 1999

Age: 18

Home Address: 1465 Bulaklak st . Dagupan Tondo, Manila

Name of Father: Harold V. Lima Occupation: Engineer

Name of Mother: Linda Lou G. Lima Occupation: Housewife

Educational Attainment

Elementary School: General Maximino, Hizon

Junior High School: Cayetano Arellano High School

Senior High School: Arellano University

56
Name: Sinangote, Atherson C.

Birthday: December 3, 1998

Age: 19

Home Address: 1203 wagas st. Tondo Manila

Name of Father: Nelson Sinangote Occupation: Business man

Name of Mother: Emelda Sinangote Occupation: Housewife

Educational Attainment

Elementary School: Pio Del pilar Elementary School

Junior High School: Claro M. Recto High School

Senior High School: Arellano University

57