I.

Introduction

The toothpaste consumption in the Philippines was very little in the 1950's but
during1998 up to today almost all Filipinos is consuming toothpaste. The story of
success of Lamoiyan Corporation which is owned by Mr. Cecilio Kwok Pedro is similar
to the growth of the toothpaste industry in the Philippines. He started a company which
creates aluminum container for toothpaste. Mr. Pedro tried to get a deal with
multinational companies which are Colgate and Unilever but no one listened to him
for the first three years but due to his perseverance a company called him and his
company started to supply 25 to 30 % of the total demand. But after three years his
company was hit by a big problem because the multinational companies turned into
another packaging which is plastic tube. Mr. Pedro ran out of business and decided to
layoff all his employees.
Since Mr. Pedro had machines which can create toothpaste containers he then decided
to put up a new company which is Lamoiyan Corporation. He also knew that
perceptions are the only difference between toothpastes in the market. Since Filipinos
have a colonial mentality and therefore if Lamoiyan would just be branded as a Filipino
made product people will perceived it to be of low quality, to counter this he highlighted
Lamoiyan's tie-up with a Japanese company. Another problem that Lamoiyan
encountered was they lack brand awareness. But they were able to solve it by
sponsoring the Philippine Olympic team.
Lamoiyan Company attacked the two multinational companies in an area where they
cannot compete which is price. They priced their toothpaste 30% below the price of
their competitors. Lamoiyan also targeted unsaturated markets. They segmented
their market by producing specific toothpaste for kids, teens and oldie consisting of
HapeeKiddie, Hapee Red and Green gel and Hapee Gold. By targeting those markets
their competitors will just think that they are a small company and will underestimate
them.
Lamoiyan also developed unique marketing activities. They knew that Colgate have
alot of budget to spend on TV advertising so they focused on other strategies that
their companies can't do or out do. They marketed Hapee through road signs, school
buildings and through sponsorships. Because of the principle of Mr. Pedro that profit is
not the main purpose of business and giving to people is more important, Lamoiyan had
various charity works like donations to school buildings and church. They also hired
handicapped workers. Through those charitable acts the image of the company was
enhanced and it became difficult for their competitor to attack them.
Finally when Colgate and Procter and Gamble began to notice Lamoiyan, they put their
prices down by as much as 30%. And they also countered Lamoiyan's product line and
offered their own toothpaste for kids but since Hapee was positioned the market it was
able to sustain. Another problem came when Zest-O launched Beam toothpaste which
is positioned as low price toothpaste. To fight back Lamoiyan launched Kutitap. When
there were production rejects the company used it to produced Dazz, a dishwashing
liquid.
Opportunities for expansion came for Lamoiyan. They had captured a considerable
amount of market share in the Philippines. And they had penetrated to market from
supermarkets to sari-sari store by producing new product lines and even producing
products in sachets to be able to distribute to sari-sari stores. And they have already
started exporting their products to Asian countries. Mr.Pedro wants to be the market
leader in the industry in Asia but to make it possible he needs to penetrate
larger markets and distribute extensively to every market.

ission
mprove the quality of life by bringing essential products within the reach of the common
people.
Vision
To have a Lamoiyan product in every home.

OBJECTIVES:
O We will create 50% awareness of our product to the target customers in 3
months
O ncrease the net profit to more than 25% of the sales by the end of 2012
O To gain 10% of the market share by the mid of 2013.
O To introduce our product also in new market.

. naIysis of acro-environment

A. Political Factors

O Ms. Macapagal Arroyo took office in January 2001 after former president
Joseph Estrada was impeached on charges of nepotism and corruption. The
transition from Estrada, who was considered "president for the poor to
Macapagal Arroyo who desired to strengthen competition and liberalize trade,
unleashed considerable political uncertainty and a recession threat in late
2000, but by 2002, the instability had mostly subsided.

O To be creative in terms of marketing on a limited budget, Lamoiyan
Corporation sponsored traffic signs in Metro Manila and in some provinces.
Pedro benefited with the relationships he had with the government officials, a
perk that resulted from being a local company. n addition, Lamoiyan
sponsored all public schools in Metro Manila and the brand "Hapee appeared
next to the schools' name on its main building.

B. Economic Factors

O The 1997 asian financial crisis, the 2000 political instability, and the 2001
global economic downswing all adversely affected the Philippine
Economy, however growth in recent years suggested a modest recovery.
The 2002 real GDP reached $77.1 billion, reflecting an 8% increase from
2001, and export revenues in 2000 totaled $35 billion, more than four
times the amount in 1990, in 2002, however, the Philippines fell 13 places
to 61
st
out of 80 countries in the World Economic Forum's Global
Competitiveness Report, an index based on countries' expected five year
per capita GDP growth.

O The devalued Philippine peso increase input prices and forced all
manufacturers to raise toothpaste prices, although Lamoiyan was more
restrained in its price increases and thus restored a discount of 30% in
1999. n addition, with the Philippines emerging from the financial crisis,
Lamoiyan carried out a 20% price cut of its own, announced in television,
advertising as a gesture "from the heart in consideration of the difficult
economic times. The latest cut brought Hapee's price discount versus
Colgate to nearly 45% and increase Lamoiyan's market share in 2001 and
2002.

O Due to changes in competitive environment and attitudes, Lamoiyan had
grown to almost 200 full-time and contracted employees and captured
20% of the toothpaste market in some channels and regions. Pedro had
also gradually increase his prices and the price gap between Colgate and
Hapee had shrunk to 30%.

O Pedro contemplated the possibility of offering shares in his company of
which he personally owned 80%, for sale to the public. He had planned to
take the company public by 2000 but the asian financial crisis still loomed,
and the Philippine was experiencing a depressed stock market. Pedro
held off the plans and decided, instead, to reorganize the company in
preparation for a future initial public offering.

O Through 2003, all toothpaste imports to and exports from the Philippines
were subject to a 10% tariff. Multinational firms had historically avoided
such tariffs by manufacturing products locally. By 2004, however, the
Asian Free trade Association (AFTA) would be established and trade
between Philippines and other ASEAN countries in certain products
including toothpaste would become tariff free. By 2008, the free trade are
would be extended globally under World Trade Organization (WTO)
agreements. Pedro expected this policy changes to pave the way for
international expansion and hope to begin exporting his toothpaste to
other countries in Southeast Asia by 2004.


C. Social Factors

O n many of the rural islands, the use of rock salt as a mouth rinse was still
a popular alternative to toothpaste, however, analyst noted that this areas
offer growth potential.

O Pedro noted that after 100 years of Spanish colonization, the Philippines
still has this colonial mentality. The majority of the public still believes that
anything produced outside of the Philippines is better, so we had a hard
time convincing them that a Filipino product was as good or even better
than an imported product Pedro solution to this bias was to promote
Lamoiyan's imported knowledge by emphasizing technical tie-up with a
Japanese company, he believes that the perception of people here is that
with anything Japanese, the quality is good, our spelling of Hapee, even
the design of the packaging is very Japanese.


O Pedro focused on areas where big companies are not interested, so he
targeted the children through offering flavored toothpaste featuring
Sesame Street characters.

D. Technological Factors

O The highly automated production line would clean, fill, heat, seal, trim and
box the tubes, and production workers would then package and seal 4 to 6
boxes together. Manufacturers shutdown machines only once or twice a
year for maintenance, and once an existing line existed 70% capacity,
producer would add a new one. A new filling line would cost approximately
P10 million while new mixer cost P3 million.
O Pedro invested $20,000 in slightly-used Japanese machinery , opened
Aluminum Container nc., and began his first battle against entrenched
giants.

O Pedro turned to a friend from Japan for technical assistance, and by 1988,
he formally launched Lamoiyan Corporation and produced the first tube of
Hapee toothpaste.

E. Legal Factors

O The process of introducing a new product involved determining the market
size, developing the product, selecting a brand name, and label design,
registering with the Bureau of Food and Drug (BFD), testing of the
product, and getting consumer feedback. After the 8months required for
BFD approval, the remainder of the launch took an additional 8mos, when
developing a new product the sales dept first evaluated distribution.

O Pedro recognized that hiring handicapped workers, donating school
buildings, and performing other charitable acts increase publicity and
enhance product image.


O Smugglers of china made Colgate which is sold at a price in level with
Hapee, posed a challenge for Pedro.

F. Environmental Factors

O nstead of dumping production rejects, the company had been using some
of the discarded toothpaste to clean dishes at its plant and does
dishwashing paste was born. Replaced mixers were used to produce
Dazz dishwashing paste, and new ones for the toothpaste.

. naIysis of Task Environment


B#ININ POWE# OF SUPPLIE#S IS WE

The bargaining power is weak, because first and foremost both Colgate and Hapee
have their own manufacturing plants where in they supply their own packaging. Though
they outsource, those suppliers have little power to demand because these are
important customers for them; as its big companies that they could not manage to lose.


B#ININ POWE# OF BUYE#S IS WE

Toothpaste is one of the hygienic purposes produce product; especially for cleaning
teeth to avoid tooth decays and plaque. n the case of Hapee toothpaste their customer
has very low power or the ability in backward integration, for they are the ones having
benefits with the product, wherein it will be hard for them to look for another that have
the differentiation regarding to price and value. And it will costs them more to switch to
another brand; if they choose to have Colgate instead, they will need to pay more of the
costs. f they choose to have Beam they will get less of what Hapee toothpaste had
provided them over their past usages. t's either they buy Hapee as it is, or look for
another that will costs them more.

INTENSITY OF #IVL#Y ON COPETITO#S IS ODE#TE

The competition between rivals is moderate, because the main competitors are having a
different segment focused on. Though it is very critical to take chances for granted, for
every move for Lamoiyan will bring big difference. Hapee toothpaste is targeting the
niche where in colgate and close-up is focused on the larger market, if hapee goes
beyond his point, the Big competitors will surely hit her, but it will be a battle for them
because Hapee had already built a position in her market.


TH#ET OF NEW ENT#NTS IS WE

As toothpaste is a low involvement product, the threat for new rivals to enter the
industry is very minimal. First, it's going to be hard to compete against the giants who
have captured the market share for so many long years already; for they have the
customer loyalty as long as brand retention, because they have already proven their
capabilities to the market. And also it will be also hard for new entrants to capture the
niche for it is already handled also by Hapee toothpaste.



Regardless of its low density in terms of competition, still it will a large amount of costs
for new comers to enter the toothpaste industry, it will be a risk with a minimum chance
of at least surviving the market.


TH#ET OF SUBSTITUTE P#ODUCTS IS WE

Substitute products like salts; herbs and dentist have least threat as a substitute to
toothpaste. For salts mixed with water and other herbs, although it's cost will be a lot
cheaper for consumer, the assurance of prevention of decays, and health benefits is at
least.

On the other hand, dentist or having the experts checked your oral health for care and
etc. will cause a consumer more.

Both alternatives will not be a major threat, if it comes to toothpaste. For toothpaste's
benefits are differentiated with a value proposition against its substitutes.


V. ProbIem Statement

Lamoiyan's product availability varied dramatically by region and outlet type thus,
Hapee toothpaste could be found in the vast majority of supermarkets of the Philippines
but rarely in sari-sari stores and was generally much less available in Visayas and
Mindanao what action should the company do to address the issues and turning it into
an opportunity?


V. Iternative Course of ction

Since competition in the all care area is extremely intense, it is promotion, which brings
out the differential advantage of a product. Hapee toothpaste is presently in is growth
stage. Keeping this in mind, the Company's' management has outlined two major
objectives of its campaign. Since the product has been in the market for quite some
time, and has crossed its introduction stage, the management feels there is no major
need for informative promotion rather the focus should be on Persuasive promotion and
Reminder promotion. Persuasive promotion basically aims at convincing people that
Hapee toothpaste should be their first choice amongst all the other toothpaste by
address what the consumer needs when it comes to all care products particularly on
toothpaste: cleaning and freshening benefits on teeth, gums, mouth and breath giving
them the position in have an all in one toothpaste. On the other hand reminder
promotion aims at constantly reminding people that the products widely available in the
market but instead of spending so much in very expensive advertising instead they can
promote the product through low-end advertising strategies such as using posters,
flyers and stickers. t might sound ineffective but the key is placing it wherein people will
constantly see it and hear it such as jeepneys, bus, convenience stores/sari-sari stores
and airing on radio station for its local area.
Promotion is of vital importance in case of all fast moving consumer goods and
especially toothpaste's. Many good products have failed just because their parent
companies failed to focus on reminder promotion. Since the region in Visayas and
Mindanao areas offered growth potential the company can do a community outreach
program and school program partnering with the Philippine Dental Association in
promoting good health and hygiene and on the dental part using Hapee tooth paste and
explaining the benefit they can get and giving samples of their products and reaching
out to provincial areas at the same time giving more business opportunities those in
sari-sari stores country wide such as offering discounts for its resellers giving them
opportunity to offer it to the end-consumers at a fair price at the same time gain profit
since most Filippinos are use in buying per piece rather in bulk because of convenience
and financial problems.

SaIes promotion: After advertising, sales promotion is the most effective tool used at
Lamoiyan Corporation for its products as a far as Hapee toothpaste is concerned. Some
of the common sales promotional techniques used by the brand management team
include:
O Free sampling: Free small sized samples of toothpaste are given to doctors, dentists
and general consumers. The per head cost of sampling, according to the
management, is high but results are much more positive if compared to advertising.
O Distribution of souvenirs: Free souvenirs and momentous like pens, key chains, T-
shirts etc are distributed to consumers, especially students.
O Contests: Sales contests are organized amongst retailers and prizes are distributed
amongst the winners.
O Conferences: Annual conferences are held. Doctors, dentists and the Hapee
toothpaste sales team attend these Conferences. These conferences not only
enhance sales but also help in image building.
O Public Relations and Publicity: The public relations activities are undertaken as
regard as Hapee toothpaste is concerned focus on creating a healthy image of the
brand. Sponsorship of community events, distribution of customer newsletters
among the dental community are important examples. Publicity for Hapee toothpaste
usually takes place through mention in newspapers, medical journals and other
magazines.





V. #ecommendation

O We recommend the Lamoiyan Company to allot budget in research and
development. New product design and development is more often than not a crucial
factor in the survival of a company. n an industry that is changing fast, firms must
continually revise their design and range of products. This is necessary due to
continuous technology change and development as well as other competitors and
the changing preference of customers. The Hapee toothpaste has 2 other big
competitors in the Philippines; Close-Up and Colgate. Colgate and Close-Up is up to
date when it comes to creating brand extensions. For example, a mouthwash is a
good extension for their brand. The company should also cope up with the
development of competitor's brand in order for the Hapee toothpaste to survive and
maintain its market share.

O The company should allocate funds in expanding their warehouses in Visayas and
Mindanao. Hapee toothpaste is a Filipino brand, that's why they need to capture
other regions. The Lamoiyan Company should have supplies for our fellowmen living
in the Visayas and Mindanao areas so that the company could increase their market
share, potential sales, and can further strengthen their brand image and equity.

O Lastly, they need to invest in their product promotion. With this action, the company
may acquire short or long term goal of increasing sales. Lamoiyan Company should
not focus on just one medium. Online social media can be a good medium for
promoting their toothpaste. Some of the most popular forms of online social media
are Facebook, Twitter, and MySpace. Within an online social media network, The
Lamoiyan Company has the ability to advertise and promote their products to
anyone, at anytime, anywhere in the world. Because of the vast popularity of social
media, the company can have great success on marketing products to the younger
generation who otherwise might not have seen an ad in a newspaper or on TV.

University of Santo Tomas

CoIIege of Commerce and Business dministration
SY 2011-2012



LOIYN CO#PO#TION OF THE PHILIPPINES:
CHLLENIN ULTINTIONL INTS


Case naIysis


Submitted To:


sst. Prof. #eaI So


In PartiaI FuIfiIIment of the Course Strategic anagement


Submitted By:


Juco, Jun
Lopez, Iex
Lopez, CarI
endoza, Jenesse
Ong, eIvin
PaIma, retchen
4


December 2, 2011