MARKET STUDY

Marketing is a system of business activities designed to plan, price, promote and distribute want-satisfying goods and services to present and potential customers. It is considered as the lifeblood of every business transactions because it is a strategic way on how to cope up to the needs and wants of the customers, finding opportunities regarding it, introduce and market the product, achieve customers loyalty and patronage. This aspect includes the following topics: demands, supply, demand and supply gap analysis, marketing programs and the projected sales. The objective of the proposed project is to delight the customers, not just by meeting their expectation but rather exceeding and going extra mile. Moreover, its about profitability. Marketing aspect serves as the basis of the financial section through the projected demand. There can be no discussion of profitability or of the other aspects of the study; if in the first place, there is no demand or market. Every business is practically aspiring for productivity but practically in order to last in the business world the first thing to take into consideration is the target market. The customers will be the key factor to achieve the objectives of the organization. Finding opportunities and spotting the right market are both important in establishing a business. Knowing customers demand and supplying them right products at reasonable prices.

Objectives a. To analyze the market demand and supply of the business, b. To define the target customer of the business through market segmentation, c. To determine the marketing strategies to be applied in the business, d. To determine the feasibility of the business, e. To determine the range of the business, f. To analyze and understand the complexities of the hardware business

A. DEMAND It is very essential to know the demand of our products in order to answer our customer needs and wants. Knowing the demand will help us to determine the trend for our products. Analyzing the demand thoroughly will give the projection of the total number of quantity each product that we are going to produce daily, weekly, monthly, and annually.

A.2. PROJECTED DEMAND A.2.1. for the Industry The annual increase of demand for the years 2013-2017 is based on the annual population growth rate from 2010 by 1.55% (NSO record). The annual projected demand was obtained by multiplying the market acceptability which is 90% to target population and to the frequency of agreement. Based from the obtained demand, it was distributed again to every product in order to determine its demand. (90% = 316 satisfied/ total 349)

Annual Year 2013 2014 2015 2016 2017 MA 91% 91% 91% 91% 91% Target Household 2,721 2,763 2,806 2,849 2,894 FOA 81 81 81 81 81 Demand 200,565 203,674 206,831 210,036 213,292

Table 3 Projected Demand for the Industry

A.2.2 for the Products It is computed by multiplying the projected annual of industry to the percentage of each product based on the survey.
Household & Constructio n Year 2013 Year 2014 Year 2015 Year 2016 Year 2017 Kitchenwar e (32%) 64,181 65,176 66,186 67,212 68,253 Cleaning Supplies (38%) 76,215 77,396 78,596 79,814 81,051 Tiles & Glasses (16%) 32,090 32,588 33,093 33,606 34,127 Pipes & Roofing (12%) 24,068 24,441 24,820 25,204 25,595 Others (2%) 4,011 4,073 4,137 4,201 4,266 TOTAL

200,565 203,674 206,831 210,036 213,292

Table 4 Projected Demand for the Products

A.3. Market Segmentation A.3.1. Geographic Location Climate Barangay : South Montilla Boulevard : W et & Dry : Nearby barangays mainly San Vicente, Pangabugan, and Villa Kananga Region & City : CARAGA Butuan City

Density of the Area: Semi-urban A.3.2. Demographic Age Gender Focus A.3.3. Psychographic Personality Lifestyle : Curious, Skilled, & On-the-go : Outgoing, Adventurous, Hardworking : no limit (age of understanding) : Male & Female : Various, predominantly households & industries

B. SUPPLY Based on the percentage of the population who already availed hardware satisfaction from our survey questionnaire, we determined our past supply.

B.2. Projected Supply The projected supply will help to determine the total satisfied market or the total number of customers who availed hardware satisfaction for four years. It was obtained by percentage of purchases to the target population with 1.55% growth rate to the frequency of agreement and it was distributed per product to determine the total satisfied market for every product.

B.2.1. for the Industry Computation of projected supply for the product is the same in past supply per product. It changed only in the target population based on the annual growth rate of 1.55%. (86% = 301 willing/349 total)

Year 2013 2014 2015 2016 2017

Percentage of Purchases 86% 86% 86% 86% 86%

Target Population 2,721 2,763 2,806 2,849 2,894

FOA 81 81 81 81 81

Annual Supply 189,545 192,483 195,466 198,496 201,573

Projected Supply for the Industry

B.2.2. for the Products

Household & Construction Year 2013 Year 2014 Year 2015 Year 2016 Year 2017 Kitchenware (32%) 60,654 61,594 62,549 63,519 64,503 Cleaning Supplies (38%) 72,027 73,143 74,277 75,428 76,598 Tiles & Glasses (16%) 30,327 30,797 31,275 31,759 32,252 Pipes & Roofing (12%) 22,745 23,098 23,456 23,820 24,189 Others (2%) 3,791 3,850 3,909 3,970 4,031 TOTAL

189,545 192,483 195,466 198,496 201,573

Table 8 Projected Supply for the Products

B.3 Competitors Analysis The following are the competitors of the business: CitiHardware (1) Filipino-based store catering most hardware items except industrial materials. The store is a grocery-style arrangement where you can have freedom to choose and compare items. Dy Teban (1) A foreigner-owned Butuan City-based store catering at one main desk. It offers mostly industrial items and auto supplies. Datalan (1) A local computer hardware store offering computer-related services only with free job orders of purchased items except of intentional damage(s). Other Small-Medium Stores (12) their service is at one main desk only. They cater basic items or supplies at an instant necessity such as industrial supplies.

C. Demand Supply Gap Analysis This is necessary to determine Mighty Hardwares market share. The gap or the unsatisfied market is obtained by subtracting the projected demand to the projected supply which shows the available market for the hardware supplies.

Year 2013 2014 2015 2016 2017

Demand 198,361 201,435 204,558 207,728 210,948

Supply 189,545 192,483 195,466 198,496 201,573

Gap 8,816 8,953 9,091 9,232 9,375

Household & Construction Year 2013 2014 2015 2016 2017 Total Household & Construction Year 2013 2014 2015 2016 2017 Total Demand 63,475 64,459 65,458 66,473 67,503 327,370

Kitchenware Supply 60,654 61,594 62,549 63,519 64,503 312,820 Gap 2,821 2,865 2,909 2,954 3,000 14,550

Cleaning Supplies Demand 75,377 76,545 77,732 78,937 80,160 388,752 Supply 72,027 73,143 74,277 75,428 76,598 371,474 Gap 3,350 3,402 3,455 3,508 3,563 17,278

Tiles & Glasses Demand 31,738 32,230 32,729 33,237 33,752 163,685 Supply 30,327 30,797 31,275 31,759 32,252 156,410 Gap 1,411 1,432 1,455 1,477 1,500 7,275

Pipes & Roofing Demand 23,803 24,172 24,547 24,927 25,314 122,764 Supply 22,745 23,098 23,456 23,820 24,189 117,308 Gap 1,058 1,074 1,091 1,108 1,125 5,456

Household & Construction Year 2013 2014 2015 2016 2017 Total

Other Supplies Demand 3,967 4,029 4,091 4,155 4,219 20,461 Supply 3,791 3,850 3,909 3,970 4,031 19,551 Gap 176 179 182 185 188 909

Table 9 Demand-Supply Gap Analysis

D. Market Share Analysis Every business must determine their market share that will serve as basis of marketing strategies of the establishment. It will define the extent of market that we need to satisfy. Out of the total available market which is 4.48% (2,721 households/60,755 total households), we made our capacity to supply based in our resources. The store hours are based on common operating 12 hours per day plus preclosing hour. 316 persons (those willing) is the estimated capacity to supply per day and annually it is 115,340 (316 x 365) which is 9.66% of the total available market as shown in the graph below. ( Therefore, market share is calculated by dividing the capacity to supply to the available market. They all increase by 5% every year due to promotional tactics by the business.

Household & Industrial Hardware Supplies Year 2013 2014 2015 2016 2017 TOTAL Kitchenware 464 471 478 486 493 2,392 Cleaning 551 559 568 577 586 2,840 Tiles & Glasses 232 235 239 243 247 1,196 Pipes & Roofing 174 177 179 182 185 897 Others 29 29 30 30 31 149 Total 3,462 3,486 3,509 3,534 3,558 17,549

Table 10 Market Shares of Mighty Hardware

Year 2013 2014 2015 2016 2017 Projected Growth 5% 5% 5% 5% 5% Market Share 9.66% 10.14% 10.65% 11.18% 11.74%

Note: Capacity to supply annually: 115,340 persons Increase: 5% Table 11 Projected Market Share
D.1.Projected Sales

Projected sales on Mighty Hardware depend on the item sold. Since hardware involves high inventory, the sales requires high variability content due to numerous prices. But projected sales for the next periods are 5% based on market share.
Year 2013 2014 2015 2016 2017 Growth Rate 5% 5% 5% 5% Annual Sales 24,885,701.28 26,129,986.34 27,436,485.66 28,808,309.94 30,248,725.44 Monthly 2,073,808.44 2,177,498.86 2,286,373.81 2,400,692.50 2,520,727.12 Daily 68,180.00 71,589.00 75,168.45 78,926.88 82,873.22

Table 12 Projected Sales

Breakdown of Markets
E. Marketing Strategies E.1. Product Strategies

In order to meet a genuine class of material, the products of Mighty Hardware are from selected legal suppliers. Products must be duly registered per item. No imitations are to be sold to refrain from fraudulent transactions and recordings or ingenuity. Of course, Mighty Hardware products must pass certain qualifications to prevent damage to customers such as health issues and environmental awareness. MH Materials may be delivered to limited access routes within the city only unless otherwise mass delivery on nearby municipals only. Packaging must observe fragility and safety precautions.
E.2. Place Strategies

Mighty Hardware will be established at South Montilla Boulevard, Butuan City. The location proper is at Brgy. Pangabugan situated near Macapagal Bridge. Area is by new national highway intersecting the Montilla Boulevard. The scope of business is within Butuan City but there is a possibility that people from neighboring municipals or cities like Cabadbaran, Surigao, Cagayan, and Gingoog can also be our customers.

The main factor of the location on its possible growth is because of the new national highway crossing Macapagal Bridge because it is the citys Department of Transportation and Communications law that more than 4 -wheeled vehicles are prohibited to cross over the old national highway crossing Magsaysay Bridge. Thus, the place is also an economic spot of the growing city. Residential areas are near the location.
E.3. Pricing Strategies The computation for pricing of Might Hardware products is set as: Purchase Cost + Mark Up + Operating Cost = Selling Cost E.4. Promotion Commonly known to the city of Butuan are posters, streamers and flyers. Hence, Mighty Hardware will adapt the basic promotional strategies. E.4.1 Poster E.4.2. Website E.4.3. Flyers E.4.4 Streamer E.4.5 Gift Certificate

F. SWOT Analysis Strengths The store is integrated, thus, one-stop hardware store The location is accessible enough to meet the target market The business is capable to perform demanded service

Weaknesses Hardware investment needs greater capital The inventory check is a risk in accounting

Opportunities The business will be the first integrated hardware to cater industrial, household, computer, automotive, and other supplies. Trucks and 4-wheeled+ vehicles will get a glimpse of having a try on hardware shopping. Threats Long-term hardware stores will be of great competition even at different combination of supplies. The business will be established away from the city center, thus, it may consider encountering fluctuating demands.