III.

Target Market

PantSaloon targets college students of University of the Philippines - Diliman,

Ateneo de Manila University and Miriam College and residents of pre-selected
communities, belonging to the 15-24 age group. This group, based on the survey
conducted (See Appendix 2), are very much willing to have their jeans custom-made
and are willing to pay as much as Php 1000 just to get one. This will be discussed
on further in Targeting section of the study.

In order to forecast the demand of our product, the size of the target market should
be defined first, using the formula:

TM = CS + (KR x AG)
Where:
TM = target market
CP = college student population from UP, AdMU and Miriam College
KR = residential population of pre-selected areas near Katipunan
AG = percentage of population between 15 to 24

The total population from the three academic institutions, UP-Diliman, Ateneo and
Miriam College, were gathered and summed up to 25,378. The group also
determined the average annual growth rate of population in forecasting their
population in the next ten years.

Table 6 | Population and Growth Rate of Targeted Schools

School Population Growth Rate
AdMU – College Dept. 8,437 1.83%
Miriam College 3,982 1.22%
UP - Diliman 12, 959 2.03%
TOTAL 25,378

On the other hand, the group has pre-determined the residential population which
EALA will target according to their area of residence. This stratification has to do

1
also with their buying power as exemplified by their resident’s ability to stay in
areas with high land value.

The following information pertains to the communities and their respective

population that the group has qualified for PantSaloon's target market:

Table 7 | Population of Targeted Locality

Locality Population
Pansol 18,968
Teacher’s Village 25,643
Loyola Heights 15,344
Blue Ridge A& B 3,450
Xavierville 10,989
White Plains 2,010
TOTAL 76,404

According to the 2000 Census of Population and Housing - Reports by Highly

Urbanized City, 21% of the total Quezon City population is comprised of male and
females aged 15-24. Thus, giving EALA a 16,045 young adult population for its
target market. This figure was adjusted for the years 2006-2016 based on the
National Statistic’s Office’s historical data telling that the annual population growth
rate in Quezon City is 1.92%

Table 8 | Projected Population for the next ten years

Age Of
Y Residential Collegiate
Between 15- Target Market
ear Population Population
24
2
76,404 16,045 25,378 41,423
006
2
77,871 16,353 25,844 42,197
007
2
79,366 16,667 26,319 42,986
008
2
80,890 16,987 26,803 43,790
009
2
82,443 17,313 27,295 44,608
010
2
84,026 17,645 27,797 45,442
011
2
85,639 17,984 28,309 46,293
012

2
 2
87,283 18,330 28,830 47,160
013
2
88,959 18,681 29,361 48,042
014
2
90,667 19,040 29,902 48,942
015
2
92,408 19,406 30,453 49,859
016

A. Market Demand and Demand Forecast

Market demand refers to the amount (in units/peso) that potential buyers from the
target market would likely consume or render our service. It represents the
projected market share of PantSaloon based on the estimated acceptability rate of
the product to the target market. Hence the formula used to calculate the market
demand is:

MD = AMAR x TM x CR

Where:
MD = market demand
AMAR = adjusted market acceptability rate
TM = target market
CR = consumption rate

AMAR is computed by:

AMAR = MAR x Conservative rate

Where:
MAR = number of willing buyers / sample size

The Market Acceptability Rate (MAR) is reflected in the survey results where 81.91%
answered yes to the question of whether or not they are willing to have their pants
custom-made (see Appendix). Conservative rate of 95% was used to accommodate
a 5% sampling error. However, it is not safe to assume that the MAR result would

3
actually buy the products. Table 3.2 presents the computation for market demand
for pants using an annual consumption rate of 4. The consumption rate figure was
based from the professional opinion of the owner/manager of Viktor Jeans. To further
substantiate this claim, EALA conducted a convenient sampling of 50 individuals
within the target market through a phone interview. Results showed that young
adults and students usually buy 4 to 6 pants annually. Hence, for a more realistic
estimate of PantSaloon’s demand, EALA considered using the conservative value of
4.

Table 9 | Market Demand and Demand Forecast

Y A Target Potential Consumpti Annual Monthly
ear MAR Market Buyers on Rate Demand Demand
2 77.81
41,423 32,231 4 128,925 10,744
006 %
2 77.81
42,197 32,833 4 131,334 10,944
007 %
2 77.81
42,986 33,447 4 133,790 11,149
008 %
2 77.81
43,790 34,073 4 136,292 11,358
009 %
2 77.81
44,608 34,709 4 138,838 11,570
010 %
2 77.81
45,442 35,358 4 141,434 11,786
011 %
2 77.81
46,293 36,021 4 144,082 12,007
012 %
2 77.81
47,160 36,695 4 146,781 12,232
013 %
2 77.81
48,042 37,381 4 149,526 12,460
014 %
2 77.81
48,942 38,082 4 152,327 12,694
015 %
2 77.81
49,859 38,795 4 155,181 12,932
016 %

B. Supply Analysis

PantSaloon’s material supply consists of garments and other sewing elements

offered by fabric distributors within Metro Manila. The total supply can be derived
from the annual average production capacity of the garment industry for 2005 as

4
taken from data gathered from the Department of Trade and Industry (See Appendix
6). However, this figure comprises all the sectors (children, male, female) of the
garment industry and so must be adjusted to extrapolate the specific supply for
PantSaloon. In order to achieve that, the formula used is

Market Supply = PC x RP x PT x GR

Where:
PC = annual average production capacity of garment industry
RP = rate of young adults and students who dissatisfaction in fitting jeans
PT = percentage of target market (Target market / NCR population)
GR = growth rate of supply

The rate of students and young adults who encountered problems in buying clothes
were taken from the survey conducted, who answered yes in question whether or
not they are satisfied with the currently available jeans in the market. The
production capacity is adjusted with this rate so as to capture the supply of
garments usually bought by the target group who do not find the perfect fit of
jeans/pants. The next table presents the adjustment of the production capacity for
the base year.

Table 10 | Adjustments of Production Capacity for the

base year

Annual Supply for

Trousers/Pants 19,439,180
Percentage of
Dissatisfaction 19.55%
Total Supply for the Base
Year 3,800,359.69

However, according to the Monthly Integrated Survey of Selected Industries, the

Volume of Production Index for wearing apparels registered a negative growth rate
of 4.6% in 2003 (See Appendix). Annual supply projection is then adjusted using
this value, assuming that its rate would remain constant. A declining growth would

5
then be observed as an industrial occurrence issue mentioned in the environment
analysis

The proportion of the target market to the population is also used as an adjustment
rate to as to capture the supply that is only intended for our target market. Table 11
shows the computation of the market supply for the 10-year projection, adjusted
both through the percentage of target market and the growth rate.

Table 11 | Market supply for the 10-year projection

Year Supply Target Market NCR Annual Supply
Population
3,800,359.
2006 41,423 9,932,560 15,849.12
69
3,975,176.
2007 42,197 10,037,845 16,710.81
24
4,158,034.
2008 42,986 10,144,246 17,619.57
34
4,349,303.
2009 43,790 10,251,775 18,577.86
92
4,549,371.
2010 44,608 10,360,444 19,587.81
90
4,758,643.
2011 45,442 10,470,265 20,652.99
01
4,977,540.
2012 46,293 10,581,250 21,776.75
59
5,206,507.
2013 47,160 10,693,411 22,961.70
46
5,446,006.
2014 48,042 10,806,761 24,210.50
80
5,696,523.
2015 48,942 10,921,313 25,528.00
11
5,958,563.
2016 49,859 11,037,079 26,917.27
17

C. Demand-Supply Analysis

Upon computing separately the demand and supply, the analysis of one in
comparison to the other produces the gap that PantSaloon aims to address. This
difference would be the driving force of the existence and growth of the business as
it presents the degree of the demand for the proposed product. Comparing the

6
market demand and the market supply estimates, we could compute an average of
113,075 potential demands in units that PantSaloon hopes to supply.

Table 12 | Demand-Supply Analysis

Year Total Demand Total Supply Demand-Supply
Difference
2006 128,925 15,849.12 113,075.88
2007 131,334 16,710.81 114,623.19
2008 133,790 17,619.57 116,170.43
2009 136,292 18,577.86 117,714.14
2010 138,838 19,587.81 119,250.19
2011 141,434 20,652.99 120,781.01
2012 144,082 21,776.75 122,305.25
2013 146,781 22,961.70 123,819.30
2014 149,526 24,210.50 125,315.50
2015 152,327 25,528.00 126,799.00
2016 155,181 26,917.27 128,263.73

We cannot however, entirely accommodate all the demand-supply differences

projected. Being a relatively new entrant in the industry, PantSaloon aims to gain a
market share of at least 0.5% in its first year of establishment. As the business
progress, EALA Inc. targets to gradually carve bigger market share in the industry as
we expand our product lines, services and capacity throughout the course of the
company’s operations.

D. Market Share

Market share represents the portion of the market that PantSaloon will hold. This
would represent the viable capability of the business in the industry as well as it
shows how strong PantSaloon will be in the market, given the present supply in the
market and the demand that the business caters to. Market share is computed
through this formula:

7
Market Share = PantSaloon Ave. Monthly Production Capacity
Monthly Market demand

PantSaloon’s average monthly production capacity shall be divided with the total
market demand for pants/trousers taken from their 2006’s projected demands
respectively. Hence, this would reflect the fraction that PantSaloon aims to provide
in proportion with the total demand in the introductory phase of its venture.

The production capacity came from industry standards that we took from the
professionals who are in pant-customization business. According to Ms. Bea dela
Cruz, store manager of Clement Garments in Recto, Manila, a business venture can
accommodate 30 job orders for jeans in a day. Throughout the month, PantSaloon is
capable of producing 900 job orders.

Substituting the formula, a 9.55% market share was computed as:

Market Share = 900 / 9422.99

Over the years, PantSaloon would strive to aim for the bigger share in the “pie” as
the business gradually creates its niche in the market. Strong promotional efforts
will be continuously done as the company tries to expand its reach to its target
market. Branches will also be opened at an annual rate starting from the 3rd year.
New products will be offered for customization like shirts and jackets in the fifth year
of the business. By doing so, and by assuming a fairly good economic flow in the
industry, PantSaloon is thereby guaranteed to make its mark in the business.