Cover Page Attachment 1

Name: Anape, Thomas Ivan E. Brand: Malagos Chocolate

No. Questions Total Marks Scored

1 Describe the primary market segment of this 10

brand
2 Describe the need/s of the market segment 10

3 Describe the range of marketing offers created by 10

the brand to satisfy their customers’ need/s

4 Describe any one method the brand uses to 10

create customer value

5 Use either social benefits, financial benefits or 10

structural ties to describe how the brand builds

relationship with their customers.

6 Conduct a SWOT analysis of the brand 50

TOTAL 100
 De La Salle University
Ramon V. del Rosario
College of Business

ICA #1: Marketing Analysis for Malagos Chocolate

In Partial Fulfillment of the 

Course Requirements for:

  

Principles of Marketing

1 Term, A.Y. 2019-2020

st

  

Submitted by:
Anape, Thomas Ivan E.
11907452
C35

 
Submitted to:
Prof. Carlos Miguel Saavedra

  

Submitted on:
October 30, 2019
Company Description:

Malagos Chocolate is a chocolate manufacturer situated in Davao that aims to

become the preferred source of premium chocolates in the world, all while maintaining a
reputation for ethical and sustainable farming, for production processes that adhere to
strict quality standards. Refer to Figure A in Appendices for Malagos Chocolate’s Logo.

Malagos Chocolate’s products are made from Tree to Bar through the efforts of
many people. Especially the farmers. The entire process of planting, growing,
fermenting, drying, sorting, roasting, and production of the chocolate is done right the
company’s farm on Malagos at the foothills of Mt. Talomo, Barangay Baguio District,
Davao City, giving the products a more distinctive and pronounced taste (Malagos
Chocolate, 2019)

Primary Market Segment:

The Philippines is antonymous with cacao-growing countries. Despite its

potential in the growing agricultural sector, it is only 72 nd in the world in terms of market
share, providing 0.1% of what is consumed worldwide. All while Côte d’Ivoire (Ivory
Coast) penetrates with 30% of the cocoa beans for the world chocolate market,
according to Tim Adams (2019); and Ghana putting its total share in the world chocolate
market at 20%, according to African Business Exchange (2017)—both cacao-growing
countries still taking the lead in production.

This is where Malagos Chocolate finds its market niche (Rex Puentespina,
2018). He added that the chocolate products are pure and of high quality, sold at a
higher price point and only in gourmet shops. Moreover, the company focuses on
competing in the fine chocolate where it is not saturated. The primary market segment,
being that Filipinos, are identified as the ones being sold to, by Malagos Chocolate.

According to the BDU Manager of Malagos Chocolate, Jamie Concepcion,

bringing home to the Philippines the international awards upon joining international
trade shows and competitions has led to greater feats for the products of the company,
which ultimately targeted the market for the Filipinos through psychographic
segmentation by selling the chocolate products through gourmet shops that caters to
the primary market segment’s interest and positive attitude towards locally-made
chocolate products. Additionally, the manager mentioned that the primary market
segment has been identified by focusing on behavioral aspects such that the company
sells its products as a healthier alternative (2018).

Needs of the Market Segment (Filipinos)

The primary market segment, being Filipinos that are starting to have interest
and positive attitude towards locally-made chocolate products have been identified. In
identifying the need of the primary market segment, there are key points that will
contextualize the needs of the market segment.

First, the local demand for chocolate and chocolate products is four times the
local production, at 40,000 tons a year, according to CocoaPhil (n.d.). As a result, the
Philippines imports nearly $2 Million worth of cacao beans every year from countries
such as Malaysia and Indonesia, alongside more than $50 Million worth of chocolates
from USA and Singapore, according to the PSA (n.d.).

Second being that Filipinos, in general, still prefer imported products over the
local ones. The mentality that when an item (specifically chocolate products) is
produced overseas, it is deemed as better than anything Filipinos can buy locally—
ultimately deeply rooted in the Filipino consciousness, according to Catherine Armecin
(2017).

Moreover, it can be inferred from the data that there is a need for more chocolate
products in the Philippines due to the surplus in demand and decrease in supply, which
can be a window opportunity for Malagos Chocolate. Additionally, there is a need for
local product awareness that will benefit Malagos Chocolate as it is focused on.

Range of Marketing Offers Created by Malagos Chocolate to Satisfy the Needs

According to the Facebook Page of Malagos Chocolate, the company offers

discount in purchasing their chocolate products in bulk. The company stated that for
every Php 5,000 worth of purchase, a discount of 5% will be deducted. However, it was
also stated that the discount is only applicable for Manila-based customers and is only
available at Malagos Chocolate’s satellite office in Quezon City and in Trade Shows.
Speaking of Trade Shows, the company offers free taste of their chocolate products for
the visitors. Refer to Figure B in Appendices for Reference. Moreover, the company has
a Calendar of Events that showcases the different trade shows they are joining. Refer
to Figure C in Appendices for the Calendar of Events for year 2019.

In line with this, it is inferred that Malagos Chocolate has been boosting its efforts
to meet with the needs of the primary market segment. Through the offering of
discounts, this implies that the company aims for more Filipinos to patronize its locally-
made products. In addition, the free taste in trade shows is another marketing offer that
efforts Malagos Chocolate to showcase its chocolate products to the primary market
segment.

One Method Malagos Chocolate Uses to Create Customer Value

Malagos Chocolate focuses in creating customer value by offering better quality

as reflected in the chocolate products. According to Charita Puentespina in an interview
for “My Puhunan”, when the farm located in Malagos in Davao City was first purchased,
it was merely an abandoned area wherein coconut and cacao trees grow. After which,
she took the risk to create her own chocolate manufacturing company for the farm is
located along the equator where the cacao thrives best. All of which came together to
create a unique terroir that gives Malagos Chocolate’s cacao beans its own identity
(Malagos Chocolate, 2014).

Moreover, Malagos Chocolate is being recognized internationally for the quality

of its products. Puentespina Farm has reaped Heirloom Cacao Designation award as
#16 in the world and is included in the Cocoa Excellence Programme BEST 50 BEANS
in the world. In addition, each chocolate product Malagos Chocolate offers has garnered
awards. Refer to Figure D in Appendices for the full list of awards.
Social Benefits to Describe How Malagos Chocolate Builds Customer
Relationship

Since the opening of Malagos Chocolate, Charita Puentespina wanted to help

the farmers. Before Malagos Chocolate was established, there was first Puentespina
Farm that solely focused on exporting of Cacao beans. However, Charita Puentespina
added value to the cacao beans by exporting finished chocolate products (Malagos
Chocolate, 2014). According to the BDU Manager of Malagos Chocolate, Jamie
Concepcion, exporting raw material is much cheaper, and when the Philippines imports
the finished product it will be much expensive (2018). Since then, part of Puentespina
Farm became a training facility for local farmers to learn good agricultural practices on
cacao farming. In addition to the own harvest made by Puentespina Farm, the farm
works with and source from small farmers in the area to promote sustainability in the
community. Puentespina Farm also employs more than 100 in-house farmers (Malagos
Chocolate, 2014).

All of these are anchored to building relationships with the primary market
segment. According to Malagos Chocolate, it offers “The Tree-To-Bar Experience” that
allows the customers to explore the cacao farm, enables the customers to learn about
the history of Philippine chocolate and how chocolates are manufactured at the Malagos
Chocolate Museum, pioneered as the 1 st chocolate museum in the Philippines, lets
customers try some of the chocolate products of Malagos Chocolate at the Malagos
Chocolate Bar, and lastly, create their own one-of-a-kind chocolate bar at the Malagos
Chocolate Lab (2014). It is inferred that it need not to be programs and discounts that
will build a connection with the customers. Ways such as opening a chocolate museum
can retain the existing customers, and in the same manner educate them of the
potential of locally-made chocolate products.

SWOT Analysis

For Strengths of Malagos Chocolate, it boasts a “Tree-to-Bar” process of

producing the final products. The process starts from planting of seeds to the packing of
the product that ensures the quality of the products. Refer to Figure E in Appendices for
reference. Also, the company also has its own farm (Puentespina Farm) that cuts down
costs for importing cacao beans for the farm can produce its own raw materials. The
company is also a pioneer in the Philippines through its own chocolate museum that
educates and widens the community of existing customers of the company. The
company offers the “Cacao Seminar” that educates customers in planting Cacao beans.
Lastly, the company has garnered international and local awards that proves that the
quality of chocolate products is on par with other globally-recognized products.

For Weaknesses of Malagos Chocolate, Rex Puentespina shared that the

company has been facing financial challenges in acquiring equipment ever since the
beginning of the venture through an interview with Business and Leisure (2016).
Additionally, he shared in the same interview that the company sells its chocolate
products only with limited flexibility in pricing due to the cost of production and the long
and tedious process of such. The company only positions itself in gourmet shops,
though it is their unique selling point, the company has not been tapping different
markets that demand different products. The company offers only a small variety of
chocolate products compared to direct competitors (e.g. Auro has over 22 variants).
Lastly, the company does not advertise its marketing offers (e.g. discounts and free
sampling) that could entice more customers.

For Political, IPP 2014-2016 highlights the production of cacao as a commercial

production activity is among the preferred activities listed in the IPP. All projects must be
endorsed by the Department of Agriculture. (Boi.gov.ph., 2018) this is under
opportunity, for manufacturers of cacao will be able to get the benefits and assistances
from DA. PNS/BAFPS 58:2007 sets a system of grading or classifying the cacao or
cocoa beans derived from the harvested pods of cacao trees before being sold in
markets. (Spsissuances.da.gov.ph, 2008) This is an opportunity, for manufacturers
would have better guidance in producing their raw materials. PNS/BAFPS 104:2011 is
a code of practice for Philippine cacao beans that was developed by the Bureau of
Agriculture and Fisheries Product Standards (BAFPS) that codifies practices at the farm
level for a range of activities to fulfill the trade and government regulatory requirements,
particularly on food safety. (Bafps.da.gov.ph, 2011) Similarly, an opportunity that guides
the manufacturers at farm level in producing raw materials.
 For Economic, the Inflation Rate as of 2018, has been -2.7% inflation rate for
Sugar, Jam, Honey, Chocolates and Confectionery products. (PSA, 2018). An
opportunity for more manufacturers to start producing chocolate products with lesser
costs for raw materials. Proximity to growing demand markets due to rising incomes
in Asia results in increased consumption of chocolate as consumers shift towards more
Western lifestyles. The Philippines’ is close to many of these markets. (Duke CGGC,
2017). An opportunity for it entails a wider array of untapped markets for manufacturers.
Lacking in economies of scales, as it is estimated that in the Philippines there are
among 10,000-15,000 cocoa bean farmers who face problems of access to markets and
decreasing bargaining power. (Duke CGGC, 2017) A threat for it discourages the
farmers to produce cacao beans due to the problems being faced.

For Social, Filipinos’ Growing Interest in Bean-to-Bar Chocolates has

reflected a more affluent and health-conscious client base, according to founder of Theo
& Philo, Philo Chua. (Sarmiento, 2017) An opportunity for manufacturers to offer
chocolate products to a new market (health-conscious customers). Filipino
Consumerism for Filipinos prefer imported products over locally-made products due to
colonial mentality which infiltrates social, political, and purchasing decisions. (Catherine
Armecin, 2017) A threat that discourages customers to patronize locally-made
chocolate products. Filipinos’ Concentration on Snacks – According to Nielsen
Global Survey of Snacking (2014), survey revealed that Filipinos prefer bread/sandwich
above other snack choices (31%), fresh fruit (20%), and chocolate (12%). A threat for
manufacturers since only a small percentage of Filipinos demand for chocolate products
as a snack.

For Technological, Enhancement of Equipment has been developed by DOST-

DTI for production of locally-sourced cacao products. Accordingly, these will speed up
production time and improve the quality of cacao-based chocolate (PIA, 2017) An
opportunity for this will boost manufacturers’ production time and mitigate costs in the
long run. Underdeveloped post-harvest fermentation and drying techniques lead to
reductions in quality and amount of beans suitable for processing since proper
fermentation and drying increases the selling price for farmers (Field Research, 2016) A
threat for manufacturers for it cuts down the profitability of the products. Lack of
modern production operations in agriculture due to the limited time to see returns
on investment due to incomplete land reform programs (Field Research, 2016) A threat
for manufacturers for it discourages farm yields and maximizes post-harvest loss.

For Legal, Regulation (EC) No 178/2002 of the European Parliament and of the
Council lays down the general principles and requirements of food law for exporting,
establishing the European Food Safety Authority and laying down procedures in matters
of food safety. (EUR-Lex, 2002) A threat for local manufacturers in exporting products
for there are high standards to be met before entering the global market. R.A. No. 7900
accelerates the growth and development of agriculture in general, enhance productivity
and incomes of farmers and the rural population, improve investment climate,
competencies and efficiency of agribusiness and develop high-value crops as export
crops. (FAO.org., 1995) An opportunity that enables manufacturers to employ more
farmers and develop sustainability for the business. R.A. No. 10173 protects the
fundamental human right of privacy, of communication while ensuring free flow of
information to promote innovation and growth (Data Privacy Act, 2016) An opportunity
created to ensure that recipes in manufacturing products are well-protected.

For Environmental, Geographic conditions provide large potential production

area since cocoa beans may be widely produced in the Philippines. Majority of
production occurs in the southern island of Mindanao, but increasingly production is
spreading to other parts of the nations (Field Research, 2016) An opportunity for the
chocolate industry to grow in the Philippines. Ability to grow all the three main cocoa
bean types is important since most cocoa beans are mid-value, Trinitario beans. All the
three varieties of beans are present and grown in the nation, though Trinitario beans are
the most prominent. Criollo beans are mainly from older trees that are lower yield but
are still produced. Higher value varieties of Forastero beans are beginning to be planted
on some farms (Field Research, 2016) An opportunity of manufacturers to produce
different types of chocolate products for different markets. Negative Effects of Climate
Change leads to increases in temperature, tropical cyclones that destroy vegetation,
crops, orchards, and livestock. (Sivakumar 2005) A threat for manufacturers since
cacao beans come from trees that are classified as crops.
 STRENGTHS
 Boasts a “Tree-to-Bar” process of
producing chocolate products
(Malagos Chocolate, 2014)
 Has its own farm—Puentespina
Farm, that produces its own raw
materials (Cacao Beans). (Malagos
Chocolate, 2014)
 A pioneer in the Philippines by
opening the 1st Chocolate Museum
(The Malagos Chocolate Museum).
(Malagos Chocolate, 2014)
 Offers a three-day hands-on
seminar (Cacao Seminar) for
customers (Malagos Chocolate,
2014)
 Garnered international and local
awards (e.g. 2019 International
Chocolate Awards) that continues to
mark the Philippines internationally
(Malagos Chocolate, 2014)
OPPORTUNITIES
 IPP 2014-2016 (Boi.gov.ph., 2018)
 PNS/BAFPS 58:2007
(Spsissuances.da.gov.ph, 2008)
 PNS/BAFPS 104:2011
(Bafps.da.gov.ph, 2011)
WEAKNESSES
 Faces financial challenges in
acquisition of equipment (Rex
Puentespina, 2016)
 Only sells at gourmet shops such
as, All About Baking, Echostore,
Gourdo’s, etc.) (Malagos
Chocolate, 2014)
 Does not have a wide variety of
chocolate product offerings
(ranges from roasted cacao nibs,
chocolate bars, dried fermented
cacao beans, to planting
materials only). (Malagos
Chocolate, 2014)
 Does not advertise Malagos
Chocolate’s marketing offers (e.g.
Discounts, and Free Sampling) in
social media websites. Refer to
Figure B in Appendices.
 Sells with limited flexibility in
pricing (Rex Puentespina, 2018)
THREATS
 Lacking in economies of scales
(Duke CGGC, 2017)
 Filipino Consumerism (Catherine
Armecin, 2017)
 Filipinos’ Concentration on
 Inflation Rate (PSA, 2018)
 Proximity to growing demand
markets (Duke CGGC, 2017)
 Filipinos’ Growing Interest in Bean-
to-Bar Chocolates (Sarmiento,
2017)
 Enhancement of Equipment (PIA,
2017)
 Geographic conditions provide large
potential production area (Field
Research, 2016)
 Ability to grow all the three main
cocoa bean types (Field Research,
2016)
 R.A. No. 7900 (FAO.org., 1995)
 R.A. No. 10173 (Data Privacy Act,
2016)
Snacks (Nielsen Global Survey of
Snacking, 2014)
 Underdeveloped post-harvest
fermentation and drying
techniques (Field Research,
2016)
 Lack of modern production
operations in agriculture (Field
Research, 2016)
 Negative Effects of Climate
Change (Sivakumar 2005)
 Regulation (EC) No 178/2002 of
the European Parliament and of
the Council (EUR-Lex, 2002)
 Appendices:

Figure A for Malagos Chocolate’s Logo

Figure B for Reference of Marketing Offers through Facebook Chat

Figure C for the Calendar of Events for year 2019
Figure D for the full list of awards for each chocolate product of Malagos Chocolate
Figure E for the “Tree-to-Bar” Process of Manufacturing Chocolate Products
 References:

Malagos Chocolate. (n.d.). Retrieved from

https://www.facebook.com/malagos.chocolate/.

Single-origin Map. (2018, October 30). Retrieved from

http://malagoschocolate.com/single-origin-map/.

Cacao Seminar Schedule. (2018, February 10). Retrieved from

https://malagoschocolate.com/cacao-seminar/.

Tree-to-Bar Processing. (2019, June 5). Retrieved from

https://malagoschocolate.com/cacao-processing/.

Ramoran-Malasig, C. (2018, May 30). Can The Philippines Make Premium Chocolate?
This Chocolatier is Betting On It. Retrieved from
https://www.forbes.com/sites/cmalasig/2018/05/30/malagos-chocolate-sustainability-
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Salveron, R. J. D. (2017, October 10). Davao chocolate brands earn sweet spot in
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FAOC040804