I.

Executive Summary

Puregold is the second leading hypermarket in the Philippines. The company is in a very

competitive position. Puregold Price Club, Inc. is a Philippines-based company engaged in the

business of trading goods, such as consumer products (canned goods, housewares, toiletries, dry

goods, and food products, among others) on a wholesale and retail basis. The Company operates

in retailing business segment. The company conducts its operations through a hypermarket

known as Puregold Price Club, which offers a range of food and non-food products, and caters to

both retail customers and resellers. The company has a supermarket chain known as Puregold

Junior, which is operated by its subsidiary Puregold Junior Supermarket, Inc. Its Puregold Extra

is the small store format, which offers a range of goods, comprising the company’s stock keeping

units (SKUs) ranging from 3,000 to 5,000. It operates through stores in various locations. It’s

store provides products that range from groceries, apparel, household accessories and furniture.

It has approximately 280 operating stores and over 20 food service stalls.

This paper reflects that the company’s portfolio is above average and near to outstanding.

The company are studied in this paper to further envision the strategies and objectives to be

drafted for the constant growth of the company.

This paper also shows the analysis of the company’s customers, suppliers and their

collaborators. Through this paper also we can determine the current PEST Analysis, alongside

with TOWS Analysis, about the company that will allow them to look into the future and

identify potential obstacles well in advance so that they can be planned for and avoided should

they occur.

Through those analysis also, the researchers suggested or recommended some marketing

strategies. For puregold, these existing strategies applying the 5Ps of the Marketing Mix
help the company to be profitable for so many years. For them all of these components

plays a vital role in their operations and help them to be known in the country.

Therefore, these good marketing practices must be retained, improve and develop

in order to cater more enterprises especially small business that engage in retail and

reselling of consumers good that the company can do business with. With this small

entrepreneurs would source their goods in Puregold, this would somehow eliminating in

one way or another, Puregold’s market competition. Puregold is and will continue to be

the powerhouse among food retailers in the Philippines.

This paper also shows the different analysis that could help on creating new marketing

strategies that could also help the future researchers and even aspiring business owners.

II. Marketing Goals

Current Revenue and Profit

 From the previous years, Puregold has an uptrend revenue. The revenues generated each

year comes from the different store formats: Puregold Price Club, Extra, Jr. And S&R stores.
 Consolidated net sales grew by 9.4%; Puregold and Parco stores sales increased by

18.2%; S&R contributed 16.4% and Company E accounted for 1.0% of total consolidated net

sales. Gross profit grew by 8.8%; with gross profit margin improving to 15.6%; S&R accounted

for 22.4% of the realized gross profit. Operating income increased by 88.5%; with operating

margin shooting up to 7.4%; S&R contributed 42.3% of the recorded operating margin.

Consolidated NIAT expanded 105.3%; Puregold and Parco stores NIAT swelled 30.1%; S&R

added 36.4% to the consolidated NIAT. Net profit margin chalked-up at 6.0%.

Major Markets Served

Today, Puregold is the No. 1 Retailer in the Hypermarket Format in the Philippines and

the No. 2 in Retail Format in the Country. The company has been catering to more and more

Filipinos having over 150 (159) stores nationwide. They have over 1500 Suppliers and Trade
Partners. With their exemplary services, they are servicing to over 230,000 sari-sari stores and

small businesses in the Metro, various places in the Northern and Southern parts of Luzon, and

Visayas. Puregold has completed over 600 million sales transactions.

The mission of the company is to provide products, services and business opportunities to

every Filipino family in the aid of innovation and technology. They establish lasting relationship

to their customers, suppliers, and business partners. They also strive to promote the personal and

professional development of their employees.

SCOPE AND LIMITATION

This marketing plan is only limited to Puregold and its top competing competitors. Since

there are only a few players in this field of business with the relatively same market share and

market size, we only chose 2 other leading players who are respective models and material

companies to be studied in this paper.

III. Environmental Scanning

a. Macro-Environment (PEST Analysis)

 Political and Legal Environment

- Policy of Community Quarantine, which will be spearheaded by the Armed

Forces and the Police. The goal is to drastically limit the movements of the

population, especially in key cities. The policy was implemented by setting up

check points, but is manned by AFP and PNP personnel with insufficient

protective equipment against the virus. The people are told to stay home, and

the use of private vehicles and public transportation were suspended. This is

made without any ready guidelines on some basic factors, such as what will
 happen to the employment status of workers who cannot report to work?

Because of this mandate, their customers lessen and they need to consider

how their workers will go to work without the public transport.

- As reported by Asia times, the Philippine Chamber of Food Manufacturers

Inc. or PCFMI, said in a statement reported by the local Philippine Daily

Inquirer newspaper that there may be gaps in their operations and supplies in

the coming weeks.

- To date, at least all cities and towns have passed ordinances banning or

regulating the use of plastic bags, with several more LGUs poised to follow

Senate Bill No. 2759- Total Plastic Bag Ban. Puregold has been using

plastic bags to package the customers’ purchases. It is both a threat and

opportunity for the company. One bad thing this would do to the company

is how the company would dispose of the remaining plastic bags unused

prior to the passed laws and also, the source of new manufacturers for their

paper bags or Eco bags. The good side is they can minimize garbage wastes.

This is an opportunity for the company to inculcate new marketing schemes

to increase profit.

 Economic Environment
 Table 1. GDP and Unemployment comparison around Asia

- The projections by the global vanguard of macroeconomic and external

account stabilization, the International Monetary Fund (IMF). Its most recent

and most comprehensive report is the World Economic Outlook (WEO)

released last October.1 We arranged the grouping of countries to be similar as

that by The Economist for easier comparison of projections.2

1
The Economist, December 21, 2013
2
http://www.economist.com%2Fnews%2Feconomic-and-financial-indicators%2F21591899-output-prices-and-
jobs&sa=D&sntz=1&usg=AFQjCNEwA8Sta9dv-OpGsEqjuVTtONQEbw
 Source: IMF, World Economic Outlook Database

Table 2. Expansion of Asian Economies

Belgium, Italy, Netherlands and Spain are among Europe's biggest economies,

and they are either crawling or backsliding. The US and Canada are performing

better than those in Europe but their expansion not fast enough to compensate for

sluggish growth on the other side of the Atlantic Ocean.3

Asian economies -- led by China, Japan, India and South Korea, plus the other

tiger and emerging markets of the continent -- continue to hum and push the

world economy to modest growth. The Philippines is projected to be second to

China in pace of growth this year and next year.4

3
http://www.imf.org%2Fexternal%2Fpubs%2Fft%2Fweo%2F2013%2F02%2Fweodata
%2Findex.aspx&sa=D&sntz=1&usg=AFQjCNGssnYcL-GURUK1jOnToGg5o32k2w
4
IMF, World Economic Outlook October 2013 Database
Strong GDP growth is being supported by stability in the economic environment, especially low

consumer inflation and interest rates that encourage consumption and investment. While we

forecast an uptick in headline inflation this year as a result of natural calamities in 4Q13, we

expect it to ease by 2H14 as supply shocks recede. Indeed, January headline inflation of 4.2% is

still low versus a 10-year average of 4.7% (Figure 1). Similarly, interest rates are low with the

benchmark 91-day Treasury bill currently below 1.0% compared with a 10-year average of 3.8%

(Figure 17). This virtuous cycle enhances domestic growth prospects that ultimately result in

rising incomes. In addition, stability in personal spending is supported by a large number of

overseas Filipino workers who regularly remit supplemental income to their families and the rise

of the business process outsourcing (BPO) industry.

Figure 1. Ten-year inflation and 91-day T-Bill rates

 Figure 2. Steady growth in OFW Remittance and Fast-growing Philippine BPO Industry

Positioned to benefit from strong Philippine economy PGOLD should be among the

main beneficiaries of the strong Philippine economy as it is being driven mainly by robust

domestic growth. 2013 GDP growth of 7.2% YoY was already among the highest in Asia

(Figure 3), even as domestic demand (GDP without net exports) slowed down sharply in 4Q13,

attributable mainly to the natural disasters in Oct and Nov of last year. The slowdown in 4Q13

domestic demand growth to 5% from 11% in 9M13 was not enough to detract from it being the

main engine of growth last year. Even better is that robust domestic demand is happening within

the context of underleveraged corporates and households, and declining fiscal debt ratios. That

means there is space for growth to continue.

Figure 3. Philippines GDP Growth among 5 ASEAN Countries

- The economy of the Philippines has been continuously growing, but with it

grows too, the economy of other countries. The economic crisis has surely

affected the financial status and buying power of the consumers. Decision

to buy or not, what to do with their money and whatnot is greatly affected

by these changes. Puregold's target market is the general public, with a

growing economy; more consumers would have more money to spend.

Products offered by the company are focus to households. Some of the

economic factors that Puregold may face are:

− Young and expanding population

− Steady growth in personal consumption

− Global competitiveness
 − Unemployment rates

Young and expanding population

Growth in domestic demand is supported by a population estimated at 97m (Figure 10), the

second largest in Southeast Asia and the 12th largest in the world. It is estimated to be rising

1.7% annually, faster than the 1.6% average for Southeast Asia (Figure 4). It is young, with an

average age of 22.5 years. By 2015, it is estimated that the working population (ages between 15

and 59 years) would account for more than 60% of the total populace (Figure 5). Such

demographics support the country’s healthy growth in personal consumption.

Figure 4. Population in Southeast Asia

−

Figure 5. Population Growth Rates

−
Figure 6. Philippine population breakdown by age

Steady Growth in Personal Consumption

Consumer spending is the cornerstone of the Philippine economy, accounting for the largest

portion of real GDP at 69% (Figure 7) in 2013. Because of its size, growth in private

consumption usually sets the pace for overall economic growth. In the past 10 years, real private

consumption expenditures (PCE) grew an average 4.7% annually. On a per-capita basis, nominal

GDP grew 11.8% CAGR in 2003-13 to USD2,716 (Figure 7). We forecast PCE will grow at

around 6% this year and next from 5.6% in 2013. Robust PCE growth will be complemented by

investments. With the government’s fiscal consolidation over the past years, there are now

resources to address the country’s inadequate infrastructure. In the process, other sources of

demand are expected to open up from which Puregold will eventually benefit through sales in all

its store formats.

 Figure 7. Philippine nominal GDP per capita and GDP Compilation 2013

Unemployment Rates
 Jobless rate rose to 7.5 percent, up from 6.5 percent in the previous period and 7.1

percent a year ago. There were nearly 3 million unemployed in the Philippines, up from 2.8

million in January 2013.

The employment rate is estimated at 92.5 percent. Workers in the services sector

continued to comprise the largest proportion of the population who are employed. These workers

made up 54.1 percent of the total employed in January 2014. Employed in agriculture sector

comprised the second largest group making up 30.0 percent, while workers in the industry sector

made up the smallest group registering 15.9 percent. Among the major occupation groups, the

laborers and unskilled workers remained the largest group making up 31.3 percent of the total

employed.5

For 2020, Fitch Solutions cut irs GDP Growth forecast by two percentage points to 4 percent

while Capital Economics is projecting no growth for the economy. Under a worst-case

scenario, the National Economic and Development Authority (NEDA) is forecasting the

Philippines will fall into a recession with the economy declining by 0.6 percent because of the

pandemic. Considering the economic weakness, most businesses will also be negatively

affected. Puregold is a retailer of basic goods and retailers that sell basic goods will be

relatively resilient since they were allowed to stay open. A week before President Duterte

imposed the isolation of Luzon, sales of these retailers shot up as Filipinos hoarded basic

goods to prepare for a lockdown.

Household consumption is expected to decelerate until June as consumer confidence dips due to

health concerns and social distancing measures. In particular, a 5.0 to 10.0 percent decline 17 in

5
http://www.tradingeconomics.com/philippines/unemployment-rate
household consumption of non-essential commodities (i.e., alcoholic beverages and tobacco,

clothing and footwear, furnishings, household equipment and routine household maintenance,

recreation and culture, restaurants and hotels, and miscellaneous goods and services) could result

in a loss of gross value added of PHP45 to PHP94 billion, equivalent to 0.2 to 0.5 percent of

GDP, and reduce employment by 16,500 to 62,500.

 Social and Cultural Environment

Online Shopping

The Nielsen report found that among consumers who engaged in e-commerce

activities, 72 percent of online consumers in the Philippines indicated using the

Internet for grocery shopping research over the past month.6

The study also showed that online Filipino consumers were also the most active in

Asia-Pacific to search online for deals. Sixty-one percent of Filipino consumers

have, in fact, done online deal searches during the past month, compared to only

39 percent in the Asia-Pacific.

Go organic. Healthy living trend

Filipinos are venturing into the healthy living lifestyles. People are spending more on

gym memberships, organic food, and the like. Organically-grown vegetables are only available

in select stores. Since more and more people are getting into this new kind of diet, people tend to

rush to organic hippie groceries and only buy their food there.

Puregold is coping with the online marketing. It is because for them Online

Marketing is very much helpful nowadays. Filipinos are using the internet for
6
http://technology.inquirer.net/16152/filipinos-top-in-online-shopping-research-but-lag-in-
purchases#ixzz30C4ZbgEb
 averaging from 4-8 hours a day, give or take. The internet is an inexpensive

way of promotion business and increasing profitability.

Online shopping is a trend even in the Philippines. This trend would be a big

opportunity for the company to establish a store format on the internet.

Filipinos nowadays are very fond of buying stuff from the internet. It is very

convenient for the consumer and there is less hassle in transacting especially

most online shopping sites have payment methods through online banking.

Paypal, and whatnot. The main point here is to be the first online supermarket

to cater to all states of life in the Philippines. Another aim is to sell products

and deliver them to the convenience of the customer’s doorsteps.

 Technological Environment

Credit card frauds and scams

2013 was certainly not a shrinking violet in terms of card skimming and

associated card fraud scams. With 2013 card compromise data in hand, I thought

I’d share the latest year-over-year trend breakdowns and offer a few predictions

for the year ahead (an update to my post last year on ATM fraud trends).
Figure 8. FICO Banking Analytics Blog

The chart above reflects ATM points of compromise within the United States that

were analyzed by FICO® Card Alert Service. Looking at overall volume of

activity, we instantly see a continued increase in card skimming at bank-owned

ATMs over the past couple years. As this segment increases each year, point-of-

sale (POS) card and PIN skimming has somewhat diminished in comparison.

In 2014, increasingly, risk on payment cards will develop in two phases. Fraud

spend may initially be signature-based, and then, after a significant time has

elapsed, the same group of affected cards could see PIN fraud develop on cards

that were not previously reissued. This criminal strategy points out the danger

when we focus only on the risk at-hand without considering the potential
 exposure of other data elements, like PIN numbers, that might have previously

been ignored.

Credit card trends are a great opportunity for the company. Most consumers

would use cash as a medium of exchange but with the rapid development of

technology, and if this trend would expand to more and more Filipinos,

transactions would go faster and relatively could increase sales due to the faster

service.

For Puregold, the technological development that any large groceries should

come up with is the availability of cashless transactions. Though cash is still

the primary way of payment option in Ozamiz, cashless payments has

undeniably become a need for grocery stores. Banks have constantly innovate

ways of furnishing financial products that would make it easier for consumers

to pay without having to undergo the stressful lines of withdrawing money

from ATM machines. BDO, particularly, have successfully introduced cash and

debit card that allows payments as good as cash. Most of the consumers of

Puregold are cardholders. Puregold advertises bulk shopping and therefore

customers will have to incur bigger payments. Therefore, card payments are

needed as bringing a lot of cash can make consumers feel unsecured. Puregold

must always ensure that it is possible for consumers to purchase using card in a

secure environment.

b. Micro-Environment

 Customers Analysis
PGOLD is the second largest modern grocery retailer in the Philippines by sales. Its

estimated market share was 11.7% in 2013, according to Euromonitor. It operates

hypermarkets, supermarkets and discounters carrying the flagship Puregold brand. Its

target markets are low and middle income consumers, and resellers that operate

traditional neighborhood outlets known as sari-sari stores. PGOLD also operates S&R

Membership Shopping stores, the only warehouse membership club in the Philippines

that services middle to higher income consumers.

The Company divides its customers into several categories:

• Retail consumers ("C" and "D" class): These consumers have an average income

of P12,000 to P80,000. A typical ticket for retail consumers ranges from P500 to

P3,000 per shopping trip at a frequency of two to four times per month.

• Resellers: Consisting of resellers, small to medium size sari-sari stores, as well as

canteens, restaurant, bakeries, convenience and drug stores. As at December 31,

2018, there were over 415,000 business owners registered with the Company.

• Retail Consumers ("A" and "B" class): For S&R, it is targeting that 4% population

of the Philippines which comprise the "A" and "B" market segment. This segment has

an average income of over 80,000 per month.

 Competition Analysis

Competitors

Knowing about the competitors will help the company to communicate with their

target audience, distinguish their business from competitors, improve their

processes, and navigate challenges in their market.

 The competitors of Puregold are SM Hypermarket and Robinsons

Supermarket.

Competitive Profile Matrix (CPM)

The competitive profile matrix is based on the variables of marketing operations

and finance of three hypermarkets in the Philippines. The CPM categorizes a

firm’s main rivals and its particular strengths and weaknesses in relation to a

design firm’s strategic position. In CPM, an organization asses itself as well as its

rivals by giving rating and weights to key success factors. It recognizes its

strategic competitive place with its major rivals.

 Critical Success Weight Robinson
Puregold SM Hypermarket
Factors (%) Supermarket

Weighted Weighted Ratin Weighted

Rating Rating
Score Score g Score

Price
.10 3.0 .30 4.0 .40 3.0 .30

Inventory

management .10 3.0 .30 4.0 .40 3.0 .30

Products: Variety
.20 4.0 .80 2.0 .40 2.0 .40
and Availability

Quality of Service
.15 4.0 .60 4.0 .60 3.0 .45

Facilities,

Equipment, etc. .15 3.0 .45 4.0 .60 2.0 .30

Accessibility to

market .20 3.0 .60 2.0 .40 2.0 .40

Number of branches .10 3.0 .30 2.0 .20 2.0 .20

TOTAL 1.00 3.35 3.00 2.35

Table 3. Competitive Profile Matrix (CPM)

We gave a 20 % weight on the variety of the products and the accessibility of their

facilities because hypermarkets serve as source of common household products and

items and they should be easily accessible to their market. Since all of these

companies’ primary business is to sell groceries, it is given that weight to emphasize

their manner of introducing and maximizing it to their market. We differentiate the

 companies through analysis of how they use these factors. Other factors are not given

much weight for it does not contribute a major percentage in the share of the profits.

As interpreted in the matrix, the company has a good rating because it is a good

company if you look at the overall appearance and appeal of the company to the

general public.

Marketing Segment

PUREGOLD Price Club Inc. plans to double its grocery and hypermarket chain

over five years as it challenges its only bigger rival, SM Investments Co., by

targeting low-income shoppers and neighborhood stores. The nation’s second-

biggest supermarket operator plans to spend P10 billion to boost the network to

200 stores by 2016, its chairman, Lucio Co, said in an interview. The outlets will

target “market segments that the existing players aren’t serving,” Co said. “We

want to be everywhere.” The retailer plans to have 150 stores by 2013 as it

intends to lure customers from the hyper markets and groceries in billionaire

Henry Sy’s 163-outlet SM retail chain, which includes 41 department stores. Co

has already doubled the number of stores since last year as a rebate of as much as

3 percent on purchases and a program offering to improve the stores of top buyers

with signage and merchandising jars attracted low-income shoppers and owners

of so- called sari-sari stores, aka variety or convenience stores.

Strengths and Weaknesses

 Strengths

Leading player in modern grocery retail

 PGOLD is the second largest modern grocery retailer in the Philippines in terms of sales

with an estimated 11.7% market share in 2013, according to Euromonitor. Based on our

estimates, it also had the second highest 2012 net sales among store-based retailers in the country

at PHP57.5b, behind SM Investment Corp’s (SM) SM Retail with PHP159.5b and at par with

Robinsons Retail Holdings Inc’s (RRHI) PHP57.4b. PGOLD is mainly in grocery retailing,

namely hypermarkets, supermarkets and discounters. It also operates warehouse membership

shopping stores. As of 9M13, PGOLD had 201 stores nationwide with 341,056 sqm of net

selling space.

Figure 9: 2013 market share of Philippines’ modern grocery retailers

 Figure 10: Puregold Net Sales and Store Network of top three grocery retailers in the

Philippines

The company is majority-owned by the Co family through a 16% direct equity stake and

an effective 37% stake through Cosco Capital Inc’s (COSCO) 51% interest in PGOLD. COSCO
is the holding company of the Co family and is also engaged in liquor distribution, real-estate

development, and oil and mining exploration

Figure 11. Corporate Structure

PGOLD primarily conducts its operations through hypermarkets, supermarkets and

discounters carrying the flagship Puregold brand. Throughout the years the brand has been

associated with low prices and a wide assortment of value-for-money offerings. Puregold focuses

on two customer segments, namely retail consumers in the low- and middle-income classes, and

resellers who are small business owners.

The company has uniquely positioned itself against other grocery retailers by specifically

targeting resellers, mainly the sari-sari stores or mom-and-pop outlets through its customer

loyalty programme Tindahan ni Aling Puring. Resellers account for around 35% of PGOLD’s
revenue. PGOLD also operates S&R Membership Shopping stores, the only warehouse

membership club in the Philippines, which services higher-income consumers.

Figure 12. Puregold’s key business statistics

From only 34 stores at end-2009, PGOLD has since opened 117 new stores via organic

expansion as of 9M13 and acquired 50 others that were operating under four different brands;

namely Puregold Jr, Parco, S&R and Company E. In a span of less than four years the company

was able to almost triple total net selling space. PGOLD’s expansion strategy focused on both

existing and new markets. Smaller store formats were opened within the vicinity of the
hypermarkets, which resulted in deeper penetration of highly-populated areas. The company’s

store network also widened to include other parts of Luzon, and last year, the Visayas and

Mindanao regions.

PGOLD acquired Kareila Management Corp in 2012, operator of S&R Membership

Shopping stores. With the S&R brand catering mainly to the upper income segment, the strategic

acquisition helped PGOLD address all segments of the market. The company acquired 19 Parco

supermarkets in 2012 and 15 Company E stores in 2013, most of which have already been

rebranded to Puregold stores. Last December, wholly-owned subsidiary Entenso Equities bought

a 49.34% stake in San Roque supermarkets, operator of nine grocery stores in Metro Manila.
Figure 13. Puregold’s store network expansion via organic growth and acquisitions

Figure 14. Store Network Location and Puregold key milestones

 Weaknesses

Intensifying competition among industry players

Competition among Philippine modern grocery retailers has further intensified in recent

years as the industry consolidates. Key players are expanding their store networks and acquiring

or forming strategic partnerships with independent store chains. They compete on the basis of

price, product availability and quality, customer service and store location, among others.

Aggressive expansion, particularly in Metro Manila, has contributed to softening SSSG over the

past year. As retailers expand into areas outside Metro Manila, securing key locations and

opening new stores ahead of others may also be the subject of competition.

Execution risk

The company’s ability to deliver on its target number of store openings each year

depends on its success in securing prime store locations in a timely manner and on favorable

terms. Availability of sufficient cash flows to support capital expenditures is another important

factor in successfully executing its store network expansion plans.

Sensitivity to rising prices

PGOLD’s customer base is composed mainly of low- to middle-income consumers,

which are most sensitive to rising prices. There is no guarantee the company will be able to pass

on all cost increases to customers. A significant rise in suppliers’ selling prices may either

negatively affect PGOLD’s SSSG or result in lower margins.

 Table 4. Key Internal Factors; Strengths and Weaknesses

Key Internal Factors Weight Rating Score

STRENGTHS

Very Low Price .14 4 .56

Strategic Location .12 3 .36

due to accessibility

to target market

Branded as one of .13 4 .52

the leading

supermarket in the

Philippines

Leading distribution .12 4 .48

channel of goods to

sari sari stores/small

businesses

Numerous branches .13 4 .52

WEAKNESSES

Outdated technology .12 3 .36

Intensifying .13 3 .39

competition among

industry players

Sensitivity to rising .11 4 .44

 prices of customers

TOTAL 1.00 3.63

Market Shares

Today, Puregold is the No. 1 Retailer in the Hypermarket Format in the Philippines and the No. 2

in Retail Format in the Country. The company has been catering to more and more Filipinos

having over 150 (159) stores nationwide. They have over 1500 Suppliers and Trade Partners.

With their exemplary services, they are servicing to over 230,000 sari-sari stores and small

businesses in the Metro, various places in the Northern and Southern parts of Luzon, and

Visayas. Puregold has completed over 600 million sales transactions.

Analysis

Porter’s Five Forces of Competitive Analysis

Figure 15. Porters Five Forces Analysis

− Potential development of substitute products – LOW

Puregold offers a wide variety of products and mainly composes of basic

household grocery items and staple household needs. The development of

substitute products does not affect the company much because Puregold is very

flexible when it comes to adapting to sudden changes in the new products being

introduced in the market. Since most products are not exclusive to only one

hypermarket, the possibility of one company having a monopoly of hat certain

product is very vague, though feasible; it still doesn’t affect the firm much.

− Bargaining power of Suppliers – MODERATE

 Developing good ties with their suppliers, the company is not prone to suppliers

haggling with regards to their product offers. Recently, Puregold has been

producing there own line of products just like what SM is doing. With these all

said, the bargaining power of their suppliers is only moderate and will only affect

the profitability and productivity of the company if PGOLD will not contain such

shortcomings. SM Hypermarkets is the leading competitor of Puregold.

Bargaining with suppliers could be at a strong factor if SM would try to buy the

suppliers of Puregold.

− Rivalry among Competing Firms – HIGH

It is well established that the rivalry among the competitors in this field of

business is very high. Though Puregold is branded as one of the leading

hypermarkets in the Philippines, we cannot ignore the fact that SM is still the

leading hypermarket in the country and both companies are doing very well in

their fields. They are both competitive and upgrading.

− Bargaining power of Consumers – LOW

It is evident that the general public is the target market of the company. The

bargaining powers of the latter are very low. A good subject to support this

statement is that the price of the commodities offered by the company is very

inexpensive. PGOLD offers affordable and quality products, other than that, they

are giving out numerous promotions, discounts, and the like for the consumers to

have and enjoy. The company sells at the suggested retail price or less, and this is

because they do not only sell in retail but also in wholesale (not applicable to

Puregold Jr. And Puregold Extra).

 − Potential entry of new competitors – LOW

Puregold, SM Hypermarkets, Rustans, and Robinsons Supermarkets are amongst

the top key players in the game. The entry of new competitors would be very low

because it is very hard to enter into this line of business since the former

companies have already established a good reputation in the society. Also,

consumers prefer an established company over a new one especially if it is not in

a large scale business.

BCG Matrix

Quadrant II – It represent the organization’s best long – run opportunities for growth and

profitability. Divisions with a high relative market share and a high industry growth rate should

receive substantial investment to maintain or strengthen their dominant positions. The following

strategies are recommended: Forward, backward and horizontal integration; market penetration;

market development; and product development are appropriate strategies for these divisions to

consider. Among the stores of Puregold, those that belongs to Rising Stars are Puregold

supermarkets, S&R Membership warehouse clubs and S&R New York Style Pizza Stores

because of the emerging demand of the consumers.

Grand Strategy Matrix

Quadrant I: Firms located in this quadrant are in an excellent strategic position. These firms

continued concentration on current markets such as market penetration and market development

and product developments which is an appropriate strategy. The following are recommended

strategies are: market development, market penetration, product development, forward

integration, backward integration, horizontal integration, and related diversification.

 Suppliers Profile

With over 3,000 regular suppliers, the Company's supplier base is diversified

between local suppliers such as San Miguel Corporation, Universal Robina

Corporation, Monde Nissin, and multinational corporations such as Nestle,

Unilever and Procter & Gamble. The Company selects its suppliers using a

number of criteria, including product assortment and quality, market share of the

Company in a particular supplier's location, brand reputation, supplier's capacity,

Company business plans and budgets, logistic possibilities, and compliance with

the Company's commercial principles. S&R sources majority of its merchandise

from global vendors who have been supplying to membership clubs worldwide

for an extended period of time. Most of its products are sourced from the United

States.

The Company believes that its business as a whole is not dependent on any single

supplier. The Company's three largest food suppliers are Nestle Philippines,

Universal Robina Corporation and Monde Nissin. The Company's three largest

non-food suppliers are Procter & Gamble, Unilever Philippines and Globe

Telecom Inc. Further, the Company is not reliant on a single or few customers but

to the buying public in general. The Company's stores target customers who live

within walking distance of its stores and those who use personal or public

transport to shop. The Company provides suitable car parking facilities to

accommodate customers who travel to stores by car, and also locates its stores in

areas close to main transportation hubs. The Company also offers delivery

services to resellers who are unable to travel to the Company's stores. Likewise,

S&R is not dependent on a single or few customers but to the buying public in

general who become members. The Company believes that its stores can address
 the needs of its customers through its wide product range, large selection of food

as well as non-food products and increasing share of private label products.

 Collaborators Profile

The Company, in the ordinary course of its business, engages in a variety of arms-

length transactions with related parties. Certain related party transactions are

described below: The Company leases the building from its related parties where

some stores are located. The Company pays its related parties a minimum fixed

amount or is calculated in reference to a fixed sum per square meter of area

leased. The terms of the lease are for the periods ranging from 10 to 35 years,

renewable for the same period under the same terms and conditions. The rent shall

escalate by the range from 1% to 7%. Rental payments are fixed amounts based

on the contracts. The Company is a party to a trademark Licensing Agreement

with Mr. Lucio Co, under which Mr. Co licenses the use of trade names and

trademarks related to the "Puregold" brand and other Company affiliates,

including Puregold Finance, Inc., Puregold Duty Free-Subic, Inc., Puregold

Realty Leasing and Management Inc., Puregold Duty Free, Inc. and Puregold

Properties, Inc. The Company pays Mr. Co royalty fees of 1/20 of 1% of the

Company's net sales for the use of trade names and trademarks. This Licensing

Agreement is for a period of 30 years and is exclusive. Consequently, during the

term of the Licensing Agreement, Mr. Co cannot license the trade names and

trademarks under this agreement except to Puregold Junior and the Licensed

Affiliates. None of the trade names and trademarks can also be transferred by Mr.

Co. In 2007, Kareila entered into a concession contract with PSMT Phils., Inc., a
 company owned by Mr. Co, for the 4 locations of S&R in Manila. Instead of

paying rental to PSMT, Kareila pays a concession fee of 15% of revenue. The

contract was for 5 years and renewable thereafter. In March 2012, concession fee

was reduced to 4%. The concession fee covered the cost of lease rental, utilities,

manpower, security services, maintenance costs and marketing expenses. The

Company has an agreement with Puregold Finance, Inc., pursuant to which the

employees are able to borrow money from Puregold Finance, Inc., and loan

repayments are made by the Company through salary deductions, which are

withheld from employees to repay Puregold Finance, Inc. The Company is not a

guarantor to any of these loans. Transactions between related parties are on arm's

length basis in a manner similar to transactions with non-related parties. The

terms under which the Company binds itself with related parties are comparable

to those available from unrelated third parties. To ensure this, the Company uses

the terms and provisions it has in place for similar contracts with unrelated third

parties as a benchmark for its agreements with related parties.

c. Company Analysis

 Goals

VISION

To be the Most Customer-Oriented Hypermart offering a One-Stop

Shopping convenience and Best Value to our Customers.

Sa PUREGOLD, Always Panalo.

Parameter Yes / No Evaluation

1. Does it clearly answer the Yes The statement shows what the
question, “What do we want company wants to become. It

to become?” is concise as regards to its

content.

2. Is it concise enough yet Yes The Vision of the company is

inspirational? very much brief and concise.

The idea of having such

statement is for everyone to

understand. The statement

mentions “Sa Puregold,

always panalo.” This is

inspirational to both

employees of Puregold and

their customers.

3. Is it aspirational? Yes The vision very much

contains a meaning to lead

them to future advancement.

They aim to be the ‘most

customer-oriented’

supermarket and to give the

‘best value’ to their

customers.

4. Does it give a clear No The statement does not

indication as to when it contain any indications of

 should be attained? time or time frame as to when

the vision should be achieved.

The table above is an evaluation of Puregold’s Vision Statement. It is shown that the

company lacks an essential component to complete a proper vision statement. This paper

proposes to revise the vision of the company in order to fill-out the necessary components. Thus,

this will hopefully make the company more organized and be more competitive in their field of

business.

MISSION

Our Mission is to Provide Products, Services and Business Opportunities to

Every Filipino Family.

We Establish Lasting Relationship with Our Suppliers and Business

Partners.

We Strive to Promote the Personal and Professional Development of our

Employees.

We Commit Profitable Results to the Stockholders.

Sa bawat araw, PUREGOLD, kasama mo!

Component Yes / No Evaluation

1. Customers Yes The Mission states that

Puregold’s mission is to cater

to every Filipino Family. This

is addressed to the general

 public that is of the citizens of

the Philippines. Also, it is

mentioned that it is in their

mission to build a good

relationship with their

suppliers and business

partners which is also their

customers, one way or

another.

2. Products and Services Yes The Mission Statement

mentioned “provide products,

services and business

opportunities”. They do not

only sell products, but also

they provide quality service to

customers, stockholders of the

company, and their business

partners.

3. Markets Yes The company operates more

than 150 stores nationwide,

mostly in Luzon, its target

market is the general public.

Their business is concerned

 with every age group. The

term ‘every Filipino family’

coins out that they are

targeting households as their

primary market.

4. Technology No Although the Mission

Statement is very much

flexible and innovative

patterned to the needs of their

customers and stockholders, it

did not mention technologies

that can be used to serve the

former and the latter.

5. Concern for survival, Yes Though it is not stated that the

growth, & profitability growth, survival, and

profitability is for them, the

statement has a concern for

such because with the

successful profitability and

progress of their stockholders

and the good bond they

establish with their business

partners, it will lead to their

 own advancement.

6. Philosophy Yes Puregold’s philosophy is “Sa

bawat araw, Puregold kasama

mo.” This statement reaches

to the Filipino citizens.

Unlike other companies, they

used Filipino language to

make their company more

appealing to the public

7. Self-concept No Although Puregold has been

operating in most cities in

Metro Manila, Northern and

Southern Luzon, the company

failed to include in their

mission a self concept of

being the top 3 hypermarkets

in the Philippines despite

being the 2nd best

hypermarket in the country.

8. Concern for Public Image No Although Puregold has

received various awards, the

Mission statement does not

contain any words or phrases

 that shows their concern for

their public image

9. Concern for Employees Yes Their mission statement

indicates their healthy

relationship with their

employees and their drive to

promote their employees’

development both

professionally and personally.

In the current Mission statement of the company, it lacks the method of what they

would use to be innovative and should be patterned to the needs and wants of their customers

and stockholders that they should serve with just competence. The statement also lacks a self-

concept in which they should establish a self-identification as to what they want to project in the

public. Their public image was not concerned if you would study the statement. The company

should have an awareness and consciousness to their public image. The current mission

statement is very promising but it lacks merit for it lacks a few factors necessary to a proper

mission statement, that is stated in the step-by-step formulation of a strategic management paper

textbook by Fred David.

FINANCIAL OBJECTIVES

 Profits to increase at 26% CAGR from 2015-20181Q

 We are aiming for the company’s net income to go up 22% this year to PHP4.56b

after an estimated 37% rise in 2016 to PHP3.7b. In 20181Q, earnings are expected

to grow 19% to PHP5.4b. This translates to a three-year profit CAGR of 26%

from 2015 to 20181Q to be driven by higher revenues from new store openings

and improving operating margins.

 Store network expansion to drive revenue growth

From an estimated 28% growth in 2016 revenues to PHP73.6b, total net sales are

likely to go up 18% this year to PHP87.1b and 14% in 20181Q to PHP99b.

Revenue growth would come mainly from new store openings, which we aim, it

would be 30 Puregold stores this year and 26 stores next year, comprising 25

Puregold stores and one S&R warehouse club. From 213 stores as of end-2016,

we are expecting PGOLD’s total store count to reach 243 by end-2017F and

further grow to 269 by end-2011QF. In terms of net selling space, we forecast this

would increase 9% this year and 7% next year, or from an estimated 352,006 sqm

as of end-2016 to 382,656 sqm by 2017F and 410,806 sqm by 20181Q. Our

forecasts have not factored in PGOLD’s potential acquisitions.

 Higher margins from improving economies of scale

Puregold has still room to improve in terms of the operating margins because the

company reaps economies of scale from opening additional stores in areas outside

Metro Manila that have considerably lower rental, manpower and other operating

costs. Operating profit margin likely reached 7.2% in 2016 and we estimate this

would further improve to 7.4% in 2017F and 7.7% 20181Q. Likewise, we forecast

overall gross margins to expand to 17.8% this year and 17.9% next year from our
 projected 17.4% gross margin in 2016. This would be driven by the bigger

contribution to sales from the higher-margin S&R warehouse membership

shopping business, which we estimate would account for 22% of total revenues

this year and 24% next year from our 19% estimate in 2016.

 Operating cash flows to support capex requirements

One of the proposed objectives for the company is to make the total capex allotted

for new store openings to be PHP3.2b- 3.3b in 2017F and 20181Q from our

PHP3.8b estimate for 2016. We believe PGOLD’s operating cash flows of

PHP5.4b-6.5b in the next two years will be sufficient to support its expansion

needs. The company also has existing unused credit lines it may use in the case of

additional capital requirements.

STRATEGICAL OBJECTIVES

 Focus on modern grocery retail

Puregold is the second largest modern grocery retailer in the Philippines by sales.

Its estimated market share was 11.7% in 2016, according to Euromonitor. It

operates hypermarkets, supermarkets and discounters carrying the flagship

Puregold brand. Its target markets are low- and middle-income consumers, and

resellers that operate traditional neighbourhood outlets known as sari-sari stores.

PGOLD also operates S&R Membership Shopping stores, the only warehouse

membership club in the Philippines that services middle- to higher-income

consumers.

 Key player in industry consolidation

 We expect PGOLD to remain a key player in the modern grocery retail business

through rapid store network expansion, especially in areas outside Metro Manila

where modern retail penetration is considerably lower. As competition in these

areas is less intense and operating costs are lower, we believe same-store-sales

growth will improve and overall margins widen. In the next 3-5 years PGOLD

expects to open at least 25 Puregold stores, mostly in Luzon, and one S&R

Membership Shopping store annually.

 Traditional retail to remain a major growth driver

Traditional trade accounts for 73% of the country’s grocery retail industry. Given

the high level, we think traditional grocery retailing will remain a significant

driver of PGOLD’s revenue growth for some time. PGOLD derives about 35% of

its revenue from approximately 300,000 reseller members of its loyalty

programme out of more than 1m traditional retail channels in the country.

Traditional grocery retail is forecast to expand 8.1% CAGR in the next five years,

while modern grocery retailing is projected at 8.9% CAGR until 2018F.

 Earnings CAGR of 26% from 2015-20181Q

We forecast PGOLD’s net income to rise 26% CAGR in 2015 to 20181Q, driven

by higher revenues from new store openings and improving operating margins.

From 213 stores as of end-2016, we expect PGOLD’s total store count to reach

243 by end-2017F and further grow to 269 by end-20181Q. In terms of net selling

space, we forecast this will increase 9% this year and 7% next year, or from an

estimated 352,006 sqm as of end-2016 to 382,656 sqm by 2017F and 410,806

 sqm by 20181Q. Our forecasts have not factored in PGOLD’s potential

acquisitions.

 Manpower

Puregold supermarkets houses more than 30000 employees. With its competent

employees, Puregold is serving its valued customers through its effective

customer service program and competitive price scheme.

 Market Share

Today, Puregold is the No. 1 Retailer in the Hypermarket Format in the Philippines and
the No. 2 in Retail Format in the Country. The company has been catering to more and
more Filipinos having over 150 (159) stores nationwide. They have over 1500 Suppliers
and Trade Partners. With their exemplary services, they are servicing to over 230,000
sari-sari stores and small businesses in the Metro, various places in the Northern and
Southern parts of Luzon, and Visayas. Puregold has completed over 600 million sales
transactions.
 S-T strategies

IV. TOWS ANALYSIS

a. THREATS

1. 10% increase in Credit card frauds as recorded by FICO Banking Analytics Blog. The

rising number if credit card scams and frauds is a threat to the company’s operations. The

payment of those defrauded cards could possibly be refunded and could decrease the
 income and profit of the company. In addition, card scammers continue to innovate new

ways to victimize cardholders and this also means that establishments offering cashless

payments such as Puregold must continue to upgrade their security measures and that

means incurring additional cost. Moreover, if credit card frauds occur inside any

Puregold stores, it can affect the image of the company and some customers may opt to

shop to other hypermarkets. Thus, losing not only revenue but also customer trust.

2. Unemployment rates are rising amid COVID-19 pandemic. According to Washington-

based International Monetary Fund, the COVID-19 pandemic would not slow the

Philippines’ economic growth to a dismal 0.6 percent but also render more Filipinos

jobless this year of 2020. With slower gross domestic product expansion, the

unemployment rate in the Philippines was projected to climb 6.2 percent in 2020 from 5.1

percent in 2019 before falling to 5.3 percent in 2021. Unemployment only means that

people would have significantly lesser and unstable source of income. This impose a

threat to hypermarket despite selling basic goods because of significantly less spending of

consumers and this would gravely affect sales records of the company for the year.

b. Opportunities

1. Increased demand for online grocery shopping due to covid19 crisis. Retailers are seeing

a surge in online grocery shopping as consumers stock up on food and other essentials

because of the coronavirus outbreak. Both customers who want to avoid the crowds and

those who are running into empty shelves at brick-and-mortar stores are turning to the

internet to shop (Bandoim, 2020). Even before the pandemic, there is already an

increased preference among online consumers to shop for groceries online. This would be
 a great opportunity for hypermarkets such as Puregold to catch that growing market in the

online platform in order to offset the decreased revenue in their physical stores.

2. The use of eco bags are in due to ' I'm not a Plastic Bag campaign. With the Senate Bill

No. 2759 or the Total Plastic Bag Ban which prohibits the use of plastics bags in

groceries, restaurants and other establishments, hypermarkets such as Puregold are

required to use eco bags or brown paper bags to pack grocery items. This is an

opportunity for the company to inculcate new marketing schemes to increase profit such

as offering exclusive and unique type of eco bag.

3. Increased demand in sari sari stores. Due to pandemic, the government encourages the

public to go out only once a week. Moreover, going out to buy basic goods is more

difficult due to the limited number of people allowed to go inside malls and other

establishments and the rise of fare rate. These factors in turn leave people buying their

needs in the nearest sari sari store. Puregold should then strengthen their service to sari

sari stores so that even if there are significantly lesser people going into their

hypermarkets, the increased demand of sari sari stores could somehow help to alleviate

the declining revenue of the company.

c. Weaknesses

1. Hardships in opening branches in Visayas and Mindanao. In 2016, the company only had

two branches in Mindanao. Being new to this area, the company may have challenges in
 shifting customer loyalty from other supermarkets that have been around in Visayas and

Mindanao for an exceptionally long time.

2. Intensifying competition among industry players. Competition among Philippine modern

grocery retailers has further intensified in recent years as the industry consolidates. Key

players are expanding their store networks and acquiring or forming strategic partnerships

with independent store chains. They compete on the basis of price, product availability and

quality, customer service and store location, among others. Aggressive expansion,

particularly in Metro Manila, has contributed to softening SSSG over the past year. As

retailers expand into areas outside Metro Manila, securing key locations and opening new

stores ahead of others may also be the subject of competition.

3. Sensitivity to rising prices. PureGold’s customer base is composed mainly of low- to

middle-income consumers, which are most sensitive to rising prices. As in the industry of

hypermarket, goods sold are mostly the basic ones such as canned goods. There is no

guarantee the company will be able to pass on all cost increases to customers. A significant

rise in suppliers’ selling prices may either negatively affect PGOLD’s Same Store Sales

Group or result in lower margins.

d. Strengths

1. Puregold membership: Aling Puring Card gives out more benefits than its competitors.

For the Aling Puring Card members of the club in the company, the prices are discounted

and members are more privileged. The company’s membership is called the Aling Puring

membership. AP members earn up to 3% rebate through points accumulation in his/her

Aling Puring card whenever he/she shops at any Puregold Branch (excluding Puregold

Jr.) Points earned are equivalent to rebates which can be redeemed at any Puregold

Branch (excluding for Puregold Jr) and can be used as tender in shopping.Other benefits

are: Instant Ka-Asenso Welcome Kit, Points – Rebate Redemption Program, Free

Delivery *with minimum purchase and distance requirement of store, Call – Order –

Pick-up Service via call/text/e-mail, Wireless and COD Transactions, Kitang-Kita Packs

and Kitang-Kita Case for added savings and points, Special Ka-Asenso events, promos

and text blast updates, Bi-annual Ka-Asenso Booklet with exclusive Kalendaryo ni Aling

Puring discount coupons7. (Source:http://puregold.com.ph/aling_puring.do?id=7772)

2. Promotions

- Unlike Shopwise and SM, Puregold has more promotions and antics. They have been

introducing more and more promotions like raffles, packages, discount items, freebies,

and the like. Also, they do not only give out free stuff but they also give out medical

check-ups for free.

7
3. Quality of service to customers. PureGold supermarkets houses more than 30000

employees. With its competent employees, Puregold is serving its valued customers

through its effective customer service program and competitive price scheme.

4. Established company brand name. In 2008, PureGold was branded in Reader’s Digest

Asia’s “Most Trusted Brands” and have introduced a new store format, Puregold Jr. In

2009-2010, Puregold became the 2nd largest hypermarket and supermarket retailer in the

Philippines as regards to the net sales. PGOLD primarily conducts its operations through

hypermarkets, supermarkets and discounters carrying the flagship Puregold brand.

Throughout the years the brand has been associated with low prices and a wide

assortment of value-for-money offerings.

5. Strong relationship to suppliers. They have over 1500 Suppliers and Trade Partners. With

their exemplary services, they are servicing to over 230,000 sari-sari stores and small

businesses in the Metro, various places in the Northern and Southern parts of Luzon, and

Visayas. Puregold has completed over 600 million sales transactions.

6. Leading distribution channel of goods to sari sari stores/small businesses. The company

launched a loyalty program in 2001; renamed as Tindahan ni Aling Puring in 2004. With

Aling Puring membership benefits such as discounted prices and free delivery, more sari

sari store owners prefer to order in bulk in Puregold.

7. One of the leading player in modern grocery retail. PGOLD is the second largest modern

grocery retailer in the Philippines in terms of sales with an estimated 11.7% market share

in 2013, according to Euromonitor. PGOLD is mainly in grocery retailing, namely

hypermarkets, supermarkets and discounters. It also operates warehouse membership

 shopping stores. Puregold, SM Hypermarkets, Rustans, and Robinsons Supermarkets are

amongst the top key players in the game. The entry of new competitors would be very

low because it is very hard to enter into this line of business since the former companies

have already established a good reputation in the society. Also, consumers prefer an

established company over a new one especially if it is not in a large scale business.

V. Marketing Mix

a. Product

 Brand name

Puregold’s primary product is its retail service. Puregold offers consumers

product such as grocery products.

 Quality

One of the key factors in running a successful supermarket is establishing

consistent quality control – both in terms of having a high volume of stock and in the

quality of individual products as they are delivered to the store. Inadequate attention

to these areas can lead to loss of sales (Ostrow, 2016).

Since that Puregold offers variety of brands in its grocery line products,

Puregold will ensure its products to be at highest quality through proper selection of

brands to be offered in all its physical stores nationwide. Puregold offers product that

are well tested, potent and safe.

 Scope of product line

Puregold is one of the most popular supermarket chains in the Philippines.

Engage in trading of consumer products including canned goods, dry goods, food
products, groceries, pharmaceutical, medical goods, cookware, hallway and entry

furniture, beds, lighting supplies, housewares, and toiletries on a wholesale and retail

basis. We recommend that Puregold should develop their products and services into

all their store formats to increase sales and possibly attract new types of customers,

thus, increasing their scope of market. By doing so, they are not only creating

diversity and offering a wider variety of products but this also helps the company to

lessen the chances of new substitute products entering the markets which can affect

the company’s external and/or internal environment.

 Warranty

Puregold, guarantees to replace faulty product during the warranty period if

the product is damaged or defective within a reasonable time especially in its

furniture product. However, warranty is not applicable to consumable products such

as grocery goods because Puregold will ensure that proper quality control in its

consumer’s goods is up to date.

 Packaging

Puregold will procure products in very large quantities across the country and

prior to its procurement the firm will see to it that there choice of product is influence

by the quality and aesthetic appearance of the products that can attract consumers to

buy. Traditionally, grocery goods are packed with plastics. Supermarkets contribute a

minimum of 59 billion pieces of single-use plastic to our plastic pollution problem

each year (Polisano, E. et al. (2018).). We recommend Puregold to promote

environmental friendly packaging initiatives in its grocery products like the use of
 recyclable material. For instance Plastic, paperboard, cardboard and other materials

can be reconstituted to create new items. Both recycled and recyclable materials come

from a variety of sources and can be adapted to product packaging with ease.

Although these environmentally friendly packaging initiatives are primarily selfless

in nature, they offer additional benefits such as allowing Puregold to build better

reputations among their pro-environment customers.

b. Price

 Pricing

It procures products in very large quantities across the country and hence can

easily price its products lower than its competitors can, thereby enjoy the benefits of

economies of scale. Puregold charges Customer-friendly prices and focus on bulk

sales to maximize prices rather that overpricing products, excellent procurement

strategies that allows the company to bargain with the most affordable players in the

supply chain to keep prices low, diversification is also apply to ensure that

complimentary goods can drive the sales of other product if one is under promoted.

 Discounts

Since that Puregold already introduces Loyalty perks promo, will just

implement an enhance loyalty Perks program through its "Perks Card". It is a loyalty

program open to all Puregold shoppers who are 18 years old and above. It is

specifically designed for customers who do not own sari-sari stores or related

businesses. Points earned have an equivalent peso value which can be converted to a

rebate or treat. To further enhance customer experience, Puregold has even tapped its
affiliates into doing partnerships so customer can enjoy more benefits. Also the Aling

Puring membership, the company’s membership name. Members can earn up to 4%

instead of 3% rebate through point’s accumulation in his/her Aling Puring card

whenever he/she shops at any Puregold Branch (excluding Puregold Jr.) Points earned

are equivalent to rebates which can be redeemed at any Puregold Branch (excluding

for Puregold Jr) and can be used as tender in shopping. By increasing points rebate

will attract more consumers to patronize their stores.

 Bundling

Product bundling is already being offered in the all Puregold Stores

nationwide this is done in order to attract consumers who will benefit from a single,

value-oriented purchase of complementary offerings. However Puregold must

intensifies its product bundling offerrings during country various occasions such as

Christmas season, summer season and other festive seasons where consumers

spending in consumers good such as groceries is high so Puregold must take

advantage to it.

 Payment terms and financing options

The target market of Puregold is the general public who most of the times use

cash to pay for their purchases and also those who uses credit/debit cards in their

purchases.. We also recommend Cashless payments to eliminate several business

risks at a time such as theft of cash by employees, counterfeit money, and robbery of

cash. Moreover, Puregold wants consumer’s welfare to be their top priorities, so

 cashless payments will be advantageous for consumers for it will reduce costs of

security, withdrawing cash from bank and the likes.

c. Place (Distribution)

 Channels

The distribution strategy includes direct delivery to stores by vendors who

are the suppliers of the retail stores. The products are delivered in huge volumes

to the stores. There are over 345 Puregold stores, 16 S&R membership shopping

warehouses in the country which use cross docking method. The hub & spoke

method is used by Puregold wherein the goods are centrally ordered and then sent

to individual stores. They majorly stress upon reduction costs of transportation

and supply chain and make greener transportation. The items are placed in rural

and urban stores on shelves.

 Motivation for the channels

Building a planned, professionally managed, vertical marketing system

that meets the needs of both manufacturer and distributors (Kotler, 2017).

The margin for a distributor may range from 3% to 25% of the sales price;

the margin for the retailer may range from very little to 60%. This all depends on

the type of product and who pays for the marketing activities.

 Criteria for evaluation distributors

Puregold is very particular in terms of evaluating distributors and has the

best practices in this area in fact various entities has already signed partnership
 with company and currently having sound trades with Puregold. In case Puregold

will induce more expansion on its distribution channel, Puregold must be active in

finding a distributor that meets company’s needs and avoid the temptation to sign

an agreement with a distributor merely because they are the biggest, most

persistent or super-enthusiastic that is why we recommend Puregold to consider

these qualities when evaluating a distributor:

 Proven track record in a similar line, but no conflicts of interest

with competing products

  Established distribution networks and strong contacts with key

buyers. You may have to appoint several distributors in a country

where business is done regionally and there is little consolidation

(Lockhart, 2015).

 Solid financial history (be sure to do a credit check) and sufficient

cash flow in order to extend credit to customers, as well as a

willingness to invest in your line.

  Storage facilities, showrooms, shops, service workshops and after-

sales service as required by your product.

  Knowledge of local import procedures and regulations.

  References from other suppliers and customers.

 Locations

Currently, there are over 345 Puregold stores, 16 S&R membership

shopping warehouses in the country specifically in metro Manila, North Luzon,

 South Luzon, Visayas and Mindanao. We expect PGOLD to remain a key player

in the modern grocery retail business through rapid store network expansion,

especially in areas outside Metro Manila where modern retail penetration is

considerably lower. It is important to introduce present products and services into

new geographic area because maximizing the stockholder’s investment through

expansion will have a greater chance of getting back the ROI and profit of the

company.

 Logistics

We recommend that Puregold must undertake this to level up its

replenishment and distribution through the following:

 Cross-dock facilities — Puregold must develop more Cross-dock facilities

where products and materials are unloaded from one inbound source

(truck, railcar, etc.) and then immediately moved onto outbound

transportation with as little storage time as possible. If possible increase its

storage capacity because sometimes becomes a reason why supplier failed

to delivers on time. About 12% of the suppliers who are unable to directly

deliver to the Company's stores deliver their products to the Company's 2

out-sourced crossdock facilities for onward distribution to Puregold stores.

 Store-to-store transfer — All of the Company's stores have a stockroom on

premises with warehousing capabilities for additional inventory. However,

there are hypermarkets with large warehouses which can accommodate

merchandise intended for nearby small-format stores. As needed, goods

 are transferred from a large store to a small store. Puregold is practicing a

commendable Store-to-store transfer strategy that allows merchandiser

with multi-location businesses to track store to store inventory transfers

we suggest that Puregold must retained this strategy to shortened

replenishment and distribution of its products.

d. Promotion

As a part of its marketing mix promotional strategy, Puregold will adopts an

aggressive brand promotion strategy. Puregold currently employs a diversified array

of advertising media, ranging from TV ads, billboards, social media, and even their

eCommerce platform.Public relations and it should be intensify in order to get ahead

with the competitors.

 Promotional programs

Puregold advertises itself through its online website, general and

local publications and through social networking sites. They are currently

in partnership with a noon time show television program aired through

GMA 7 “Eat Bulaga”. Puregold must extend sponsorship in various TV

programs with high audience rating that bring better exposure of the store

through mass media and if possible create partnerships in various media

networks in the country. Furthermore, Puregold will be introducing more

and more promotions like raffles, packages, discount items, freebies, and

the like.
 e. Positioning

By the end of 2020, will be the top supermarket chains in the Philippines.

Puregold will be operating a total of 220 hypermarkets, 130 supermarkets, 30 extra,

20 minimarts, 20 S&R warehouse clubs, 43 S&R-QSRs, for a total of 465 stores

located in the following areas:

Puregold S&R QSR Total

Metro Manila 135 7 26 168
North Luzon 110 4 5 119
South Luzon 105 3 6 114
Visayas 30 3 4 37
Mindanao 20 3 2 25
TOTAL 400 20 43 463

Puregold want to be the Most Customer-Oriented Hypermart/Supermart

offering a One-Stop Shopping convenience and Best Value to our Customers. “Sa

Puregold, Always mura, always Bago, always may Promo, Always Panalo”.

For puregold, these existing strategies applying the 5Ps of the Marketing Mix help the

company to be profitable for so many years. For them all of these components plays a

vital role in their operations and help them to be known in the country. Our group

suggested new marketing strategies that may help the marketing of Puregold and below

are the suggestions:

 Advertise Multi-Use Products

Often supermarkets will make the majority of their revenue from existing customers, who

already know the quality of the shop and the brands they offer. Because of this, the
 majority of new sales and increase in sales will come from convincing existing customers

to spend more – rather than attracting new customers. 

If the company advertise a product as having more than one purpose, they will give

people an extra incentive to buy. This can be as simple as advertising carrots as a great

dinner side, but also as a snack when sliced to have with humans. For example,

advertising the more usage of Aling Puring Card for the store owners.

 Work with Brands

Finding a brand that designs beautiful kitchen utensils or plates can really entice the

customers to return to the store for the smallest things, which on a mass counts a lot.

Try where possible to use local brands. This will gain positive feedback within the local

community that is most certainly worth fostering. Examples of local brands are San

Miguel Beer, Mama Sita Mixes, Oishi Snacks, and Jack ‘n Jill Snacks, Magnolia dairy

products, Purefoods, Lucky Me Instant noodles and many other local brands.

 Social Media Campaigns

It’s no secret that the world is the social media crazy, and as a result, businesses have to

be. Social media campaigns have been a whole new source of revenue for businesses in

the past few years and there’s no reason supermarkets cannot have a Facebook page, or

Instagram and Twitter account.

 Supermarkets can market their produce exceptionally well on social media platforms.

Having an image-based Instagram account can be hugely beneficial. Showcase all of the

different ways in which your business interacts with the community.

The company can also take advantages of national and international food days, such as

National Doughnut Day and be creative with hashtags and images.

If they are feeling creative they can develop a newsletter that can be used to entice

readers through digital coupons for different produce depending on season, availability

and interest.

For example, at Valentine’s Day, they could consider offering coupons for hot chocolate,

flowers, gift bags and celebrations cards.

 Personalized In-store Advertisement

By the use of in-store advertisements and announcements they can inform their customers

of any promotional offers in the specific areas of the store that they need to find things.

If the company use a handwritten chalkboard sign in a section for local produce like fresh

fruits and vegetables, it offers a sense of locality – and represents that they care about the

personal touches that there local farmers offer.

The company should as advertise with the branding, it should match their general store’s

color palette and typography so that their customers can begin to create firm and positive

associations with their brand.

 Locations according to prices

Place the most economical products in the lower shelves, the most expensive in

the upper shelves and those that you most want to sell at eye level. In this way,

and in a natural way, sales are increased.

 In-store events

Tastings are a great way to introduce new products to customers, but how about revving

up that spirit with an actual event? Maybe a cooking demo, “kiddie kitchen,” or a

grouping of samples that coincide with an upcoming holiday or cultural event. Drawing

folks into the store will mean they’ll not only improve foot traffic but capture

unexpected/unintended sales from customers.

 Digitize Coupons
 People still love deals, even if they’re no longer scouring newspaper inserts to clip

coupons. Instead, digitize your coupons so they can be found and retrieved with a

simple finger swipe on a smartphone. Having a few coupons to use just may make

the difference between whether they pick up their groceries at your store or the one
across town.

Recommending Strategies

Market Penetration

It is important to seek and achieve increase in market share for present products or

services in present markets through greater marketing efforts because the firm needs to embrace

its market to surpass the sustainable competitive advantage. By introducing new marketing and

sales promotion to entice customers to patronize the services of Puregold by introducing discount

cards to really show their mission-vision to provide low cost in their products that are inside their

establishments.

Market Development

It is important to introduce present products and services into new geographic area

because maximizing the stockholder’s investment through expansion will have a greater chance

of getting back the ROI and profit of the company. Moreover, by reaching out to the sub urban

areas by establishing Puregold or PuregoldJr branches depending on the availability in the target

area to capture the market.

Product Development

The company should develop their products and services into all their store formats to

increase sales and possibly attract new types of customers, thus, increasing their scope of market.
By doing so, they are not only creating diversity and offering a wider variety of products but this

also helps the company to lessen the chances of new substitute products entering the markets

which can affect the company’s external and/or internal environment.

At this point, it may be useful to engage a wider portion of the population in the supply of the

essentials to fight COVID-19. Existing business may be encouraged to reconfigure their product

offerings to include these essentials. Below are some suggestions:

(issued by NEDA on March 14, 2020: http://www.neda.gov.ph/wp-

content/uploads/2020/03/NEDA_Addressing-the-Social-and-Economic-Impact-of-the-COVID-19-
Pandemic.pdf)
VI. Financial Projections
VII. Conclusion

In conclusion, Puregold Price Club, Inc. has a great market share, market growth and has

a rock-solid reputation in the food retail market. According to a study by Kantar Worldpanel, a

global research firm engaged in consumer knowledge and insights, Lucio Co’s Puregold is one

of the top 10 retailers in the country’s modern trade channel. The study further said that Puregold

is now able to reach out to 22 percent and 14 percent of Filipino shoppers, an increase of 4

percent and 3 percent, respectively. In 2012, for just 14 years, they have grown with 180 stores

in the country. Presently, they have more than 300 branches nationwide. There is no doubt that

Puregold has successfully established their brand in the market. However, the established brand

of the company does not exclude them from the challenges in the market. Threats for the

company continue to thrive especially in this time of pandemic. Threats include a remarkably

high unemployment rate and declining economy in the country. Despite the crisis, now is the

time to dive further into the performance sector and seize the opportunities arising from the

crisis. The company can do this by entering the online market either by creating an application or

creating partnerships with online shopping companies. Through Puregold’s established brand

image of offering goods at low price and strong relationship with neighborhood retail shops, it is

possible for them to acquire a good amount of revenue despite the crisis. Puregold is and will

continue to be the powerhouse among food retailers in the Philippines.

Being one of the country’s biggest supermarket chains, the company is principally

involved in trading consumer products on a wholesale and retail basis. With their good

marketing practices that they been applying for years, it seems that Puregold certainly knows

how to take advantage of the market. PUREGOLD is positioned as a low-cost food retailer and is

known for its strong following by low-end resellers, while its S&R brand is a membership-only
store targeting the upper-income segment of shoppers. S&R does also have its S&R Quick

Service (QSR) store format. The recent everyday-low-price (EDLP) strategy has grown S&R

memberships. Most of its operations are run under the Puregold’s three store formats, which are

hypermarkets, Puregold Jr. (supermarkets) and Puregold Extra (discount stores). These market

positioning made PUREGOLD one of the leading market player in the country. Currently, the

company already has strong marketing practices wherein Puregold’s strategy of aligning itself

with the sari-sari store owners, establishes a strong financial certainty and these must be retained,

improve and apply more as PUREGOLD expand more location in the country. PUREGOLD

already has a program called “Aling Puring”, with this; sari-sari store owners have access to

Puregold’s huge product inventory-most probably at a discount. These good marketing practices

must be retained, improve and develop in order to cater more enterprises especially small

business that engage in retail and reselling of consumers good that the company can do business

with. With this small entrepreneurs would source their goods in Puregold, this would somehow

eliminating in one way or another, Puregold’s market competition. There are various

recommendations we incorporate in the marketing strategies of the marketing plan that would

help PUREGOLD in some way to generate more sales in the future. Thus, PUREGOLD must be

more aggressive when it comes to implementing its marketing Strategies.

VIII. References

 Gundaniya, N. (2020). Moving towards a cashless society: types and major benefits. Retrieved
from https://www.digipay.guru/blog/towards-a-cashless-society-major-benefits/.
 Ostrow, D. (2016). Exploring supermarkets need for Quality Control. Retrieved from
https://progressivegrocer.com/exploring-supermarkets-need-quality-control.

 http://puregoldbeta.webtogo.com.ph/company.do?category_id=6844

 Polisano, E. et al. (2018). How Did Your Supermarket Score In Our New Plastic League Table.
Retrieved from https://www.greenpeace.org.uk/news/supermarket-plastic-reduction/.

 Bryne, J. (2017). Ideas For Environmentally And Eco Friendly Packaging. Retieved from
https://www.johnsbyrne.com/blog/5-ideas-environmentally-friendly-packaging/.

 Rice University, (2016). Introduction to business: Distributing and Promoting Products and
Services. Retrieved from https://opentextbc.ca/businessopenstax/chapter/using-supply-chain-
management-to-increase-efficiency-and-customer-satisfaction/.

 Austria, J. (2019). Manila Standard Net: Puregold Set To Open More Stores. Retrieved from
https://manilastandard.net/mobile/article/286014.

 Lockhart, C. (2015). Evaluating Distributors: How to Avoid Distribution Problems.

Retrieved from http://www.sideroad.com/Export/distributors.html.

 Datuon, C. (2019). Puregold Annual Report. Retrieved from http://www.puregold.com.ph/wp-

content/pgold-data/Corporate%20Governance/Disclosures_SEC/SEC%2017-A/Puregold
%20Annual%20Report%20CY%202018.pdf.

 Henderson, B. (1970). Growth-Share Matrix. BCG Perspectives. Retrieved from

https://www.business-to-you.com/bcg-matrix/
 Puregold Price Club Inc. (2018), Company Presentation Results and Performance. Retrieved from
http://www.puregold.com.ph/wp-content/pgold-data/Investor%20Relations/Investor
%20Relations%20Presentation/2018/1Q%202018%20Presentation.pdf
 S&P Global Market Source (2020), Financial Data Source. Retrieved from
https://www.marketscreener.com/PUREGOLD-PRICE-CLUB-INC-10053446/financials/
 Francia, Arra B. (2018), Article entitled “Puregold earns P5.84B in 2017”. Retrieved from
https://www.bworldonline.com/puregold-earns-p5-84b-in-2017/
 Santos, Arantxa Stefi L. (2015), Puregold Strategic Management Paper. Retrieved from
https://www.academia.edu/14211651/STRATEGIC_MANAGEMENT_PAPER_On_PUREGOLD