FAR EASTERN UNIVERSITY-MANILA

Institute of Accounts, Business, and Finance

Department of Accountancy and Internal Auditing

MODULE 2
Marketing Aspect
Learning Outcomes
After studying Module 2, you must be able to:
1. Identify the activities involved with respect to the determination of the demand
gap.
2. Analyze the existing market condition through the use of different forecasting
techniques.
3. Describe the basis in determining the sales forecast, market share and annual
production capacity of the business..
4. Explain the different marketing strategies to penetrate the market.

This module will help the learner know the importance of demand and the target market. The
estimated existing size and capacity of the industry (specifying market leaders), its past growth,
the estimated future growth (specifying major programs of development), the local dispersal of
industry, its major problems and prospects, and general quality of goods including the
approximate present size of demand, its past growth, major determinants and indicators. Also,
anticipated competition for the project from existing and potential local and foreign producers
and supplies, sales program, estimated annual sales revenues from products and by-products,
and estimated annual cost of sales promotion and marketing.

The following should be presented:

Target Area - sample
a. MARKET DESCRIPTION
1. Target Area The location of the business is one of the first decisions to make in
(Business Location)
starting up a business. A good location is highly significant in the success of a
Tell something about
your business thus its selection must be done deliberately. There are factors that need
target area or business to be considered in choosing the location and it should be aligned with the
location.
company’s needs and objectives. The proponents decided to establish the

business along Nicanor Reyes St. Sampaloc, Manila. The location is accessible to

the potential target market, which consist of individuals studying in different

schools, colleges, and universities, because it is within the University Belt, a sub-

district in Metro Manila where a lot of big universities and colleges can be found.

2. Competitive Situation:
a. Perfect competition – is a market structure where many firms offer a
homogeneous product. Because there
is freedom of entry and exit and perfect
Features of Perfect competition

a. Many firms
b. Freedom of entry and
exit
1 c. All firms produce an
identical or
homogeneous product
d. All firms are price takers
e. There is perfect
 FAR EASTERN UNIVERSITY-MANILA
Institute of Accounts, Business, and Finance
Department of Accountancy and Internal Auditing
information, firm will make normal profits and prices will be kept low by
competitive pressures

b. Pure monopoly - -exist when a single firm is the sole producer of a product
for which there are no close substitutes.
Characteristics:
a. Single seller, firm and
industry are synonymous
b. The firm is the price
maker, firm has
considerable control over
the price.
c. Unique product, no close
substitutes

c. Monopolistic - - products are

differentiated (based on things like service, quality or design).The product of
a firm is close, but not perfect
substitute of other firm. This gives Characteristics:
some monopoly power to an individual a. Large number of buyers and
firm to influence market price of its sellers ( but not as large as
perfect competition)
product.
b. Free entry and exit of firm
c. Product differentiation
d. Selling cost – advertisement
is the most constituent of
selling cost
 In order to sell more
reduce its price
Example: gasoline,
pizza, vitamins, alcohol,
soap

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 FAR EASTERN UNIVERSITY-MANILA
Institute of Accounts, Business, and Finance
Department of Accountancy and Internal Auditing
d. Oligopoly - is a market situation in which there are only a few sellers of
commodity. Under this each
Characteristics:
seller can influence its price – a. Monopoly power – since there are only a
output policy few firms and each firm has a large share
of the market. It controls the price and
output.
b. Interdependence of firms – there are only
Competitive Situation - sample a few firms each producing a
homogeneous or slightly differentiated
Establishing a business within University product. Since the number of firms is
small each firm enjoys a large share of
Belt or U-belt is a great opportunity as to market the market and has a significant influence
on the price and output decisions.
penetration. Mainly, this is due to the fact that the c. Conflicting attribute of firms.
d. Interdependence among firms – each firm
location, which is teeming with universities, treats the other as its rival firm
e. Nature of product
colleges, review schools, condominiums, and
Example. Car manufacturer, airplane
dormitories, is populated by a large number of manufacturer
students. As such, the business will be accessible

to the target market, which are the students. In

addition, a lot of fast-food restaurants can be found

within the University Belt and each business offer

their products at different prices. It is also noted that

most fast-food chains have chicken as their main

meal. On the other hand, Chick ‘N Cheese offers a

variety of flavors of chicken wings with stuffed

mozzarella cheese and bacon and this unique

quality provides an advantage for the business. The

level of competition a business will face plays a

significant role in determining the attributes needed

in order to attract the target market and obtain an

advantage against competitors. The proponents’ 3.

List of Direct & Indirect
business is under a monopolistic competition, Competitors
a. direct competitors – any
wherein, many other competitors offer the same but
business that offers the same
not the exact product. This type of competition can thing as you.
b. indirect competitors - any
be easily penetrated by new competitors since the
business whose products or
services are different from yours but potentially could satisfy the same need and
reach the same goal.

List of Direct and Indirect Competitors - sample

Direct Competitors

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 FAR EASTERN UNIVERSITY-MANILA
Institute of Accounts, Business, and Finance
Department of Accountancy and Internal Auditing
Chick ‘N Cheese offers products and services similar to other businesses near the store

location. The following are the direct competitors of our business:

Table 1
List of Direct Competitors
Direct Competitors Logo Address

 1223 Delos Reyes Street Sampaloc Manila,

D’ Bricks
Sampaloc, 1008 Metro Manila

 866 Nicanor Reyes St., Sampaloc, Manila,

Buffalo’s Wings N’ Things
1015 Metro Manila

 1173 Padre Noval St., Sampaloc, Manila,

24 Chicken
1015 Metro Manila

 1175 Padre Noval St., 466 - Zone 46,

Sampaloc, Manila, 1008 Metro Manila
Jacko's Burger Bar
 1601 Piy Margal St., Sampaloc, Manila, 1008
Metro Manila

 1001 Tolentino St., Sampaloc, Manila, 1008

Chiquitos
Metro Manila

 St. Thomas Square, 1150 España Blvd,

For the Wing
Sampaloc, Manila, 1015 Metro Manila

 840 M.F. Jhocson St., Sampaloc, Manila,

Wing Bites
1015 Metro Manila

 1222 Delos Reyes St., Sampaloc, Manila,

Wing Vibe
1008 Metro Manila

Indirect Competitors

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 FAR EASTERN UNIVERSITY-MANILA
Institute of Accounts, Business, and Finance
Department of Accountancy and Internal Auditing
We have also considered the businesses that are not the same as our products and

services but can satisfy the customers’ needs. Here are the lists of our indirect competitors:

Table 2
List of Indirect Competitors
Indirect Competitors Logo Address
 886 Nicanor Reyes St., Sampaloc, Manila,
1008 Metro Manila
 Shop B, University Shopping Arcade, Ground
Floor, 2219 Recto Ave., Sampaloc, Manila,
Jollibee
1008 Metro Manila
 907 Padre Noval St., Sampaloc, Manila, 1015
Metro Manila

 810, 1008 Nicanor Reyes St., Sampaloc,

Manila, Metro Manila Isetann Cinerama
Complex, G/F, Evangelista St., Manila
 1800 España Blvd., cor. Padre Campa St.,
McDonald’s
Sampaloc, Manila, 1008 Metro Manila
 850 Padre Noval St., Sampaloc, Manila, 1008
Metro Manila

 844 Nicanor Reyes St., Sampaloc, Manila,

1008 Metro Manila
 UST Carpark, León María Guerrero Dr.,
Sampaloc, Manila
KFC
 1008 Metro Manila San Jose Building, (G/F),
917 Padre Campa St., Sampaloc, Manila,
1008

 Morayta St., España Blvd., 396, Manila, 1015

Metro Manila

Mang Inasal

 España Boulevard, Sampaloc, Manila, 1008

Metro Manila

Greenwich

 1104-1118 España Blvd, Sampaloc, Manila,

1008 Metro Manila
Chowking

 Lot 41, 42, 55, 56, Block 88, Paquita Street,

Baliwag Sampaloc, Manila, 1008 Metro Manila

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 FAR EASTERN UNIVERSITY-MANILA
Institute of Accounts, Business, and Finance
Department of Accountancy and Internal Auditing

b. TARGET MARKET
1. Market Structure – A, B, C, D, E (High, Middle or Low Income)
We can appropriately use High, Middle or Low income in defining income
classes. According to Family Income & Expenditure Survey (FIES) of National
Statistical Coordination Board (NSCB):
a. High income class - are Market Structure - sample
families/people earning an average of
P200,000 a month or P2.4 million a
year, as per the NSCB. Thus, they The target market of Chick ‘N Cheese are those
students, who have a weekly allowance of Php 500 to Php
may be described as the “rich” 3001 and above, populating the University Belt in Sampaloc,
segment of the population. They are Manila. Location is one of the key factors in business strategy.
As such, our location is surrounded with big schools,
very few, numbering only 0.1% of universities, condominiums, and dormitories. It will help in
total families in the Philippines. increasing the sales because of its accessibility from the
b. Middle income class - is said to earn target market. Likewise, the location is accessible to the
suppliers giving rise to an easy transportation of the materials
an average of P36,934 per month. needed. Also, the nearby universities in the business’ location
c. Low income - earns an average of have a large number of student population. This provides an
P9,061 per month. opportunity for Chick ‘N Cheese since most of the students
are looking for near establishments, and affordable meals for
their tight budget and hectic schedules.

2. Age Bracket – indicate the specific age of

your target market. Avoid using the word
below or above.

Age Bracket - sample

The target market is within the age bracket of 16 to 24 years

old. Such age bracket is chosen because most of the
prospective customers are students. Also, many students are
known to love chicken wings as well as cheese. Additionally,
most of them belong to the demographic group called
‘Millennials’ and ‘Generation Z’ and these generations are
notorious for wanting to try new and different things. That
being said, chicken wings stuffed with mozzarella cheese and
bacon will certainly appeal to the target market.

c. SURVEY QUESTIONNAIRE (will be placed in the

appendices)
How to make a Questionnaire
 Know your question types.
 Keep it brief, when possible.
 Create questions with straightforward, unbiased language.
 Ensure every question is important.
 Ask one question at a time.
 Order your question logically

Demand Questionnaire

Family Income
Below Php10,000 ⃞ Php100,001-250,000
Sample ⃞ Php10,001-50,000 ⃞ Php250,001-500,000
Far Eastern University ⃞ Php50,001-100,000 ⃞ Above Php500,000
Sampaloc, Manila
Demand Questionnaire
PART II. SURVEY QUESTIONS
1.How often do you eat at an unlimited (eat-all-you-can) restaurants?
Dear Respondents, ⃞ Daily
We, fifth year Accountancy students of Far Eastern University, are currently ⃞ 1-2 times a week
6
conducting a feasibility study on Taco Lab, a proposed Filipino-Mexican food venture ⃞ 3-4 times a week
which offers an unlimited “find-your-own-perfect-ingredients” taco complemented ⃞ 5-6 times a week
with milk tea. This will serve as our partial fulfillment of the requirements for the ⃞ 1-3 times a month
course Management Consultancy.
In this regard, we would like to seek your assistance and a few minutes of your time
to accomplish this questionnaire honestly and objectively. Rest assured that the data 2.Which of the following do you consider when eating at an unlimited (eat-all you-can)
 FAR EASTERN UNIVERSITY-MANILA
Institute of Accounts, Business, and Finance
Department of Accountancy and Internal Auditing

Supply Questionnaire

Sample
Far Eastern University
Sampaloc, Manila 4. When you started, how many competitors did you have?
Supply Questionnaire ⃞0–1 ⃞8–9
⃞2–3 ⃞ 10 – 12
4–5 ⃞ More than 12
6–7

5. In succeeding years, how many competitors are added per year?

⃞ 0 – 20 competitors ⃞ 81 – 100 competitors
Dear Respondents, ⃞ 21 – 40 competitors ⃞ 101 – 120 competitors
⃞ 41 – 60 competitors ⃞ 121 – 140 competitors
⃞ 61 – 80 competitors ⃞ More than 141 competitors
We, fifth year Accountancy students of Far Eastern University, are currently
conducting a feasibility study on Taco Lab, a proposed Filipino-Mexican food
venture which offers an unlimited “find-your-own-perfect-ingredients” taco Part II. Survey Questions
complemented with milk tea. This will serve as our partial fulfillment of the 1. Do you operate as an unlimited (eat-all-you-can) food venture?
requirements for the course Management Consultancy. ⃞ Yes ⃞ No
In this regard, we would like to seek your assistance and a few minutes of
your time to accomplish this questionnaire honestly and objectively. Rest
assured that the data you will provide will be treated with utmost 2. Do you offer special (marginal) utility to the customers other than just
confidentiality and will be used for academic purposes only. Thank you for serving your products? (If yes, proceed to number 3. If no, proceed to
your cooperation. Proponents of the Business number 4.)
⃞ Yes ⃞ No
_________________________________________________________________

3. What business tactics do you employ?

Directions: Put a check mark (✓) in the box that corresponds with your ⃞ Product promos (Ex. Buy-One-Take-One)
answer. ⃞ “Instagrammable” dining area / store
⃞ Birthday / holiday treats
⃞ Others, please specify: _________________

Part I. Respondent’s Profile

4. How many days do you operate in a week?

1.Name of Business (optional): _________________________________ ⃞ 1 – 2 days ⃞ 5 days
⃞ 3 days ⃞ 6 days
⃞ 4 days ⃞ 7 days
2.Location of the business: ____________________________________ 5. If operating less than seven (7) days a week, on what day/s do you NOT
operate? (Check as many as applicable. If operating for 7 days, proceed to

d. SAMPLING AREA
Is one in which area are sampled with know probability…. In such designs,
households, individuals, businesses, or other organizations are studied, and they are
sampled within the geographical areas selected for the sample.

Sampling Area
The necessary data were gathered by conducting surveys to
selected sampling areas where there is a high number of prospective
target market and competitors.
Online survey questionnaires, in the form of Google Forms,
were used in the distribution of demand questionnaires to students
from chosen schools, colleges, and universities that are located near
the place of business and within the University Belt. The demand
questionnaires were distributed through social media applications like
Facebook.
In the gathering of data for the supply analysis, the survey
was conducted with the aid of printed supply questionnaires which
7
were personally given to all the direct competitors identified by the
business.
 FAR EASTERN UNIVERSITY-MANILA
Institute of Accounts, Business, and Finance
Department of Accountancy and Internal Auditing

e. SAMPLE SIZE
In doing a research, if the population is too big to handle, a substantial number of
samples is acceptable. Determining sample size is a very important issue because
samples that are too large may waste time, resources and money, while samples that
are too small may lead to inaccurate results.
There are many approaches to determine the sample size. This includes using a
census for small populations, imitating the sample size of similar studies, using
published tables and applying formulas to calculate a sample size. For this subject we
will be applying formulas to calculate a sample size, using the Slovin’s formula.

Demand Sample Size -sample f. The same formula was used in the computation of S
In determining the number of students to be competitors to be surveyed. The number of competitors that
surveyed, the proponents used the Slovin’s formula. The total
A to be located the near the place of business were
are identified
number of projected students enrolled for the Academic Year 8 whichMwas shown in Table 1. The same margin of error was
2018 from universities namely Far Eastern University – Manila, P was 10%. It yielded 7.41 which was rounded off to
used, which
FEU -Institute of Technology, Philippine School of Business the nearest tenths, 7 competitors. Supporting computation is
L
presented below.
Administration – Manila, University of Santo Tomas, and
University of the East – Manila were used as the total I N
population with a total of 73, 422 students. A margin of error of N ¿
ten percent (10%) was also used. It yielded 99.86 students G 1+ Ne 2
which was rounded to the nearest tenths resulting to a total of
100 students. The supporting computation is shown below: Where:
N n = number of samples
¿ N = total population
1+ Ne 2 e = margin of error
Where:
n = number of samples
N = total population 8
e = margin of error ¿ 2
1+[ ( 8 ) ( 0.10 ) ]
8
73,422 73,422 n=
2
n= 1+[ ( 8 )( 0.01 )]
1+[ ( 73,422 )( 0.10 ) ] 1+[ (73,422 ) ( 0.01 ) ] 8
n=
1+.09
73,422 8
n= n=
1+734.22 1.09
n=7.41∨7
73,370
n=
735.22

METHOD
The purpose of sampling is for the researches to be able to draw conclusions
about the population from the study on samples. We must use inferential statistics which
enables us to determine a populations’ characteristics by directly observing or studying

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 FAR EASTERN UNIVERSITY-MANILA
Institute of Accounts, Business, and Finance
Department of Accountancy and Internal Auditing
only a portion (or sample) of the population. We use a sample rather than a complete
enumeration (a census) of the population because it is convenient and cheaper to
observe a small part rather than the whole.
In this module, we will be using Probability Sampling Technique.

Types of Probability Sampling Technique:

1. Simple Random Sampling - all members of the population have a chance of being
included in the sample
Example; Lottery sampling and using the table of random numbers
2. Systematic Sampling - it selects every kth member of the population with the starting
point determine at random.
Example: selecting every 4th member of N=100 with 5 random as a random start
gives as: 5, 9, 13, ………
3. Stratified random sampling - this is used when the population can be subdivided into
several smaller groups or strata, and then samples are randomly selected from each
stratum.
4. Cluster sampling – this is sometimes called area sampling. It is usually used when
the population is very large.

g. SURVEY RESULT
Good statistical presentation requires making it easy for readers to understand
and interpret the data, and to identify key patterns or trends. Though analysis can be
done from the text, it is however recommended to organize the data in tables for better
comparison of values and quicker and better analysis of details. Furthermore, if data are
presented in plain text, readers sometimes get bored, thus tables and graphs are
oftentimes used.

1. Graphical presentation

Survey Results - sample

Presented below are the results of the survey conducted upon students from selected universities of the proposed business.

35%
Femal
e
65%

Figure 4
Distribution of the Respondents According to Gender

Table 3 9
Distribution of the Respondents According to Gender
Response Number Percentage
Female 65 65%
Male 35 35%
Total 100 100%
 FAR EASTERN UNIVERSITY-MANILA
Institute of Accounts, Business, and Finance
Department of Accountancy and Internal Auditing
2. Tabular presentation

h. DEMAND ANALYSIS
Demand analysis – is a research done to estimate or find out the customer
demand for a product or service in a particular market. Demand analysis covers both
future and retrospective analysis so that they can analyze the demand better and
understand the product/service’s past success and failure too.

1. Historical and Projected Population ( Philippine Statistics Authority, City Hall,

Barangay)
2. Historical and Projected Population with Age Breakdown
3. Historical and Projected Annual Demand
a. Schedule of Projected population with frequency
b. Average consumption

Demand Analysis

The list of projected population of the student on selected universities for the next five (5) years are also

discussed.

Table 4
Historical Student Population - sample
School 2015 2016 2017 2018 2019
24,61 21,23 18,80 19,27
19,167
Far Eastern University - Manila 1 5 6 3
Far Eastern University - Institute of 10,71
9,081 6,439 6,411 6,383
Technology 5
Philippine School of Business Administration 1,365 1,371 1,377 1,327 1,277
17,07 13,73 12,37 11,02
9,664
University of the East – Manila 1 2 6 0
44,74 41,61 38,71 37,82
36,931
University of Santo Tomas 8 4 1 1
96,87 88,66 77,70 75,85
73,422
Total 6 7 9 2

The historical student population of the schools and universities were obtained through direct queries through their

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 FAR EASTERN UNIVERSITY-MANILA
Institute of Accounts, Business, and Finance
Department of Accountancy and Internal Auditing

Table 5
Projected Student Population - sample
School 2020 2021 2022 2023 2024
17,80 25,71 25,32 25,19 25,15
Far Eastern University - Manila 6 0 4 6 3
Far Eastern University - Institute of
5,709 7,857 8,292 8,437 8,486
Technology
Philippine School of Business
1,255 1,483 1,452 1,442 1,438
Administration
17,10 16,87 16,79 16,77
7,812
University of the East - Manila 5 3 6 0
34,97 43,60 44,04 44,19 44,24

Table 6
Historical Demand - sample
A B C D E F G H I J

% of
Capable % of Potential
Population capable
% of of willing to customers
Historical based on of Historical
Year Target affording try willing to Frequency
Population target Affordin Demand
Market the chicken try chicken
market g the
product wings wings
product
2015 99,876 100% 99,876 100% 99,876 96% 95,881 133 12,752,173
2016 88,667 100% 88,667 100% 88,667 96% 85,120 133 11,320,960
2017 77,709 100% 77,709 100% 77,709 96% 74,601 133 9,921,933
2018 75,852 100% 75,852 100% 75,852 96% 72,818 133 9,684,794
2019 73,422 100% 73,422 100% 73,422 96% 70,485 133 9,374,505

The total historical population statistics as discussed in the previous tables, were gathered from schools and universities – Far Eastern University
- Manila, Far Eastern University - Institute of Technology, Philippine School of Business Administration - Manila, University of Santo Tomas, and
University of the East - Manila. Since the business’ target market are students and the statistics of the historical data that came from their
respective universities and colleges, the whole population (100%) will represent the percentage of target market. To get the population based on
target market, the historical population is multiplied by its respective percentage of target market.
To compute for the percentage of the target market who can afford the product, the total percentage of respondents’ weekly allowance/income as
well as their average spending on a regular order of chicken wings (3 pcs.) per visit are considered and were asked in the survey conducted.
Based on such factors, it was noted that students of such schools and universities can afford the product of the business; thus assigning 100%
capability of purchasing the product. The population based on the target market is multiplied to the percentage of capable to afford the product to
get the total number of individuals in the target market who can afford the product.
The percentage of those who are willing to eat chicken wings are derived from the survey results wherein 96% of the respondents
answered that they are eating chicken wings. To compute for the potential customers willing to eat and try/ spend chicken wings, the number of
individuals in the target market who can afford the product of the business is multiplied to the percentage of those who are willing to eat chicken
wings.
Lastly, the historical demand is computed as the product of number of potential customers who are willing to eat and spend by its
respective frequency explained in Table 30.

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 FAR EASTERN UNIVERSITY-MANILA
Institute of Accounts, Business, and Finance
Department of Accountancy and Internal Auditing

Table 7
Projected Demand - sample
A B C D E F G H I J

% of
Population capable
% of % of
Historical based on of Capable Market Projected
Year Target Willing Frequency
Population target availing Buyers Availing Demand
Market buyers
market the
product
2020 67,559 100% 67,559 100% 67,559 96% 64,857 133 8,625,981
2021 95,760 100% 95,760 100% 95,760 96% 91,930 133 12,226,690
2022 95,991 100% 95,991 100% 95,991 96% 92,151 133 12,256,083
2023 96,068 100% 96,068 100% 96,068 96% 92,225 133 12,265,925
2024 96,094 100% 96,094 100% 96,094 96% 92,250 133 12,269,250

The total projected population statistics were computed using the percentage of change as year 2018 and 2019 as the basis. Like what had
been discussed above, the target market are the students and the projected population were forecasted using the historical student
population which came from the registrar of its respective Universities and Colleges, thus the whole (100%) population will represent the
percentage of the target market. To get the population based on the target market, the projected population is multiplied by its respective
percentage of target market
Also, same as to what has been stated earlier, the percentage of the target market who can afford the product is based on the total
percentage of respondents’ weekly allowance/income as well as their average spending on a regular meal of chicken wings (3pcs.) per visit.
All the respondents (100%) are capable of availing the product. The population based on the target market is multiplied by the percentage of
capable of affording the product. The percentage of willing buyers is derived from the conducted survey wherein 96% (Table 25) who are
willing to try boneless chicken wings.
The projected demand is computed by the product of market availing the product and its respective frequency computed in table 31.

Table 8
Determination of Frequency - sample
A B C D

(A / 100) (B x C)
Number of Percentage
Number of
times per of Total Frequency
Respondents
  year Sample
Regular (5-7 times per
16 312 16% 50
week)
Moderate (2-4 times per
38 156 38% 59
week)
Occasional (once a week) 46 52 46% 24
Never 0 0 0% 0
TOTAL 100 520 100% 133

Frequency is divided into four (4) categories namely regular, moderate, occasional and never. Regular is the classification of those individuals

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 FAR EASTERN UNIVERSITY-MANILA
Institute of Accounts, Business, and Finance
Department of Accountancy and Internal Auditing
i. SUPPLY ANALYSIS
A detailed review of the inputs and outputs of a process that is employed to assess
how the available quantity of a product is affected by changes in demand, input factors
and production techniques.

Supply Analysis - sample

The numerical figures presented below are derived from the results of the survey conducted
to 7 would-be competitors Such number is based on the sample size generated using Slovin’s
formula.

N
n=
1+ Ne2

8
n= 2
=7
1+8 (.10)

Table 9
Historical Supply - sample
Average
Number of Number of
Year Historical Supplies per Year
Chicken Wings Competitors Per Year
Sold Per Year
29,340 6 176,040
2016 62,157 6 372,942
2017 73,935 7 517,545
2018 129,546 7 906,822
2019 163,911 8 1,311,288

The average number of customers per year is supported by the schedule below. Approximately, six (6)
shops were present in the specified area during 2015 and 2016, one (1) additional competitor is added in 2017 and
2019. Such information is gathered from the survey conducted upon the competitors. Historical supply per year is
computed by getting the product of average number of customers per year and number of competitors per year.

1. Historical and Projected Annual Supply (Existing & Prospective Competitors – Direct
& Indirect)
2. Method of Projection (Use of any : Statistical straight Line, Statistical Parabolic, Arith
metic Straight Line, Arithmetic Geometric Curve, Linear Regression, Exponential
Growth Function)

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 FAR EASTERN UNIVERSITY-MANILA
Institute of Accounts, Business, and Finance
Department of Accountancy and Internal Auditing

Market Projection:

A. B.

C.
D.

E. F.

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 FAR EASTERN UNIVERSITY-MANILA
Institute of Accounts, Business, and Finance
Department of Accountancy and Internal Auditing

G. H.

I. J.

K. L.

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 FAR EASTERN UNIVERSITY-MANILA
Institute of Accounts, Business, and Finance
Department of Accountancy and Internal Auditing

M. N.

O. P.

Q. R.

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 FAR EASTERN UNIVERSITY-MANILA
Institute of Accounts, Business, and Finance
Department of Accountancy and Internal Auditing

j. DEMAND GAP (In units and percentage)

The “gap” refers to the difference between the supply and demand for that product.
In other words, it means a consumer-need that supply has not yet met. For companies, a
gap in the market represents an
opportunity for it to widen its customer Table 10
base. You can achieve market Historical Demand-Supply Analysis - sample
penetration by identifying a gap in the
market and filling it. A B C (A - B)
YEAR
Historical
Historical Historical
Demand
Demand Supply
Gap
1. Annual capacity (consider Dine-in, 12,752,17
Take Out, B To B plus B to C) 2015 3
176,040
12,576,133
Expected annual capacity is 11,320,96
372,942
the planned activity levels or 2016 0 10,948,018
2017 9,921,933 517,545 9,404,388
output for a given year taking into
2018 9,684,794 906,822 8,777,972
account efficiency and idle 1,311,28
capacity. 2019 9,374,505 8 8,063,217
a. Maximum capacity –
capability of the plant to Presented above is the student population gathered from
different schools and universities of our target market customer.
utilize all the equipment The historical demand for the years 2015 to 2019 computed and
without consideration of presented under Table 29. Historical supply for the years 2015 to
breakdown and material
outages which can’t be
achieve in actual situation.
b. Normal capacity – based on the budgeted output for a certain period of time
which is usually
Table 11
Projected Demand-Supply Analysis - sample
not in full
A B C D E F G capacity
(
( E c. Full
( C
A (B capacity –
- + /
B / E) to operate
) A
) F utilizing all
P P
)
available
r P r
o r o M
P
j o D j a
ro
Y je e j e e r
e ct c e m c k 17
t c a t e
e
e t n e t
d
d e d d
T Mar
T d A
ot ket
o D n s
al size
t e G n h
D
a m a u a
 FAR EASTERN UNIVERSITY-MANILA
Institute of Accounts, Business, and Finance
Department of Accountancy and Internal Auditing
equipment and materials excluding equipment breakdown and material
outages.
d. Market share – is the percent of total sales in an industry generated by a
particular company.

Table 12
Computation of Projected Annual sales - sample
Number of chicken Percentage increase in Projected annual Projected annual
Year
wings sold prior year sales sales per piece sales per meal
2020 - 105,840 35,280
2021 105,840 10% 116,424 38,808
2022 116,433 10% 128,066 42,689
2023 128,062 10% 140,873 46,958
2024 140,867 10% 154,960 51,653

For the first year of operation, 105,840 chicken wings would be sold. Sales are estimated to increase by ten
percent (10%) on the succeeding years. As shown and discussed in the determination of production capacity (Table 36),
the estimated number of cycles per day that would be made at a normal capacity in the first year is 480 chicken wings
per day or 172,800 per year, and will increase at a constant rate of ten percent (10%) per year. Thus, when the normal
capacity of the business would be compared to the projected sales, such sales could be satisfied given the production
capacity of the business.

Table 13
Production Capacity - sample

A B C D E F G H I J K

B*C A*D F/E D*G H*360 I*J

Year Normal Estimated

Time Unit Capacity Projected
Number Units per Hours per Production Capacity Percentage of
required in capacity Batch per day per day Annual
of fryers batch batch hours per year (in Capacity
hours per fryer (in units) Capacity
units) Availed

Pre-prod 36secs
Prod 1 48secs
Prod 2 6sec
2020
1min & 30
Total Prod 2hr & 30
secs per 50 units 2 100 units 12hrs 4.8 480 172,800 61.25% 105,840
Time mins
unit
Pre-prod 36secs
Prod 1 48secs
Prod 2 6sec
2021
1min & 30
Total Prod 50 2hr & 30
secs per 2 100 units 12hrs 4.8 480 172,800 68.60% 118,540
Time units mins
unit
Pre-prod 36secs
Prod 1 48secs
Prod 2 6sec
2022
1min & 30
Total Prod 50 2hr & 30
secs per 2 100 units 12hrs 4.8 480 172,800 76.83% 132,762
Time units mins
unit
Pre-prod 36secs
Prod 1 48secs
Prod 2 6sec
2023 18
1min & 30
Total Prod 50 2hr & 30
secs per 2 100 units 12hrs 4.8 480 172,800 86.05% 148,694
Time units mins
unit
Pre-prod 36secs
Prod 1 48secs
Prod 2 6sec
 FAR EASTERN UNIVERSITY-MANILA
Institute of Accounts, Business, and Finance
Department of Accountancy and Internal Auditing

k. SWOT ANALYSIS – (strengths, weaknesses, opportunities, and threats) analysis is

framework used to evaluate a company’s competitive position and to develop strategic
planning. SWOT analysis assesses internal and external factors, as well as current and
future.

SWOT ANALYSIS
l.

STRENGTHS
m. 1. First to offer boneless chicken wings stuffed 1. Lack of business reputation since the
with mozzarella cheese and meat
2. Wide variety of flavors are offered.
3. High product quality.
4. Location is accessible to a large number of
consumers.
5. Customer-oriented culture
OPPORTUNITIES
1. High demand for chicken wings in the
market.
2. Expanded menu
3.Delivery Service
4. Expansion of business
5. Population increase
WEAKNESSES
business is new.
2. Limited start-up cost.
SWOT ANALYSIS
THREATS
1. Epidemic widespread of bird flu virus.
2. Food poisoning and allergies.
3. Huge number of competitors already in
existence.
4. Possible imitation of products by existing
competitors and possible entrants in the market.
5. Low entry barrier for new competitors
6. Increase in inflation rate.

Figure 1
SWOT Matrix

PRODUCT PRICING – basis

Pricing is a major decision that a manager should make. It must be a price that is
not only acceptable to the owner for the fair return of his investment but also acceptable
to the consumers who will patronize the company’s product. The price set for the product
should be more than enough to cover the expenses to be spent in operating the product
so that there will be a profit.

1. Absorption Costing Approach – requires the identification of the cost of

manufacturing a product, and a mark-up based on the cost. Must cover the
estimated selling and administrative expenses that should come up with a
satisfactory profit.

For example:
The fixed manufacturing overhead of P240,000 is based on the premise of 30,000 units
volume capacity. Assuming that the policy of the company is to markup their product by 30%,
the selling price will be computed as follows in Fig. 11.2.

Direct Materials 15.00

19Direct labor
Variable Mfg. Overhead
10.00
5.00
Fixed Mfg. Overhead 8.00
Total 38.00
Plus 30% mark - up 11.40

The selling price of the product 49.40

 FAR EASTERN UNIVERSITY-MANILA
Institute of Accounts, Business, and Finance
Department of Accountancy and Internal Auditing

Cost Structure
Direct materials 15.00
Direct labor 10.00
Variable Mfg. Overhead 5.00
Fixed Mfg. Overhead 8.00
Total 38.00

Fig. 2.1

2. The Variable Costing Approach – requires identifying the variable cost of the
product.

For example:

Direct Materials 15.00

Direct labor 10.00
Cost Structure Variable Mfg. Overhead 5.00
Direct materials 15.00 Variable Selling & Admin Expenses 6.00
Direct labor 10.00 Total 36.00
Variable Mfg. Overhead 5.00 Plus 30% mark - up 10.80
Variable Selling & Admin Expenses 6.00
Total 36.00 The selling price of the product 46.80

Fig. 3.1 Fig. 3.2

Computation of Selling Price Using Cost Plus Pricing
Approach

n. Marketing program, mix, and strategies sample

People
In order to minimize the cost of training, employees will be hired strictly in accordance with company’s policies and procedures. After
which, the company ensures that staffs will be treated as family and be given appropriate and reasonable salary. Its employees are
expected to be courteous in every customer that they encounter. This will help the company generate more customers.

Price
In pricing its products, Do-Wich-Yourself, would consider its costs as well as its customer’s preferences. The company ensures
that it provides reasonable price without compromising the quality of its products and its services. Aside from the product itself, its price
would be one of its competitive advantages as against other similar businesses.

Process
The General Manager would establish a strong relationship to its suppliers because through this good relationship, the
company could serve its customers better. In terms of customer relationship, employees are very accommodating at all times. They
20
great customers upon entering the store and talk to them with enthusiasm. Every sandwich is prepared within reasonable time and
are freshly made along with proper safety and sanitary measures.
 FAR EASTERN UNIVERSITY-MANILA
Institute of Accounts, Business, and Finance
Department of Accountancy and Internal Auditing

Physical Evidence
In every business, it is important to consider the physical aspect because it is one of the major factors that would make the customers
return to the shop and patronize its product.
Do-Wich-Yourself make sure that its customers would receive the utmost satisfaction while dining in. Its interior is designed to give a
calming and relaxing ambiance. The store space is adequate enough to cater its customers. It is well ventilated and well maintained by the
employees. The store physical environment is designed to give a very comfortable experience as they eat with their friends and families. In
Product
addition to this, the employees are always well-groomed as they are the line function of the organization. They also make sure that they
Do-Wich-Yourself offers variety of sandwiches that are freshly made in accordance with its customers’ preferences. The
serve the product in the most attractive and appealing way as possible.
customers are free to choose the combinations they wanted to have on their customized sandwich. There are several choices to choose
from. From mouth-watering bacon, ham, chicken, tuna flakes, spam, egg, to fresh toppings such as cheese, tomato, cucumber, onions,
mushroom, coleslaw, lettuce, condiments like mayonnaise, ketchup, mustard, ranch, oil and vinegar. Imagine these packed in the
Promotion
combination that the customers want. The sandwiches are wrapped and presented to the customers not just in an attractive manner but
Promotion
as fresh as possible would
as the help theare
ingredients company grow.
preheated andAserved
good right
promotion
away. strategy could help increase sales and cater wide range of
customers. Though the company would incur costs for promotional activities, its benefits would out weight its costs as its benefits are long
term and essential for company that is just starting. Through promotion, the product would be introduced to the business industry and the
company could start to build its market.

REQUIREMENTS

Third Week Output:

You are now ready to submit your demand and supply questionnaires for your feasibility
study. Each group will submit the following:

1. Sampling Area
2. Population
3. Target Market
4. Sample size and sampling method
5. List of Direct and Indirect Competitors
6. Data-gathering instrument

Fourth Week Output:

You are now ready to submit your demand and supply questionnaires for your
feasibility study. Each group will submit the following:
1. Survey Results
2. Historical and Projected Population
3. Historical and Projected Demand
4. Historical and Projected Supply
Fifth Week Output:

21
 FAR EASTERN UNIVERSITY-MANILA
Institute of Accounts, Business, and Finance
Department of Accountancy and Internal Auditing
You are now ready to submit your survey results and demand analysis. Each group will
submit the following
1. Projected Demand Gap - Demand and supply analysis
2. Production capacity - Maximum and normal
3. Market size
4. Market share
5. Average customers per day
Sixth Week Output:
You are now ready to submit your supply analysis, demand gap, SWOT analysis, product
pricing, marketing program, mix, and strategies. Each group will submit the following:
1. Advertising and promotional activities
2. Location of the business
3. Description of the product
4. Product pricing
5. SWOT Analysis
6. Competitive situation

Rubrics

Criteria (1- 2 Points) (3-4 Points) (5 Points) Score

Fair Good Very Good
Punctuality in Submits the output Submit the output Submits the output
submission one or more weeks the following week on time.
after the deadline. after the deadline.
Completeness in Incomplete in many Complete in most Complete in all
contents aspects and aspects and aspects and
includes few includes most includes all
requirements requirements requirements
Analysis and Presents incomplete Presents an Presents an
utilization of analysis of data; and insightful and insightful and in-
project failed to use project analysis of most of depth analysis of
development development the data; uses all data; uses
concepts concepts some project many project
development development
concepts concepts.
Overall Presentation is Presentation is not Presentation is
presentation generally dull; so appealing; not generally
hurriedly done. seriously done appealing;
artistically and

22
 FAR EASTERN UNIVERSITY-MANILA
Institute of Accounts, Business, and Finance
Department of Accountancy and Internal Auditing
neatly done
Total maximum points 20

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