CHAPTER 2

MARKET STUDY

This study is about determining the possible market for the product. It analyzes the

activities in a market which may affect the operation of the business. It includes target

market, demand, supply and at the same time describing the marketability of the product that

will help design the appropriate marketing strategies and plans to ensure that the projected

input will reach and the target users. This are also about the structured questionnaire floated

to the respondents and the result determines the demand and supply for the researchers to

know whether the service will penetrate the target market.

Objectives of the study

The market feasibility aims to achieve the following:

1. To analyze the demand and supply situation of the proposed project.

2. To identify the target market of the proposed business.

3. To create an effective marketing strategy for the business.

4. To determine the estimated market share of the proposed business.

Methodology

Research Design

The researchers used descriptive research design and exploratory research design for

this study and applied it using survey questionnaire. An exploratory study is conducted to

explore a problem. The main focus in these research projects is on the discovery of ideas and

insights. The exploratory research might help the researcher to modify the original objectives

to study the unsolved problem.

 A descriptive study, on the other hand, describes the variables being studied. As a

descriptive research in nature, this study attempted on describe the marketing, management,

financing, and socio- economic aspects of establishing and operating Grabtaxi in Lucena

City. This was done through exploring all possible sources of data through different data

gathering information.

Research Locale

Lucena City is classified as a highly urbanized city, a status it has been holding since

1991. As per DTI records of 2019, there are over 6,000 registered business establishments,

80% of which are micro-business. There are already numerous popular establishments in the

city such as SM City Mall, Save More, Pacific Mall, Metro Gaisano, Pizza Hut, 7-eleven

convenience store, Bookstores, Jollibee, McDonald, Mang Inasal, Chowking, KFC among

others. This city is the 2nd highly urbanized city in CALABARZON Region.

The more establishments the city has, the more people come to the place because of

the economic, political, and other events like festivals, celebration of different seasons of the

year, holding significant events like concert conventions and sport activities. These

developments in the city attract city goers especially the residents of its nearby municipalities

such as Sariaya, Candelaria, Pagbilao, Tayabas, and Lucban to work and visit the city.

Moreover, some of the Lucenahins decides to work in its nearby municipalities because of

the status and opportunities there. But the problem here is the availability of public

transportation in the said areas.

The COVID-19 pandemic had a large impact on public transportation. Many countries

advised that public transport should only be used when essential, passenger numbers fell

drastically, and services reduced especially at night. There is also limitation in the operation

of public transportation. That is why city goers and workers in Lucena and its nearby
municipalities find it hard to hail a commuting transportation. Not everyone has a car or the

ability to bike to work that is why there is no other choice but to take public transportation

even though there is a high risk of COVID-19 infection through it. One of the concerns of the

commuters are the safeness of the public transportation. So, the researchers come up with the

idea to study a business to put up in Lucena City to address the problem on safeness and

availability of public transportation.

Research Participants

The research participants in this study are the residents of Lucena City and it’s nearby

municipalities specifically Pagbilao, Tayabas, Lucban, Sariaya and Candelaria. In total, there

are 758, 891 populations in Lucena City and its nearby municipalities. The researchers used

the Slovin’s formula to determine the sample size needed for the market study provided

below.

N
n=
1+ N e 2

Where:

n=sample size of the target market

e= marginal error at 5%

N= Total number of respondents

N
n=
1+ N e 2

758,891
n= 2
1+(758,891)(.05)

n= 400 respondents
 The researchers used stratified random sampling to divide the entire population into

smaller groups. Overall, there are 140 respondents in Lucena City, 62 respondents in

Candelaria, 27 respondents in Lucban, 40 respondents in Pagbilao, 78 respondents in Sariaya

and 53 respondents in Tayabas with a total of 400 respondents.

Table 1

Mucipality Population Respondents

Lucena City 266, 200 140
Candelaria 117, 434 62
Lucban 51, 475 27
Pagbilao 75, 023 40
Sariaya 148, 980 78
Tayabas 99, 779 53
Total 758, 891 400

Research Instrument

The primary data-gathering instruments is survey questionnaire. The data gathering

instrument aimed to solicits information from the respondents of the study that will answer

the objectives of the market study. The survey questionnaire is composed of two parts. The

first part of the questionnaire includes demographic profile such as name, age, sex,

residence, and employment status which provides data regarding research participants to

determine if they are really representative sample of the target population. The second part of

the questionnaire includes the commuting experiences and the possible market share of the

proposed business.

Data Gathering Procedures

The first stage in the gathering data process is to clearly define the number of

respondents. The researchers selected the respondents using stratified random sampling.

Then, framing of questionnaire proceeded based in objective of the study. After finalizing the
questionnaire through consultation and validation with the feasibility study adviser assigned

to the researchers, the researchers secured a permit to administer the questionnaire. The

researchers then gathered the data and retrieved the questionnaire afterwards for

interpretation and analyzation.

Treatment of Data

After the data is gathered, the results of the survey questionnaire was recorded,

tabulated, and analyzed with the use of appropriate statistical tools. The researchers

used simple average and simple percentage.

The simple average formula is:

Σx
Simple average =
N

Where:

x is the value of each item

N is the total number of the items

f
Simple Percentage = x 100
N

Where:

f= frequency of occurrence of the items

N= total number of the items

Target Market

The main target market of the proposed business is the commuters in Lucena City and

its nearby municipalities; Sariaya, Candelaria, Tayabas, Pagbilao and Lucban.

The following demographic profile of the target market had been identified.

Table 2

Distribution of residence of the target market.

City and other Frequency Percentage

Municipalities
Lucena City 140 35%
Candelaria 62 15.50%
Lucban 27 6.75%
Pagbilao 40 10%
Sariaya 78 19.50%
Tayabas 53 13.25%
Total 400 100%

The above figure showed the demographic profile of the target market in terms of

residency. Overall, the target respondents residing in Lucena City is 35%, 19.50% residents

in Sariaya, 15.50% residents in Candelaria, 13.25% residents in Tayabas, 10% residents in

Pagbilao, and 6.75% residents in Lucban.

Most of the target market live in Lucena City. Therefore, this will give the business

the opportunity to have them as the customers of the proposed business.

Table 3
Distribution of occupation of the target market.

Occupation Frequency Percentage

Employed/ Self- employed 260 65%
Unemployed 12 3%
Student 128 32%
Total 400 100%

The above figure showed the demographic profile of the target market in terms of

occupation. The highest percentage based on the survey is employed/self- employed which is

equivalent to 65%, followed by student who got 32% and unemployed got 3%. Most of the

respondents are employed/ self -employed.

Table 4

Distribution of sex of the target market.

Sex Frequency Percentage

Male 166 41.50%
Female 234 58.50%
Total 400 100%

The above figure showed the demographic profile of the target market in terms of sex.

The highest percentage based on the survey is female which is equivalent to 58.50%,

followed by male who got 41.50%. Most of the respondents are female.

Table 5

Market acceptability of Grabtaxi.

Responses Frequency Percentage

Willing to commute using Grabtaxi 324 81%
 Not willing to commute using Grabtaxi 76 19%
Total 400 100%

The table above shows the result of the survey on willingness and unwillingness to

take Grabtaxi as their commuting transportation. 324 of the respondents are willing to

commute using Grabtaxi which is equivalent to 81% while 76 of the respondents are not

willing which is equivalent to 19%. The result shows that the service has high level of

acceptability.

Table 6

Computation of market size.

Route Number of commuters everyday

Inside Lucena City 16,000
From Lucena to Sariaya 7,840
From Lucena to Candelaria 4,320
From Lucena to Tayabas 3,680
From Lucena to Pagbilao 1,800
From Lucena to Lucban 1,600
Total 35,240
Multiply by acceptability rate 81%
Market segment size 28,544

The data above presents the market size of the proposed business. It shows the

number of commuters travelling inside Lucena City, to Sariaya, Candelaria, Tayabas,

Pagbilao and Lucban. When multiplied by 81% as the market acceptability level, the market

that will patronize Grabtaxi is 28,544, which is considered the market segment size.

Projected Annual Demand

Table 7

Availment of 1-3 days in a week.

Responses Frequency Multiplier Yearly Availment

 1 20 52 1,040
2 20 52 2,080
3 20 52 3,120
Total 60 6,240

Annual Average Availment for 1-3 times of commuting:

6,240
Average Availment = = 104 times
60

The table shows the number of people who commutes 1-3 times per week. There are

20 people who usually commute 1-3 times per week. The yearly availment is 6,240 is

divided by 60 commuters and this gives the result of an average of 104 times each

respondent commutes in a year.

Table 8

Availment of 4-6 days in a week.

Responses Frequency Multiplier Yearly Availment

4 38 52 7,904
5 38 52 9,880
6 38 52 11,856
Total 114 52 29,640

Annual Average Availment for 4-6 times of commuting:

29640
Average Availment = = 260 times
114

The table shows the number of people who commutes 4-6 times per week. There are

38 people who usually commute 4-6 times per week. The yearly availment is 29,640 is

divided by 114 commuters and this gives the result of an average of 260 times each

respondent commutes in a year.

Table 9
Availment of 7-9 days in a week.

Responses Frequency Multiplier Yearly Availment

7 191 52 69,524
8 191 52 79,456
9 191 52 89,388
Total 573 238,368

Annual Average Availment for 7-9 times of commuting:

238368
Average Availment = = 416 times
573

The table shows the number of people who commutes 7-9 times per week. There are

191 people who usually commute 7-9 times per week. The yearly availment of 238,368 is

divided by 573 commuters and this gives the result of an average of 416 times each

respondent commutes in a year.

Table 10

Availment of 10 days and above in a week.

Responses Frequency Multiplier Yearly Availment

10 151 52 78,520
Total 151 78,520

Annual Average Availment for 10 times of commuting:

78520
Average Availment = = 520 times
151

The table shows the number of people who commutes 10 times per week. There are

151 people who usually commute 10 times per week. The yearly availment of 78,520 is
divided by 151 commuters and this gives the result of an average of 520 times each

respondent commutes in a year.

Table 11

Combined annual demand.

Times a week

Annual ave.
Market size

commuters

Total annual
Percentage

Number of

availment

availment
whi whi
Share

1-3 times 5% 28,544 1,427 104 148,408

4-6 times 9.5% 28,544 2,712 260 705,120

7-9 times 47.75% 28,544 13,630 416 5,670,080

10 times 37.75% 28,544 10,775 520 5,603,000

Total 100% 28,544 1,300 12,126,608

The table shows the annual demand of the commuters for public transportation. To get

that, the number of commuters who will avail with different times in a week will be

multiplied by the annual average availment. To get the annual demand, the total annual

availment will be multiplied to the average days.

Table 12

Projected five-year annual demand.

Year Total 1-3 days 4-6 days 7-9 days 10 days and
Demand above
2021 12,126,608 148,408 705,120 5,670,080 5,603,000
 2022 12,369,140 151,376 719,222 5,783,482 5,715,060
2023 12,616,523 154,404 733,607 5,899,151 5,829,361
2024 12,868,853 157,492 748,279 6,017,134 5,945,948
2025 13,126,230 160,642 763,245 6,137,477 6,064,867

The table shows the computation of expected annual demand and the availment for

five years with the assumption of 2% increase.

Projected Annual Supply

Table 13

Projected annual supply.

Route Numbers of Multiplier Annual supply

public
transportations
travelling daily;
Inside Lucena City 12,000 365 4,380,000

From Lucena to Sariaya 2,000 365 730,000

From Lucena to Candelaria 1,500 365 547,500

 From Lucena to Tayabas 1,335 365 487,275

From Lucena to Pagbilao 2,250 365 821,250

From Lucena to Lucban 1,200 365 438,000

Total 20,285 7,404,025

The table shows the number of public transportations travelling daily inside Lucena

City, to Sariaya, Candelaria, Tayabas, Pagbilao and Lucban. To get the annual supply, the

number of public transportations will be multiplied by 365 days.

Table 14

Projected five years supply.

Year Projected supply

2021 7,404,025
2022 7,774,226
2023 8,162,938
2024 8,571,084
2025 8,999,639

The table shows the computation of expected annual supply for five years with the

assumption of 5% increase. The researchers assume that there is 5% increase in supply

annually because Land Transportation Office estimated that there is 2-5% annual increase in

public transportation.

Demand and Supply Gap Analysis

Table 15

Demand (D) Supply (S) D-S Gap Percent of

unserved market
12,126,608 7,404,025 4,722,583 38.94%

The table shows the total demand of 12,126,608 subtracted by the total supply of

7,404,025 with the total of 4,722,583. The computation of the demand exceeds the total

supply, it means there is an opportunity for Grabtaxi business to enter the market.

Estimated Market Share

Table 16

Projected share for unserved market in (in days)

Unserved Market Market Share Projected Share (in days)

4,722,583 2% 94,452

The market share assumption of 2% prove that the business evaluates their respective

strength in the market with their target customer.

Projected Five-year Annual Sales in Days

Table 17

Five-year projected annual sales (in number of days)

Year Projected Sales (in Base Fare Price per Km Total Annual
days) Fare Sales
2020 94,452 Php 40 Php 14 Php 54 5,100,408
2021 99,175 Php 40 Php 14 Php 54 5,355,450
2022 104,134 Php 40 Php 14 Php 54 5,623,236
2024 109340 Php 40 Php 14 Php 54 5,904,360
 2025 114,807 Php 40 Php 14 Php 54 6,199,578

The table shows the annual sales that can attain to operate in the year 2020. The

business expected Php 5,100,408 in the first year of operation. The table shows the

computation of projected sales for five years with the assumption of 5% increase.

Marketing Strategies

Marketing strategy lays out the target markets and the value proposition that will be

offered based on the analysis of the best market opportunities (Kotler & Kotler, 2015).

Grabtaxi company plans to fulfill it’s marketing strategy by presenting it’s 7p’s of

marketing mix (product, place, price, promo, physical evidence, people and process). 

7P’s of marketing mix is the extended version of the original 4P’s of marketing mix.

This new version was brought in 1981 by modern academics Booms and Bitner. They extend

and include a further 3 factors: Physical Evidence, People and Processes.

Product/ Service Positioning Strategy

"Quality products and services are almost everything to customers." Laura Ashley

Grab is an app based transportation services that  provide cashless, safe, hassle free

and  convenient services to its riders in an easy way by just opening the Grab application

 by the rider and the driver would be easily connected (Foo, 2018).
 According to social impact study published in 2016, Grab’s customers rated the

platform highly on numerous factors, including improved accessibility, security, convenience

and safety.

Pradhan (2019) stated that Grab is a TNVS that allowed the transportation to connect

the drivers and riders through the use of smartphone applications. 

GRAB APP WALKTHROUGH

Figure 1. Grab Mobile Application Walkthrough

 GRABCAR SERVICE AND PARKING

Figure 2. Grabcar service and Parking

Place  (Distribution) Strategy

The company's main office will be located at Barangay Isabang Tayabas City. This

location is the ideal place because it has a wide area for the grabtaxi for parking. 
 GEOGRAPHICAL AREA OF ACCESSIBILITY

Figure 3. GrabCar Area of  Accessibility

The area that will be covered of Grab service are Lucena, Tayabas, Lucban, Pagbilao,

Sariaya and Candelaria. For now, the company will not cover all part of Quezon Province.

The company will only includes the stated area for efficiency and practicality.

Pricing Strategy

Grab automatically assigns the nearest vehicle to you at an upfront fixed fare. This

allows you to know your exact fares even before you book. (Grab official Website). 
Table 18

Fare in Grabtaxi.

Grabtaxi Base fare P40

Per Kilometer P10-14

Charge

Booking Fee O

Per minute Charge 2

Cancellation fee 0

Promotional strategy

With Grabtaxi, you have the freedom to go anywhere. Key in your pick-up and drop-

off locations to get your estimated fare. Grab will find you the nearest available driver. To

increase the awareness of the people of the product offering, the service business needed

more promotional strategies. 

The company will use social media and posters for advertising. These methods are the

best way to promote the proposed business. 

 Figure 4. Social media and poster advertisement

The company will use different social media platforms (e.g. twitter, instagram and

facebook) to inform the target market that Grabtaxi is now available in their respective area.

This method is the cost efficient, most effective and fastest way to gain customers and 

disseminate information.

Also, the company will provide posters that will be placed on the public areas (e.g.

SM, public markets and other establishments that will have  the most probable number of

commuters that will use the proposed service). In this method, those who don't always use or

check their social media account will also be knowledgeable about Grabtaxi to be offered. 

This method is more compatible in the proposed service. This marketing strategy  will

help improve and strengthen target customer brand awareness.

Physical Evidence 

According to the 7p’s of marketing mix, physical evidence is proof that the brand

they’re purchasing or interacting with, are legitimate and, well, actually exist in real life. 
Meaning validation or confirmation. Examples of this are logo, website, brand’s headquarter,

equipment and social media presence.

       Figure 5. Logo

Figure 5 shows the brand logo of the service and the  business official logo and

identity. A logo can be described as the face of the company, it plays an important role, as it

provides the customer with an instant recognition of the  business. This logo will appear on

the car, social media advertisements and other means of promotional tools used by the

company. Once the brand has made a name itself on the market, consumers are more likely to

respond positively on the service.

 GRAB OFFICIAL WEBSITE IN THE PHILIPPINES

Figure 6: Grab Official website Philippines

GRAB FACEBOOK PAGE

Figure 7. Grab Facebook Page

People
 Grab will select drivers and staff that  will fit to provide service, and make sure that

they  have  proper etiquette towards customers. Mostly, the company will ensure that drivers

have the proper requirements and licenses. The company will also conduct seminars and

trainings with the drivers with regards to different knowledge they needed (includes: how to

use the app, proper maintenance on cars used, Commissions deducted, proper etiquette with

customers and anything related to the service they will provide). These seminars and training

will ensure and enhance the smooth transactions between the commuters and the drivers. 

Process

Figure 8. Customer Journey Mapping

The process of hailing a grabtaxi is a combination of application.

1. First, the commuters will use the app ( this will require internet connection or mobile

data to be able to locate ). They will choose their pick up and drop off location. Select

payment option. Then , the riser will wait for the nearest driver to pick up.

2. Second, the driver will pick up the rider to the selected drop off location. (The rider

can locate his/her location using the  grab app). 

3. Third, after the driver drops the rider to his/her selected drop off the customer can

now pay the trip payment.

4. Lastly, the rider will submit a rating (not required). Also, checking for the receipt.

“FEASIBILITY STUDY OF FRANCHISING GRABTAXI BUSINESS IN

 LUCENA CITY.”

RATINGS

Group 6 ( BSA)

Leader: Natad, Bryan 15

Members:

Del Rosario, Kyla 14

Reyes, Elaine 15