1 marketing in feasibility studies

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HErmes errand services | Marketing Aspect

Marketing Aspect

Introduction

In today’s competitive world, it is important that a

company should have an effective marketing program for its

products and services. It is with these marketing strategies

that attract customers and would eventually drive higher

monetary inflows. This is in consonance with the definition

given by American Management Association (AMA), “As the

activity, and processes for creating, communicating,

delivering, and exchanging offerings that have value for

customers, clients, partners, and society at large.”

Marketing deals with selling goods and services to

consumers. It evaluates prices, consumer demand, promotional

activities, and other factors that affect sales. (Webster,

1988)

Marketing aspect of the study also deals in determining

potential markets and market share, and market size. Novak

in his research entitled Market and Feasibility Studies: A

How-to-guide states, “Market analysis searches for the

intersection of demand and supply that will create a market

for a product at a given price”. It involves target market

participation in the form of survey and interview. In this

aspect of the study assesses the potential return on the

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investment, absorption and market capture rates and the

project timing.

Service Description

“Today, people in society seem to be caught in a rat

race of life. They have very busy time schedules and find it

hard to perform the mundane services of their lives, which

take significant proportion of the available time”

(Bizymoms.com). Consequently, people nowadays prefer to let

others do errands for them. Either, as a favor or more often

pays someone to do it for them. This arises to introducing

such kind of industry in the market.

An Errand service acts like a “personal assistant”

doing errands for people who do not have the time and

instead opted to pay someone to do it for them. Hermes

Errand Service would offer services to students, working

individuals, offices, and households.

The nature of the service is to help the clients who

are not able to perform their personal errands. The service

of the firm will start as the client will contact and inform

the firm about the service they want to avail. However,

before the service will be accepted, the client must be

registered through online or at the office. The office staff

of the firm will get the complete name, exact address, and

telephone number of clients and the client must fill-out the

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information needed. After informing the office, the employee

in-charge to perform the said service will go to the house

of the client to get the payment of the errand to be

performed and payment for the service to be rendered. The

client must sign a contract about the service to be

performed. The employee will be the one to perform the

errand until it is done. For the service that needs to be

delivered, the service is done until the right commodity is

delivered. The firm will stick to the policy that all

equipment’s needed in the performance of the service will be

provided to relieve the clients with the worry of not having

the equipment.

As to the services to be offered by the firm, it is

divided into four (4) major categories. These categories are

the following:

1. Pabili’t pahatid- the firm will be the one to buy

the commodity and give assurance to the clients that

the commodity to be delivered has the quality and

quantity indicated in the contract. This category

includes but not limited to grocery shopping, foods

and flowers. The grocery shopping is only limited to

a certain amount due to the equipment being used in

transporting the commodity.

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2. Pabayad- the firm will be the one to pay the bills

and give assurance to the clients that the bill will

be paid on time. This category includes but not

limited to payment of bills (electric bills, water

bills, telephone bills and PLDT bills), tax dues and

tuition fees.

3. Pareserve- the firm will be the one in-charge in

getting a reservation for the following but not

limited to: event ticket, movie pass and bus/plane

ticket. The client will be rest assured that the

reservation will be informed to them as soon as

possible to avoid discrepancies in the service being

performed.

4. Pakuha’t pahatid- the firm will perform the service

of getting the thing to the client and deliver to

the respondent. This service includes but not

limited to party needs (balloons, cakes, loot bags

and others); handy packages and letters. The client

will be given an assurance that the things to be

delivered will be received by the respondent in the

same packaging.

The service will be performed by the firm well in order

to attain the client’s satisfaction. In attaining the

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clients satisfaction, a policy will be given to employees

for them to follow in the performing their jobs. This policy

includes the following:

a. Employees must treat their clients well.

b. In doing the service, the employee must finish the

job as soon as possible but the service rendered

must still satisfy the client.

c. Employees must accept suggestions or comments from

the clients, especially if it is about their work.

The payment of the service rendered will be given by

the client to the employee in-charge of doing the job. Upon

receiving the money, the employee must give a receipt to the

client. The payment can be paid through cash or check only.

If the payment is in the mode of check, the check must be in

the name of the company.

Hermes Personal Errand Service will only accept errands

that require non-appearance, authorization and should only

be legal transactions. Any illegal transactions are not

accepted completely by the business.

Determination of Target Market

According to Ozmond Vitez, to analyze market,

identifying and defining a specific market to target with

the new services is the initial step. Feedbacks from these

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target markets will help determine if there is a demand for

the services offered as the case of this feasibility.

The proponents choose age group of 15 to 64 population

for this study because at this age comprises the possible

target market. The possible target market of this study are

elderly individuals, stay-at-home moms, college students,

and even people who work eight or more hours daily and

anyone who would possibly avail the services.

Table 1.1 Historical Population of age group 15-65 years in

Baguio City (2007-2010)

YearPopulation of age group 15-64 years

old2007 203 ,4072008 208, 2072009 213, 1212010 216, 328

The above table is gathered data from National

Statistics Office (NSO). Population for 2008 and 2009 are

based on the growth rate recorded from 2007 to 2010 latest

census.

There are two ways of determining the method of

projection - the graphical method and the mathematical

method. The proponents used the graphical method wherein

historical data were plotted along in the coordinates to

determine the changes or trend in the increase or decrease

of population. The shape of the line can more or less

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suggests which method to use. The result shows a constantly

increasing trend line, therefore suggests an Arithmetic

Straight Line method of projection where;

Yc = a + Yi – 1

Where a = Yn – Yc

N – 1

Yc = initial value (1st year)

Yn = final value (last year)

N = number of years

Yi = value for the year past

Table 1.2

Arithmetic Straight Line

Year Population a Yi-1 yc Y-Yc (Y-yc)2

2007 203407

2008 208207 3230 203407 206637 1570 243049

2009 213121 3230 206637 212021 1100 1210000

2010 216328 3230 212021 216328 0 0

1453049

Table 1.3

Projected Valuesyear a y1-1 Yc

2011 3230 216328 2195582012 3230 219558 222,7882013 3230 222,788 226,0182014 3230 226,018 2292482015 3230 229248 232,4782016 3230 232,478 235,708

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2017 3230 235,708 238,9382018 3230 238,938 242,1682019 3230 242,168 245,398

The above tables show the result of the method used in

population projections. This will serve as basis for the

demand projection of the study.

Slovin’s Formula

Slovin’s Formula was used to determine sample size that

will represent number of respondents.

n= __N__

1+Ne2

where: n = sample size

N = current year population

e = margin of error (5%)

n= 229, 248

1+229, 248(0.05)2

n= 399 ~ 400 respondents

Questionnaire Analysis and Result

Questionnaire Survey is the method used in gathering

data for this study. The results are the following:

1. How often do you do the following errands?

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This question aims to establish demand. It ascertains

if there is a potential of putting such business within

the city.

Table 1.4

Frequency

Services

Everyday Weekly Monthly Others

Total AnnualDeman

dresul

t x360resul

t x52 result x12 +Pabili't Pahatid

Grocery 8430,24

0 190 9,880 98 1,176 13 41,309

Food 16960,84

0 152 7,904 60 720 69,464Flower 15 5,400 21 1,092 78 936 126 7,554

Total 26896,48

0 36318,87

6 236 2,832 139 118,327Ratio 82% 16% 2% 0.12% 100%

Table 1.4 presents the result of demand for the service

pabili’t pahatid. It shows that an errand that requires

buying and delivery has the most percentage in everyday

frequency with a total demand of 96, 480 or 82% of the

total.

Table 1.5

FrequencyPabayad


Total Annual

Demand

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result x360 result x52 result x12 +Bills 21 1,092 298 3576 5 4,992Tuition Fee 7 364 206 10712 54 11,343Tax Dues 96 1152 194 1,442

Total 28 1,456 600 15,440 253 17,777Ratio 8.5% 90.0% 1.4% 100%

In table 1.5, the service pabayad has total annual

demand of 17,777. Since the given examples for this service

are due in a month, monthly Frequency has a most votes with

a 90% of the total. Weekly follows with 8.5%, which

indicates that there are dues that are weekly paid in nature

or it is possible that dues falls on a different date that

makes respondents pay dues weekly.

Table 1.6

FrequencyPareserve

Everyday Weekly Monthly OthersTotal

AnnualDemand

result x360 result x52 result x12 +Event Ticket 163 1956 211 2,167Movie Pass 29 1508 104 1248 196 2,952Bus/plane ticket 66 792 124 916Total 29 1,508 333 3,996 531 6,035

Ratio 25% 66% 9% 100%

Pareserve service includes reservation for an event

ticket, movie pass, and bus tickets. Results shows that most

of respondents “pareserve” monthly for the given examples of

this type of service.

Table 1.7

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Frequency

Pakuha't Pahatid


Total Annual

Demandresult x360 result x52 result x12 +

Reserved Party needs (Handy) 47 564 253 864Handy Packages 32 1664 64 768 187 2,619Letters 24 1248 98 1176 124 2,548Total 56 2,912 209 2,508 564 5,984

Ratio 49% 42% 9% 100%

For computing for the actual annual demand as a result

of survey question #1, everyday is multiplied by 360, weekly

by the average week of 52, monthly by 12 and others will

just simply be added.

Table 1.8 Summary of Annual Demand per service

Summary of Annual DemandServices Demand Ratio

Pabili't Pahatid118,18

8 80%Pabayad 17,777 12%Pareserve 6,035 4%Pakuha't Pahatid 5,984 4%

TOTAL147,98

4 100%

From the above table, Pabili’t pahatid service has the

most number of demand. This implies that respondents’

everyday routine includes buying.

2. Are you willing to let others do your errands?

This is to find out whether the demand for the services

offering really exists.

Table 1.9

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CHOICES Result FrequencyYES 277 70%NO 118 30%

TOTAL 395 100%

70%

30%

Willingness to let others do theire personal errands

YESNO

Figure 1.1

3. If an errand service will be established here in Baguio

City, are you willing to avail?

Question #3 aims to determine if there are

respondents willing to avail of the service that the

business will offer. Likewise to know the number of

possible customers represented by the respondents.

SERVICES YES NOPABILI 256 21PABAYAD 209 68PARESERVE 163 109PAKUHA/PACLAIM 201 76

Table 1.10

4. How much are you willing to pay for each service?

This question aims to know how much respondents

are willing to pay for the services provided.

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SERVICES 55-75 76-85 86-100PABILI 197 35 6PABAYAD 176 28 10PARESERVE 96 46 14

PAKUHA/PACLAIM 175 20 21TOTAL 644 129 51

Frequency 78% 16% 6%

Table 1.11

In the above table, presents that the lowest cost

provided have the most votes from respondents. Since there

is no direct competitor in this type of business, this will

be the basis in determining the pricing for each service.

Demand Analysis

“Demand is a schedule or curve that shows the various

amounts to product that consumers are willing and able to

purchase at each of a series of possible prices during a

specified period of time. Demand shows the quantities of a

product that will be purchased at various possible prices,

other things equal” (Campbell, et. Al, 2009).

The proponents floated a total of 400 questionnaires

but only 395 were collected. In this study, the target

market are ages 15-64 years old which most likely comprises

the desired target market of students, working individuals,

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busy moms, professionals and individuals willing and able to

avail of the services.

Table 1.12

Year Projected Population

Potential Customers

2015 232478 162, 7352016 235708 164, 9962017 238938 167, 2572018 242168 169, 5182019 245398 171, 779

To further study demand, willingness of the respondents

to let others do errands for them is computed. Out of 395

collected questionnaires, 277 respondents are willing to let

others do errands for them or the potential customers of the

business or 70%.

In Table 1.12, computation of potential customers is by

multiplying the potential customer rate of 70% by the

projected population from table 1.12.

Question #3 determines the willingness of the

respondents to avail of the services to be offered by the

business. Respondents who are willing to let others do

errands for them but not willing to avail of the services

will not form part of the market.

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Availing customers is the result of multiplying the

percentage of willingness of each service by the computed

potential customers.

AC (availing customer) rate is computed by dividing the

result of the survey of Question #3 by the number of

potential customers which is 277.

Services Availing Customers(AC)

AC Rate

Pabili’t Pahatid 256 92%Pabayad 209 76%Pareserve 163 59%Pakuha’t Pahatid 201 73%TOTAL 829

Table 1.13

Projected Annual Demand

The following tables are the projected annual demand

for each service for the next five years.

Table 1.14. Projected Demand for 2015

SERVICES AvailingCustomers

Everyday Weekly Monthly Others Annual Demand

Pabili 149,716 122,767 22,188 3,258 164 118,702Pabayad 123,679 1,367 14,470 241 16,078Pareserve 96,014 1,200 3,169 432 4,801Pakuha 118,797 2,911 2,495 535 5,941

TOTAL 122,767 27,666 23,392 1,372 145,522

For the computation of the projected annual demand,

everyday, weekly, monthly, and others’ ratio as a result of

the computed annual demand in tables 1.4 to 1.7 is used. It

is multiplied to projected availing customers from table 3.2

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to get the share of each frequency for the said service and

multiplying it further to the portion of the said service in

the total demand.

Table 1.15 Projected Annual demand for 2016



Pabili 151,796 93,537 22,496 3,303 166 119,502Pabayad 125,397 1,386 14,671 244 16,302Pareserve 97,348 1,217 3,213 438 4,868Pakuha 120,447 2,951 2,529 542 6,022TOTAL 93,537 28,500 23,716 1,391 146,694

Table 1.16 Projected Demand for 2017




Table 1.17 Projected Annual Demand for 2018




Table 1.18. Projected demand for 2019




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Table 1.19 Summary of Projected Total Annual Demand

Year Total Actual Annual Demand

2015 145,5222016 146,6942017 147,7072018 150,7152019 152,722

Table 1.19 presents the summary of the computed

projected annual demand from the previous tables.

Supply Analysis

Brink (2013) states that there exists a competitor

before someone thought of putting up a business – the first

customer. That before an entrepreneur thought of satisfying

his needs, he already thought of meeting his own. It is

indeed important to supply them with a better, cheaper and

more convenient services compared to what they can do for

themselves.

Competitors play a vital role in the success or failure

of a new business. It is therefore significant to identify

the other types of competitors. Hermes Errand Service

business is new in the market of Baguio City; it is most

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likely that when others see it successful, they will too

start up in competition. Indirect competitors might as well

be important taken into consideration –they are the

individuals who serve as an alternative of the services

offered by the business. These are a few of the

considerations in supply analysis, specifically in

determining unsatisfied demand.

In this study, the proponents assumed a 5% market share

of indirect competitors. This is to give allowance to

satisfied demands by them. The results are in the table

below.

Table 1.20

Year Total Annual

Demand

Supply Unsatisfied

Demand

2015 144,505 7,225 137,280

2016 146,694 7,335 139,359

2017 147,707 7,385 140,322

2018 150,715 7,536 143,179

2019 152,722 7,636 145,086

Normal Capacity:

Working hours 8

Multiply by # of errand employee on duty 8

Normal Daily Capacity 64

Multiply: Ordinary days of 360 360

Annual Normal capacity 23, 040

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Maximum Capacity:

Total working hours 12

Multiply: Total number of errand employee 10

Maximum Daily Capacity 120

Multiply by: 365 days 365

Annual Maximum Capacity 43, 800

SWOT Analysis

Internal Analysis

Strengths

1. First-mover advantage

2. Quality Service

3. Well-trained and trustworthy personnel

Weaknesses

1. Presence of Indirect competitors

2. Newly established firm

3. New to the Cordilleran culture

External Analysis

Opportunities

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1. Increasing market demand

2. Changing lifestyle

3. Increasing services offered

Threats

1. Entry of new competitors

2. Management problems

3. Declining economic condition

Opportunities

1. Increasing market demand

2. Changing lifestyle

3. Increasing services

offered

Threats

1. Entry of new competitors

2. Management problems

3. Declining economic

condition

Strengths 1.First-

mover advantage

2.Quality Service

3.Well-trained and

trustworthy

personnel

1. First-mover advantage –

Increasing Market demand

(S1, O1)

2. Quality services –

increasing Market

demand(S2, O1)

3. Well-trained and

trustworthy personnel –

increasing services

offered (S2, O3)

1. First-mover advantage –

Entry of new competitors

(S1, T1)

2. Quality

services – Declining

economic condition (S2,

T3)

3. First-mover-Declining

economic condition (S1,

T3)

Weaknesses

1.Presence of

Indirect

competitors

2.Newly established

1. New to the Cordilleran

market – Changing

lifestyle (W3, )2)

2. Newly established firm -

Increasing market demand

1. Newly established firm-

Management problems

(W2, T2)

2. New to the Cordilleran

Market – Declining

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firm

3.New to the

Cordilleran culture

(W2, O1)

3. Newly established firm –

Changing lifestyle (W2,

O2)

economic Condition (W3,

T3)

3. Newly established firm

– Entry of new

competitor (W2, T1)

Pricing Strategy

Oxford Dictionary defined price as “the amount of money

or goods for which a thing is bought or sold”.

In this study, prices are quoted based on the services

rendered. Expenses will be accounted accordingly. Since

Hermes Errand Service is a new entry in the City of Baguio,

the respondent’s preference will be the starting point. The

most number of votes for each service will be the basis of

pricing for each service. Services will be charge in a

maximum of one hour.

From Table 7, price range of P55-75 has the most number

of votes. The proponents agreed to the following prices:

Table 1.21

Services PricePabili’t Pahatid 65Pabayad 65Pareserve 65Pakuha’t Pahatid 65

Clients shall be charge per service basis but limited

to one hour per service. The proponents also decided that

prices shall increase by 4.20% every year due to the

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inflation since the inflation rate is 4.20% as of February

2014.

Marketing Strategies

Marketing strategies has strong positive effect on

profitability of the business. Effective marketing pulls

customers and increases market share together with profit.

Brink in his Book Buzz or Zap: Consumer Psychology for 21st

Century wrote that marketing delivers a ready, willing, and

able customer. Therefore, advertising must create a bridge

between customers and the business. The following are the

tools in introducing the business into the market:

Advertising and Promotion

1. Tarpaulin/ Posters

On the pre-operation of the business, tarpaulins

are to be posted to different barangays in Baguio City

preferably in the terminals and other potential

posting areas. The tarpaulin shall contain information

about the opening of such business including service

offerings and important details about the business.

Size/Measurement: 2ft x 3 ft

Quantity: 20

Amount: 90 each

Company: Emprenta de Baguio

Total: 1,800.00

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2. Flyers and leaflets

Flyers and leaflets will be distributed before the

operation of the business and once a month on the

operation days.

Pieces per month 2000

Cost per piece 0.10 cents

Total Cost per year P2, 400.00

3. Newspaper advertisement

Prior to opening, an advertisement in Midland

Courier is advised. Midland courier is a local weekly

issue newspaper and the most read newspaper of the

people of Baguio. We will be availing a ¼ page with a

cost of 500 pesos. All important details will be

written to inform the reading public.

4. Word of mouth

It is the cheapest but most effective way of

marketing. Brink states that, word of mouth is a viral

marketing. “Just as the flu is passed on from person to

person in a contagious fashion, so viral marketing

spreads a buzz about a product (or service or company)

with unsolicited testimonials” (Brink, 2013). People do

not pay attention much to commercials because of the

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deceiving factor of it. They prefer to hear about

statement from friends who tried or experience a

certain product or service.

5. Online Advertising

Technology is one of the best advertising tool now

a days. A Facebook page will be made for online

marketing, which can further encourage prospect

customers.

Advertising Expense

Tarpaulin/ Posters P 1,800.00

Leaflets/ Flyers P 2,400.00

Radio P 15,000.00

Newspapers P 1,500.00

Total P 20,700.00

The aforementioned will be used as medium for wider

distribution of information about the business.

1 marketing in feasibility studies

Documents

said service

service descriptiontoday

errand service acts

market share

market size

hermes errand services

mundane services

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