Project Sample

1 Product Profile

Tropical Pharmaceuticals products are topical medicines mainly ointments and

liniments containing all-natural components that threats skin illnesses and relieves the

body from pains and aches. These products are basically for external use only.

1.1 TropiAid Products

1.1.1 Liniment

The physical appearance of liniment is a transparent and liquid-like.

It contains contains camphor, banana oil, menthol, peppermint, borneol

and eucalyptus oil. This formulation is applicable to the two variants of

Liniment, regular and massage. These are to 50ml and 100ml containing

each variant and an inhaler which contains 2ml massage formulations. The

banana oil has a higher percentage to suggest quick relief. The massage

liniment variety, however, contains higher composition of camphor and

menthol content compared to regular emphasize the distinction between

the regular and massage.

The inhaler also contains similar content with massage yet, packed

into 2ml packaging compared to massage.

1.1.2 Ointment

The ointment product appears to be a topical cream type medicine.

It is composed of banana oil, beeswax, citronella oil and Olive oil. Ointment

is further divided into three variants, the antifungal, antipruritic, and

corticosteroid. The three variants vary on the percent content of banana oil

for each variant. Antifungal heals skin irritations like an-an, bun-I, and

athlete's foot and prevents further infection caused by bacteria and fungi.

Antipruritic soothes itchiness and heals skin damaged caused by scratches

due to bug bites and the like. The Corticosteroids is specially formulated to

cure skin diseases like Psoriasis and Eczema. It also contains the highest

banana oil content among the three variants, to improve effectiveness.

A Business Plan of TropiAid

2 | P a g e

Nevertheless, these ointment formulations are not just derived for

its specific purposes but also integrated with all-natural insect repellant

solutions to protect the users from mosquito bites and helps skin heal and

return to its original state.


3 | P a g e

2 Marketing Plan

2.1 Potential Market

Primarily, the potential market includes the all households in the Philippine

population. Also, the market should belong to an ABC income level living in urbanized

areas. (See Appendix D-1: Forecasted Potential Market (2014-2018) Philippines)

2.2 Target Market

Currently, the ointments and liniments industry are composed of highly established

brands of highly competitive companies. In this light, the proponents decided enter the

industry as a market niche.

Generally, the target market focuses only in Mindanao and Cebu. Bringing the

name of its being natural, it could grab the opportunity to attract those who are interested

and preferred to buy natural made remedies. The following are the specifications of the

target market:

Households

ABC Income Level

Urbanized Mindanao and Cebu Areas

On the long run, the proponents may extend the market to doctors, specifically

dermatologists and general doctors, who are experts on skin treatments and body pain

remedies.

2.3 Projected Demand and Market Share

2.3.1 Total Projected Demand

The population of the potential market in the Philippines in the current year

(2012) is 915,296. Having an average population growth rate of 1.83 percent per

year from 2014 to 2018, from the current, it will increase to 949,381 in 2014 and

further increase to 1,020,206 in 2018. (See Appendix D-2 and D-3: Forecasted

Potential Market (2014-2018) Mindanao and Cebu)


4 | P a g e

Table 6.1. Potential and Targeted Market

The proceeding tables show the demand in unit volume of the liniments

and ointments. An assumption volume of variant was made during calculating

process. For liniment products, it is assumed to have the following percentage:

inhalers have only one variant, the massage, while the other two sizes have both

with 60% of the volume goes to regular while the other 40% are for the massage

variants. For the ointment products, it is assumed to have the following percentage:

35%, 35%, and 30% for the antifungal cream, antipruritic, and corticosteroids

respectively. The percent of the total projected market in terms of unit volume are

0.10%, 0.12%, 0.14%, 0.17%, and 0.21% for years 2014, 2015, 2016, 2017, and

2018 respectively.

For the liniment category, a 10% volume is allotted for the inhalers with an

annual increase of 10% to intensify its sales. The rest of the 90% is divided among

the other two sizes, 47% for the 50ml and 43% for the regular one. This percentage

is used in allocating the demand ratio for the inhaler and 50 and 100ml bottles.

The unit demand of each month of the year differs due to the following

certain events. For the liniments, the peak periods are during months of January,

June, July, and December with 10% of the annual demand is shown per month.

The factor behind this is that June and July are rainy seasons, thus an expected

demand for these types of medicines. Also, since January and December are cold

2014 2015 2016 2017 2018

949,848 967,610 985,704 1,004,137 1,022,914

249,345 254,008 258,758 263,597 268,526

Davao Region 22,749 23,175 23,608 24,050 24,499

Northern Mindanao - 8,159 8,312 8,467 8,626

SOCSKSARGEN 5,719 5,826 5,935 6,046 6,159

Zamboanga Peninsula - 10,058 10,246 10,437 10,632

Caraga - 10,934 11,138 11,346 11,558

Cebu - - 19,498 19,863 20,234

28,468 58,151 78,736 80,209 81,709

3.00% 6.01% 7.99% 7.99% 7.99%

4.70% 5.64% 6.77% 8.12% 9.75%

Target Market

Percentage Captured

Market Share

Total Potential Market

Potential (Mindanao and Cebu)

Total Captured Market

Targ

et M

ark

et


5 | P a g e

months, such increase in demand may also be expected. For the rest of the months,

9% is allotted for March and October, 8% for February and September, 7% for the

summer months, and 6% for August and November, the off-peak months.

For the ointments, the peak periods are during the months of April, May,

June, July, and August, thus 10% is given to each. April and May are summer

month, thus high exposure to outdoor adventures. June and July are rainy months.

June and August are Dengue and Psoriasis Awareness Months thus more

ointments should be produced. The rest of the months are given 7% each except

December with 8%.

Table 6.2. 2ml Liniments Demand in Unit Volume (Inhalers)

Table 6.3. 50ml Liniments Demand in Unit Volume (Regular)

Table 6.4. 100ml Liniments Demand in Unit Volume (Large)

Massage Massage Massage Massage Massage

January 608 774 1,266 1,563 1,910

February 486 619 1,013 1,250 1,528

March 547 697 1,139 1,407 1,719

April 431 544 886 1,094 1,337

May 431 544 886 1,094 1,337

June 615 777 1,266 1,563 1,910

July 620 787 1,270 1,563 1,910

August 372 472 762 938 1,146

September 496 630 1,016 1,250 1,528

October 564 708 1,151 1,407 1,719

November 376 472 767 938 1,146

December 627 787 1,279 1,563 1,910

TOTAL 6,173 7,811 12,701 15,630 19,100

2018Month

2014 2015 2016 2017

Regular Massage Regular Massage Regular Massage Regular Massage Regular Massage

January 764 509 972 648 1,590 1,060 1,963 1,308 2,398 1,599

February 611 407 778 518 1,272 848 1,570 1,047 1,919 1,279

March 687 458 875 583 1,431 954 1,766 1,178 2,159 1,439

April 541 361 683 455 1,113 742 1,374 916 1,679 1,119

May 541 361 683 455 1,113 742 1,374 916 1,679 1,119

June 773 515 976 651 1,590 1,060 1,963 1,308 2,398 1,599

July 779 519 988 659 1,595 1,063 1,963 1,308 2,398 1,599

August 467 312 593 395 957 638 1,178 785 1,439 959

September 623 415 791 527 1,276 851 1,570 1,047 1,919 1,279

October 709 472 890 593 1,445 964 1,766 1,178 2,159 1,439

November 472 315 593 395 964 642 1,178 785 1,439 959

December 787 525 988 659 1,606 1,071 1,963 1,308 2,398 1,599

TOTAL 7,754 5,169 9,810 6,538 15,952 10,635 19,628 13,084 23,984 15,988

Month2014 2015 2016 2017 2018


6 | P a g e

Table 6.5. 10g Ointments Demand in Unit Volume

Regular Massage Regular Massage Regular Massage Regular Massage Regular Massage

January 696 464 886 591 1,448 966 1,788 1,192 2,185 1,457

February 557 371 709 472 1,159 772 1,431 954 1,748 1,166

March 626 417 797 531 1,304 869 1,609 1,073 1,967 1,311

April 493 329 622 415 1,014 676 1,252 835 1,530 1,020

May 493 329 622 415 1,014 676 1,252 835 1,530 1,020

June 704 469 889 593 1,448 966 1,788 1,192 2,185 1,457

July 710 473 901 600 1,453 969 1,788 1,192 2,185 1,457

August 426 284 540 360 872 581 1,073 715 1,311 874

September 568 378 721 480 1,162 775 1,431 954 1,748 1,166

October 646 430 811 540 1,317 878 1,609 1,073 1,967 1,311

November 430 287 540 360 878 585 1,073 715 1,311 874

December 717 478 901 600 1,463 976 1,788 1,192 2,185 1,457

TOTAL 7,066 4,709 8,939 5,957 14,532 9,689 17,882 11,922 21,852 14,570

Month2014 2015 2016 2017 2018

Anti-Fungal Antipruritic Corticostero idAnti-Fungal Antipruritic Corticostero idAnti-Fungal Antipruritic Corticostero id

January 745 745 638 948 948 813 1,551 1,551 1,329

February 745 745 638 948 948 813 1,551 1,551 1,329

March 745 745 638 948 948 813 1,551 1,551 1,329

April 1,077 1,077 923 1,360 1,360 1,166 2,215 2,215 1,899

May 1,077 1,077 923 1,360 1,360 1,166 2,215 2,215 1,899

June 1,077 1,077 923 1,360 1,360 1,166 2,215 2,215 1,899

July 1,085 1,085 930 1,377 1,377 1,181 2,222 2,222 1,905

August 1,085 1,085 930 1,377 1,377 1,181 2,222 2,222 1,905

September 760 760 651 964 964 826 1,556 1,556 1,333

October 768 768 658 964 964 826 1,567 1,567 1,343

November 768 768 658 964 964 826 1,567 1,567 1,343

December 878 878 752 1,102 1,102 945 1,791 1,791 1,535

TOTAL 10,810 10,810 9,266 13,675 13,675 11,721 22,222 22,222 19,048

Month2014 2015 2016

Anti-Fungal Antipruritic Corticostero idAnti-Fungal Antipruritic Corticostero id

January 1,915 1,915 1,641 2,340 2,340 2,005

February 1,915 1,915 1,641 2,340 2,340 2,005

March 1,915 1,915 1,641 2,340 2,340 2,005

April 2,735 2,735 2,344 3,342 3,342 2,865

May 2,735 2,735 2,344 3,342 3,342 2,865

June 2,735 2,735 2,344 3,342 3,342 2,865

July 2,735 2,735 2,344 3,342 3,342 2,865

August 2,735 2,735 2,344 3,342 3,342 2,865

September 1,915 1,915 1,641 2,340 2,340 2,005

October 1,915 1,915 1,641 2,340 2,340 2,005

November 1,915 1,915 1,641 2,340 2,340 2,005

December 2,188 2,188 1,875 2,674 2,674 2,292

TOTAL 27,351 27,351 23,443 33,424 33,424 28,649

Month20182017


7 | P a g e

2.4 Marketing Strategy

2.4.1 Marketing Objectives

Tropical Pharmaceutical Inc. has the following list of objectives for TropiAid

liniment and ointment products:

To capture 2.67 percent of the consumers based from the targeted

market in the Mindanao and Cebu in the first year and a 7.30

percent in year 5

To gain 9.75 percent market share in year 5 from 4.70 percent in

year 1 with an annual growth of 20 percent

To produce and distribute 6,173 TropiAid Inhalers, 12,923 50ml

liniments, 11,775 100ml liniments, and 30,885 ointments in the first

year with an average annual growth of 3,232, 6,762, 6,162 and

16,153 units respectively.

2.4.2 Positioning Strategies

2.4.2.1 Objective

To become a leading natural ointment and liniment brand the in the

industry which integrates banana fruit extract as its main ingredient

To become a leading natural with fast effect action medicine due to

its high potassium content

To be the most preferred premium brand of topical solutions among

Filipino households

To be a high-quality Filipino product made to provide natural skin

treatments and pain remedies

2.4.2.2 Positioning Statement

Among health conscious and environment concerned Filipino

households, Tropiaid is the Filipino premium brand of topical solutions that

relieve body, muscle, and joint pains, skin itch, fungi, and inflammations

integrated with natural mosquito repellant solutions. Furthermore, TropiAid

is the brand which is safe to the skin because of its all-natural content


8 | P a g e

integrating banana fruit extract, a high-potassium substance, as its main

ingredient. Thus, it ensures no side effects.

2.4.3 Product Strategies

2.4.3.1 Objective

To be a relief for muscle and body pains which has a relaxing

scent

To be an all-natural product, which integrates banana fruit

extract, a high-potassium substance, as its main ingredient,

thus, ensures fast action

To provides remedies for skin itch, skin fungi, and skin

inflammatory, with no side effects

To provide a skin treatment product which cures external

wounds and protects you from further infections

To provide natural protection from pesky mosquitoes

2.4.3.2 Features and Benefits

Core Product

Tropiaid is a product which relieves skin diseases and body

pains which is made out of natural banana fruit extract. The extract

is clinically proven to have therapeutic effects on the skin due to its

high amount of potassium. Such component does several medicinal

benefits which include relief from pain, swelling, itching, bruising,

wrinkles, and sunburn. (Edwards, 2000) In addition, banana fruits

contain natural anti-inflammatory antiseptic, cooling properties that

can help alleviate or reduce the severity of the eczema and

psoriasis symptoms. (Jewell, 2011)

Product Mix

o Liniments


9 | P a g e

The liniment product line is further divided into two variants,

the regular and the massage. The uses of such variants are the

following:

1. Regular

A liniment preparation integrated with natural essential

extracts especially formulated for fast and effective relief of back

and muscle pains, headache, minor sprains and strains

The regular liniments contain camphor, banana fruit extract,

menthol, and eucalyptus oil. In this formulation, the banana fruit

extract has a higher percentage to suggest quick relief on the

indications state above.

2. Massage

A minty liniment formulation that is created to give you a cool

and relaxing feeling; further helps you gain that great and relaxing

rest after a stressful day

The massage liniment variety still contains camphor,

banana fruit extract, menthol, and eucalyptus oil. In this formulation,

the camphor and menthol content has a higher composition to

suggest a high amount of aroma for that relaxing feel.

o Ointments

The ointment product line is further divided into three

variants, the antifungal, antipruritic, and corticosteroid. The uses of

such variants are the following:

1. Antifungal

A topical cream which helps you get rid of bacteria and fungi

that causes several skin irritations like an-an, bun-i, and athlete's

foot


10 | P a g e

2. Antipruritic

A skin cream integrated with natural extracts that soothes

itchiness due to bug bites and the like

3. Corticosteroids

A safe and effective specialized skin remedy that helps cure

skin diseases like Psoriasis and Eczema

These ointment formulations are integrated with natural

insect repellant solutions, thus protects the users from mosquito

bites, leaving its natural feel since the formulation is derived from a

natural source, the banana fruit and citronella oils.

2.4.3.3 Branding

Image 6.1: Product Logo

Generally, TropiAid is a pharmaceutical product. The overall

concept of TropiAids logo, which has a green color and natural feel,

illustrates the brand as a natural and environment-friendly product. The

color also implies that the product is safe to use because of its natural

content.

The logo illustrates the soft yet fast-written cursive text that

symbolizes the soft care touch of the product to the skin yet fast in action.

The silver line represents the premium image of TropiAid.


11 | P a g e

In addition, the tagline of the company will be Think Natural, Think

Tropical. This tagline will surely have an impact in the minds of the

consumers. Since the company is having a natural and tropical nature,

the consumers will immediately remember and think of the company and

its products whenever they hear such line.

2.4.3.4 Packaging

Sizes

The liniment core product has three volumes, inhaler (2ml),

50 ml and 100 ml. For the ointment products, all varieties are

available in 10g packs only. (See Appendixes D and E: Liniment

and Ointment Category Matrices)

A new size is introduced by the proponents, an inhaler which

contains 2ml liniment solution. This innovation answers the demand

for convenience. Also, this packaging integrates an inhaler to

further extend the efficiency in acquiring the products benefits in

curing headaches, which could also be used as a relief in clogged

nose. Now, the solution is one sniff away.

Container

o Primary

Generally, the packaging of all the variants shows an

elegant and attractive image that depicts its being premium yet still

considering its natural image. The silver strip incorporated with all

the caps of the products serves as an indication of the product being

premium. The overall impact of integrating the green color serves

as the indication of the product being natural.

With the use of recycled packaging, the company taps Metro

Ace Innovplas Corporation, a plant that manufactures plastic

containers for food, chemicals, and cosmetics for pharmaceutical

companies, various items for agricultural industries, and house

ware items, use of recycled plastics as their main material. With the


12 | P a g e

raw material used, the packaging is expected to have a low cost

implication. Furthermore, with the use of recycled packaging, the

company becomes parallel to its image as eco-friendly.

Inhaler

The inhaler product will be packed in a cylindrical shaped

container, containing two bodies and an in between division. (See

Image, Inhaler (2ml) Segmented for a clearer view). The upper

body is an inhaler. It holds a small soft sponge/filter that regulates

the inhalation of camphor and menthol contents of the product.

Below the upper body, there is a colored plastic that separates and

serves as a lock of the two separate bodies of the product. The

lower body is a transparent container which contains the liquid

liniment. The liquid can be directly applied on several body pains

like headaches. Furthermore, the small container can be refilled for

continuous usage.

Below are the images of the said inhaler packaging

innovation:

Image 6.2. Inhaler (2ml) - Front and Back

Image 6.3. Inhaler (2ml) - Segmented


13 | P a g e

Liniment

The liniment products will be packed in a recyclable plastic

container. It contains a flip top cap, which serves as sealer of the

product; and a body, which is a usual plastic bottle shape that

serves as the container of the liquid formulation.

Below are the images of both front and back parts of the

said container:

Image 6.4. Liniment (50ml and 100ml) - Front


14 | P a g e

Image 6.5. Liniment (50ml and 100ml) - Back

Ointment

The ointment product will be packed in a cylindrical shaped

container made out of recycled plastic. It consists of a removable

screw-type cap and a body. The body serves as the container of

the meat of the product.

Below are the packaging concepts of the ointment variants:

Image 6.6. Ointment (10g) - Front


15 | P a g e

Image 6.7. Ointment (10g) Back

o Secondary

Each product of TropiAid will be placed in a box that serves

as the secondary packaging. The main purpose of this is to further

protect the primary packaging of the product. The secondary

packaging is part of showing the product in presentable and elegant

way, even during display and in actual buying of product. The

secondary packaging makes people think how secure and quality

controlled the product is. By this, it shows its classic way selling and

presenting of the product. The packaging of the product

incorporates the premium and natural image.

The sizes of the boxes will be 1x1x3 inches for 2ml products,

1.5x1.5x4 inches for 50ml products, 2x2x5 inches for 100ml

products and 2.5x2.5x1.5 inches for the ointment products.


16 | P a g e

Image 6.8. Secondary Packaging

o Tertiary

Image 6.9. Tertiary Packaging

Each product sizes of TropiAid product have its own proposed sizes of tertiary

packaging. The tertiary products have the same label that includes the brand name,

product information, safety symbols, and box level capacity.


17 | P a g e

Tertiary packaging has proposed to be 10x10x6 inches for

the 2ml products, 10.5x10.5x8 inches for the 50ml, 10x10x10

inches for 100ml, and 10x10x10 for the ointment products.

Label

The label holds the product name and the distinctions

among variants. It also incorporates its image as natural and

premium class. The pictures of the leaves and its general green

color represent the being natural of the product. The silver line

below the brand name and along the rim of the caps serves as in

indication for its being premium.

Front

For the liniment product line, colors of the containers help

customers differentiate the product varieties. As seen above, the

light green embellished bottle container holds the massage variant

of the liniment product line while the yellow ones contain the regular

liniments. (See Image 6.4: Liniment (50ml and 100ml) Front)

For ointments, the labels below the brand and, also, the

distinction between colors serve as the differentiation of the variants.

As seen above, the light green embellished cylindrical container

holds the antifungal variant, the yellow one contains the antipruritic,

while the purple one contain the corticosteroid. (See Image 6.6:

Ointment (10g) Front)

Back

At the back portion of the containers, it highlights a quick

description of the product. Furthermore, directions for use, the

manufacturers, and some other information like approval seals are

also printed on the rear part of the containers. The seals printed are

the following: Halal certified, recyclable, Proud to be Pinoy and

BFAD approved. Customer service contact information of the

company is also presented to help in building customer relationship.

(See Image 6.5 and 6.7: Liniment (50ml and 100ml( and Ointment

10g) Back)


18 | P a g e

2.4.4 Promotion Strategies

2.4.4.1 Objectives

Tropical Pharmaceuticals has set the following objectives for its

advertising campaign strategies:

To create awareness among the target markets as a

pharmaceutical brand

To promote TropiAid as an all-natural ointment and liniment

product which contains banana fruit extract, a high-potassium

substance, thus, the product ensures fast action and has no

side effects

To emphasize the effects of the brand on several bodily

problems; giving the consumers direct cure and protection from

further infections

2.4.4.2 Advertising

Tropical Pharmaceuticals aims to create awareness among its

targeted market. During the introductory years, intensive advertising and

promotions will be done to make the market aware of the product lines that

the company has to offer. Furthermore, essential benefits will also be

printed as well.

Brochures, Flyers, and Posters

Brochures, flyers and posters are forms of print

advertisements that serve as a medium for disseminating

information. This information includes the endorsement of the

product about its benefits, effectiveness, and capacity as a natural

product and even the characteristics that differentiate the product

to other brands. This emphasizes how natural and how effective the

product is. It highlights the products high potassium content which

is good for skin remedies. This type of advertisement also

incorporates all the distribution outlets so that customers were able


19 | P a g e

to easily access the product. This advertisement also includes all

the promotional information with regards of buying products.

Image 6.10. Sample Brochure

Social networking Sites and Official Product Website

Currently, young ones, teens, young professionals, adults,

and even some of the older ones, engage with social networking

sites, making online networking advertisements somehow effective.


20 | P a g e

With this given generation state, people usually consult for updates

and gather some information with the use of these networking sites.

Having an official product website could also be a good and clear

form of advertising on a wider scope opportunity in disseminating

information that gives a lesser implication of cost.

Image 6.11. Official Product Website

Product Testing (in malls, personal care shops, and exhibits)

Product testing is a form advertising that needs a close

contact to its potential buyers allowing to try and test the product.

This advertisement can be held through an exhibit campaigning a

certain goal, booth stand and product sampling in malls, and

through presenting a testimonial AVR of the product that

encourages the customers to test it.

Television Advertising

Nowadays, even if it is too expensive on having television

advertisements; it is still the main and most effective form of

advertisement among others. Television advertisement could blow

the information nationwide but the only limits this kind of advertising

is the budget.


21 | P a g e

LED Advertising

Nowadays, as modern technology offers, LED advertising is

now on its way to become one of the most advantageous forms

of advertising. It is in an advantage and in a most attractive way

of exposure, disseminating information, and introducing the

product since this form of advertisements is usually installed in

high-traffic areas. People passing by will definitely be fascinated

and attracted to see such scenery.

2.4.4.3 Consumer Promos

The company will use some forms of sales promotion such as

offering product samples, freebies, and discounts. These are short-term

strategies to encourage purchase or sale of TropiAid products.

The firm will offer product samples during personal selling to allow

the target customers to actually try the products. These samples are for

free so that attracting probable customers will be easy. Eight hundred

100ml regular and massage liniments and 900 pieces of ointments will be

given away every year.

Moreover, starting on second year, the firm will give showcase kit

that contains the different varieties of the product. Specifically, the package

will contain one (1) inhaler, one (1) regular 50ml liniment, one (1) massage

50ml liniment, and one (1) of each variety of ointment. Instead of buying it

in its regular price, it will be offered with Php63.00 cash discount. Five

thousand packs will be made available each year.

2.4.4.4 Trade Promos

The firm will offer free products stands to each of the distributed

retailers for the first three years.

On the fourth and fifth year, the strategies above are continued, the

budget of which during those year will be doubled to intensify product

awareness so as to increase sales in these years.


22 | P a g e

2.4.4.5 Budget

Table 6.6. Advertising Cost

2.4.5 Price Strategies

2.4.5.1 Objective

To set TropiAid products at premium to suggest quality but still

considering competitors pricing

To have a high mark that compromises with the operating cost

(promotions and distribution cost) and a profit margin of at least

60%.

To have a standard selling price in the different regions.

2.4.5.2 Method

In calculating for the prices, the proponents are guided by the

following pricing methods:

Customer-Based Pricing

The price is based on the customer demand or need for the

product. This demand is taken from the market research

conducted by the proponents through the price values they have

given for the given products. (See Appendix C: Survey Results)

Through the market research, it was discovered that the budgets

for a regular sized liniment and 10g ointments are:

2014 2015 2016 2017 2018

Brochures 61,724.26 63,279.11 64,648.67 65,818.54 66,776.10

Flyers 25,718.44 26,366.30 26,936.95 27,424.39 27,823.38

Posters 20,574.75 21,093.04 21,549.56 21,939.51 22,258.70

LED Advertising - 105,465.19 107,747.78 109,697.57 111,293.50

Business Cards 5,143.69 5,273.26 5,387.39 5,484.88 5,564.68

TV Advertising - - 215,495.57 219,395.13 222,587.01

Product Exhibit 154,310.65 158,197.79 161,621.68 164,546.35 166,940.26

Product Samples 89,463.58 91,717.20 93,702.24 95,397.86 96,785.76

Freebies - 104,289.80 106,546.95 108,475.00 110,053.15

Discounts - 34,276.19 35,018.03 35,651.71 36,170.39

Trade Promos 5,143.69 5,273.26 5,387.39 5,484.88 5,564.68

Total Costs 362,079.05 615,231.13 844,042.20 859,315.82 871,817.60


23 | P a g e

Table 6.7. Liniment and Ointment Budget Allocated by Target Market

Liniment (51-100ml) Ointment (10g)

Price P51 to P60 P100 to P150

Since TropiAid is a premium product, prices will fall slightly

above the range shown. This slight difference will promote the

products image into premium.

Competition-Based Pricing

This method will help TropiAid be competitive in terms of

price with other premium pharmaceutical products. The prices of

the products will only have slight differences with other premium

brands. This will suggest a good market share in the industry in the

future. (See Appendices E and F: Liniment and Ointment of

Category Matrixes)

Cost-Based Pricing

The cost in producing and selling the products are identified.

A desired net profit margin is then identified. The total cost and profit

margin are then added to get the selling price.

Price Map

Table 6.8. Average Price of Competitors (Liniments)

Liniment

Brand Average Price/ml

Efficascent Oil 1.04

Omega 1.09

Pau Liniment 1.50

Rhea Superscent Oil 0.87

Salonpas Liniment 1.83

Ave/ml 1.27


24 | P a g e

Table 6.9. Average Price of Competitors (Antifungal)

Ointment (Antifungal)

Brand Average Price/g

Canesten Cream 26.50

Nizoral Cream 30.97

Trosyd Cream 30.97

United Home Ketoconazole

Cream 15.47

Ave/g 25.98

Table 6.10. Average Price of Competitors (Antipruritic)

Ointment Cream (Antipruritic)


Systral 20.76

Ave/g 20.76

Table 6.11. Average Price of Competitors (Corticosteroid)

Ointment (Corticosteroid)


Aplosyn 10-N 24.80

Baycuten-N 59.90

Dermovate 48.82

Diprolene 47.17

Ave/g 45.17

(See Appendices E and F: Liniment and Ointment of

Category Matrixes)

After going through the methods, the proponents then

identified the following prices for its products:


25 | P a g e

Table 6.12. Suggested Retail Prices of TropiAid Liniments (2014)

Table 6.13. Suggested Retail Prices of TropiAid Ointments (2014)

The tables above show the suggested retail price of

TropiAid products. In the liniment product line, the variety with the

least price is the Massage. This is due to the fact that massage

variant has less camphor content compared to the regular one.

In the ointment product line, the variety with the highest

price is the corticosteroid. This is due to the additives needed to the

increase of its effectiveness, thus, a higher cost is expected.

As shown in the table, the price per ml of TropiAid

corresponds basically to its costs considering some factors like

competitors price and survey results. But the level of effectiveness

proportionally increases as pricing increases. Its all-natural

formulation is the main difference of our product to its competitors.

In year 1, the unit price of liniment inhaler (2ml) is Php 30.00,

regular size (50ml) is Php 87.50 and Php 175.00 for regular and

massage respectively, and large size (100ml) is Php 175.00 and

P200.00 for regular and massage respectively For the ointment unit

prices, consisting only one size for three variants, antipruritic is

Php110.00, anti-fungal is Php 130.00 and the corticosteroids is Php

230.00.

Size ml Php/ml Unit Price Php/ml Unit Price

Inhaler 2 - - - 30.00

Regular 50 1.75 87.50 2.00 100.00

Large 100 1.75 175.00 2.00 200.00

Liniment Pricing

LinimentVariety

Regular Massage

Size g Php/g Unit Price Php/g Unit Price Php/g Unit Price

Regular 10 13.00 130.00 11.00 110.00 23.00 230.00

Ointment Pricing

OintmentVariety

Anti-Fungal Antipruritic Corticosteroid


26 | P a g e

These prices already comprise the VAT (12%), the expected

net profit margin of 60% and incurred cost comprises these SRPs.

Table 6.14. Suggested Retail Prices of Liniments per Year

2014 2015 2016 2017 2018 2014 2015 2016 2017 2018

SRP 30.00 31.50 33.10 34.80 36.60

Calculated Price 30.00 31.50 33.10 34.80 36.60

VAT 3.60 3.78 3.97 4.18 4.39

Price before VAT 26.40 27.72 29.13 30.62 32.21

Profit Margin 6.17 6.98 8.32 9.76 11.30

Cost per Unit 20.23 20.74 20.80 20.86 20.91

SRP 87.50 91.90 96.50 101.40 106.50 100.00 105.00 110.30 115.90 121.70

Calculated Price 87.50 91.90 96.50 101.40 106.50 100.00 105.00 110.30 115.90 121.70

VAT 10.50 11.03 11.58 12.17 12.78 12.00 12.60 13.24 13.91 14.60

Price before VAT 77.00 80.87 84.92 89.23 93.72 88.00 92.40 97.06 101.99 107.10

Profit Margin 29.97 32.66 35.92 39.52 43.43 40.09 43.29 47.20 51.42 55.94

Cost per Unit 47.03 48.21 49.00 49.71 50.29 47.91 49.11 49.86 50.57 51.16

SRP 175.00 183.80 193.00 202.70 212.90 200.00 210.00 220.50 231.60 243.20

Calculated Price 175.00 183.80 193.00 202.70 212.90 200.00 210.00 220.50 231.60 243.20

VAT 21.00 22.06 23.16 24.32 25.55 24.00 25.20 26.46 27.79 29.18

Price before VAT 154.00 161.74 169.84 178.38 187.35 176.00 184.80 194.04 203.81 214.02

Profit Margin 69.16 74.77 81.28 88.40 96.21 90.21 96.85 104.59 112.93 121.98

Cost per Unit 84.84 86.98 88.56 89.98 91.14 85.79 87.95 89.45 90.87 92.04

Liniment SRP

50ml (Massage)

100ml (Regular) 100ml (Massage)

Inhalers (Massage)

50ml (Regular)


27 | P a g e

Table 6.15. Suggested Retail Prices of Ointments per Year

The cost per unit is composed of the production expenses.

TropiAid products prices increase each year due to the predicted

inflation rate of 2.16% in years 2015, 2016, 2017, and 2018.

Expansion of territory during the introductory years dictates the

(See Appendix G: Forecasted Inflation and GDP Rates) increase in

costs for distribution. Because of this, a decision of 5% increase in

price was made by the proponents. In the succeeding years,

advertising became more extensive compared to the former years,

thus, the 5% increase is still applied.

Such price increase does not greatly affect the customers.

According to the survey conducted by the proponents, in both

liniments and ointments consumers look for effectiveness, quality,

and their availability first before considering the prices. (See

Appendix C: Survey Results) Furthermore, prices increase due to

these factors, thus, they are reasonable enough to increase in such

rate.

2014 2015 2016 2017 2018

SRP 130.00 136.50 143.40 150.60 158.20


VAT 15.60 16.38 17.21 18.07 18.98

Price before VAT 114.40 120.12 126.19 132.53 139.22

Profit Margin 94.98 101.09 107.17 113.44 120.08

Cost per Unit 19.42 19.03 19.02 19.09 19.14

SRP 110.00 115.50 121.30 127.40 133.80


VAT 13.20 13.86 14.56 15.29 16.06

Price before VAT 96.80 101.64 106.74 112.11 117.74

Profit Margin 77.37 82.59 87.61 92.92 98.50

Cost per Unit 19.43 19.05 19.13 19.19 19.24

SRP 230.00 241.50 253.60 266.30 279.70


VAT 27.60 28.98 30.43 31.96 33.56

Price before VAT 202.40 212.52 223.17 234.34 246.14

Profit Margin 182.95 193.46 204.08 215.19 226.93

Cost per Unit 19.45 19.06 19.09 19.15 19.20

Ointment SRP

10g (Corticosteroid)

10g (Antifungal)

10g (Antipruritic)


28 | P a g e

All TropiAid products sold in retail channels will be paid once

purchased. Online purchases, credit cards are accepted. Other

costs incurred for delivery are not included in the computed prices.

2.4.6 Placement Strategies

2.4.6.1 Objective

Tropical Pharmaceuticals aims to penetrate a target market of

about 25% in Mindanao and 78% in Cebu. In order to do so, the products

are distributed depending on the deals arranged between the firm and the

retailers, pharmacies and drugstores, personal care shops, and malls,

corresponding to its locations. Once the deals were closed, it will then be

distributed throughout the branches under those retailers. The strategy for

further distribution to its branches will depend now on the retailers.

Furthermore, the company aims to make the products available and

accessible for their target market.

2.4.6.2 Distribution Blueprint

There are several urbanized cities that are considered to be primary

target markets of the firm. These cities are the following:

Davao Region: Davao City, Tagum City

Northern Mindanao: Cagayan de Oro City, Iligan City

SOCSKSARGEN: General Santos City

Zamboanga Peninsula: Zamboanga City

CARAGA: Butuan City, Surigao City

VISAYAS: Cebu City, Mandaue City, Lapu-Lapu City, Talisay

City, Carcar City, Consolacion City

(See Appendix H: Gantt Chart of Mall Distribution)

2.4.6.3 Distribution Channel

The primary target markets of the firm are the urbanized areas,

households and basically the ABC income level in the Mindanao and Cebu

area.


29 | P a g e

Given the selected key cities as the main potential target of the firm,

the company also taps the pharmacies, drugstores, personal care shops

and malls as their main retailers of their product to respective areas. In

order to penetrate those areas, it is the retailers responsibility to distribute

the products covered by the deal, agreed by the firm and the retailers, all

throughout their branches. Through this, the products are made available

and accessible enough by the consumers.

In order to penetrate those potential target establishments, there

must be assigned key accounts to hold each selected regions together with

the sales force to sell and promote the products.

Table 6.16. Distribution Channel

The table above shows the areas that can be potential market of

the firm. Pharmacies and drugstore include only those companies who

were known nationwide like Mercury Drug and Rose Pharmacy. For

personal care shops, the data above include only the Watsons personal

care shops. Malls are also included to the potential market.

Rose

Pharmacy

Mercury

DrugsWatsons Malls

Davao 10 12 4 3

Tagum 1 2 1 1

GenSan 4 3 1 2

Butuan 2 1 1 1

Surigao 3 1 0 1

CDO 10 8 5 2

Iligan 4 5 0 1

Zamboanga 0 3 0 1

Cebu City 4 6 6 3

Mandaue 1 1 3 1

Lapu-Lapu 5 2 1 1

Talisay 1 1 0 1

Carcar 1 2 0 1

Consolacion 1 1 0 1


30 | P a g e

2.4.6.4 Trade Discounts

The company will offer incentives to its distribution channels in

order for them to pursue and push the products to its potential buyers. The

company will give a discount, 1% of SRP, for all its variants and sizes to

the retailers of the products. Retailers include the pharmacies and

drugstores. Their payment can be in a form of credit or direct cash pay. For

credits, it will have two months credit term as allowance. But, if they will

pay in cash upon delivery, they can also avail the 3% discount of the SRP

product instead of 1% discount. For the long term discounts, the company

also gives incentives to those who are serving with loyalty to the products.

2.4.6.5 Trade Incentives

Image 6.12. Trade Incentives

2.4.6.6 Sales Force

The company will have its main office in Davao. The employees,

key accounts, sales, and logistics staff stays at the office. The key accounts

are the ones who will offer deals and business arrangements to the

potential markets in Mindanao and Cebu. The sales person will then be of


31 | P a g e

close contact and be the one responsible to introduce the products to the

customers. Davao Office has distribution teams (logistics and staff) which

comprise two persons. The distribution team will then deliver the orders

and stocks to every mall and to main branches of retailers. On the first year,

the company will hire one (1) key accounts executive and two (1)

salesperson every time stalls are opened in target malls. In the said malls,

the company will assign two (1) sales person to manage the stalls. The

General Manager should make sure that these persons are performing well

with the assigned tasks given to them.

To motivate the salespersons in selling and promoting the products,

they will work as partners, if the set of quota is achieved for certain time or

period, both of them will receive an additional incentive of 10 percent, a

separate pay to their regular salary.

The distributor team will deliver the TropiAid products to the main

branches of the retailers, pharmacies and personal care shops. However,

for the distribution to malls in the different targeted cities of the company in

Mindanao, the company will directly deliver the products in the said malls

from the respected offices.

2.4.6.7 Cost Implications to Total Product Cost

Table 6.17. Distribution Cost

2.4.6.8 Sales Projection

Table 6.18. Sales Projection in Units

2014 2015 2016 2017 2018

75,000.00 76,889.28 78,553.40 79,974.89 81,138.40

Delivery Cost 320,000.00 328,060.92 335,161.17 341,226.18 346,190.52

360,585.00 450,203.63 726,836.84 877,686.62 1,049,004.65

144,000.00 383,831.27 633,454.60 890,600.32 1,059,342.98

Total Costs 899,585.00 1,238,985.10 1,774,006.01 2,189,488.00 2,535,676.54

Distribution Cost

Mall Lease

New Product Intro Fee

Royalty Fees


32 | P a g e

Table 6.19. Sales Projection in Pesos

2014 2015 2016 2017 2018

Inhalers (2-ml Liniment) 6,173.00 7,811.00 12,701.00 15,630.00 19,100.00

50-ml Liniment (Regular) 7,754.00 9,810.00 15,952.00 19,628.00 23,984.00

50-ml Liniment (Massage) 5,169.00 6,538.00 10,635.00 13,084.00 15,988.00

100-ml Liniment (Regular) 7,066.00 8,939.00 14,532.00 17,882.00 21,852.00

100-ml Liniment (Massage) 4,709.00 5,957.00 9,689.00 11,922.00 14,570.00

10-g Ointment (Antifungal) 10,810.00 13,672.00 22,223.00 27,353.00 33,424.00

10-g Ointment (Antipruritic) 10,810.00 13,672.00 22,223.00 27,353.00 33,424.00

10-g Ointment (Corticosteroid) 9,262.00 11,722.00 19,048.00 23,441.00 28,647.00

TOTAL 61,753.00 78,121.00 127,003.00 156,293.00 190,989.00

2014 2015 2016 2017 2018

Inhalers (2-ml Liniment) 185,190.00 246,046.50 420,403.10 543,924.00 699,060.00

50-ml Liniment (Regular) 678,475.00 901,539.00 1,539,368.00 1,990,279.20 2,554,296.00

50-ml Liniment (Massage) 516,900.00 686,490.00 1,173,040.50 1,516,435.60 1,945,739.60

100-ml Liniment (Regular) 1,236,550.00 1,642,988.20 2,804,676.00 3,624,681.40 4,652,290.80

100-ml Liniment (Massage) 941,800.00 1,094,896.60 2,136,424.50 2,761,135.20 3,543,424.00

10-g Ointment (Antifungal) 1,405,300.00 1,866,228.00 3,186,778.20 4,119,361.80 5,287,676.80

10-g Ointment (Antipruritic) 1,189,100.00 1,579,116.00 2,695,649.90 3,484,772.20 4,472,131.20

10-g Ointment (Corticosteroid) 2,130,260.00 2,830,863.00 4,830,572.80 6,242,338.30 8,012,565.90

TOTAL 8,283,575.00 10,848,167.30 18,786,913.00 24,282,927.70 31,167,184.30


33 | P a g e

3 Operational Plan

3.1 Technical Specifications

Banana oil is the main ingredient of all TropiAid products. This is integrated with

different natural substances to produce such products. The following are the formulations

of the TropiAid products:

Table 7.1. Liniment and Ointment Formulation

3.1.1 Raw Materials Requirements

Due to the Bagyong Pablo incident which damaged 18 percent of the

banana plantations in Mindanao, the company decided to purchase pre-extracted

banana oil, 25 percent of the banana quantity, to cover up such damage.

Table 7.2. Raw Materials Requirement per Unit (Liniments) for Years 1 and 2

Table 7.3. Raw Materials Requirement per Unit (Liniments) for Years 3, 4 and 5

Regular Massage Antipruritic Antifungal Corticosteroid

Banana Oil 5.00% 10.00% Banana Oil 40.00% 45.00% 50.00%

Menthol 60.00% 55.00% Beeswax 30.00% 30.00% 30.00%

Peppermint 5.00% 5.00% Other Oils 20.00% 15.00% 10.00%

Camphor 10.00% 10.00% Citronella Oil 10.00% 10.00% 10.00%

Borneol 10.00% 10.00%

Eucalyptus 10.00% 10.00%

Liniment Formulations Ointment Formulations

0.15 1.87 3.74 3.74 7.49

0.04 0.55 1.10 1.10 2.19

50 ml - 1.00 - - -

100 ml - - - 1.00 -

2 ml 1.00 - - - -

50 ml - - 1.00 - -

100 ml - - - - 1.00

50 ml - 1.00 - - -

100 ml - - - 1.00 -

2 ml 1.00 - - - -

50 ml - - 1.00 - -

100 ml - - - - 1.00

0.01 0.01 0.01 0.02 0.02

Raw Materials Requirements Per Unit

Banana (g)

Banana Oil (g)

InhalerMassage Regular Massage

Tertiary Packaging

Primary Packaging

Lin

imen

t

Reg

ula

rM

assag

e

Secondary Packaging

Lin

imen

t

Reg

ula

rM

assag

e

50-ml Liniment 100-ml Liniment

Regular


34 | P a g e

Table 7.4. Raw Materials Requirement per Unit (Ointments) for Years 1 and 2

Table 7.5. Raw Materials Requirement per Unit (Ointments) for Years 3, 4 and 5

0.20 2.50 4.99 4.99 9.99

50 ml - 1.00 - - -

100 ml - - - 1.00 -

2 ml 1.00 - - - -

50 ml - - 1.00 - -

100 ml - - - - 1.00

50 ml - 1.00 - - -

100 ml - - - 1.00 -

2 ml 1.00 - - - -

50 ml - - 1.00 - -

100 ml - - - - 1.00

0.01 0.01 0.01 0.02 0.02


Banana (g)

InhalerMassage Regular Massage

Tertiary Packaging

Primary Packaging

Lin

imen

t

Reg

ula

rM

assag

e

Secondary Packaging

Lin

imen

t

Reg

ula

rM

assag

e

50-ml Liniment 100-ml Liniment

Regular

3.42 3.85 4.28

1.00 1.13 1.25

1.00 1.00 1.00

AF 10 g 1.00 - -

AP 10g - 1.00 -

C 10g - - 1.00

AF 10 g 1.00 - -

AP 10g - 1.00 -

C 10g - - 1.00

0.01 0.01 0.01


Banana (g)

Banana Oil (g)

Ointment

Tertiary Packaging

Primary Packaging

Oin

tmen

t

Secondary Packaging

Oin

tmen

t

Citronella Oil (g)

Anti-Fungal Antipruritic Corticosteroids

4.56 5.13 5.70

1.00 1.00 1.00

AF 10 g 1.00 - -

AP 10g - 1.00 -

C 10g - - 1.00

AF 10 g 1.00 - -

AP 10g - 1.00 -

C 10g - - 1.00

0.01 0.01 0.01


Banana (g)

Ointment

Tertiary Packaging

Primary Packaging

Oin

tmen

t

Secondary Packaging

Oin

tmen

t

Citronella Oil (g)

Anti-Fungal Antipruritic Corticosteroids


35 | P a g e

3.2 Toll Manufacturing

Tropical Pharmaceuticals will produce the products through toll

manufacturing, an arrangement in which another company processes the raw

materials supplied by our company. Specifically, the company will supply the

banana, primary, secondary, and tertiary packaging to the toll manufacturer. After

the whole processing, the company picks up the packed finished goods then

brought and stored in the company warehouse.

If a breach of contract or discontinuity of agreement arises between

Tropical Pharmaceuticals and InventFoods, the firm will then push to deal with

Greenplus Corporation. With this, the alternative plan in line with the change of the

toll manufacturer will then pursue to continue the production. Due to the fact that

shipping a batch of banana fruits would be very expensive, it would be more

practical if the extracted oil from the banana is shipped to the toll manufacturer.

Therefore, the company will outsource Neoteheo International Inc., a company that

provides services in extracting essential oils from banana located in Toril, Davao

City. (For agreement details, see Appendix I and J: Toll Manufacturing Agreement

and SRP)

3.2.1 Operations

After several testing and certification procedures, the tolling operations

start. To further breakdown the processes that the supplied materials undergo, the

following flow chart is followed:


36 | P a g e

Image 7.1 Toll Manufacturing Operations

Delivery of Banana

Fruit

Stability Test

Banana Fruit

Distillation

Mixing with Other

Essential OilsOther Oils

Purchase/Delivery

of Other Oils

Bottling

Package in

Secondary Boxes

Package in

Tertiary Boxes

Delivery of

Secondary

Packaging

Delivery of Tertiary

Packaging

Delivery to Office

Storage

Secondary

Packaging

Tertiary

Packaging

Delivery of Primary

Packaging

Primary

Packaging

The operations enclosed within the red border are the responsibilities of

the toll manufacturer. The remaining operations outside the red border are the

responsibilities of the company.


37 | P a g e

3.3 Inventory Management

3.3.1 Finished Goods

Tropical Pharmaceuticals will maintain a 30-day inventory. The inventory is based

on the forecasted demand. Part of the 30-day inventory is an allowance for possible

defects and additional stocks to avoid stock out. As much as possible, the company targets

in satisfying the actual demand given a possible fluctuation of demand.

Table 7.6. Production Plan

2014 2015 2016 2017 2018

Beginning Inventory - 958 1,463 1,630 2,036

Production 7,200 8,400 13,000 16,200 19,200

Production (in boxes) 36 42 65 81 96

Allow ance for Scraps 69 84 132 164 202

Sales 6,173 7,811 12,701 15,630 19,100

Ending Inventory 958 1,463 1,630 2,036 1,934

Days Level 37 35 31 32 30

2014 2015 2016 2017 2018

Beginning Inventory - 1,063 1,650 2,030 2,402

Production 8,900 10,500 16,500 20,200 24,300



Sales 7,754 9,810 15,952 19,628 23,984

Ending Inventory 1,063 1,650 2,030 2,402 2,469

Days Level 33 31 31 30 31

2014 2015 2016 2017 2018


Production 5,900 7,000 11,000 13,600 14,400



Sales 5,169 6,538 10,635 13,084 15,988

Ending Inventory 671 1,061 1,314 1,692 (64)

Days Level 31 30 30 32 30

2014 2015 2016 2017 2018


Production 8,050 9,600 15,050 18,450 22,050



Sales 7,066 8,939 14,532 17,882 21,852


Days Level 31 30 31 30 30

Inventory, Inhaler (2-ml

Liniment)

Inventory, 50-ml Liniment

(Regular)


(Massage)


(Regular)


38 | P a g e

The firm will use First in First Out (FIFO) in delivering and distributing finished

products to the identified outlets. This method may avoid the damages and spoilage of

materials and products.

Also, the firm considers the Just-in-Time method in the distribution operations. As

stated in the previous chapter, the firm has its own distribution teams. The delivery times

are to be scheduled that is agreeable to both the company and its retailers.

2014 2015 2016 2017 2018

Beginning Inventory - 639 966 1,227 1,478

Production 5,400 6,350 10,050 12,300 14,750



Sales 4,709 5,957 9,689 11,922 14,570

Ending Inventory 639 966 1,227 1,478 1,506

Days Level 32 30 31 30 31

2014 2015 2016 2017 2018


Production 11,900 14,400 22,850 28,050 34,100



Sales 10,810 13,672 22,223 27,353 33,424


Days Level 31 30 31 30 30

2014 2015 2016 2017 2018


Production 11,900 14,400 22,850 28,050 34,100



Sales 10,810 13,672 22,223 27,353 33,424


Days Level 31 30 31 30 30

2014 2015 2016 2017 2018


Production 10,200 12,350 19,550 24,050 29,250



Sales 9,262 11,722 19,048 23,441 28,647


Days Level 31 30 30 30 30


(Massage)

Inventory, 10-g Ointment

(Antifungal)


(Corticosteroid)


(Antipruritic)


39 | P a g e

3.3.2 Raw Materials

Based on the production plan (see Table 7.6: Production Plan) and raw materials

requirements per unit (see Tables 7.2, 7.3, 7.4, and 7.5: Raw Material Requirements Per

Unit), the company is required to purchase the following quantity of raw materials:

Table 7.7. Annual Raw Materials Requirements

In the procurement operations, the company considered the Minimum Order

Quantity (MOQ) and turnover of each of the raw materials. From such considerations, the

days level of the materials are also identified.

2014 2015 2016 2017 2018

Banana (kg) 240.52 288.09 607.08 745.42 890.96

Banana Oil (kg) 281.31 336.95 - - -

Citronella Oil (kg) 34.00 41.15 65.25 80.15 97.45

Primary Packaging (pcs) - - - - -

Inhalers (2-ml Liniment) 7,200 8,400 13,000 16,200 19,200

50-ml Liniment (Regular) 8,900 10,500 16,500 20,200 24,300

50-ml Liniment (Massage) 5,900 7,000 11,000 13,600 14,400



10-g Ointment (Antifungal) 11,900 14,400 22,850 28,050 34,100

10-g Ointment (Antipruritic) 11,900 14,400 22,850 28,050 34,100

10-g Ointment (Corticosteroid) 10,200 12,350 19,550 24,050 29,250

Secondary Packaging (pcs) - - - - -

Inhalers (2-ml Liniment) 7,200 8,400 13,000 16,200 19,200





10-g Ointment (Antifungal) 11,900 14,400 22,850 28,050 34,100

10-g Ointment (Antipruritic) 11,900 14,400 22,850 28,050 34,100

10-g Ointment (Corticosteroid) 10,200 12,350 19,550 24,050 29,250

Tertiary Packaging (pcs) - - - - -

Inhalers (2-ml Liniment) - 10x10x6 36 42 65 81 96

50-ml Liniment - 10.5x10.5x8 142 164 244 296 308

Other - 10x10x10 637 764 1,202 1,467 1,769


40 | P a g e

3.4 Suppliers

Table 7.8. Possible Suppliers

SupplierDr. Maria Isabel

SangutanTadeco

Dezhou Tonglin

Chemicals Limited

Liability Company

GuangZhou HuangPu Gezer Enterprises

EFKS General

Merchandise and

Corporate

Giveaw ays

Location CarmenPanabo, Davao Del

NorteShandong, China Guangdong, China

Bayabas, Cagayan

de Oro City

Grace Park, Caloocan

City

Maximum

Capacity- - 1000 kg/day 300 kg/day 2000 kg/month 5000 kg/month

Wholesale

Minimum

Order

20 kg 50 kg 100 kg 100 kg 16 kg 50 kg

Price/Unit (in

Php)9.00 11.00 100.00 90.00 1300.00 2500.00

Payment

TermsOn Pick-Up On Pick-Up

30% DP, 70% On

Receipt

30% DP, 70% On

Receipt

30% DP, 70% On

Receipt

30% DP, 70% On

Receipt

Shipment Cost

at Minimum

Order (in Php)

120.23 85.78 *included in price *included in price 553.07 1712.00

Total

Price/Unit (in

Php)

15.01 12.72 100.00 90.00 1300.00 2500.00

Banana Banana Oil Citronella Oil

2 ml 50 ml 100 ml 10 g 2 ml 50 ml 100 ml 10 g

Supplier Invent Foods Greenplus

Location Tibungco, Davao City Calamba, Laguna

Maximum

Capacity80,000 pcs 100,000 pcs - 20,000 pcs 20,000 pcs 20,000 pcs - 20,000 pcs 20,000 pcs 20,000 pcs

Wholesale

Minimum

Order

1,000 pcs 1,000 pcs500

pcs/bag

500

pcs/bag

400

pcs/bag

100

pcs/bag

500

pcs/bag300 pcs 250 pcs 100 pcs

Price/Unit (in

Php)90.00 100.00 10.00 2.10 2.90 6.50 10.00 2.50 5.00 11.25

Payment

TermsOn Pick-Up On Pick-Up

Shipment Cost

at Minimum

Order (in Php)

85.04 2000.00

Total

Price/Unit (in

Php)

90.09 100.20

R. Castillo, Davao City Buhangin, Davao City

21.55

75.64 94.51

28.83

On Pick-Up On Pick-Up

Primary Packaging

Metroace Innovplas Davao Dynamic Industries

Finished Products (Tolling) - 60 ml


41 | P a g e

Among these suppliers, the company will choose the following companies: Tadeco,

for the banana; GuangZhou HuangPu, for the banana oil; Gezer Enterprises, for the

citronella oil; InventFoods, as our toll manufacturer; Metroace Innovplas Industries, for the

primary packaging; Castaneda Printing Press, for the secondary; and Mindanao

Corrugated Fibreboard, for the tertiary. These are chosen because of their cost

effectiveness. Also, their minimum order quantity can accommodate and adequate to

satisfy Tropical Pharmaceuticals demand.

3.5 Quality and Safety

3.5.1 Control Measures

Statistical Process Control (SPC)

SPC will be installed to the toll manufacturing company,

InventFoods, by Tropical Pharmaceutical through regular check-up of the

production and knowing the capacity of the toll manufacturing company in

order to achieve and maintain the standard of the desired output of the

products. SPC could verify product quality before distribution and may

provide a monthly based report through conducting a constant check of an

SupplierCastaneda Printing

PressCortes Printing Corp.

Mindanao

Corrugated

Fibreboard

Davao

Corrugated

Carton

LocationMagallanes, Davao

City

Rizal Extension

Davao City

Sasa,

Davao City

Lanang,

Davao City

Maximum

Capacity10,000 pcs 10,000 pcs 7,000 pcs 5,000 pcs

Wholesale

Minimum

Order

50 pcs 50 pcs 100 pcs 100 pcs

Price/Unit (in

Php)5.00 6.00 24.00 25.00

Payment

Terms

30% DP, 70% On Pick-

UpOn Pick-Up On Pick-Up On Pick-Up

Shipment Cost

at Minimum

Order (in Php)

102.68 94.99 39.89 74.56

Total

Price/Unit (in

Php)

7.05 7.90 24.40 25.75

Secondary Packaging Tertiary Packaging


42 | P a g e

in-house inspector. Through getting some samples in the batches of

products periodically, performing a gradual inspection in terms of the

product quality to and filing records per batch, will give assurance in

achieving the standard quality.

Quality Function Deployment (QFD)

QFD, by conducting a periodic survey, will be done to random

customers to determine the feedback of its product and its services.

Problems incurred are noted and assessed through the Corrective Action

Report (CAR). Given the results of this survey, it will determine some

adjustments in terms of its production volume and product quality. Through

the feedbacks, it may answer the question of the firm of whether to increase

or decrease the volume of the production and also it will pin point of certain

areas for improvement and points to develop.

3.5.2 Compliance Standards

International Organization for Standardization (ISO): Cosmetics

and Pharmaceuticals

The company will comply in ISO standard in checking the quality of

its finished products. By checking its physical characteristics, such as

formulations, weight, volume, labeling and other factors will ensure

qualified and safety products were distributed to the customers or buyers.

Halal

The company is engaged in toll manufacturing. The toll

manufacturer is Halal-approved in which all the products produced does

not contain any animal-based content that secures safeties to Islam users.

3.5.3 Standards Specifications

3.5.3.1 Raw Materials

Before sending the raw materials to the manufacturer, the company

ensures the quality of these materials according to the tools presented on


43 | P a g e

the previous lines. This is done through an agreement between the supplier

and the company. In return, the company sets a premium for the supplier

in terms of their pricing. The following are the list of acceptable or non-

acceptable levels of quality:

Table 7.9. Standard Specifications of Raw Materials

Level Banana Primary

Packaging

Secondary

Packaging

Tertiary

Packaging

Acceptable

Yellow,

green, no

black dots

on its skin

Complete

parts or

segments,

properly and

clearly

labeled, good

shape and

size

Standard size

and shape,

properly and

clearly

labeled

Standard size

and shape,

durable,

properly and

clearly

labeled

Reject

Full of black

dots,

exposed

banana

flesh, moldy

Deformed

shape, holes

Wet,

deformed

shape, visible

scratches and

cuts,

smudged

labels,

mislabeled

Wet,

deformed

shape, visible

scratches and

cuts,

smudged

labels,

mislabeled

3.5.3.1 Finished Goods

Finished goods are then subjected to final inspection to ensure

quality. The following are the list of acceptable and non-acceptable (rework

or completely rejected) levels of quality:


44 | P a g e

Table 7.10. Standard Specifications of Finished Goods

Level Liniment Ointment Primary

Packaging

Secondary

Packaging

Tertiary

Packaging

Acceptabl

e

Standard

liquid level

(5%),

standard

quality

Standard

weight

(5%),

standard

quality

Standard

shape and

size,

complete

segments,

secured

locks

Standard

size and

shape,

clear

labeling

Standard

shape and

size, clear

labeling,

durable

Rework

Beyond

the control

limits of

acceptabl

e liquid

level

(5%)

Beyond

the control

limits of

acceptabl

e weight

level

(5%)

Loose

threads

(caps),

slightly

deformed

shape

Manageabl

e blur of

label, slight

bends/

scratches

Low

durability,

manageabl

e blur of

label, slight

bends/

scratches

Reject

Below

standard

quality

Below

standard

quality

Leak/holes

, damaged

caps,

incomplete

segments

Smudged

labels, wet,

deformed

shape,

mislabeled

Smudged

labels, wet,

deformed

shape,

mislabeled

3.6 Waste Disposal

3.6.1 Returned Products

Rejects are the only wastes that the company encounters. Some of these

are returned to the firm due to some defects. These are then returned to the toll

manufacturer for replacement if the toll manufacturer is liable for such damage.

The usual factors of returns are damages upon delivery and damaged labels and

packaging. The damages in which the tolling firm is of responsibility are the

following:


45 | P a g e

3.6.1.1 Damages upon Delivery

Products returned because of damages upon delivery are under

the responsibility of the tolling firm. The damaged products will then be

replaced by the firm without incurring any additional payments for

Tropical Pharmaceuticals. If such incident happen, the delivery team,

which belong to the firm, should necessary be aware in caring and

maintain the quality and safety of the product within the transportation

period.

3.6.1.2 Damaged Labels and Packaging

The tolling firm will be accountable for the products that contain

damaged labels and packaging. The retailers must inform the firm

regarding the concern of the defect of the products packaging for them

to replace it. The returned products will then be returned to the toll

manufacturer to be re-labeled and re-packaged subject again for resale.

Finished products returned from the market and which have left the control

of the toll manufacturer and the firm shall be considered for re-sale, re-labeling or

incorporation in a subsequent batch only after the person responsible for quality

control has critically assessed them. If finished products were not approved for

resale and any doubt arises over quality of the product, they will then be

reprocessed for other uses.


46 | P a g e

4 Management and Organization

4.1 Pre-Operating Period

4.1.1 Project Originators and Promoters

The project originators of the firm are Eugene Angelo I. Subang, and

Princess Grace B. Baquirel. (See Appendix K: Owners Resume) They will be one

of the incorporators of the corporation. The project originators will also be the one

who will overlook on all operations, from the pre-operating period to the

actualization of the business operations. Most especially, they are the main

decision makers in the company.

The project promoters of the company will be the proponents of this project.

Since the proponents are the project originators, they are knowledgeable of the

nature of the product, how the product was made, and its profile and benefits.

4.2 Operating Period

The type of business organization of the company will be a corporation. It is a

corporation shared among nine (9) investors. In a corporation, owners have a limited

liability since a corporation is a separate distinct legal entity. Owners of a corporation are

only indebted to the extent of their interest in the corporation. In addition, the corporations

power of succession enables it to enjoy a continuous existence since the shares of its

interest can be transferred from one owner to another. Also, because of limited liability,

ease of transfer of shares and continuity, investors are more attracted to investing in

corporations rather than in sole proprietorships and partnerships. This attraction allows

corporations to raise the capital needed to manage and expand their operations.


47 | P a g e

4.3 Internal Organization

4.3.1 Organizational Structure

Image 8.1. Organizational Structure

4.3.2 Functions

General Manager

o The General Manager will oversee and control the all

branches of the business. He will be the one training

employed workers to see the level of performance of the

employee. Also, he will handle the financial aspect of the

firm.

Sales and Marketing Head

o The Sales and Marketing will manage the strategic planning

of selling and marketing of the products. This will include

looking for potential customers and close deals with them.

The head will be responsible on looking after customer

service. This will include answering their concerns, keeping

General Manager (1)

Sales and Marketing Head

(1)

Key Accounts Executive (4)

Stall Attendants (4)

Logistics and Quality Assurance

Staff (3)

Administrative Assistant (1)


48 | P a g e

good relations with them, and stabilizing their patronage

towards our products.

Administrative Assistant

o The Administrative Assistant will perform general clerical

duties. This will include bookkeeping, copying, faxing,

mailing, and filing. In addition, she will be responsible in

taking and transcribing meeting notes and more. In addition,

she will entertain walk-in customers and other immediate

businesses in the office.

Key Accounts Executives

o The Key Accounts Executives will have a close contact to

the prospect buyers. They will handle the promotion of

products and closing deals in different outlets, specifically in

personal care shops, convenience stores, and pharmacies

and drugstores.

Stall Attendants

o The Stall Attendants (or salespersons) will be situated in

stalls in different malls. They will handle the direct selling

activities of the firm.

Logistics and Quality Assurance Staff

o The Logistics and Quality Assurance Head will manage

inventory plans, close deals with the suppliers, schedule

and purchase raw materials, and ensure quality of both raw

materials and finished goods. Also, he will be in-charge of

the distribution of the products at the right time at the right

place.

4.3.3 Owners

Tropical Pharmaceuticals is proudly a Dabaweo company. All of the

owners of the corporation reside in the Davao Region. In addition, the percent of

ownership of the incorporators are illustrated below.


49 | P a g e

Image 8.2. Capital Stockholders

4.3.4 Management Personnel

Table 8.1. Requirements, Qualification and Compensation for Management Personnel

Time Qualifications Requirements Recruitment Compensatio

n

Ge

ne

ral M

ana

ge

r

5 days a week,

8 hours a day

Male or Female

Graduate of BS Industrial

Engineering or any

business related course

5-year experience

regarding management of

a company

Positive referral from

previous employer

Organized

Excellent oral and written

communication skills

Good moral character

Resume

Application

letter

Medical

certificate

NBI

clearance

Transcript

of record

Screening

Comprehen

sive Exam

Int

Project Sample

Documents

potential market

target market

market share

market niche

citronella oil

eucalyptus oil

olive oil

percent content of banana