CHAPTER 1 The Problem of the Background

1.1 Introduction

Everybody loves chocolates. Be it kids or the elderly. Filipinos are known for

having a sweet tooth and we greatly enjoys sweet foods. People around the world are fond

of sweets, and some people associate sweet foods specifically with comfort and well being.

There are variety of reasons why people are predisposed to like sweets. Being fond of

eating sweets isn’t a bad thing although it might lead to a health problem. Here in the

Philippines, we buy sweet delicacies as “pasalubong” and we get used to it.

Chocolate has become one of the most popular food types and flavors in the

world. It can be molded in different shapes and becomes traditional on certain holidays.

Chocolate is also used in cold and hot beverages.

The researchers choose the firm Choco Mocco for its study. We choose the topic

Product Line Extension and Sales Promotion for Choco Mocco. The firm is offering

chocolate products, beverages, ice cream and snacks. This study aims to determine a

better marketing approach to be done to persuade more customers and increase its sales.

1.2 Background of the study

Choco Mocco is a specialty dine-in store settled in SM City Manila. It is

established this August 7, 2010 as a sole-proprietorship business founded by Mr. Emre

Serbetci. The owner was inspired by his friends and put up this kind of business. The store

is strategically located at the Lower ground floor of SM Manila, in front of Food Court. The
firm targets the shoppers which are mostly students from different schools. It’s existence is

popularly known for it’s chocolate products and it’s welcoming ambiance.

The firm is known for it’s variety of Chocolate products which made it distinctive

among its competitors in the said area. Among it’s principal products are Chocco Mocco

(chocolate served with fruits), Choco Sticks (chocolate dipped goodies,kebab style), Choco

Ice Cream (which consists of Six Flavors to choose from: Strawberry, Vanilla, Chocolate,

Ube, Capuccino and Cheese), Special Choco , Choco Beverage, Choco Snacks and Choco

Shots. These principal products are served in different variety. The firm serves through dine-

in and take out.

The first two weeks of its existence did well but suddenly declines its sales. Aside

from having so many competitors in the market, the firm is not financially stable and lacks

promotional activities, therefore the management is finding better approach on how to

increase the demand for their product to acquire profit for the stability of the firm.

The main source of information will be directly from the owner of the firm,

customers who patronizes the product and those who are not aware of its existence. From

the facts gathered, we will analyze and set strategic plan on what promotional activities

should be done to persuade more customers and what other products should be added to

increase its sales.

1.3 Conceptual Map

The focus of this research is about the marketing strategy which is product line

extension and sales promotion. This research aims to achieve the following:

 find out if Promotional activity is an effective mean to acquire

more sales.
  find out what Sales Promotion activity is needed which fits

Choco Mocco to increase the it’s sale.

 find out if adding products to the firm’s product line will increase

its sales.

 find out what products should be added on the firm’s product

line.
Dine- in Customers;
 Product Line
Manager; Staff;
Survey, Extension
Passers by
Random Sampling, And

Interview Promotional
Products
Activities

1.4 Statement of the Problem

The firm is finding a better approach on how to increase the demand for

Choco Mocco’s product through Product Line Extension and Sales Promotion to

increase the profit of the firm and make it financially stable and survive in the

competition.

• What causes the decline of sales of Choco Mocco after 4 months of its existence

in the market?

• Does promotional activities affects the firm to increase its sales?

• Is there a need to add products on its product line? What should it be?
1.5 Hypothesis

Ho: There is no significant effect on having sales promotion and product line

extension on increasing Choco Mocco’s demand for their product and earn profit for

its survival.

1.6 Significance of the Study

This study will find ways on how to uplift the demand for Choco Mocco’s

product to increase its sales and able to sustain its operation and find better

approach through sales promotion and product line extension for them to remain in

the competition despite of arising competitors in the market. Through this research,

the management may able to apply this study and use it for the consistency of their

business.

In having this research, it is important to gather first all the necessary

information, facts and opinions of every people involved in the said study.

1.7 Scope and Limitation

This study will be focusing more on what would be the possible marketing

strategy that should be done to increase Choco Mocco’s sales. The survey will be

conducted at SM Manila where the firm is situated. The respondents would be the

manager, the staff, customers and those who are unaware of the firm’s existence.

The researchers will be using 3 methods of market research to gather the

necessary information which are: surveys, personal interview and observation. This

methods will make this study more reliable.

 The researchers will be using UAI research to measure the brand’s marketing

health towards the competition in the market.

1.8 Definition of terms

 Sales promotion- is a marketing activity that promotes a firm or its product to

persuade consumers that the product is worth buying for.

 Chocolate- is a sweet hard food made from cocoa beans. It is usually brown in

color and is eaten as a sweet.

 Ice Cream- is a very cold sweet food which is made from frozen cream or a

substance like cream and has a flavor such as vanilla, chocolate or strawberry.

 Choco loco- chocolate drizzled waffle and fruits.

 Survey- it is one of the market research method that asks concise questions to

the target respondents and gives reliable results.

 Observation- a market research method which gives a picture of consumers

buying behaivior.


 CHAPTER 2

2.1 Literature

As evidenced by Phyllis Grabot’s article entitled Increasing Your People

“Wealth” – APB’s Recipe For Increasing Profits, “it takes a significant amount of time and

investment in personnel to get new stores up and running profitably”. For many, it is

quite surprising to learn how much hand-holding this process actually takes. So, how do

dealerships overcome being “people broke” so they can focus on growth and

expansion? “, said Phillis Grabot.

“When should a firm introduce a line extension or improved product in

order to maximize total profits from the original product and the line extension? We

identify three critical issues which affect the answer to this question: the interrelationship

of sales of the two products because of substitution and diffusion, the relative margins of

the two products, and the relationship of the length of the firm's planning horizon to the

original product's diffusion time. We develop a model in which the first product

contributes a higher unit margin; however, sales develop slowly. The line extension

contributes a lower unit margin and partially cannibalizes sales of the original product,

but also broadens the market, causing sales to develop more rapidly. The timing of the

introduction of the line extension affects the subsequent sales pattern for both products

and the total profit to be made within the planning period. The optimal entry time depends

upon the product pair's substitutability. We show that it is best either to introduce the line

extension at a time early in the life cycle of the original product or not to introduce it at all.

Consideration of dynamic phenomena can make a difference. For example, our results
indicate that in some cases the line extension should be introduced early, whereas a

simpler static analysis (which neglects diffusion and the implications of a finite planning

horizon) would indicate that the line extension should never be introduced.” (Wilson, L.,

& Norton, J. (1989). Marketing Science: Optimal Entry Timing for a Product Line

Extension(Vol. 8, No. 1, Winter 1989, pp. 1-17). AT&T Bell Laboratories,

University of Virginia.)

According to Pauline Douglas’ article entitled Sales Promotion from

http://www.splash.net.au/articles/sales.html, the challenge of Sales Promotion is to influence

and modify a consumers purchasing habits by developing the perception, familiarity and trust

around a new product or service. She also added that if products are introduced several times,

customers will have enough familiarity with the product and gain trust and will probably lead to

customer buying habit.

 2.2 Studies

During the researcher’s brainstorming, they come up with the SWOT

Analysis of the firm which results to the following:

• The Brand name of the firm is very much catchy • The firm don’t have much promotional

and easy to remember. activity to persuade more people.

• The prices being offered by the firm is

affordable enough to purchase by different • The firm is financially unstable wherein it

societal classes. needs higher sales to sustain their

• The ambiance of the shop where it is located is operation.

relaxing and very welcoming.

• The location of the firm gives competitive edge

• There are many competitors who are
among its competitors.
much financially stable than Choco
• In 4 months of its existence, there were loyal
Mocco.
customers who patronizes their product and
• Same pricing scheme of its competitors.
had a good personal relation with the firm.
• There are competitors who also offers
• Students are the most regular customers, where
same kind of their products
mostly dine-in their products for snacks.
2.3 Syntesis of Literature

The difference between sales promotion and product line extension is that, Sales

Promotion is used to increase sales by providing extra incentive to purchase and creates

brand image and suddenly leads to brand loyalty. Through sales promotion, there will be

an impulse purchases by the customers. On the other hand, Product Line Extension,

offers multiple products to customers which provides choices to the customers. Both

helps generate more profit and increase market share.

With the facts that the researchers had gathered, it is applicable with

Choco Mocco to have product line extension since it is still at the early stage of the

business’ life cycle. Added with intense promotion, the firm will be able to increase the

demand on Choco Mocco’s product.

 CHAPTER 3

3.1 Research Design (add meaning of descriptive research)

The researchers decided to use Descriptive Study wherein it is designed to

acquire responses from the target respondents who are the customers and unaware

passersby in the said location where the firm is situated. The researchers will

disseminate constructed surveys to the target respondents.

3.2 Sources of Data

3.3 Respondent of the Study

3.4 Sample of Sampling Techniques

3.5 Research Instruments

3.6 Data Collection Procedure

3.7 Statistical Treatment of Data