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2021 CHAPTER 2 MARKET STUDY

IMPORTANCE OF THE MARKET STUDY
• Lifeblood of every Feasibility Study
• Question of demand is the basic issue
• No discussion of profitability and other aspects if there is no demand.

1. PRODUCT DESCRIPTION
o Name of the Product (popular/scientific)
o Properties (physical/chemical),
o Uses of the product (finished/or as an input to production
o Major users (ultimate consumers or processors)
o Geographical dispersion or where the products are mostly found.
Bluesea Lobster Product Description

Name of the Product

Lobster (Panulirus sp), locally known as banagan, is an expensive priced marine
crustacean both in the local and international markets. It is caught using bottom
gill nets and the availability of stocks is dependent on a day’s catch.

Physical and Chemical Properties of the product

Lobster serves as an excellent source of lean protein. Each 6-ounce portion
provides you with 28 grams of protein but only 1.2 grams of fat. This protein
provides amino acids - small compounds your cells can assemble into new
proteins needed to maintain healthy tissue. Protein nourishes your bones and
cartilage to keep your skeleton strong and also supports the health of your blood.
A 6-ounce serving of lobster contains just 0.3 grams of saturated fat -
approximately 1 percent of your daily recommended allowance.

Uses of the Product

Beyond food and drink, lobster shells are beginning to be used as a
manufacturing ingredient in items ranging from golf balls to counter tops. As
innovative people find more uses for what is currently a bi-product of lobster
processing it should help boost the boat price fishermen are paid for their catch. It
will also help the environment, as each year processors dispose of thousands of
pounds of lobster shells after the meat is removed.
But perhaps the most intriguing use of lobster shells is for medicinal purposes. One
of the many interesting facts about America’s favorite crustacean is that it seems
to defy the aging process. As mentioned in my book, ‘As lobsters age, they don’t
slow down or become more prone to disease. They don’t stop growing or become
infertile. Lobsters actually become more fertile as they age.’ Researchers have
found that, unlike the cells of most species, including humans, the cells of lobsters
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apparently don’t have a fixed lifespan. And scientists are already experimenting
with how lobster shells can be used to help humans live longer, healthier lives.
On a more superficial level, lobster shells may be able to help us hold onto our
youthful appearance. Glucosamine used in skin creams appears to have an anti-
aging effect on the skin. One study found it to reduce the effects of sun damage
while other studies showed that glucosamine may stimulate the production of
hyaluronic acid and collagen, which keep the skin hydrated and plump.

Users of the Product

Lobsters are served as especial menu in premium hotels and restaurants locally
and internationally. Premium gourmet meals are incomplete without the mouth-
watering lobsters.

Geographical Dispersion of the product

The Philippines has 14 regions producing lobster. Central Luzon having the
greatest production as of 2006-2015, followed by Eastern Visayas, Cagayan
Valley, Western Visayas and Caraga Region, including Dinagat Province.

2. DEMAND
o Who and where are the direct market/buyers of the product?
o Historical domestic demand (10-year demand trend
(Per capita consumption x yearly population)
o Forecast future domestic demand (10-year period)
o Importation-are we importing the product from other countries? Buying from
Foreign Countries will show unmet local demand for the product so it is an
opportunity to go on production. Show the trend (10-year period).

Bluesea Lobster Demand

The Philippine lobster demand is continuously growing over the time locally and
internationally but the country’s output so far is not enough to meet the existing demand.

Indirect buyers

Table.1 Hotels and Restaurants in the Philippines

HOTELS AND RESTAURANT ADDRESS
Garden Way, Ortigas Center,
EDSA Shangri-La
Mandaluyong City
Diamond Hotel Ermita, Metro Manila
Harbor View Restaurant South Dr, Ermita, Manila
Cafe Ilang-Ilang (Manila Hotel)
Lobster King Seafood Restaurant Seaside Market, Diosdado Macapagal
Blvd. Manila Bay Reclamation Area, Pasay
Finestra Metro, Manila
Zamboanga Restaurant Metro, Manila
Uno Wharf Seafood Palace Metro, Manila
Century Park Seafood Restaurant Metro, Manila
Yue Lai Seafood and Hotpot Restaurant Metro, Manila
Seafood Market and Restaurant Metro, Manila
Long John Silver's Metro, Manila
King Crab House Metro, Manila
Gloria Maris Shark's Fin Restaurant Metro, Manila
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New Sanly Seafood Restaurant Metro, Manila

The Golden Palace Restaurant Metro, Manila
Gerry's Grill Metro, Manila
Joward's Hotpot and Seafood Metro, Manila
Restaurant
Padi's Point Bar and Restaurant Metro, Manila
Mr. Loh Seafood Restaurant Metro, Manila
Crustaisa Metro, Manila
Island's Fisherman Seafood Restaurant Metro, Manila
Hong Kong Master Cook Metro, Manila
Blackbeard Seafood Island Metro, Manila
Golden Fortune Seafood Restaurant Metro, Manila
Aquaknox Vietnamese Kitchen Metro, Manila
Royal Garden Restaurant Metro, Manila

Table 1 shows some of the hotels and restaurants in the Philippines that serve
lobster in their daily menu.

Direct buyers

Surigao buyers include Gold Cost, Celebes, C&A, and CK. These buyers will
serve as the direct buyers of Bluesea Lobster Production. Buyers would sell lobster to
Surigao City hotels and restaurants and to another lobster buyer from Manila to Manila
hotels and restaurants and to foreign markets.

Historical Domestic Demand

Table.2 Historical Demand

PER CAPITA
YEAR CONSUMPTION Population Kgs Tons
(kg)
2005 0.40 87,857,470 35,142,988.00 35,142.99
2006 0.40 89,468,680 35,787,472.00 35,787.47
2007 0.45 91,077,290 40,984,780.50 40,984.78
2008 0.48 96,061,680 46,109,606.40 46,109.61
2009 0.55 97,976,600 53,887,130.00 53,887.13
2010 0.55 99,900,180 54,945,099.00 54,945.10
2011 0.54 101,833,900 54,990,306.00 54,990.31
2012 0.59 103,775,000 61,227,250.00 61,227.25
2013 0.55 105,720,600 58,146,330.00 58,146.33
2014 0.53 107,668,200 57,064,146.00 57,064.15

Source: Philippine Statistics Authority

Table.2 shows the fluctuating demand of shrimp and prawn which are closely
related to the demand of lobster in the Philippines. From 2004 the demand increases
18,774.14 metric tons in 2008, 26,084.26 metric tons in 2011 and 21,921.16 metric tons
in 2014.

Domestic Demand Projection (See Attached Computations)

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3. SUPPLY
o Who and where are the direct competitors?
o Historical domestic supply (10year Domestic production trend of the
product)
o Forecast future domestic supply (10year period)
o Exportation-are we exporting the product to other countries? Supplying the
foreign buyers shows a bright opportunity. Even if local supply and local
demand are near equal then exporting the product is possible. Show the
trend (10 years).

Bluesea Lobster Supply Case

Dinagat Province is composed of small-scale producers of lobster, raising only
100-200 fingerlings and were not duly registered at Department of Trade and Industry
(DTI) due to lack of capital resources. These small raisers sell their good size lobsters to
the large producers which serve as consolidators of lobster.
Direct competitors

There are only two direct competitors of the project, the Janimar Lobster Producer
of Cagdianao and Myrna Lobster Grower of Puerto Princessa, Dinagat Province.

Table. 5 Province of Dinagat Islands Lobster Producer

AVERAGE
PRODUCTION
BARANGAY MUNICIPALITY NAME OF THE PRODUCER
PER MONTH
(KG)
Puerto Princesa Basilisa Myrna Lobster Grower 720
Cabungaan Cagdianao Janimar Lobster Supplier 960
Table 5 shows the only duly registered lobster grower of Dinagat Province.

Historical Domestic Supply

Table.6 Historical Supply
DIFFERENCE AVERAGE
YEAR METRIC TONS
BETWEEN YEARS GROWTH RATE
2005 836.00 _ _
2006 877.14 +41.14 +4.92
2007 1456.35 +579.21 +66.034
2008 1439.67 -16.68 -1.145
2009 1544.28 +104.61 +7.266
1010 1400.30 -143.98 -9.323
2011 1616.06 +215.76 +15.408
2012 1475.18 -140.88 -8.717
2013 1663.95 +188.77 +12.796
2014 1672.92 +8.97 +.539
87.724/9 yrs. 87.778/9 yrs.
92.99 9.753%
Source: Philippine Statistics Authority
Table 6 shows the fluctuating supply of lobster in the Philippines. The Philippine
supply of lobster has only an average of 92.99 metric tons increase of lobster every year.

Domestic Supply Projection (See Attached Computations)

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Lobster Exportation
Tropical spiny lobster farming benefits from, and is in fact driven by strong and
increasing market demand. Unsatisfied demand exists worldwide; however, the strongest
demand and highest prices are in China. In particular, the Chinese seek Spiny lobster for
celebration dining. This species is unique in meeting the specification they prefer for
sashimi (uncooked) lobster, served whole as the centre-piece for banquet dining.
According to Mr. Gilbert Anguay Provincial Aquaculturist of Dinagat Province and
former employee of Winrock International, Hong Kong is the major importer of lobster.
Hong Kong, home to over 7 million people, enjoys a growing and competitive seafood
market. Increasing seafood imports are largely due to:
a. high levels of seafood consumption,
b. a declining domestic fishing industry and
c. because Hong Kong also serves as an important gateway for the distribution
of some seafood products into China and the surrounding region.
At the high end of the market demand for premium seafood products such as
lobster has stayed stable for another Hong Kong distributor who focuses on supplying
high-end consumption outlets such as business clubs and five-star hotels.
Demand has been so great that China recently joined the United States as a top
export destination for live Canadian lobsters, according to the Lobster Council of Canada.
Shipments to China have almost doubled annually since 2010, and they have spiked
during the Lunar New Year holiday season. Weekly exports of live lobsters to China
from Canada were expected to total 100 tons a week during this 2015’s harvesting
season, accounting for a quarter of Canada’s exports.

Premium buyers in Hong Kong and China remain the focus of new entrants offering
premium lobster. Tropical lobsters from the Philippines were introduced to Chinese
buyers at the Hong Kong show by Hilario Murillo, chairman of Manila-based Grand Catch
Inc. Filipino lobsters typically sell for USD 60 (EUR 54)/kg, said Murillo.

4. DEMAND-SUPPLY ANALYSIS
o Show the gap between Projected Domestic Supply and Projected Domestic
Demand
o If Demand is equal to Supply (D=S), identify factors that may cause demand
to grow faster than supply.

Demand-Supply Analysis
Figure.1 Demand-Supply Analysis

100,000.00

80,000.00

60,000.00
Demand
40,000.00
Supply

20,000.00

0.00
1st 2nd 3rd 4th
Qtr Qtr Qtr Qtr
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The domestic and foreign demand could not be met by current supply/ production.
This is mainly because of its barriers to entry such as capital requirements. Demand of
lobster is visibly increasing through the years and supply is obviously insufficient.

5. PRICE STUDY
o Look into the historical trend of farm gate prices of the proposed product
o Determine responsiveness of demand to price changes

Table.9 Classification of lobster sizes and its prices

CLASSIFICATION LOBSTER SIZES PRICE/kg.
Underweight <.52 kilograms ₱1,600.00
Good size .52-.9 kilogram ₱2,000.00-₱2,500.00
Overweight >.9 kilograms ₱2,000.00-₱2,500.00

6. MARKETING PROGRAM
o Determine existing marketing programs in the industry & gauge their
effectiveness
o Draw up your own marketing program (4 P’s- Product, Price, Placement and
Promotion)
o Design the marketing organization to implement your proposed marketing
program and the possible cost involved.
Existing Industry Practices
Previously, only big-time investors can afford to raise the Spiny Lobster, hiring the
small fisher folk to grow the expensive crustacean for them. The reason is that the
fingerlings which cost P500 for 50-grammers are simply beyond the reach of the poor
fishermen.
Now, Winrock makes it possible for the small fisherman to start his 150-lobster
project because they can borrow from the First Community Coop (FICCO) guaranteed by
PCCP. FICCO is a big Mindanao-based cooperative with 36 business centers and
satellite offices.
The farmer does not receive the loan in cash. When he receives the 150
fingerlings, he signs a document that is given to the fingerling supplier. The program is
the Philippine Cold Chain Project (PCCP), implemented by Winrock International. It aims
to enhance productivity and entrepreneurship among small farmers and fisher folks. The
special targets include the production of vegetables and other high-value crops, livestock
production, and fisheries.
Bluesea Lobster Marketing Program
Place Strategy
The proponent will follow the existing market flow of lobster in the Province in which
selling its product to local traders which will send to foreign market.
Price study
The lobster fingerlings are expensive, all right, but then when they are grown to
market size of at least 500 grams each, they fetch a handsome price. Most of the time it
is ₱2,000 per kilo but as of 2015 the price, according to Winrock aqua culturist Joselito
Nobillos, ranges from ₱2,000 to ₱2,500 per kilo. Sometimes prices during would reach
up to ₱3,000 due to high demand during Chinese New Year.
The proponent will use ₱1,600 per kg as its selling price.
Promotion Strategy
Bluesea lobsters will be available for purchase not only in markets and restaurants,
but also through websites that offer home delivery. The project will make use of tarpaulins
which will be place along the provincial road/ highways and also social media to promote
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the product. The tarpaulin will contain the location of the project, the name and contact
detail of the owner.

Marketing Organization
The farm will only have a general manager who will be in-charge of everything in
the farm including the maintenance of the farm, marketing of the products, maintaining a
knowledge of pests and diseases and an understanding of how they spread and how to
treat them, planning activities for trainee staff, mentoring and monitoring them and
planning finances and production to maintain farm progress against budget parameters.
Figure.2 Marketing flow
BLUSEA LOBSTER
PRODUCTION

SURIGAO TRADERS

MANILA TRADERS SURIGAO CITY HOTELS

AND RESTAURANTS
AND LOCAL
MARKETS

FOREIGN MANILA HOTELS AND

RESTAURANTS
MARKETS