Post on 26-Sep-2015
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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.
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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.
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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)
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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
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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
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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
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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
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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
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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
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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.
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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
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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
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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
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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
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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.
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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.
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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)
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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
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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.
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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.
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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.
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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
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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
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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)
Brand Average Price/g
Systral 20.76
Ave/g 20.76
Table 6.11. Average Price of Competitors (Corticosteroid)
Ointment (Corticosteroid)
Brand Average Price/g
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:
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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
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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)
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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
Calculated Price 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
Calculated Price 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
Calculated Price 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)
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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.
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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
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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
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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
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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
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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
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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
Raw Materials Requirements Per Unit
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
Raw Materials Requirements Per Unit
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
Raw Materials Requirements Per Unit
Banana (g)
Ointment
Tertiary Packaging
Primary Packaging
Oin
tmen
t
Secondary Packaging
Oin
tmen
t
Citronella Oil (g)
Anti-Fungal Antipruritic Corticosteroids
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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:
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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.
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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
Production (in boxes) 89 105 165 202 243
Allow ance for Scraps 83 103 168 200 249
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
Beginning Inventory - 671 1,061 1,314 1,692
Production 5,900 7,000 11,000 13,600 14,400
Production (in boxes) 59 70 110 136 144
Allow ance for Scraps 60 72 112 138 168
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
Beginning Inventory - 905 1,468 1,834 2,215
Production 8,050 9,600 15,050 18,450 22,050
Production (in boxes) 161 192 301 369 441
Allow ance for Scraps 79 98 152 187 227
Sales 7,066 8,939 14,532 17,882 21,852
Ending Inventory 905 1,468 1,834 2,215 2,186
Days Level 31 30 31 30 30
Inventory, Inhaler (2-ml
Liniment)
Inventory, 50-ml Liniment
(Regular)
Inventory, 50-ml Liniment
(Massage)
Inventory, 100-ml Liniment
(Regular)
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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
Production (in boxes) 108 127 201 246 295
Allow ance for Scraps 52 66 100 127 152
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
Beginning Inventory - 978 1,564 1,961 2,375
Production 11,900 14,400 22,850 28,050 34,100
Production (in boxes) 238 288 457 561 682
Allow ance for Scraps 112 142 230 283 342
Sales 10,810 13,672 22,223 27,353 33,424
Ending Inventory 978 1,564 1,961 2,375 2,709
Days Level 31 30 31 30 30
2014 2015 2016 2017 2018
Beginning Inventory - 978 1,564 1,961 2,375
Production 11,900 14,400 22,850 28,050 34,100
Production (in boxes) 238 288 457 561 682
Allow ance for Scraps 112 142 230 283 342
Sales 10,810 13,672 22,223 27,353 33,424
Ending Inventory 978 1,564 1,961 2,375 2,709
Days Level 31 30 31 30 30
2014 2015 2016 2017 2018
Beginning Inventory - 838 1,342 1,644 2,012
Production 10,200 12,350 19,550 24,050 29,250
Production (in boxes) 204 247 391 481 585
Allow ance for Scraps 100 124 200 241 295
Sales 9,262 11,722 19,048 23,441 28,647
Ending Inventory 838 1,342 1,644 2,012 2,320
Days Level 31 30 30 30 30
Inventory, 100-ml Liniment
(Massage)
Inventory, 10-g Ointment
(Antifungal)
Inventory, 10-g Ointment
(Corticosteroid)
Inventory, 10-g Ointment
(Antipruritic)
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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
100-ml Liniment (Regular) 8,050 9,600 15,050 18,450 22,050
100-ml Liniment (Massage) 5,400 6,350 10,050 12,300 14,750
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
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
100-ml Liniment (Regular) 8,050 9,600 15,050 18,450 22,050
100-ml Liniment (Massage) 5,400 6,350 10,050 12,300 14,750
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
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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
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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
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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
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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:
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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:
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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.
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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.
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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)
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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.
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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