Maryhill College Inc.

MARKET SHARE ANALYSIS OF SELECTED FAST

FOOD INDUSTRY IN QUEZON AVENUE
LUCENA CITY

An Undergraduate Research Study Presented to the

Faculty of Maryhill College, Lucena City

In Partial Fulfillment of the Requirements for the Degree

Of Bachelor of Science in Business Administration
Major in Marketing Management

By:
Jusi, Iveeh B.
Pelicano, Dennis B.

March 2017

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1. What is the demographic profile of the respondent according to:
1.1 Age
1.2 Gender
1.3 Occupation
1.3.1 Student
1.3.2 Teacher
1.3.3 Others
2. What are the contributions of fast food industries in Lucena City in terms of:
2.1 employment
2.2 family bonding
2.3 taxes
2.4 scholarship
3. What are the factors influencing the consumers to patronize the fast food establishment in
Lucena City?
4. Is there significant relationship between market shares and profitability by satisfying
consumers?
5. What enhancement program can be developed as a result of the study?

Chapter II
REVIEW OF RELATED LITERATURE AND STUDIES
Presented in this chapter are discussions of facts and principles to which the present
study is related. The researcher has found the following studies and literature as relevant to
the system being proposed.
Related Literature

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Foreign
Fast Food Marketing Strategies
by Rick Suttle,
Fast food marketing strategies can include loyalty or frequency programs.
The fast food industry is highly competitive and dominated by large companies. Smaller
businesses must be savvy in developing marketing strategies that drive consumer traffic. This
entails staying in constant touch with customers. One of the best ways for smaller fast food
companies to stay in touch with their companies is through marketing research. A small fast
food company must know what key customers want and will buy before developing
marketing and advertising strategies.
Collectibles
Fast food companies can drive traffic through collectibles, particularly those that kids enjoy.
Select a movie or popular animated film. Find companies who sell dolls, glasses or other
mementos that are related to the movie. Offer four or six characters or glasses. Provide one
free item for the purchase a kids' meal. This fast food marketing strategies entices people to
come back until they have all the collectibles. Choose a popular theme for your collectibles
that other fast food companies are not marketing.
Market Segmentation
Small fast food companies often use market segmentation as a marketing tool. Market
segmentation is the process of identifying key buying groups that patronize your restaurant.
This information is largely obtained through market research surveys, asking people
demographic information such as age, income and household size. For example, the majority

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of your customers may be 18 to 24 years old and earn less than $40,000 per year. You could
then locate clusters of this demographic group within a 5-mile radius of your restaurant.
Obtain the addresses of these residents and mail coupons to them. You can also segment your
market by various activities, attitudes and customer usage, according to NetMBA.com.
Related Reading: Examples of Differentiation in Fast Food
Loyalty Programs
Frequency card programs are a popular type of loyalty program for fast food restaurants.
Create a display and sign-up forms to promote your frequency card program. Invite people to
fill out an application. Reward people according to the frequency in which they visit your
restaurant. For example, you could offer people a free drink after their first four visits, then
free fries after their next four visits. Ultimately, a customer could earn a free meal after 12
visits. Keep repeating this cycle for six, eight or 10 weeks, or whichever time frame you
choose.
Societal Marketing
Societal marketing includes volunteering or collecting money or items for charity. Societal or
social marketing is designed more for getting ideas across than making sales, according to
Lars Perner, assistant professor of clinical marketing at the University of Southern California.
Consequently, consumers who relate to your ideas or values because of your charitable work
may, in turn, patronize your fast food restaurant.
(http://smallbusiness.chron.com/fast-food-marketing-strategies-3408.html)

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In the past, foods were primarily recognized for their essential nutrients for normal
body activity and function. During the past two decades, however, consumers have switched
from an emphasis on satisfying hunger to an emphasis on the promising use of foods to
promote well-being and to help reduce the risk of disease (Niva, 2007, Bogue& Sorenson,
2001). Today, there is a consensus that eating the right foods extends life expectancy and
improves the quality of life.
A number of factors are responsible for changing consumer attitudes toward foods
and reshaping food supply trends. These include an aging population, increased health care
costs, consumers desire to enhance personal health, change in consumer awareness and
expectations, advancing scientific evidence that diet can alter disease prevalence and
progression, advances in food science and technology, and changes in food regulations.
Following the trends observed in consumer demand, the food industry introduced a
new category of products named functional foodsfoods that bring science and hightechnology into everyday life by promising certain health benefits (Niva, 2007).
This interest has been fuelled by increased media attention and an increasing number of
consumers determined to take greater responsibility for their own health (LAbb et al.,
2008).
Markets for this category show intense competition and, in order to survive,
companies must carefully plan new product processes and base their decisions on consumer
needs and wants (Henson et al., 2008; Ares &Gmbaro, 2007). This competitive
atmosphere suffers from a lack of information and understanding of consumer attitudes and
behaviour, which unfortunately could lead to poor market acceptance (Verbeke, 2005). In

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addition, the definition for functional foods varies across countries and global markets
present different regulatory systems governing these productscareful research and analysis
are essential for the success of functional food firms entering international markets.
This report aims to provide insights to food producers and marketers into the territory of
health-claimed foods. The information was compiled from research studies that analysed in
depth the determinants of consumer acceptance of functional foods. (MARKET ANALYSIS
REPORT | DECEMBER 2009)
The functional food industry is growing steadily worldwide. Innovative products are
being launched continuously and competition is fierce. Researchers agree that the market is
growing at an annual rate of 8-14%, but the exact size of markets for functional foods is
difficult to measure. Depending on the source of data and definition of this category of
products, the global market could range from US$7 to US$167 billion (Market Research,
2004). Market researchers are frequently vague about the criteria used to define product
ranges and the methodology used to create their market numbers for functional foods, which
is confusing to supply chain participants.
The functional food industry is resource-intensive, both in terms of financial resources and
the time required for basic research, technology development, and commercialization,
including obtaining product approvals and developing and resourcing marketing strategies
(Hobbs, 2002). In this particular industry, many health-promoting ingredients are still being
tested for their long-term effects on health or face discrepancies with regard to scientific
opinions.

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The complexity of this industry leads to the formation of new supply chain partnerships
among input suppliers, farmers, researchers, and food processors. There exist opportunities
for strategic alliances or joint ventures and the need for a consistent supply of functional
ingredients through contracts or special supply arrangements. Thus, not only a wide range of
products but different market segments and economic conditions characterize this industry. In
particular, the functional food industry reflects a shift from a mass market to a market with
differentiated products, serving consumers with relatively high incomes.
Health Canada considers a health claim for food as any representation in labelling or
advertising that states, suggests, or implies that a relationship exists between consumption of
a food or an ingredient in the food and a person's health (Health Canada, 2009).
With the introduction of the concept of functional foods in the market place, health claims
have become a means to communicate to consumers the health benefits of foods that contain
specific formulations, conveying relevant information that would otherwise remain unknown
(Jew et al., 2008). Communication can have a great impact on changing
Consumers knowledge and attitudes and reshaping their decision-making processes
(Verbeke, 2008). Health claims are indeed key factors for the development of a successful
market for functional foods, especially if the product is made of novel ingredients, or its
health benefit is not widely known.
There seems to be a consensus among researchers that demographic characteristics play a
minor role in consumer acceptance of functional foods and their perceptions of health claims
(Verbeke et al., 2009). Significant predictors of functional food consumption are related to
consumers health motivation, perceived diet effectiveness of products, and knowledge about

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nutrition (Landstrm et al., 2007, Petrovici&Ritson, 2006). There is evidence that
consumers most likely to have a positive attitude toward functional foods are the ones who
have faced illness among relatives or have experienced illness themselves (Verbeke, 2005).
Chronic diseases are strongly associated with the demand for functional foodsproducts
targeted at preventing widespread diseases such as heart diseases and cancer capture a great
deal of attention from consumers (West et al., 2002). Therefore, it is important to understand
predominant public health issues in a targeted market because they strongly dictate consumer
behavior toward the purchase and consumption of products with health claims.
The literature is conflicting with respect to the demographic profile of functional food
consumers. Studies developed in different markets have shown results either highlighting
stronger purchase behavior by females or no gender differences. Both higher and lower levels
of education have been associated with positive attitudes toward functional foods (Herath et
al., 2008; Urala&Lhteenmki, 2007; de Jong et al., 2003; Verbeke, 2005).
Regarding age groups, it seems that older consumers perceive the use of functional foods as
more beneficial than younger consumers (Herath et al., 2008; Landstrm et al., 2007). This
relationship may be explained by the exposure of older consumers to more health problems.
Level of income may also play a role in functional food consumption, but research data lack
consistency. Some studies show that consumption of functional foods is associated with
lower income households (Herath et al., 2008). Others, however, highlight that it is a market
dominated by well-off consumers, arguing that packaged functional foods tend to be
available at a premium price and are perhaps beyond the reach of consumers with modest

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incomes, particularly retired consumers where the incidence of poverty is high
(Petrovici&Ritson, 2006).
The conflicting information found in the literature highlights the importance for
companies to understand consumers in their global markets and define target audiences in a
strategic manner.
Local
Food is a basic necessity. The industry which deals with preparing food items/products refers
to the food service industry. The food service industry is and will always remain in high
demand because of its genre. These industries include restaurants, fast foods, school and
hospital cafeterias, catering operations, food carts and food trucks etc. Restaurants and fast
foods mainly contribute to the food service industry. Fast food generally refers to the type
of restaurants that sell quick, inexpensive take-out food. During a relatively brief period of
time, the fast food industry has helped to transform not only diet, but also landscape,
economy, workforce, and popular culture. The extraordinary growth of the fast food industry
has been obsessed by fundamental changes in society. The whole experience of buying fast
food has become so habitual, that it is now taken for granted, like brushing your teeth or
stopping for a red light.
Restaurants and fast foods are meant for same services except that restaurants offer a large
menu including a variety of cuisines as compared to fast foods, which usually offers a small
menu with quick service. Another difference between a restaurant and fast food is, restaurants
offer meals that are cooked and prepared and is eaten at the premises while fast food usually
is pre-cooked meals or serves meals that are cooked easily. Diners may eat it inside the store

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or they can order their food to-go. In fast foods you usually pay before eating unlike full
service restaurants.
Like every other country, the food industry has flourished very well in Philippines.
Filipinos love to eat and thats the reason why you will see a lot of restaurants and fast foods
restaurants scattered in the cities. These restaurants and fast foods can be local or
international food chains. Filipino food and chefs are considered one of the best in the world.
It is hardly surprising that Filipino food is often labeled as somewhat strange (like the balut
for example) but in its own way, its food is a unique mixture of eastern and western cuisines
and reflects the history of Philippines. The Filipino food includes dishes and cooking
procedures from China, Spain, Mexico, United States, and more recently from further
abroad. However, what makes them Filipino is the history and society that introduced and
adapted them; the people who turned them to their tastes and accepted them into their homes
and restaurants, and specially the harmonizing culture that combined them into modern
Filipino fare. Some of the popular fast food chains of Philippines are Jollibee, McDonald,
KFC, Chowking, etc. and popular restaurants being Abe, Chelsea, Fridays, Chilis and a lot
more.
Attracting a huge crowd to restaurants or fast foods require more than just good food.
Though important, good food is only a part of the total dining experience. Equally important
is believed to be the way people feel while in the restaurant. This physical and emotional
response is a result of the atmosphere, the total environment to which customers are exposed.
The proper atmosphere can make the food, service and whole dining experience seem better.
For that reason a restaurant or a fast food must take care of the following to please its

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customers. This includes checking the cleanliness of the place and freshness of the food,
guarded premises, parking area where people can park, ambiance and landscaping, building
design, lighting, and even music.(Food Service Industry in the Philippines | July 13th, 2010
by: Ginger Arboleda)
Combining two food items to create a hybrid, a trend popularized by Cronuts, a cross
between a croissant and doughnut, found its way into other fast food categories in the
Philippines towards the end of the review period. Jollibee, for instance, introduced its
pancake sandwich in 2014, which involves pancakes being used in place of buns to create
breakfast sandwiches. McDonalds also has its own version of pancake sandwiches called
McGriddles, which were sold in selected branches for a limited time during 2014. Wendys,
meanwhile, combined a pretzel and burger to create the pretzel bacon cheeseburger and KFC
has its double down dog in which chicken fillets are used in place of buns to create a hotdog
sandwich.
Various franchisees remain the largest presence in fast food in 2014 with a combined
value share of 34%. Among the owners of chained brands, Jollibee Foods Corp maintained
its lead in 2014 with a value share of 31%. Jollibees leadership stems from its wide brand
portfolio composed of Jollibee, MangInasal, Chowking, Greenwich, Red Ribbon and Burger
King. Furthermore, with the exception of Burger King, all of its brands are leaders in their
respective categories. Its different brands are highly patronized by consumers as their
product offerings are tailored to suit the local taste preferences. These brands also
continuously offer new menu items and are adequately promoted, which allows them to
sustain consumer loyalty to their brands.

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Fast food is expected to increase in value at a CAGR of 3% at constant 2014 prices
over the forecast period, which is a slower rate of growth than the value CAGR of 5%
recorded at constant 2014 prices over the review period. The slowdown in growth is
indicative of the categorys maturity, which limits its prospects for sustained increases in
growth rates. Another factor is the Philippines growing middle class, many of whom are
likely to trade up to affordable full-service restaurants at the expense of fast food. Sales per
outlet, however, are expected to improve over the forecast period, rising at a marginally
positive CAGR at constant 2014 prices. Although low, this is better than the -1% CAGR
recorded in this measure or over the review period. This improvement is set to be driven
partly by the entry of foreign brands. Stiffer competition, meanwhile, is likely to result in the
creation of more premium offerings, which is also set to boost sales per outlet in fast food
over the forecast period. (Fast Food in the Philippines, Aug 2015)
Related Studies
Foreign
Local
Promotional Practices of Selected Food Chain Stores in the University Belt in Manila,
Jan 2014. Vol.21no.1 2012-2014 JITBM & ARF.
This study paper was undertaken to know the management and customers\ perception on the
promotional practices of selected food chain stores in the university belt. Generally, the
research is concerned in identifying and comparing promotional practices adopted by the five
(5) selected fast food companies. These fast food companies are:

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The Tropical Hut Hamburger or Tropical Hut Food Mart; Jollibee Foods Corporation;
McDonalds or McGeorge Food Industries, Inc.;Kentucky Fried Chicken or Quick Service
Restaurants (QSR) Corp; and Chowking Food Corporation. The research objectives are
generally to determine the following: (1) the promotional practices implemented and the
media most commonly used by the selected food chain stores? (2) The promotional practices
that attracts most of the customers in patronizing the store? (3) The promotional practices
problems that beset the food chain stores and their suggested solutions to these problems.
Further, descriptive method of research was used in this study and the instrument used in
gathering data is a researcher- constructed questionnaire. The respondents were three hundred
(300) customers and nineteen (19) managers of the five food chain stores in Claro M. Recto
Area.
Findings revealed that the selected food chain stores used TV Program, Value/Combo
Meal/Price Pack, and Endorsement by Well- known Personalities, Billboards, Product
Advertisement and Premium. Television is the most commonly used media by the food chain
stores while the most attractive promotional practice is TV Program and Endorsement by
Well- known Personalities. Lack of continuous program to effectively launch direct selling
strategies is the most serious promotional problem that was given by the respondents.
The Philippine fast food industry, C&C VIEWS by Ed F. Limtingco |January 2012.
According to the Institute for Development and Econometric Analysis, Inc. (IDEA) latest
Industry Trends, a regular publication produced by IDEA, food is always viewed as an
indispensable household necessity. Based on the 2009 Family Income and Expenditure
Survey (FIES), around 42.6 percent of the total expenditure of a typical Filipino household is

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solely being allocated for food. Changing consumer behavior and lifestyle, however, are
some of the factors that continuously shape and influence households decisions on food
consumption. The increasing numbers of white-collar workers, the womens changing role in
the society, the shifting consumers preferences towards leisure and convenience, and
urbanization have heightened consumer demand for food servicesparticularly for fast food
services.
Per IDEA, a fast food refers to a type of restaurant that offers quick services and affordable
food. This thriving industry has transformed the landscape of Filipinos diet and culture.
Buying of fast food has now become an everyday routine for most people, especially for
middle class earners engaged in productive activities. Most fast food establishments are
located in Metro Manila and in several major cities in Central Luzon and Southern Tagalog.
As of 2009, there are around thirty-two thousand fast food outlets in Metro Manila area
alone. Emerging urban areas outside Luzonincluding Metro Cebu and Metro Davaoare
also considered as strategic locations for outlet expansion
Per same published report, it was revealed that according to the 1994 Philippine Standard
Industrial Classification (PSIC) handbook, fast food services are classified under class 55210
restaurants, cafes and fast-food centers. This classification comprises all activities
concerned with the sale of prepared foods and drinks for immediate consumption in the
premises such as restaurants, cafes, lunch counters and fast food outlets. It is also concerned
with take-out operation activities which includes drive-thru option.
Furthermore, it was also revealed that Gross Value Added (GVA) in the hotel and
restaurant industry remains to be in the uptrend in the past decade (Figure 1). The industry

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posted a decade? Best of 9.3 percent GVA growth in 2007, but was immediately followed by
modest GVA growth rates of 3.1 percent and 2.7 percent in 2008 and 2009, respectively. The
slowdown illustrated the industrys difficulties in sustaining high growth during the height of
the Global Economic Crisis (GEC) in 2008 and 2009. The industry reverted back to its
bullish growth in 2010 with 9.1 percent. The sustained positive growth of the industry during
the last decade can be attributed to the robust performance of the restaurant sector,
particularly the fast food subsector given that approximately 80 percent of the restaurants in
the country are classified as fast food. Based on a report released by the Department of
Primary IndustriesVictoria, Australia, the Philippine Fast Food subsector is valued at USD 3
billion, with growth rates ranging from 10% to 15% in the last decade. This subsector is
immune to most economic turmoil given its large pool of consumers, ranging from middle
class workers to wealthy local and expatriate customers. In addition, the fast food industry
has managed to capture high-end restaurant goers when general prices are rising; this was
said to be evident during the GEC, according to IDEA.

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