ATENEO DE MANILA UNIVERSITY

John Gokongwei School of Management

Project Information Cataloging System (PICS)

Class Project Information and Cover Sheet

Name of Students: School Year: 2016 -2017 Sem: 1st
Karakaya, Burak
De Haney, Julia Subject Code: MKT 172
Guevarra, Shandrei Allen E.
Course Name: International Marketing
Mendoza, Beatrice Natividad B.
Uy, Josen Joseph P. Teacher: Mr. Senen M. Perlada
Si, Kristel Ivy G.
(Information below this line and in this column for use
TEAM TITANS by Faculty &/or PICS staff only.)

Grade: Call Number:

Project Title: Mkt 172 Final Business Plan Functional Area: Marketing Depaartment

Client: Spanish Market Comments:

Industry Category:
Tile Industry

Abstract (150 words or less)

This paper aims to formulate a business plan from company Kalikhasan Inc, dedicated towards
connecting local Philippine farmers with international business institutions through Cococslate, or Coconut
shell tiles. This paper will analyse the Spanish market and the tile industry, and how their different
characteristics can be utilized in our exporting strategy. Kalikhasan Inc will also present its overall
marketing strategy, and projected financials in order to form a deeper understanding of the products place
in the market. Overall, this will mean providing a platform for companies to become more socially aware,
provide opportunities for the Philippine coconut farming sector, allowing for a more sustainable and
eco-friendly future.

Authors Recommended Key Words

Furniture, Coconut Shells, Tiles, Spain, Philippines, International Marketing
LOYOLA HEIGHTS, QUEZON CITY

MKT 172: FINAL PAPER

Team Titan Group Members:

KARAKAYA, Burak
DE HANEY, Julia
GUEVARRA, Shandrei Allen E.
MENDOZA, Beatrice Natividad B.
UY, Josen Joseph P.
SI, Kristel Ivy G.

Advisor:
Mr. Senen M. Perlada

December 7, 2016

2
EXECUTIVE SUMMARY
The goal of Kalikhasan Inc is to bridge local Philippine coconut farmers to
international markets, utilizing natural resources that help bring awareness of these
underdeveloped sectors. The company will start out by selling Cocoslate, coconut shell tiles
that can be used for flooring and walls. Over time, the company will delve into expansions
through the many uses of coconut husk tiles, capturing other potential markets and reaching a
wider audience.
Kalikhasan Inc plans to capitalize on the many strengths of its product; its uniqueness,
variability, and inclusion of social responsibility that is a trend in our current business
landscape. Looking into who we can tap into, we can see growing infrastructure, interdesign,
and eco-tourism in the Spanish market. Because the Spanish tile industry is mostly ceramic,
our product is more unique and can be differentiated among the sea of products in the market.
Taking into consideration all of these factors, Cocoslate will be positioned as a
lightweight, aesthetically pleasing, and eco-friendly product that can be used by business
institutions such as resorts and offices. Kalikhasan Inc will partner with Philippine
communities like CSCFMPC and IRR in hopes of connecting their livelihood with
international clients. This is our overall aim: to connect businesses, people and lives.
To effectively market the product in Spain, Kalikhasan Inc shall focus on Barcelona
and Madrid, populous cities in Spain. Cococslate will use sales agents and take part in
hardware stores and trade fairs. A cost-plus pricing will be adopted, depending on the
ultimate market destination. The company will then plan on promoting Cocoslate through
various methods in gaining awareness, buyers, and retention.The company will use a direct
export method, and will follow an export department structure.
Our projected financials show that the business is a profitable one to venture into.
With a product cost of P329.20 and an SRP of P1,200, the company hopes to be able to
garner 0.05% of the total market share of Spains ceramic tile industry. As the companys
operations expands and economies of scale are factored in, the company foresees profit to
increase as costs decreases.

3
TABLE OF CONTENTS

Goal Setting 4

Purpose of Entering Export Business 5

Competitive Landscape 5

Marketing Strategy 10

Methods of Exporting 19

Entry Structure and Organization 20

Financials 20

Bibliography 23

I. Goal Setting
Long Term Goals
It is the mission of Kalikhasan Inc to create an export business model that penetrates a
specific target markets by utilizing integral environmental elements and developing the
internal characteristics that establish the company as a lead exporter/marketer of coconut
shell mosaic tiles. The company envisions itself as an influential key player in the tile
industry that creates a strong social impact by improving the living standards of the
community sourcing and manufacturing our product, and an economic one by strengthening
brand equity, growth, and stability. This will require the company to raise its market share to
5%, and obtain healthy growth in terms of company profitability during its first 5 to 10 years
of operation. Having detailed knowledge and firsthand experience of the products
capabilities and positioning in the market, the company aims to expand in other countries and
show the products potential for market viability. These long-term goals will be done through
steps taken in intermediate and short-term goals that will help keep the company competitive,
innovative, and versatile.

Intermediate Term Goals

Within the span of 5 years, the company must already have an established presence,
measured in: increase of market share, growth in annual profits, and improvements in net
income. The company will also tackle personnel advancement and empowerment by forming

4
and developing a management team that is diverse, skilled, and knowledgeable. This team
will contribute to the companys drive to consistently be innovative and premium.

Short Term Goals

During its first year, the companys short term goals will involve establishing and
widening its reach within the target market, while further understanding the industry and their
consumers behavior, preferences, and traits. This will help direct the companys operations
towards growth and profit in the succeeding years. As Kalikhasan Inc is a new company with
little or no market presence in the foreign market they wish to enter, the company only aims
to reach a minimal growth rate of 5% or at least to break even on its first two (2) years of
selling.

II. Purpose of Entering Export Business

Kalikhasan Incs main purpose for existing is to connect businesses with other
businesses by sourcing directly from farmers and communities that process the raw materials
to create coconut shell mosaic tiles. The finished products will be delivered and sold to
businesses and institutions such as resorts, hotels, buildings, etc. Through this, we hope to
provide an avenue for Filipino farmers to engage in international trade and explore the
international market to exploit any opportunities while promoting local goods and services.
This opportunity provides them with better quality of living, and chances to develop their
livelihood and skills.
To effectively market the product, Kalikhasan Inc will need to form partnerships with
institutions that can promote the companys eco-friendly and socially responsible products to
garner support for the underdeveloped farming sectors of the Philippines. This will allow
these institutions to promote social responsibility ials and integrate it in their own businesses
and brand. (For example, resorts can improve their brand image by mentioning to their
customers that they promote the lives of poor farmers and utilize recycled products.)

III. Competitive Landscape

Strengths, Weaknesses, Opportunities, and Threats
Strengths

5
 In the global business environment, there has been a rising trend in utilizing
organic/natural resources and patronizing brands that do too, thus businesses are beginning to
acquire eco-friendly and recycled materials in order to establish or develop their image as a
brand that has environmentally-friendly and sustainable business practices.
Because coconut shell mosaic tiles are not as common in other countries such as
Spain, this can set our product apart from the typical tiles like ceramic, giving the company
an edge while creating a differentiated presence in the target market. Another strength or
advantage of using coconut shells as raw materials is the potential for further expansion and
diversification given the versatility offered by the material: there are several products these
shells can be transformed into; not only can they be used for flooring and walls, but also
bowls, and other furniture accents. This provides Kalikhasan with the opportunity to
eventually expand its product lines and offerings to introduce and create new ways to recycle
coconut shells while remaining sustainable and waste-reducing given that Filipino farmers
usually just dispose of the coconut shells once the meat and juice have been extracted.
Weaknesses
The uniqueness of our product can be seen as a double-edged sword: while it is
unique and relatively new in the market, some consumer segments may not be familiar with
the product or concept, making it challenging for the company to penetrate certain market
segments. The companys initial lack in connections and networks within our target market
will also make reaching customers more difficult.
Opportunities
The emergence of different forms of infrastructure in the country, such as homes in
private subdivisions, shopping malls, museums and schools, is an opportunity for growth in
Spains tile industry.1 It is forecasted that this business segment will obtain an annual growth
rate of 20% within the next ten years. Aside from this, the increasing number of interior
designers in Spain is an opportunity for this industry because of many Spaniards preference
for mosaic tiles given their cultures history of using them as traditional art & design pieces.2
Threats
The competition posed by emerging tile manufacturers is a threat to the whole
ceramic tile industry as more and more firms are entering the marketplace which puts

1
Ceramic Tiles Industry Analysis and Forecast. Transparency Market Research. T ransparency Market Research, 22 June 2016. Web. 3
Dec 2016.
2
The history and art of Spanish ceramic tiles.Culture, heritage and sightseeing. Spain @ M, 19 April 2014. Web. 7 Dec 2016.
6
pressure on Spanish companies that produce tiles to show development in improving their
operations and overall position in the entire industry in comparison to existing and entering
players. Furthermore, the usage of wooden, plastic and vinyl flooring in Spain remains to be
widely popular. Such products are perceived by some to be more affordable and convenient
to find and install, particularly in Spanish households. This serves as a serious threat to the
tile industry as it influences the amount of sales and the size of the overall market share that
the sector will be able to maintain in the country and in other global markets.

Porters Five Forces

Competitive Rivalry
The competitive rivalry of players in Spains local ceramic tile industry is weak as
there are only a few companies who impact the domestic market, however, when ones take
into consideration the international suppliers, competition then becomes rigid as there are
formidable rivals situated in countries like Bangladesh, China, Thailand and Sri Lanka.3 Due
to rising labor costs for the tile industry all over the world and the exponential growth of
demand for tiles, developed countries are focusing on having high quality ceramic wares
manufactured in low-cost labor countries in order to address the emergence in demand.
Tile producers in Spain are also showing active progression in enhancing their overall
business performance, mainly by introducing more innovative and attractive designs to the
market, and this will subsequently result to ameliorating their place in the industry.4 Rivalry
in the tile industry, mainly in the local scale, however, remains weak among existing
companies but the slowly increasing number of foreign entrants into the sector is notable.
Bargaining Power of Suppliers
In terms of production, the necessary raw materials for manufacturing tiles comprise
roughly 30% of the total cost. Such raw materials include different kinds of clay, such as ball
clay, fire clay, and China clay.5 Aside from this, feldspar, quarter plaster, aluminum oxide,
zinc oxide, and liquid golds are also indispensable to the process. Furthermore, the necessary
machineries utilized for the manufacturing of ceramic tiles are primarily imported from India,
China, Indonesia, Germany and Italy.

3
ransparency Market Research, 22 June 2016. Web. 3
Ceramic Tiles Industry Analysis and Forecast. Transparency Market Research. T
Dec 2016.
4
Ibid.
5
Ibid.

7
 But compared to other European countries, raw materials are not readily available in
Spain.6 However, the equipment and machines needed for production are on hand and easily
accessible. Because of this, raw material suppliers, both in the local and foreign
environments, possess greater leverage in bargaining prices. However, the supplier base of
the ceramic industry is moderately large, which weakens and regulates the supplier power.
Furthermore, several supplying firms in India are beginning to display interest in expanding
and catering to the ceramic industry of other countries, which could threaten the currently
existing and established suppliers.
Bargaining Power of Buyers
Consumers of ceramic products, which include tiles, possess high bargaining power,
especially in terms of price negotiation.7 Even though customers commonly purchase the
product for the price set by the company, it would be relatively easy for them to shift to
ceramic goods that are priced comparatively lower. Taking this into account, local producers
of tiles continue to direct their efforts at competitive pricing in order to remain viable in the
eyes of consumers.
In international markets, the bargaining power of buyers is also reasonably strong
since they can easily switch to other cheaper suppliers.8 Such suppliers are mostly located in
China, Sri Lanka, Malaysia and Thailand. However, these countries also face difficulty in
setting competitive prices in the marketplace, thus, often lose a part of their market share and
lessen overall impact. In addition, putting the tile industry into context, as the number of
buyers in the local and global market grows, customers bargaining power weakens.
Threat of New Entrants
Considering that the tile industry has great potential for investment, it has since then
been an attractive segment for both local and foreign investors. Since demand for ceramic
products are rising rapidly in the domestic and global market, new entrants can easily become
profitable by capturing untapped and unmet demand -- this is with the consideration that the
gap between demand and supply is widened.9 In addition to this, the increase and
improvement of various kinds of infrastructure including residences, shopping malls, schools,
and other institutions will contribute to the growing demand for tiles. Therefore, the business

6
Ibid.
7
Tiles: Global Industry Perspective. Market Research Store. Market Research Store, Nov 2015. Web. 3 Dec 2016.
8
Tiles: Global Industry Perspective. Market Research Store. Market Research Store, Nov 2015. Web. 3 Dec 2016.
9
Ceramic Tiles Industry Analysis and Forecast. Transparency Market Research. T ransparency Market Research, 22 June 2016. Web. 3
Dec 2016.

8
of ceramic tiles is expected to emerge as one of the largest sectors with an annual growth rate
of 20%.
However, in Spain, the quantity and capacity of new contenders remains to be
relatively low when put in perspective with domestic and international demand.10 Given this,
although there is imminent threat of potential entry, it is still not strong enough to
significantly impact or threaten current participants of the industry.
Threat of Substitution
The tile industry in Spain does not cover a large portion of the countrys total market
share in the present. Numerous urban households still patronize linoleum and plastic flooring,
as well as vinyl floors with mosaic designs.11 Other notable substitutes of tiles also include
wooden flooring or tiles, bamboo flooring, ply board, marble stones, and other artificial
stones that are utilized both indoors and outdoors. Having said this, readily available and
low-cost alternative products contribute to the threat of substitution.

Competitive Analysis
Arcana Ceramica
Arcana Ceramica, one of the leading players in Spains tile industry set itself apart
among the pool of Spanish tile companies by manufacturing products that are made of
excellent quality with a high-end aesthetic.12 One of the companys main goals is to
consistently participate in the latest developments of the tile industry in terms of functionality
and design, while viewing international market trends and capitalizing on opportunities for
export.
Having effective methods and techniques for production, Arcana Ceramica has the
capability to develop advancements in tile products tailor-made for walls, ceilings & floors.13
The company also partakes in corporate social responsibility and commits itself to delivering
technical superiority to meet the varying demands for specific markets.

Indarex

10
Ibid.
11
ransparency Market Research, 22 June 2016. Web. 3
Ceramic Tiles Industry Analysis and Forecast. Transparency Market Research. T
Dec 2016.
12
About Us. Arcana Ceramica. Arcana Ceramica, 2016. Web. 3 Dec 2016.
13
Ibid.

9
 Indarex is a Spanish company wholly devoted to the production of ceramic tiles.14 The
company has ever since been dynamically promoting their locally manufactured tiles. Aside
from this, the company also represents and carries several small Spanish manufacturing firms
who have their own line of ceramic tiles. Indarex makes itself present and relevant in various
global markets by continuously innovating and developing.
Indarex also strictly aligns with the laws and regulations for the purpose of
consistently upholding and developing their overall standards for quality control.15 Indarex
successfully also maintains its company name by delivering products, services, and
distribution of high quality and efficiency to their diverse customer base composed of
construction material companies, distributors, retailers, tile stores, professional architects, and
individual consumers.

IV. Marketing Strategy

TARGETING MARKETS AND CUSTOMERS
Determine Which Markets Offer the Best Prospects for Export Sales
Since part of the companys products unique selling proposition is its principle of
connecting people and lives with businesses through our enterprise, the European market is
seen as a better target market. This is because of the increasing social and environmental
awareness and activities in the region. Given this, the company looked at the
Southern-European market as a possible target market and further narrowed it down to Spain.
Spain was chosen due to its growing economy and rising tourism industry which makes it
have a big potential. Spain is the 4th largest economy in the Eurozone and has a GDP of USD
1.2 trillion with a population of 46.4 million16. In 2015, Spain leads the Travel & Tourism
Competitiveness Index ranking for the first time17. Its economy continues to see steady
growth driven by the strong tourism and export levels. Furthermore there are only a few
small competitors within this market and Cocoslate can differ from the others with its social
and environmental impact. In European countries like Spain, Eco-Tourism becomes more and

14
Indarex. Indarex. Indarex Commerce SL, 2014. Web. 3 Dec 2016.
15
Indarex. Indarex. Indarex Commerce SL, 2014. Web. 3 Dec 2016.
16
"Spain-Market Overview." Export.gov. N.p., 25 July 2016. Web. 06 Dec. 2016.
<https://www.export.gov/article?id=Spain-market-overview>.
17
"The Travel & Tourism Competitiveness Index Ranking 2015." World Economic Forum. N.p., n.d. Web. 06 Dec. 2016.
<http://reports.weforum.org/travel-and-tourism-competitiveness-report-2015/index-results-the-travel-tourism-competitiveness-index-ranking
-2015/>.

10
more important18. Therefore existing and new built resorts and hotels need to think about
changing their interior design into eco-friendly materials to ride on the trend. Aside from
Spain, Cocoslate could be also exported to other European countries around the
Mediterranean Sea, because there is not a big difference between these countries in terms of
its tourism industry.
Identify Customers Within your Chosen Markets
The company chose to target the business institutions like resorts and hotels especially
those who are seeking for a natural or tropical look and feeling because these institutions are
the ones who would appreciate the aesthetic beauty of the product most since the tourism
industry is grounded very much on image and aesthetic appeal. Moreover, our company will
also be targeting higher end hotels and resorts with a growing social and/or environmental
interest and who are willing to invest in natural product and beauty to be recognized as a
socially responsible business (i.e. Inter-Continental Hotels and Resorts). Given that tourism
continues to be an important sector of Spains economy, as Spain is the worlds third largest
tourist destination, the industry will continue to grow and to build structures to meet this
demand. The company then believes that it will be able to capture value in this opportunity.

PRODUCT
Products to be Offered Internationally
Cocoslate offers a greener and a more eco-friendly
option for tiling and decorating business institutions like
hotels, resorts and buildings. Kalikhasan Inc will be initially
providing a range and selection of tiles used for walls,
ceilings and floor panels. Cocoslates are hand-assembled using reclaimed, cut, and processed
chips from the protective hard shells of coconuts, along with cement and adhesive. The
disposed coconut shells, the sturdy layers of the coconut fruit which is left after the copra
kernels have been scooped out from the coconut, will be sourced and collected from various
coconut farms and their communities located across the Philippines, which is a country
abundant in coconut, especially in places such as the Quezon and Davao region19. Then, the

18
"Sustainable Travel & Ecotourism in Spain." Frommer's. N.p., n.d. Web. 06 Dec. 2016.
<http://www.frommers.com/destinations/spain/648653>.
19
"Philippine Statistics Authority." Philippine Statistics Authority. N.p., June 2016. Web. 06 Dec. 2016.
<https://psa.gov.ph/non-food/coconut>.

11
shell, after being cleaned and polished, will be cut into chips, and processed with varnish to
make the material water-resistant and durable.20
Currently, raw coconut shells are being used for creating handicraft items and
producing charcoal briquettes for cooking, but as personal consumables, these outputs offer
limited added value. Our company then offers another possible use for these chips that has
not been completely exploited while giving the coconut shells more added value as they are
transformed into premium-looking coconut tiles.
Cocoslate, being a more eco-friendly and responsible alternative to ceramic tiles, aims
to ride and capitalize on the trend of eco-tourism as it exports its products to European
countries like Spain. Businesses that use our product will have the advantage of being able to
market their institution as one that is socially responsible to get the support of people who
look for eco-touristic accommodation.
Our company wishes to initially target Spain, given that it is one of the top
destinations in the world with about 52.5 million tourists by August 2016 (an increase of 10%
from August 2015).21 Moreover, the countrys eco-tourism industry has grown in popularity
as an increasing number of tourists are incorporating environmental awareness into their
decisions while visiting Spain22. Given these two factors, business institutions like hotels,
resorts that constitute one of the largest aspects of the tourism industry can hit two birds with
one stone with our product. Not only can they attract the increasing number of tourists with
the premium and luxurious atmosphere created by the aesthetics of the tiles, but they can also
bring in tourists looking for eco-friendly and socially responsible institutions.
Unique Selling Proposition
Kalikhasan Inc will position its products as lightweight, low-maintenance,
aesthetically-pleasing and eco-friendly alternatives to the traditional ceramic tiles that
commercial and business institutions typically use. Another unique aspect of Cocoslates
business model is its principle that grounds the business, which is its aim to connect
businesses, people and lives. Kalikhasan Inc will partner up with communities such as
Calauag Small Coconut Farmers Multipurpose Cooperative (CSCFMPC) and the
International Institute for Rural Reconstructions (IIRR) Climate Smart Agriculture Program,

20
"Tree of Life." Tree of Life. N.p., n.d. Web. 06 Dec. 2016. <http://www.spscoconuts.com/coconut-tree.html>.
21
Govan, Fiona. "Everyone Loves Spain: Tourist Numbers Break New Record." The Local. N.p., 30 Sept. 2016. Web. 06 Dec. 2016.
<http://www.thelocal.es/20160930/everyone-loves-spain-tourist-numbers-break-new-record>.
22
Webb-Hicks, Deirdre Nicole. "Eco Tourism in Spain and Spain." TUSPAIN - Environment - Eco Tourism in Spain. N.p., n.d. Web. 06
Dec. 2016. <http://www.tuspain.com/env/env2.htm>.

12
which support small-scale farmers that grow agricultural products, to connect and bridge the
company to communities that can supply raw materials vital to Kalikhasan Incs operations.
They will serve as the companys coconut shell supplier as we in turn provide the community
with an empowering and steady source of income and employment.

Production process

Production will be held in a warehouse located

in Cabuyao, Laguna, which is situated in the
middle point between the communities that
supply our raw coconut shells and our suppliers
who will provide the other materials needed for
manufacturing.

The procedure for manufacturing our finished product is as follows:

1. Scraping off of any leftover copra or coconut meat: To ensure that our products are clean
and ready for processing and treatment to produce durable and industrial-grade tiles, any
substances that could serve as obstructions and could possibly interfere with the polishing,
cutting, or sealing.
2. Sanding of shell: Using a rough and abrasive surface, workers will sand the coconut shell
in order to smoothen the surface and make the polish/varnish application easier and even.
3. Cutting of the shell: Workers will then use a circular saw to efficiently and easily slice the
coconut shells into workable chips with sizes and dimensions that vary per tile design or
style.
4. Washing and Treating of coconut shell chips: To further clean the chips and eliminate any
dust, grime or dirt, the chips will be washed in warm water.
5. Coating the coconut shell chips with varnish: To prevent the coconut shell chips from
rotting or breaking, a protective coat of varnish will be painted on the shells by the workers.
The additional layer of varnish will also make the coconut shell chips water and dust
resistant.
6. Assembling the tile onto the finished cement base: The cement base will be made
beforehand by the workers by using a cement mixer to combine the cement with the

13
appropriate amount of water and allowing the tile/sheet to dry. After the cement sheet has
hardened and formed, the tiles design will begin to take shape as coconut shell chips are
glued to the base using a strong industrial thinset mortar adhesive. After assembling and
placing the coconut shell chips, the tile will be left to dry under the sun for the adhesive to
set.
7. Sealing the whole tile with varnish: To properly lock the coconut shell chips in place, a
final coat of varnish will be applied all over the surface area of the finished tile. This will
make the tile water-resistant, smoother, and easier to maintain and clean.
8. Final inspection: Because Kalikhasan Inc upholds high standards for the products they
create and sell to their clients and consumers, a final inspection to ensure the quality and
durability of the tiles will be made. Workers will manually inspect each individual tile to
identify any possible defects, damages, and deformities that must be addressed or eliminated
and ensure quality control. The tiles will also be cleaned by the staff by wiping the product to
remove any excess dirt or dust that might have been accumulated throughout the process in
the warehouse. Lastly, our logo that carries our companys name will also be stamped at the
bottom of the tiles (on the side that will face the floor or wall).
9. Packaging of tiles: Given that our products will mostly be bought and sold by bulk, they
will be packed into boxes by workers and wrapped in protective material to prevent any
breakage or losses that could occur as it is shipped or transported to the clients and consumers
located all around the globe.

Raw Materials Required for Each Tile (Standard 1 meter x 1 meter)

Raw materials cost per tile (Php) Amount/tile Unit cost Cost/tile
Coconut Shell Chips (1 kg) 1 kg 6.00 6.00
Cement (94 lbs) 2.62 lbs 230.00 6.41
Thinset Mortar Adhesive (2000 g) 394 g 90.00 17.73
Varnish (11000 ML) 20mL 250.00 0.45
Total cost per tile 30.60
Total cost per square meter (x 10.76)23 329.20

Suppliers

23
http://www.metric-conversions.org/area/square-meters-to-square-feet.htm
14
 Suppliers for the raw materials of Kalikhasans products will be chosen based on the
most competitive prices as well as taking the suppliers location and reliability into account in
order to have a consistent production process as well as to be able to price the final products
affordably.

Material Supplier Location Unit Cost

Coconut Calauag Small Coconut Farmers Calauag, Quezon Php 6 per kg

Shell Chips Multipurpose Cooperative
(CSCFMPC)

International Institute for Rural Guinayangan,

Reconstructions (IIRR) Climate Quezon
Smart Agriculture Program

Cement Ha Long Buffalo & Cement Quezon City, Php 230 per 94
Philippines lbs

Thinset Teeshoppe Clothing and Printing Taguig City, Php 90 per 2,000
Mortar Services Philippines grams (2 kgs)
Adhesive

Varnish Samuel Chun Mandaluyong Php 250 per

City, Philippines 11,000 ML (11 L)

PLACE
Kalikhasan Inc will be focusing on the two major cities for regional market in Spain
which are Madrid and Barcelona for its distribution strategy. These two cities were chosen
due to the availability of majority of agents, distributors, and other foreign trade related
entities. Further expansion plans for the company will include expanding to various cities in
Spain like Seville, Granada etc.
Sales Agents
Since the companys primary selling strategy is a business-to-business (B2B) strategy,
using a sales agent as a possible middleman between the company and the business customers
is effective as the company tries to reach out to as many customers possible. Since
relationships are important in achieving success in selling in Spain especially in large account
sales24, employing a sales agent to transact with institution can help build the relationship

24
"Spain - Selling Factors and TechniquesSpain - Selling Factors." Export.gov. N.p., 25 July 2016. Web. 06 Dec. 2016.
<https://www.export.gov/article?id=Spain-selling-factors-and-techniques>.

15
between the company and the institution. This sales agent will be exclusively selling mainly
the companys products to avoid conflicts of interests that may arise and to ensure that the
customers identify the agent as part of the company.
Hardware Distributor Stores
Although the company will be selling its products primarily to business institutions, it
will be best for the company to go into hardware distribution channels as it hopes to gain
market awareness and exposure regarding the product. Moreover, the company also plans to
target the consumers with highly disposable income who looks for trendy and innovative
products to use for their own houses. The company plans to target BricoKing, Leroy Merlin,
and Bauhaus25 which are all specialty hardware stores located in Spain. The company will get
into exclusive distribution agreements with these specialty stores to try to maintain the
exclusivity and premium outlook towards the product and the brand.

Trade Fairs
The company will participate in several trade fairs with the theme centered on interior
design or architecture, specifically those that target the market that Kalikhasan Inc aims to
reach out to (business institutions in Spain) during its launch in order to increase brand
awareness. Examples of trade fair that the company could look into are CEVISAMA
(International Exhibition of Ceramics, Surface Facing for the Building Industry, Sanitary
Ware, Fittings, Raw Materials, Glazes, Frits & Machinery), SCS SICRE (Sustainable
Construction Solutions International Show) and CONSTRUCTEC (International Trade Show
for Construction Material & Building Solutions Exhibition)26. During trade fairs, calling
cards will be given to interested buyers and this will hopefully create more exposure for the
company as well through product referral.

PRICE
Pricing strategy
The company will be using a cost-plus pricing strategy in coming up with the selling
price of Cocoslate. This pricing strategy will depend on the ultimate market destination of

25
"Furniture, Hardware and Office Supplies in Spain - Spain - Angloinfo." Angloinfo. N.p., n.d. Web. 06 Dec. 2016.
<https://www.angloinfo.com/how-to/spain/housing/setting-up-home/furnishing-a-home>.
26
"Trade Shows in Spain2017 - 2018." Trade Shows Worldwide - Spain ('17-'18). N.p., n.d. Web. 06 Dec. 2016.
<http://www.eventseye.com/fairs/c1_trade-shows_spain.html>.

16
the product as well as the mode of transportation used, tariffs and different costs associated
with getting the product to the end users. A full-absorption costing will be used to estimate
the costs by summing up all the past or current direct and indirect manufacturing and
overhead costs.
Product Costing (in Philippine peso) Price Percentage (%)
Manufacturer
Raw Materials 329.20 27%
Overhead Costs 581.54 48%
Retained 289.25 24%
End Price 1,200.00 100%

PROMOTION
Phase 1: Awareness
Website: The company will be having its own website as well in order to legitimize the
company in the eyes of the business customers which is important especially since
Kalikhasan Inc is a foreign company. This will help the company build its credibility against
other foreign companies who would also enter the same market. The website could also be a
source for information regarding the product, its production, as well as the companys
distribution networks from which the products can be bought. The website will also have a
consumer feedback system in order to maintain a customer-centric approach. The company
will use these feedbacks as constructive criticisms to improve on the product and address
these as soon as possible and as a check and balance to see if the products quality is
maintained as it is being distributed across different hardware stores.
Feature article
The company will also look into promoting the product through feature articles by
well known architectural magazines and online websites like ArquitecturaViva.com.27 The
following that these websites/publications have will be beneficial for the company and its
product to gain more awareness and exposure and also create buzz in the online world due to
the products innovative design and aesthetics.

27
"ArquitecturaViva.com." ArquitecturaViva.com. N.p., 7 Dec. 2016. Web. 7 Dec. 2017.
<http://www.bing.com/cr?IG=FD59DFA3C477443B9243BD1BFCA511D6&CID=1BB0A39ED88B69100AF3AA7AD9BA684C&rd=1&h
=_U9OYebvTuHQsi5z97U5hhayIY5zwqftJ-nsmwKqcuw&v=1&r=http%3a%2f%2fwww.arquitecturaviva.com%2fen&p=DevEx,5087.1>.

17
Phase 2: Purchase
Relationship with Influencers
Influencers with regards to this industry refer to the people who have access or
influence to the decisions of the target customers of the company. Examples of these are the
architects, designers of business institutions like hotels or resorts that are credible and trusted
sources of suggestions by those who make the purchasing decision. By building relationships
with them and introducing the companys product to them, they could influence the decision
making process of the business leaders to make the purchase in favor of the company.

Product catalog

Scaled model with Cocoslate shell floor

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 Scaled model with Cocoslate shell wall

To be able to communicate properly to our business customers, it will be best to have

a product catalog of all the product offerings that the company offers as well as scaled model
featuring the companys products. By giving out product catalogs, the companys agents and
representatives could provide the customers with a more visual image of the product which
serves the company well as it could build on one of the products strength which is aesthetic
beauty.
Phase 3: Retention
Bulk discounts
Since the primary market for the products will be business institutions instead of
individual consumers, the amount of each order that will be placed is expected to be in bulk.
Targeting this kind of customers, it will be important to give them incentives for placing bulk
orders to lure them into buying the companys products instead of other competitors since
each customer that the company will be able to get will bring in a lot of sales for the
company.

V. Methods of Exporting
Kalikhasan Inc will be using direct exporting in bringing the product to Spain. Direct
exporting will be used despite the higher risks and costs associated with it because of the

19
higher control and closer relationships built with overseas buyers. This will be essential for
the company moving forward in the long term ass it hopes to continue expanding the business
under the company name--Kalikhasan Inc.

VI. Entry Structure and Organization

In the companys efforts to go international, the best organizational structure that

would best fit it is the export department structure. This organizational structure allows the
company to capitalize on the market of Spain for its products. However, the company must
first do extensive market research and look at the possible opportunities and threats in the
Spanish market. The company must be able to come up with a strategy to capitalize on these
opportunities and minimize or reduce these threats. Since the company is still a new player in
the international scene, using this structure will help them specialize on their product with the
goal of market expansion. Creation of this division facilitates the beginning of a global
strategy.

VII. Financials
Spanish Ceramic and Tiles Industry28
Year (2011-2019) 2011 2012 2013 2014 2015 2016-2019
Production 392 404 420 425 440 N/A
Total national sales 705 575 557 574 643 N/A
Exports 1892 2082 2240 2328 2452 N/A

28
"A Competitive Sector." ASCER. N.p., n.d. Web. 06 Dec. 2016. <http://www.ascer.es/homeinstitucional/sectorDatos.aspx?lang>.

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Domestic sales growth rate -- -18.44% -3.13% 3.05% 12.02% N/A
Average growth in the last 3 years 3.98% N/A

Top-down financial forecast 2016 2017 2018 2019

0.5% of domestic sales (in Million of euros) 3.34 3.48 3.61 3.76
0.5% of domestic sales (in Million of Php)29 178.15 185.24 192.61 200.28

The data found above reflects the overall growth and size of the industry (Ceramic
and Tiles Industry) Kalikhasan Inc wishes to penetrate and enter in the target market (Spain.)
Forecasted sales were then computed by multiplying the target market share (0.5%) by the
national sales in the industry, and growth of the companys revenues were based off the
domestic sales growth rate of the country.

Forecasted Overhead Costs

The company forecasts the following overhead costs which it will incur throughout its
daily operations:

29
1 = Php53.29 on Dec.7, 2016

21
Profit & Loss Statement

Assuming an SRP of Php 1,200 and considering all of the expenses we will incur
from manufacturing (COGS) and selling, the income statements found above show our
projected sales, profits, expenses, and losses during our first 3 years of selling to the market.

22
VIII. Bibliography
"A Competitive Sector." ASCER. N.p., n.d. Web. 06 Dec. 2016.
<http://www.ascer.es/homeinstitucional/sectorDatos.aspx?lang>.

About Us. Arcana Ceramica. Arcana Ceramica, 2016. Web. 3 Dec 2016.
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"ArquitecturaViva.com." ArquitecturaViva.com. N.p., 7 Dec. 2016. Web. 7 Dec. 2017.
<http://www.bing.com/cr?IG=FD59DFA3C477443B9243BD1BFCA511D6&CID=1
BB0A39ED88B69100AF3AA7AD9BA684C&rd=1&h=_U9OYebvTuHQsi5z97U5h
hayIY5zwqftJ-nsmwKqcuw&v=1&r=http%3a%2f%2fwww.arquitecturaviva.com%2f
en&p=DevEx,5087.1>.

Ceramic Tiles Industry Analysis and Forecast. Transparency Market Research.

Transparency Market Research, 22 June 2016. Web. 3 Dec 2016.

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<https://www.angloinfo.com/how-to/spain/housing/setting-up-home/furnishing-a-ho
m
e>.

Govan, Fiona. "Everyone Loves Spain: Tourist Numbers Break New Record." The Local.
N.p., 30 Sept. 2016. Web. 06 Dec. 2016.
<http://www.thelocal.es/20160930/everyone-loves-spain-tourist-numbers-break-new-
r
ecord>.
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"Philippine Statistics Authority." Philippine Statistics Authority. N.p., June 2016. Web. 06
Dec. 2016. <https://psa.gov.ph/non-food/coconut>.

"Spain-Market Overview." Export.gov. N.p., 25 July 2016. Web. 06 Dec. 2016.

23
 <https://www.export.gov/article?id=Spain-market-overview>.

"Spain - Selling Factors and TechniquesSpain - Selling Factors." Export.gov. N.p., 25 July
2016. Web. 06 Dec. 2016.
<https://www.export.gov/article?id=Spain-selling-factors-and-techniques>.
"Sustainable Travel & Ecotourism in Spain." Frommer's. N.p., n.d. Web. 06 Dec. 2016.
<http://www.frommers.com/destinations/spain/648653>.

The History and Art of Spanish ceramic tiles.Culture, heritage and sightseeing. Spain @
M, 19 April 2014. Web. 7 Dec 2016.

"The Travel & Tourism Competitiveness Index Ranking 2015." World Economic Forum.
N.p., n.d. Web. 06 Dec. 2016.
<http://reports.weforum.org/travel-and-tourism-competitiveness-report-2015/index-re
sults-the-travel-tourism-competitiveness-index-ranking-2015/>.

Tiles: Global Industry Perspective. Market Research Store. Market Research Store, Nov
2015. Web. 3 Dec 2016.

"Trade Shows in Spain2017 - 2018." Trade Shows Worldwide - Spain ('17-'18). N.p., n.d.
Web. 06 Dec. 2016. <http://www.eventseye.com/fairs/c1_trade-shows_spain.html>.

"Tree of Life." Tree of Life. N.p., n.d. Web. 06 Dec. 2016.

<http://www.spscoconuts.com/coconut-tree.html>.

Webb-Hicks, Deirdre Nicole. "Eco Tourism in Spain and Spain." TUSPAIN - Environment -
Eco Tourism in Spain. N.p., n.d. Web. 06 Dec. 2016.
<http://www.tuspain.com/env/env2.htm>.

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