Problem: What problem is this project trying to address?
This venture’s target market are the newly married couples, one or both of whom are minimum wage earners; having yet one or two children; renting a house in Metro Cebu, and have no relatives living with them and dependent financially on them.
Sharp Philippines revealed in its 2008-2009 fiscal year report that its firm has sold 17,000 TV sets nationwide or an increase of 34% from the previous year’s sale. We have no data from other firms selling TV sets in the Philippines. However available data from Potential Water Supply Projects of Metro Cebu Water District and data from the National Statistics Office for the year 2000 show that Metro Cebu has a population of 1,094,100 and those belonging to low income families numbered 183,350++, with an annual growth rate of 4.5%.
The foregoing data clearly shows that there is a growing market in Metro Cebu (composing of Cebu, Mandaue, Lapu-Lapu, Talisay and Naga cities). If this product will also be made available throughout the 40 municipalities and 4 other component cities (Danao, Toledo, Carcar and Bogo) of the Province of Cebu, one would certainly be very conservative in projecting a sale of no less than 7,400 reconditioned TV sets on the first year of operation.
The identified competitors in Metro Cebu and some other parts of the component cities and municipalities of the Province of Cebu are the long established manufacturers of brand new TV sets and those selling second-hand or used TV sets (locally known as “surplus” TV units). The producers of brand new televisions are Sony, Sharp, Samsung, LG, Goldstar and many more Japanese and Korean brands, and more recently Chinese brands. These products are usually catered by the high and middle income families. Low income families normally purchase the so called “surplus” TV sets, which are priced between at PhP3,000(US$69.76) to PhP5,000(US$116.28). The external appearance alone of surplus TV sets is already a turn-off to many prospective buyers. Most of the plastic casings have scratches and cracks, and they appear to have come from 1980s or earlier models. When the rear portions of surplus TV sets will be opened for inspection, one finds many components to be covered with rusts and layers of dusts. We regard the sellers of used/surplus TV sets as our direct competitors since the only market of their wares are those belonging to the low-income segment of the market.
Considering that in the production of reconditioned TV sets, all components will be thoroughly cleaned, rusted parts will be replaced, and new plastic casings will be installed, the yet envisioned reconditioned TV sets will surely be more attractive to buy than the surplus TV sets.
Solution: What is the proposed solution? Please be specific!
The Innovation- By engaging in deals to purchase scrap TV sets from major buyers of scrapped appliances, the proposed enterprise gets to have an assured supply line at a fair price of just from 200(US$4.65) to 300(US$6.88) pesos each. The project proponents then estimate reconditioning costs to be from 700(US$16.28) to 1050(US$24.41) pesos, depending on the size of the TV unit. Along with other costs, the proposed venture could sell the reconditioned products at prices ranging from 2,100(about US$48.83) to 2,500 (US$58.13) pesos, with profit margins of over 50 percent. And yet, despite the decent profit margins, the suggested retail prices on these refurbished units would still be significantly lower than that of other refurbished, reconditioned and the so-called surplus(second hand) TV sets in the market.