CHAPTER 2

I. INDUSTRY PROFILE
ChewBicho is part of the Baked Good Industry where the main product is a nutritious donut that
offers the taste and feel of a normal donut but more healthy and has more benefits.

II. PESTEL Analysis

Political Aspect
Chewbicho will start in small bakeries and stores in cities or barangays. That means that the
owner will ask for a permit from the barangay and when it becomes bigger, the permit will be
from the city hall or the mayor. When it comes to taxes, on net taxable income, the regular
corporate income tax (RCIT) is 30%. Starting from the fourth year of commercial operation,
a minimum corporate income tax (MCIT) equal to 2% of gross income is implemented.
(Business tax laws in the Philippines, 2016). Considering that ChewBicho is new to its line
of work, trading from other countries is not yet on the table, but trading across cities is one of
the considerations. For the competition regulation, the ChewBicho is new to its line which is
pastry and desserts, existing brand and products are already at their peak that is why having
competition will be somewhat good and healthy for the product because the product itself
will be judged according to its taste and even from the presentation of the employees. The
product will start its peak when people will no longer patronize the same old product.

There are two kinds of consequences for the government regulation that the company might
face: indirect and direct. An example for indirect is when the local government units will add
coding for a specific place, the company will be affected indirectly because the company will
also open online wherein the product will be delivered through delivery apps and motor or
car coding from one place is not coding from another, so finding a driver could be a hassle.
The direct effect is when a specific city or province that the company has been eyeing closed
their doors for new enterprises, the city could be a good spot for the product but since the
LGU has its rules, the company is affected.
Economic Aspect
When sales in a region come to their peak, the corporation has two options: launch new
items or expand into largely unavailable regions. There is a growing middle-class percentage
in the country, which means more money to spend, and more than 60% of the population is
under the age of 35, which implies more possibility for companies to profit from higher
customer lifetime value. ChewBicho also standardized operations to facilitate franchising and
achieve economies of scale, but must proceed with caution because our customers are very
particular about food taste, and any cost-cutting measure that results in a change in taste may
not be acceptable to the customers, even if it means a price reduction.

Social Aspect
It is visible in a society that different communities are developing and growing with diverse
groups of people. These people have different backgrounds, beliefs, perspectives, social
statuses, and the like. Hence, there are several social aspects that we must look into for better
execution and success. First is the different social classes, our target market is children, and
children live in different social classes which we must look deeper into for our product to be
accessible to everyone. Second and lastly is the different perceptions of people regarding our
product, ChewBicho. ChewBicho is an improvised and newly developed NutriBun that has
been introduced before during the dark times of the Marcos’ Era. There may be some people
who will think our product is just like the old NutriBun. So by this, we will delve deeper in
sharing the benefits, improvements, and developments of our ChewBicho.

Technological Aspect
As ChewBicho begins its initial store operations, the team aims to seek a location to establish
its main bakery in which the first step of production takes place. Machines and technological
equipment such as stand mixers, full fridges, and commercial ovens will be utilized by bakers
as a means of convenience and easier processing of raw materials of ChewBicho’s healthy
donuts. In addition to this, the company aims to establish an online store with the use of
social media platforms such as Facebook & Instagram as a form of exposure, accessibility,
and interaction to the audience and potential customers. With this, the Director of Marketing
and their members will be able to access and monitor the market online, to know what is the
current trend and be able to follow it, be able to attract a vast unit of customers and find their
interests, and utilize the said platforms to its fullest potential as an asset to the company’s
sales and marketing strategies in the future.

Environmental Aspect
One of the largest sources of global pollution is the business industry. Considering that most
of the businesses around the world use plastics for their products’ packaging security, these
businesses find plastics to be the most convenient material in exporting their products.
According to Parker (2018), 40% of the global plastic production is used for packaging
which is used just once and disposed of later. In food businesses, microwavable plastic
containers are also used which also produce chemicals in the stored food after reheating
them. This huge production of plastics affects global pollution, therefore Chewbicho aims to
avoid the use of plastic bags or any other plastic containers. Since we are in the pastry
industry, it is best to keep our products in paper and box pastry packaging.

Legal Aspect
Although the business is not yet fully established, policies and regulations should be
properly maintained especially for the employees. First is the sanitation, the place will be
regularly cleaned to maintain sanitation and hygiene, this will be checked by the Department
of Health and some Local Government Units. The next is the rule for the employees, no store
will be left unattended, every employee will be informed about the rules and regulations
before he/she starts the job. The employees also receive a minimum wage and they do have
benefits when it comes to medical, life insurances and also the 13th-month pay or the bonus.
Lastly but not least for the employees, the proper attire and hair when inside the bakery, the
hair should always be neat and fixed with a hairnet, with regards the uniform, they will be
asked to wear an apron to less dirt on their clothes. The next one is the pricing, the price hike
and price reduction will be checked thoroughly by the marketing department before it will be
 implemented. The company also ensures to pay the tax regularly. ChewBicho is also
particular to its flavor and recipe, that is why flavors will be thoroughly discussed before
commencing. With these, the company guarantees that every change will be checked by the
LGU together with the permit that will be asked before the establishment of the company.

III. SWOT Analysis

As ChewBicho begins its operations, the vast market of baked products will have a new addition
of business that diversifies its place in the merchandise business. The team of business owners
have done a thorough examination on the brand’s extencial performance through the form of
SWOT analysis. 

STRENGTHS
- The products are nutritious and have health benefits to its consumers, preferably its target
market which are children.
- ChewBicho donuts have diverse flavor options to choose from.
- ChewBicho donut prices vary for both classic and premium flavors to accommodate diverse
social classes that wish to purchase the product. 
- The concept of vegetable infused donut treats is something new in the market.
- Star Wars themed products and donuts named after famous characters make the brand unique
and stand out from the rest.

WEAKNESS
- ChewBicho focuses only on one product, donuts.
-  ChewBicho donuts are something new and potential customers may be unfamiliar with them.
- The concept of baked donuts is not a new product to be introduced in the market.
- Children may not be familiar with the word “Bicho” in the brand’s name as it may cause
confusion.

OPPORTUNITIES
- As the markets online progress, the business may innovate new products with the same concept
of producing healthy and nutritious pastries while incorporating vegetables and vitamins to it.
- ChewBicho may come up with a vast variety of flavors to include in its brand. 
- As the brand is inspired by the famous Star Wars franchise, the team can collaborate with them
in the future.
- ChewBicho can offer franchises to investors to other locations in the Philippines.
- The brand can further collaborate with LGUs in creating stalls or business locations through
bakeries for the donuts to be much accessible to local communities.
- The brand can create more jobs for potential bakers and workers in the company as part of the
solution to the high rate of unemployment in the country. 

THREATS
- The baked goods industry may have been oversaturated through the years.
- As the brand expands its network and reach, quality control in production must be observed at
all times.
- All raw materials and ingredients must be fresh and kept to date.
- Because of the demand for donuts, ChewBicho may not be able to catch up, which can
potentially cause issues in the production process.
- Many workers and bakers working on the product may cause sanitary concerns.
- International donut brands are taking over the donut market. 

IV. Competitors Analysis

I. Direct Competitors
A. Krispy Kreme
Krispy Kreme is a well-renowned global donut brand that has recently
branched out in the Philippines. They offer a variety of donut flavors, with their
glazed donut particularly gaining more popularity than others. They also uniquely,
relative to other brands, have released a healthy version of their glazed donut--
with less gluten and sugar. This release puts them directly at par with
ChewBicho’s donuts. In retrospect, however, the healthy version of their glazed
donut does not offer extensive variety or flavor at all. It has also not gained
 enough traction, specifically in the Philippines, as the healthy donut is not as
heavily promoted in comparison to their other products. 

However, despite the lack of variety and marketing hype on their healthy
donut, Krispy Kreme is at an exclusive advantage in respect of machinery and
market share. On machinery, given Krispy Kreme’s capital, it is easy for them to
produce healthy donuts in massive amounts and to verify as well the health
benefits of their said donut, due to them having access to food nutritionists and
scientists. ChewBicho, as a start-up, has lacking capital to produce on mass and
specialize in the various health protocols needed for the ChewBicho donut. The
capital Krispy Kreme has is also predicated upon the market share that they have.
Krispy Kreme, as a brand, has amassed massive support from many
demographics, particularly the middle class and above-- due to the price points of
their donuts which range around 60 pesos and above. In lieu of this, it is difficult
then to sell the ChewBicho premium donuts as Krispy Kreme’s prestige and
existing clout puts them at the forefront. In a positive light, in contrast to Krispy
Kreme’s prices, the prices of ChewBicho’s donuts are much more accessible. 

Lastly, on marketing and communications. Although heavily popularized

in the Philippines, Krispy Kreme’s marketing strategy does not cater to Filipino
taste and culture. This is evidenced by the language and advert references they
use. The adverts that they also release are not specifically targeted toward
children, albeit they encompass the said market, which provides room for
ChewBicho to capitalize on its brand image as fun yet Filipino. Even though
ChewBicho potentially has the exclusive advantage when it comes to branding,
the amount of capital that Krispy Kreme has to produce commercials, posters, and
adverts is relatively a lot higher than that of ChewBicho’s. Conclusively, when it
comes to marketing, both are at a deadlock. 

B. Dunkin Donuts
 Dunkin Donuts, in comparison to Krispy Kreme, is also a global donut
brand that has expanded to the Philippines. It is known due to the variety of
classic and premium donuts it offers, are more affordable prices-- with prices
usually ranging from 20 to 40 pesos. The donut brand has been a household name
in the Philippines for many years now. With its price position and offering
structure, it puts itself directly at par with ChewBicho. The price position is
particularly important in this context as consumers have the tendency to compare
products relative to their prices-- especially if they have similar offerings. The
ChewBicho donuts, particularly the classic ones, have heavily incorporated the
“pink glaze”, which Dunkin Donut is relatively popular for. Flavorings and the
extent or variety are also similar between the two, but, with Dunkin Donuts
having the ability to better produce and perfect theirs on a mass. The biggest
differentiating factor will be the healthiness of the said donuts wherein Dunkin
Donuts fall explicitly behind. After COVID-19, to a degree, consumers are
expected to become much more health-conscious about the food they potentially
consume. 

The added health benefit of the ChewBicho donut puts the donuts, when
based on design and flavor, is the potential tiebreaker between the two. However,
despite its potential, Dunkin Donuts holds a massive market share over the
Philippine market. They have successfully made their brand Filpino through
hiring Filipino stars in their adverts, taking references from Filipino culture, and
even naming offerings after Filipino things, such as the Sari-Sari Bucket. This
places ChewBicho’s attempt to try at Filipino culture as Dunkin Donuts is not
only recognized for it but also has enough capital to roll out advertisements in
relation to it. Their capital, just like Krispy Kreme’s, provides them an advantage
for they already have existing clout and machinery. On the flip side, however,
ChewBicho may capitalize off  of Star War’s clout which is also known in the
Philippines. Dunkin Donuts, although taking references from Filipino culture, is
still known to be quite Westernized to a degree. This usually offers
inconsistencies within their brand reputations. Star War’s branding, as a  brand
 reputation, can take both Filipino and Western references while still seeming
standardized and consistent. 

Lastly, on a minor note, Dunkin Donut is also known for its heavy
franchising culture, particularly in its international counterparts. In the long-term,
ChewBicho aims to franchise towards various sectors and to create partnerships
with state actors and establishments. This puts their expansion directly at par with
that of ChewBicho’s. ChewBicho must then exert effort in heightening brand
loyalty and reputation as these will determine how franchises and state actors trust
their products and their credibility. 

II. Indirect Competitors 

A. Julie’s Bakeshop
Julie’s Bakeshop is a popularly known Filipino owned-brand, focusing on
various baked goods, with no primary focus on donuts. This puts them as an
indirect competitor for their offerings are not directly similar to that of
ChewBicho’s. However, they are still indeed a valid competitor for they are
heavily known by the Filipino masses, particularly those hailing from low-income
areas or communities, is primarily due to how they brand their products, mainly
taking inspiration from Filipino culture and references, and the low prices they
have placed upon them, usually ranging from 5 to 10 pesos. In the long-term,
ChewBicho aims to target these low-income and vulnerable communities, which
is heavily dependent on the competition they encounter as they scale. Once they
do scale heavily and transition toward the price range Julie’s Bakeshop is at, it
will be difficult to compete given that Julie’s Bakeshop has numerous franchises
in low-income areas and communities, especially in barangays and
municipalities. 

In terms of marketing, however, Julie’s Bakeshop is not as apparent and

upfront as of the aforementioned direct competitors. ChewBicho has the ability to
 leverage off of marketing its product on the basis of Star Wars and Filipino
culture. Julie’s Bakeshop also has downsides in terms of them not inputting
enough capital towards marketing and not identifying a specific target market to
leverage on-- this can exclusively be taken advantage of by ChewBicho.

B. Gardenia 
Gardenia is a well-known brand of tasty bread in the Philippines today.
For this analysis, their popularly known as healthy Wheat Bread is taken to
account. One of the advantages of the ChewBicho donut is its added health
benefits, if this is marketed by ChewBicho, consumers might have the tendency to
label them as competitors in the healthy baked goods markets. This tendency goes
the same for other competitors currently seen in the market. Gardenia has also
marketed their healthy Wheat Bread and has amassed massive brand recognition
for the likes of it. In minute cases, wherein the ChewBicho donut is boxed in, it
might not be able to actively compete in these markets. 

ChewBicho, given this, must then smartly position itself either in between
the healthy baked goods market and donut baked goods market-- this is to clarify
to their consumers what they advocate for and streamline their roll-out and
marketing strategies as well. In the long-term, as retroactive harm, if the
ChewBicho donut will be shelved in stores, Gardenia also remains as a tough
competitor if placed right beside each other, for their Wheat Bread has purely
health benefits without any added sweetened factors such as a glaze, sprinkles,
and the like. 

REFERENCES:

Bush, T. (2016, July 4). PESTLE Analysis: Economic Factors Affecting Business.

PESTLE Analysis. https://pestleanalysis.com/economic-factors-affecting-business/amp/?

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 Business tax laws in the Philippines. (2016, April). Oxford Business Group.

https://oxfordbusinessgroup.com/overview/key-points-detailed-look-tax-laws-businesses#:

%7E:text=The%20regular%20corporate%20income%20tax,fourth%20year%20of

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