University of Santo Tomas

College of Commerce

And

Business Administration

Case: Lamoiyan
Corporation of the
Philippines: Challenging
Multinational Giants
Submitted by:

Albor, Alex

Germar, Reynaldo Bonifacio

Ong,Raymond

Ramos, Marah

Shi

4m1

Submitted to:

Professor So

Date: December 6, 2010

Introduction

The toothpaste consumption in the Philippines was very little in the 1950’s but during
1998 up to today almost all Filipinos is consuming toothpaste. The story of success of
Lamoiyan Corporation which is owned by Mr. Cecilio Kwok Pedro is similar to the
growth of the toothpaste industry in the Philippines. He started a company which
creates aluminum container for toothpaste. Mr. Pedro tried to get a deal with
multinational companies which are Colgate and Unilever but no one listened to him for
the first three years but due to his perseverance a company called him and his company
started to supply 25 to 30 % of the total demand. But after three years his company
was hit by a big problem because the multinational companies turned into another
packaging which is plastic tube. Mr. Pedro ran out of business and decided to layoff all
his employees.

Since Mr. Pedro had machines which can create toothpaste containers he then decided
to put up a new company which is Lamoiyan Corporation. He also knew that
perceptions are the only difference between toothpastes in the market. Since Filipinos
have a colonial mentality and therefore if Lamoiyan would just be branded as a Filipino
made product people will perceived it to be of low quality, to counter this he highlighted
Lamoiyan ’s tie-up with a Japanese company. Another problem that Lamoiyan
encountered was they lack brand awareness. But they were able to solve it by
sponsoring the Philippine Olympic team.

Lamoiyan Company attacked the two multinational companies in an area where they
cannot compete which is price. They priced their toothpaste 30% below the price of their
competitors. Lamoiyan also targeted unsaturated markets. They segmented their
market by producing specific toothpaste for kids, teens and oldie consisting of Hapee
Kiddie, Hapee Red and Green gel and Hapee Gold. By targeting those markets their
competitors will just think that they are a small company and will underestimate them.

Lamoiyan also developed unique marketing activities. They knew that Colgate have a
lot of budget to spend on TV advertising so they focused on other strategies that their
companies can’t do or out do. They marketed Hapee through road signs, school
buildings and through sponsorships. Because of the principle of Mr. Pedro that profit is
not the main purpose of business and giving to people is more important, Lamoiyan had
various charity works like donations to school buildings and church. They also hired
handicapped workers. Through those charitable acts the image of the company was
enhanced and it became difficult for their competitor to attack them.

Finally when Colgate and Procter and Gamble began to noticed Lamoiyan ,they put
their prices down by as much as 30%. And they also countered Lamoiyan’s product
line and offered their own toothpaste for kids but since Hapee was positioned I the
market it was able to sustain. Another problem came when Zest-O launched Beam
toothpaste which is positioned as low price toothpaste. To fight back Lamoiyan
launched Kutitap. When there were production rejects the company used it to produced
Dazz, a dishwashing liquid.

Opportunities for expansion came for Lamoiyan. They had captured a considerable
amount of market share in the Philippines. And they had penetrated to market from
supermarkets to sari-sari store by producing new product lines and even producing
products in sachets to be able to distribute to sari-sari stores. And they have already
started exporting their products to Asian countries. Mr.Pedro wants to be the market
leader in the industry in Asia but to make it possible he needs to penetrate larger
markets and distribute extensively to every market.

Problem

 Lamoiyan’s product availability varied dramatically by region and outlet type.

Hapee toothpaste could be found in the vast majority of supermarkets of the
Philippines but rarely in sari sari stores and was generally much less available in
Visayas and Mindanao.

 Company’s limited product line

Objective

 To leverage Lamoiyan company by focusing on the marketing strategies and to

be more competitive by increasing their product lines and widening their product
distribution.

SWOT Analysis
STRENGTHS

 Door-to-door selling as their strategy in introducing new product.

 Brand perception- Having a technical tie up with a Japanese company which

helped them in manufacturing of toothpaste.

 Good brand image- providing quality products and was recognized as the Most
Outstanding Toothpaste Manufacturer in the country.
  Lamoiyan was known to be the number three toothpaste producer in the
Philippines.

 They offer variety of products such as toothpaste, dishwashing soaps, fabric

softener, feminine wash and so on.

 Affordability of Hapee toothpaste- it offers 50% of Colgate’s price.

 Corporate Social Responsibility through sponsorship of local schools and sports

teams.

 Advertising by sponsoring a Philippine Basketball League Team, Philippine

Olympic Team, traffic signs and public schools in Metro Manila.

WEAKNESS

 Poor product distribution- Hapee toothpaste was less available in sari sari stores
and was much less available in Visayas and Mindanao.

 Limited product availability- Hapee was only available in 59% of all outlets and
Kutitap was only available in only 29%.

 Insufficient budget for radio and TV advertising, billboards, etc.

 Competing with big competitors such as Colgate and Close Up.

 Limited product line which affect their market growth.

 Lamoiyan’s lack os sachet packaged toothpastes- due to the limited budget of

the customer base, the 10ml sachets made up 70% of all sales through sari sari
stores.
OPPORTUNITIES

 Trade between Philippines and other ASEAN countries which makes it tariff-free
for products including toothpaste.

 Targeting niche markets that could stimulate sales by catering to the specific
tastes of different market segments.

 International expansion- lamoiyan has tied up with Dacco, a Vietnamese brand

who is the largest toothpaste manufacturer.

THREATS

 High competition with Colgate and Close Up.

 Colonial mentality that affects consumers’ buying behavior because they believe
that anything produced outside the Philippines is better.

 Exclusive distribution networks of rivals.

 Threat of substitutes- in rural area there are those who still use rock salt as an
alternative.

 Low price rivals including Beam, Maxam and Unique toothpaste.