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Introduction In the late 1970s, Dr. Pedros Aluminum Containers, Inc. stood as the major supplier

of Aluminum collapsible toothpaste tubes to Colgate-Palmolive, Procter and Gamble and Philippine Refining Company (PRC) now Unilever. Aluminum Containers, Inc. enjoyed profit growth due to the increasing demand from the countrys leading toothpaste manufacturers. However, in 1985, these companies began using plastic laminated tubes. Although this caused Dr. Pedro to close his factory, he realized his old equipment could still be put to good use by forging into the Philippines toothpaste market on his own. Two years later, he reopened his factory as Lamoiyan Corporation, now known as the manufacturer of toothpaste brands Hapee and Kutitap. Lamoiyan Corporation mission is to improve the quality of life by bringing essential products within the reach of the common people and their vision is to have Lamoiyan product in every home. Lamoiyan values are to pursuit of excellence in doing things better than before and better then competitor, respect for individual means values individuality by treating each other with fairness. They are focusing also on social responsibility by making their presence a blessing to society, teamwork to reaching collectively goals that cannot be reach separately and their integrity in doing things right. 1.1 Describe Cecilio Pedros entrepreneurial traits? Do you think he is a good entrepreneur? Why? I think Pedros entrepreneurial is one of the best entrepreneurs because he fell that it is necessary to produce the toothpaste in Philippines. This country has a large population so there is negative elasticity between market and produce the toothpaste. Before that people use salt and weather rise or nothing at all to brush their teeth. It is emergency product because it is necessary for health and people believe that. The toothpaste was available but the price was expensive so people dont attention to brand so we think it was the best position for product the toothpaste

In order to analyze Pedros life as an entrepreneur, it is crucial to build a complete understanding of what an entrepreneur really is. Entrepreneurship is the act of being an entrepreneur, which can be defined as "one who undertakes innovations, while integrating finance and business acumen to transform innovations into economic goods". This may result in revitalizing mature organizations in response to a perceived opportunity, or a new organization itself, while latter being a common form (Startup Company). However, in recent years, the term has been extended to include social and political forms of entrepreneurial activity. According to Schumpeters theory, innovation led by five different types (cases) of entrepreneurship there are product, process, market, input and organizational innovations. Thus, in the context of Schumpeters theory lets discuss the Pedros entrepreneurial traits and analyze his contribution as an entrepreneur,
1. Product Innovation: Aluminum Containers, Inc. under Dr Pedro, in 1977, enjoyed

profit growth due to the increasing demand from the countrys leading toothpaste manufacturers such as Colgate-Palmolive, Procter and Gamble and Philippine Refining Company (PRC) now Unilever. However, in 1985, these companies began shifted to plastic laminated tubes. This market shift led Dr. Pedro to close his factory, but quickly he realized that he could use the old equipment in the Philippines toothpaste market. Eventually, two years later, he reopened his factory, Lamoiyan Corporation, now known as the manufacturer of toothpaste brands Hapee and Kutitap.

2. Process Innovation. Earlier, toothpaste production was a fairly simple process that

consisted of mixing seven or eight ingredients together, mainly water (70%), and the other ingredients, which were often imported from around the world. A highly automated production line would do main tasks such as clean, fill, seal. Thereafter, the production workers would pack bundle of products together.
3. Market innovation. Pedro found that the companys limited product line put it at a

disadvantage. According to him when the distributors are demanding so many things and you do not have leverage, if your products are not selling, or if you're only selling one product, they tend to give you less priority. The product development team for Pedro also worked to find out the related product chain to complement companies product line.

Taking on five new products, however, was a risky endeavour, and although Pedro planned to minimize risk by subcontracting production, he still faced the high marketing cost of product introduction. Internationally, Pedro recognized that two of the biggest barriers to success in international markets would be distribution access and brand recognition, and he thus believed that it was essential to find a local Paltner, most likely a consumer products retailer or distributor, who understood marketing and was willing to take risks. Pedro also mentioned that finding a right partner is difficult, if he can't find a good one; his approach would be to penetrate into for his brand, but not go in like a multinational with a big plan, because other competitors can come up very challenging for him. Hence, he must slowly test the market and work it out from the inside. This shows that not only was he adaptive to the market needs, but also very open for taking risks, and not just risks, but thoroughly and well calculated risks.
4. Input and organizational innovations. For Pedro, he observed that the plastic tubing

offered no substantial cost advantage over aluminum tube design it offered more smart packaging opportunities. As aluminum tubes could display only four colours, plastic tubing could house more colours and various graphical patterns, and so Pedros industry was turning down. Also, most other toothpaste producers also prefer plastic tubes, and hence his machines were just useless. The addition of flavors for the childrens toothpaste and medicated toothpaste such as for gum treatment enabled them to penetrate in the market. Encouraged by the success of Hapee, Kutitap, and Dazz, by 2002 Pedro began to explore opportunities for further company evolution. Primly on his mind were the possibilities of going public, accomplishing deeper channel penetration with existing products, launching new products, and expanding internationally. In input innovation, for distribution to many small toothpaste outlets in the Philippines, Lamoiyan trusted on independent salespersons distributors who carried products from different suppliers. But, Lamoiyan also worried about the efforts of its distributor specialists who trained independent businessmen to sell and promote its products. Entering in to the market in 1988, he realized that other competitors controlled 99% of the market as compared to the current 65% only. The first step of Dr. Pedro's strategy was to aim the multi-nationals' main weakness: price. While Dr. Pedro knew that

he could not compete in areas such as promotion and distribution, his decision to cut price by 50% won an immediate response from consumers. However, when Colgate followed suit with a 20% price cut, Dr. Pedro focused his attention to the market breadth. Among other things, he developed multi-flavoured toothpaste for children. It took Colgate three years to respond, but by that time, Lamoiyan had already successfully captured the new market. With perseverance and effective advertising, and by selling his product at a price 30% lower than the leading brands, Dr.Pedro succeeded in making the No.3 toothpaste brand in the country. Based on Schumpeters theory and the methodology acquired by Dr Pedro, we conclude that he has been successful in all the five factors of innovation. His utilization of resources and moving to Lamoiyan Corporation right after downfall of his last company, shifting the location of his target consumers based on demographics study, and region, and then taking calculated risks throughout his entrepreneurial endeavours shows a remarkable dynamism in his personality which must complement a good entrepreneur. Thus, Pedro by undertaking innovation and as a good entrepreneur has creatively been able to transform innovations into new products, economic goods as well as in market, input and organizational innovations. 1.2 Discuss the marketing strategy deployed by Lamoiyan Corporation. There are a few marketing strategies deployed by Lamoiyan Corporation:

Brand Awareness. Lamoiyan became the official sponsor of the Philippine Olympic team. With US$2,000 Pedro is very happy because he get chance to use the Olympic rings in his advertising and produced a TV commercial in two days where it was a 15 second commercial and featured the Olympic rings. People think that Lamoiyan had sponsored the entire Olympics. Pedro decided to sponsor a Philippine Professional Basketball league team, known simply as Hapee Toothpaste, in the mid-1990s. Pedro also sponsored traffic sign s in metro Manila and some of the provinces.


Price Competitive. Lamoiyan attacked the two multinational companies in an area where they cannot compete which is price. They price their toothpaste 30% below the price of their competitors. Pedro began to sell his toothpaste at 50% of Colgates price, and sales shot up. Although

Pedro benefited from in-house production of aluminum tubes, lower overhead, and nonunionized labor, the majority of his costs were no lower than the multinationals. By his third year of business, however, Pedro became profitable where the income increase two millions from previous year and by 1992, his production volume had increased 2,500% from the 100 tons of toothpaste he had produced his first year.

Saturated Market or Market Segmentation. Lamoiyan also targeted unsaturated markets. Lamoiyan segmented their market by producing specific toothpaste for kids, teens and oldie. In 1991, Pedro introduced Hapee Kiddie for children with flavors such as green apple, tutti-frutti, melon, orange, and strawberry. Pedro signed an exclusive contract with Sesame Street in which, for the flat fee of $20,000, Lamoiyan could features characters such as Big Bird, Cookie Monster, and Elmo on its boxes of Kiddie toothpaste. Next Pedro introduced Hapee Gold, a gumcare and gingivitis-preventing toothpaste that catered to consumers in their 40s and 50s. In addition, he developed Red and Green Sparkling Gel targeted toward teenagers


Unique Marketing Activities. Lamoiyan also developed unique marketing strategies where Lamoiyan knew that Colgate have a lot of budget to spend on TV advertising so Lamoiyan focused on other strategies that their companies cant do or out do. Lamoiyan marketed Hapee through road signs, school buildings and through sponsorship. In addition, Lamoiyan sponsored all public schools name on its main building. By 2002, 97% of Philippine consumers were familiar with Hapee toothpaste, and 70% had tried the product.


Social Responsibility. Because of the principal of Pedro that profits is not the main purpose of business and giving to people is more important. Sponsoring local schools and sports teams was just one of the ways Pedro and Lamoiyan back to the community. The head of numerous church activities, president of the Manila Jaycees member of the Chamber of Commerce, and chairman of the Deaf Evangelistic Alliance Fpundation

Inc. (DEAF). DEAF the only organization of its kind in Asia, founded schools where hearing-impared students received free education as well as room and board. Pedro employed many of the schools graduates and as a result, almost one-third of Lamoiyans employees were hearing impaired. While intrinsically motivated, Pedro did recognize that giving handicapped workers, donating school buildings, and performing other charitable acts increased publicity and enhanced product image.

Produced a New Product. Lamoiyan launched Kutitap as new, lowestpriced toothpaste available. While Kutitap had achieved only 1.1% market share by 2002, the new product was growing rapidly.


Product Expansion. Having expanded beyond the Hapee brand with the introduction of Kutitap, Lamoiyan was led by an odd set of circumstances to expand into additional product markets. In brainstorming about creative ways to salvage the rejects, executives noted that the company had been using some of the discarded toothpaste to clean dishes at its plant. Thus, Dazz dishwashing paste was born. Dishwashing paste was similar to liquid dishwashing soap, but rather than being poured onto a sponge, it was scooped out of a 200 gram or 400 gram tub. When Dazz was first introduced, Colgate-Palmolives Axion dominated the dishwashing paste market with almost a 40% share, but employing tactics very similar to those used in its toothpaste business, and with the help of a heavy advertising campaign featuring a local TV personality, Lamoiyan quickly captured 25% of the market. This rapidly elevated Dazz beyond a simple outlet for Lamoiyans surplus toothpaste, although limited amounts of excess toothpaste continued to be used for this purpose.


Market Penetration. Lamoiyan had captured a considerable amount of market share in the Philippine and Lamoiyan 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. These trends convinced Pedro to mount an aggressive effort to

expand distribution to sari-sari stores. In 2002, Lamoiyan distributors called on 22,000 sari-sari stores and were successful in stocking Hapee or Kutitap toothpaste at approximately 10% of those stores at any one time. Pedros immediate goal was to increase the number of called-on stores to 50,000 per year and increase the sale completion rate to 30%.

Market Expansion. Pedro wants to be the market leader in the industry in Asia. By 2008, the free-trade area would be extended globally under World Trade Organization agreement. Pedro expected these policy changes to pave the way for international expansion and hoped to begin exporting his toothpaste to other countries in Southeast Asia by 2004.


Is Lamoiyans success attribute to their good strategy or bad strategy by Colgate and Unilever

Lamoiyan Corporation was success because of their own strategy even though the strategy that they used is almost similar strategy used by Colgate and Unilever especially in marketing and distribution channel. The toothpaste distribution methods depended on the size of the manufacturer and the type of outlet. The main attributes for success is their price strategy. Lamoiyan began to sell his toothpaste at 50% of Colgates price, which is 10 Pesos meanwhile Colgate offered 20 Pesos. The customer will prefer the cheaper price and the price that offered by Lamoiyan has increase their profit. Besides that, Lamoiyan Corporation has good marketing strategy whereas, they became official sponsor of Philippine Olympic team even though the team has no potential to win but Lamoiyan takes this opportunity by sponsored the team and its worth to them because they can use the Olympic rings in their advertising. They produced TV commercial in two days and it was about 15 second commercial and featured the Olympic rings. Through this strategy people will think that Lamoiyan has sponsored the entire Olympic and they will get some benefit after the Olympic. Besides became as sponsorship, the Lamoiyan Corporation also become pioneer on some product and it has also given advantage for them. For example, they produced children toothpaste named Hapee Kiddie. This new product is for children and they came out with variety of flavour such as green apple, tutti-frutti, melon, orange and strawberry. Through this new product, they had signed exclusive contract with Sesame Street and Lamoiyan need to

feature characters such as Big Bird, Cookie Monster, and Elmo on its boxes of Kiddie toothpaste. After came out with Hapee Kiddie, Pedro was introduce another new product that target consumer age 40 and above. This product named Hapee Gold focus for gum-care and gingivitis-preventing toothpaste. Successful of these two new products was encouraging Pedro to come out with another product, which is Red and Green Sparkling Gel that targeted teenagers. Based on this case study, before Lamoiyan produce new product, they do some research regarding determining market share, developing the product, selecting a brand name and label design, registering with the Bureau of Food and Drug (BFD), testing the product, and the is getting consumer feedback. month advertising campaign. Television is the main channel for developing toothpaste brand awareness in the Philippines. It is because, people will watch television everyday and they will watch the advertising that television show, so that, they will more aware about the product rather than they read the advertising. The Lamoiyan have good relationship with the local television stations and it is advantage to them because they get discount 40%- 50% off for advertising. This will decrease their cost of marketing. Besides promotion through television, Lamoiyan also do another way of promotion such as product sampling. Based on successful of sponsorship the Olympic, Pedro has decided to sponsor another local team, which is Philippine Professional Basketball League. Besides that, Pedro also sponsored traffic signs in metro Manila and some of the area meanwhile, Unilever need to pay for the privilege to place its name in a highway sign. They get this advantage because Lamoiyan build strong relationship with government officials and this make their status as local manufacturer. Lamoiyan like to use sponsorship strategy because by sponsor people will know about the product especially when the brand appeared at the main place. Another point that makes Lamoiyan like to sponsor is to winning the community. Besides sponsor the team and sign, Lamoiyan also sponsored all public schools in metro Manila. Their brand Hapee appeared next the schools name on its main building. Another strategy that makes Lamoiyan success is they do community activities by hired handicapped workers, donating school building, and performing some charitable. enhance product image. This strategy has help them increased their publicity and This strategy helps Lamoiyan to know their competitors and customers preferences. After they produce new product three do three-

The failure of Colgate to maintain their low price for long gives opportunity to Lamoiyan because maintains their position as number one producer especially in the childrens market. 1.4 What are the lessons learnt? Cecilio Pedro is an entrepreneur and he is a risk taking person. He and his cousin opened a hardware shop in downtown Manila, although they know there are extreme competitions against their business. Pedro is a good role model to the new comers to become entrepreneur because Pedro also has no experience when he decided to open hardware shop. As entrepreneur we must have attitude where we will try harder and never give in doing businesses, after failure in hardware business Pedro recognized an opportunity in producing aluminium toothpaste tubes. We must be smart to grab any opportunity during doing the business, Pedro enter this business because he noted at that time there were only two suppliers for Colgate and Unilever. As be mention before, we must never give to be successful in doing businesses, Pedro sent sample tube after sample tube to ColgatePalmolive and Unilever but they doesnt take him seriously but finally they accept Pedro sample because they have gotten curious since Pedro was there almost every week for a year. Before we involve in doing business that we want to do, we must know what is product that we want to produce. How to do it and what is technology involving in making our product. So we must able to learn from someone else who has been successful in doing business that we want to entre, entrepreneur must have attitude never stop to learning they have ask if they do not know what to do at the beginning of their business, keep asking and learning is the key of successful. Pedro before he making the actual toothpaste, he sent his technician for training in Osaka, Japan for two months, for them to watch and follow certain procedure of making toothpaste. As entrepreneur, we must grab all the opportunity that might be able to promote our product especially went we are new in the business. We should follow Pedros marketing strategy, he become official sponsor of the Philippine Olympic team although it was lousy team. Although for only US$2,000 payment they get the advertising on TV commercial for only 15 second for two days but they still get some momentum because people thought they sponsored the entire Olympic. Pedros is a smart entrepreneur, he knew that he never can compete with Colgate because he just entre the market. So he began to sell this toothpaste at

50% of Colgates price, he knew customer tent to buy lower price product.

We as

entrepreneur must be able to identify competitor strength and weakness, so we can use their weakness to compete with our strength. Same situation with Pedros and Colgate situation, strength of Colgate is they are well establish they already have the brand and their weakness is they offer higher price. Pedro use Colgates weakness by offering lower price than Colgate price to grab Colgates customers because in business today customers have no loyalty toward the brand if others can offer lower price. We also must be creative to fulfil customer needs and wants; we cannot only depend on one product to be succeeded. Create new product line or be innovative to the exciting product because customer needs and wants are changing rapidly. Pedros introduce Dazz dishwashing that is made from the rejection of toothpaste and Dash dishwashing entered the liquid market with joy. We also need to know who is our customers and their segmentation in order to attract their intention to buy and loyal to our product, Pedros introduces Hapee Kiddie for children with flavours such as green apple, tutti-frutti, melon, orange, and strawberry. As a conclusion entrepreneur must able to take a risk to be success in the business world, be able to grab any opportunity that might bring company to the top of successful. Entrepreneur must create product that can penetrate to the market and fulfil the customers needs and wants, as Pedro said his personal philosophy is that profit should not be main objective in business, civic consciousness should prevail and eventually profit will come.