Setting the Sweet Spot: Price Determination for Local Chocolates in the Philippines

Abstract

A research study was conducted to assess the price sensitivity and determine the optimal pricing strategy of locally produced chocolate in Bicol region, Philippines. Selected respondents were interviewed composed of cacao farmers, processors/entrepreneurs and chocolate consumers using purposive random sampling procedure. They were from different location and provinces who have knowledge on cacao production and consumption. Data were gathered using survey questionnaire and key informant interview (KII) based on Van Westendorp Price Sensitivity Meter tool. Result of the study showed that the acceptable price range of the locally produced chocolate is between the point of marginal cheapness (PMC) at Php 1.20 per gram (or $2.16/100grams) and point of marginal expensiveness (PME) at Php 2.00 per gram (or $3.60/100grams). The values outside these range will result in declining number of potential buyers because the locally produced chocolate is either too cheap or too expensive. Furthermore, the optimal price where respondents feel the locally produced chocolate is not too expensive and will not question the quality of the product is Php 1.60 per gram (or $2.88/100grams). This is the best price that does not only satisfy the demand of chocolate customers for affordable price but also maximize profit of the producers. This result will provide valuable insights on the potential marketability of locally produced chocolates, make informed pricing decisions, assess price competition with the leading and known brands of chocolates and will allow local chocolate entrepreneurs and businessmen to set prices that optimize profitability while ensuring consumer acceptance and satisfaction. Likewise, this will provide a holistic picture for the success of the local chocolate industry and make it globally competitive in the future.