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PRICING PRACTICES OF SELECTED GROCERY STORE

OWNERS IN GENERAL TRIAS CITY, CAVITE
Written by Avie Atienza*, Anna Rosella Manalo**, Vyone Aira Pelenio***, Marish
Cuenca**** & Steven Jocson*****

* Graduate of ABM Strand, Samuel Christian College, General Trias City, Cavite

** Graduate of ABM Strand, Samuel Christian College, General Trias City, Cavite

*** Graduate of ABM Strand, Samuel Christian College, General Trias City, Cavite

**** Associate Professor 1/Research Coordinator, Samuel Christian College, General Trias
City, Cavite

***** Associate Professor 1/Assistant Department Head, Samuel Christian College, General
Trias City, Cavite

ABSTRACT

The study was conducted from November 2019 – January 2020, Descriptive quantitative
research design was used in the conduct if this study wherein, the researchers used a structured
survey questionnaire to collect relevant information to the grocery store owners. The Statistical
tool used in analyzing the data gathered were frequency, percentage, and mean to present the
survey results.
This study aims to determine the business profile in terms of: location, business status,
length of business operations, and estimated monthly net profit; determine the pricing strategies of
selected grocery store owners; determine the level of factors that affect the pricing of the products
of selected grocery store owners; conduct the pricing performance analysis; i) price cost margin;
ii) price enforcement compared to competing products.

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Majority of the participants of this study own the place where the grocery store is located,
has 1-5 years of business operation, and has an estimated monthly net profit of above 25,000 php.
The ranking of the pricing strategies used by the grocery store owners are, rank 1: mark up pricing,
rank 2: perceived value pricing and rank 3: promotional pricing. This study found out that most of
the participants seldomly considered factors of cost, consumers/market demand, profit, and
competitors before pricing their products with a mean of 2.18. Most of the grocery store owners’
have a price cost margin of 8.33% for rice, 5.56% for sardines, 11.54% for instant noodles, 5.00%
for powdered milk, 20.00% for instant coffee of its sales can be allocated for other expenses.
Majority of the grocery store owners put their selling prices above the suggested retail price.

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TABLE OF CONTENTS

ABSTRACT .................................................................................................................................... i

LIST OF FIGURES .......................................................................................................................v

LIST OF TABLES .........................................................................................................................v

LIST OF APPENDIX FIGURES ............................................................................................... vi

INTRODUCTION

Objectives of the Study ........................................................................................................2

Significance of the Study ....................................................................................................3

Time and Place of the Study ...............................................................................................4

Scope and Limitation of the Study.......................................................................................4

Conceptual Framework ........................................................................................................5

Definition of terms ...............................................................................................................6

REVIEW OF RELATED LITERATURE ..................................................................................x

METHODOLOGY ...................................................................................................................... xi

Research Design.................................................................................................................17

Sources of Data ..................................................................................................................17

Participants of the Study ....................................................................................................17

Data Gathered ....................................................................................................................17

Data Gathering Procedure ..................................................................................................18

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Research Instrument......................................................................................................….19

Statistical Treatment .........................................................................................................19

RESULTS AND DISCUSSION ................................................................................................. xii

SUMMARY, CONCLUSION, AND RECOMMENDATION……………………...xiii

Summary ............................................................................................................................34

Conclusion .........................................................................................................................35

Recommendation ...............................................................................................................36

REFERENCES .......................................................................................................................... xiv

APPENDIX FIGURES ................................................................................................................xv

APPENDICES ............................................................................................................................ xvi

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LIST OF FIGURES

Figure Page
1 Conceptual Framework 5

LIST OF TABLES

Table Page

1 Distribution in Terms of Location ............................................................ 21

2 Distribution in Terms of Business Status ................................................. 22

3 Distribution in Terms of Length of Business Operations ......................... 22

4 Distribution in Terms of Estimated Monthly Net Profit ........................... 23

5 Ranking of Pricing Strategies ................................................................... 23

6 Level of Factors for Cost .......................................................................... 24

7 Level of Factors for Consumers/Market Demand .................................... 24

8 Level of Factors for Profit ........................................................................ 25

9 Level of Factors for Competitors .............................................................. 26

10 Price Cost Margin for Rice ....................................................................... 26

11 Price Cost Margin for Sardines................................................................. 27

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12 Price Cost Margin for Instant Noodles ..................................................... 28

13 Price Cost Margin for Powdered Milk...................................................... 28

14 Price Cost Margin for Instant Coffee........................................................ 29

15 Price Enforcement for Rice ...................................................................... 30

16 Price Enforcement for Sardines ................................................................ 30

17 Price Enforcement for Instant Noodles..................................................... 31

18 Price Enforcement for Powdered Milk ..................................................... 32

19 Price Enforcement for Instant Coffee ....................................................... 32

LIST OF APPENDIX FIGURES

Figure
1 Data gathering in Barangay San Francisco with our technical critic

2 Data gathering in Barangay Sampalucan

3 Data gathering in Barangay Manggahan

4 Data gathering in Barangay Santiago

5 Data gathering in Barangay Corregidor

6 Data gathering in Barangay Corregidor with our research adviser

7 Validation of research with Dr. Elizabeth Dumlao

8 Validation of research with Mr. Leymar Toliba

9 Validation of research with Ms. Lynette Rue

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PRICING PRACTICES OF SELECTED GROCERY STORE

OWNERS IN GENERAL TRIAS CITY, CAVITE

INTRODUCTION

According to Robles (2015) businesses can limit competition in two ways: (1) cooperate
with their rivals which is called collusive practices and (2) interfere with their competitive capacity
which is called exploitative practices (para. 1). Similarly, Baker (2013) stated that in both cases,
their ultimate objective is to raise the price they charge to their consumers for their products or
services. Among these exploitative practices, (such as false advertising) the most obvious example
is the direct imposition of excessively high prices.
Elgar (2009) defines pricing as the process wherein business sets the price at which it will
offer its products and services and may form part of the marketing plan of the business. The
business should consider the price at which it can purchase the products, the cost of production,
the marketplace, competition, market situation, brand, and product quality when setting prices (p.
2
9).
In addition, it states that an abuse may consist of “directly or indirectly imposing
overpericing purchase or selling prices or other trading conditions” (Treaty on the Functioning of
Union, paras. 248 – 249).
In the result of the study of Cseres (2008), it is concluded that imperfect information can
result in a market that appears to be competitive and can damage consumers by setting excessive
(overprice) prices or other overpricing trading conditions (as cited in Abad et. al, 2012).
With regard to the introductory information, this study mainly focuses on giving a deeper
and clearer understanding about the pricing practices. Moreover, the study aims to determine the
business profile in terms of their a) location b) length of the business operations c) estimated
monthly net profit; determine the pricing strategies; determine the level of factors that affect the
pricing of the products; conduct a pricing performance analysis; (i) price cost margin and (ii) price
enforcement compared to competing products.

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OBJECTIVES OF THE STUDY

Generally, this study aims to determine the pricing practices of selected grocery store
owners in General Trias City, Cavite.
Specifically, it aims to:
1. determine the business profile in terms of:
a) location;
b) business status;
c) length of business operations;
d) estimated monthly net profit;
2. determine the pricing strategies of selected grocery store owners;
3. determine the level of factors that affect the pricing of the products of selected grocery
store owners;
4. conduct the pricing performance analysis;
i) price cost margin;
ii) price enforcement compared to competing products;
a) rice
b) sardines
c) instant noodles
d) powdered milk
e) instant coffee

SIGNIFICANCE OF THE STUDY

The study will help to determine and assess the pricing practices of grocery store owners
in General Trias City, Cavite.
To the consumers, through this study, they will understand the pricing practices of the
business and they will be aware of how these businesses price their products. This will give them
information about the different pricing of grocery stores with the same products.

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To the grocery store owners, this study will give them information about the pricing
practices. This can also help them identify how many percent of markup should be added in a
certain product.
To the Department of Trade and Industry – Local, this study will help them to assess
various businesses in terms of their pricing practices. In addition, they can evaluate the
4
performance or the set of standards of businesses on how they price their products.
To the future researcher/s, this study may be a useful material that will serve as a basis in
designing of additional suggestions and recommendations. This study will provide information
about the pricing practices of grocery store owners. And this can also serve as a future reference
to their study.

TIME AND PLACE OF THE STUDY

The study was conducted in selected 13 barangays of General Trias City, Cavite. namely
Barangay Arnaldo, Barangay Bacao II, Barangay Biclatan, Barangay Buenavista II, Barangay
Corregidor, Barangay Javalera, Barangay Manggahan, Barangay Pasong Camachile I, Barangay
Pasong Camachile II, Barangay Pasong Kawayan II, Barangay Sampalucan, Barangay Santiago
and Barangay San Francisco, from November 2019 to January 2020. The list of registered grocery
store and its location were given by the Business Permit and Licenses Office of the Municipality
of General Trias City, Cavite it helped the study to identify and determine the pricing practices of
selected grocery store owners.

SCOPE AND LIMITATIONS OF THE STUDY

The study is limited only to the selected grocery store owners in General Trias City, Cavite
namely: Barangay Arnaldo, Barangay Arnaldo, Barangay Bacao II, Barangay Biclatan, Barangay
Buenavista II, Barangay Corregidor, Barangay Javalera, Barangay Manggahan, Barangay Pasong
Camachile I, Barangay Pasong Camachile II, Barangay Pasong Kawayan II, Barangay
Sampalucan, Barangay Santiago and Barangay San Francisco. This study aims to determine the

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5

demographic profile of the participants in terms of highest educational attainment, business status,
location, and length of business operations, and monthly net profit; determine the pricing practices
of selected grocery store owners.
This study focuses only on identifying the pricing practices of selected grocery store
owners. The participants of this research are the grocery store owners from selected barangays of
General Trias City, Cavite. The study used non-probability sampling such as convenience with a
combination of purposive sampling. The study is only limited to the sample size of 65 participants
from the 13 selected barangays in General Trias City, Cavite. Hence, the study did not include the
reasons behind the factors chosen by the grocery store owners. Considering that the researchers
are focused on the pricing practices with respect to competition issues, only subset of their findings
regarding the pricing practices ae relevant for our purposes. The comparison of the products is
only used for the same brand and measurement. Hence, the study did not include the reasons behind
the factors chosen by the grocery store owners and did not also include the relationship of the price
cost margin and price enforcement compared to competing products.

CONCEPTUAL FRAMEWORK OF THE STUDY

The figure above presents the conceptual framework of the study which shows the input,
process, and output that were used in the data collection. The researchers distributed the survey
questionnaires to sixty-five (65) grocery store owners in selected barangays of General Trias City,
Cavite. to determine their pricing practices.

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6

PROCESS:
OUTPUT:
INPUT: The researchers
survey The results of
This study aims to
survey will
determine the
determine the
pricing practices of
pricing practices
selected grocery
of selected grocery
store owners in
store owners in
General Trias City,
Selected grocery General Trias
Cavite.
store owners in City, Cavite.
selected barangays

Figure 1. Conceptual Framework of the Study

DEFINITION OF TERMS

Business Status. It refers to the company status whether a company is recorded as

registered, amalgamated, removed or in receivership/liquidation (Solomon Island, 2019);
Operationally, it is the identification whether the business rent or own the place.

Consumer Surplus. Is the difference between the price that consumers pay and the price
that they are willing to pay (Pettinger, 2017); Operationally, it is a measurement of consumer
benefits.

Surcharge. Is added to an existing tax and is not included in the stated price of the good or
service (Investopedia, 2019); Operationally, it is an extra fee added to a service or product.
Trading Conditions. It is a contractual status of the worldwide freight forwarding business
and the liability warrant customer, exemptions, restriction of liability, and fees. (Standard Trading
Conditions, n.d.); Operationally, it is a general contract of terms and conditions between two
parties.

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Unilateral Market. It is a term to describe the behavior of certain market participants in

wholesale electricity markets occurs (Journal of Competition Law & Economics); Operationally,
is one of the most common causes of prices being higher than the competitive equilibrium.

REVIEW OF RELATED LITERATURE AND STUDIES

Pricing Strategies

The study of Wiley & Sons (2014) defines that pricing is one of the major elements of the
marketing plan. It allows to differentiate a product or service from one another of similar
characteristics (Wiley & Sons, 2014, p. 1).
Bonnici (2015) describes the most common types of pricing strategies, namely mark-up
pricing, competition-based pricing, promotional pricing, and price skimming. Other pricing
strategies are psychological pricing, loss leader pricing, predatory pricing, going rate pricing,
perceived value pricing, and target return pricing.
The researcher stated that mark-up pricing involves markup on the product costs; many
businesses compute the cost of producing a product and add a specific margin (p. 1, para. 3).
However, competition-based pricing is a form of pricing that prices are decided relevant to those
of competitors (para. 6). Promotional pricing is a sales promotion technique in which the prices
are reduced extremely for a short period of time (International Journal of Research in Management
Science & Technology, 2014, vol. 2). Another pricing strategy is price skimming where a product
is originally marketed at a high price but is reduced over time (Dolgui & Proth, 2010, para. 1).
The article “Accounting Tools” (2018) explained that psychological pricing is setting
prices lower than a whole number. In addition, loss leader pricing is a pricing strategy that involves
a retail outlet that sells desirable products below their cost to attract customers (“Loss Leader
Pricing Definition”, n.d.). Another strategy is the predatory pricing, which is an act of setting low
prices to eliminate the competition (Boudreaux and Kleit, n.d., para. 3) In contrary, going rate
pricing is when the business prices its product at the same level or very close to its competitors’

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prices (para. 1). Target return pricing is a pricing method in which a formula is used to calculate
the price to be set for a product to return a desired profit or rate of return on investment assuming
that the quantity of the product is sold (para. 4). Lastly, perceived value pricing is wherein many
businesses base their pricing on perceived value as identified by the buyer; the price is set to
maximize the value assigned to the item based on its utility (para. 5).

Factors to Consider in Pricing a Product

Zimbroff (2015) stated that it can be a challenge to set a price for a product or service.
Therefore, accurate pricing can be based on principles or values that without extensive research
can be difficult to know. As a result, most businesses make expensive mistakes if they try to market
a product or service incorrectly (para. 1).
Various pricing strategies are incorporated in determining the price of a product. There are
important factors that the businesses should consider before pricing their products (Burnett, n.d.).
Pricing product involves considering common key factors (Toftoy, 2019).
Costs, first and foremost, before setting the price, needs to be involved with running a
business (Jesnoewski, 2019). The researcher also added that fixed costs is the expenses that will
come in every month regardless of the sales while direct costs is the expenses you incur by
producing and delivering products and services (Jesnoewski, 2019, para. 1).

According to Collis (2012) emphasized that owners should also have a revenue target for
how much of a profit they want their business to make. Revenue target should include
prices for manufacturing, marketing, and merchandising the product and the return up with
a worth per product that the owner wants to charge (para. 18).

Abey (2019) indicated that one of the factors to consider is the market demand. It measures
the number of individuals who want to purchase a good and can afford to purchase the good at a
certain price (para. 2). Similarly, demand measures the quantity of product that consumers are
willing to buy and able to purchase at a given value (Abey, 2019, para. 1).

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Wasserman (2019) argued that consumers is one of the factors to consider in pricing. The
owner should understand what their consumers want from their products and services. This
information will help them determine whether their cost is correct, the amount of service or
inclusions they should be providing and, whether they are targeting the correct market (para. 19).
Lastly, Amanda (2018) emphasized that competitors is one of the factors to consider in
pricing the product. Preparing a comparison of the cost of the product(s) to the product(s) of the
competitor may even be worthwhile. Comparing net rates, not just the list (or released) price, is
the key here. During this phase, the owner should give importance on how the market perceives
their business and products and the competition (para. 2).

Many firms consider the cost of production as a base for calculating the price of the goods
(Buena, 2015). On the other hand, consumers are always checked by the businesses before pricing
the products since they are the ones who purchase it. However, according to the article of Nitisha
(2012, whenever a seller is pricing the product, they seldom compute the profit that will be earned
at the end of the period. Danielle Corcione (2018) stated that once the owners have a frame of
reference on their competitor's prices, you can determine their products prices.

Pricing Practice

The study of Abad, Gonzales, Rosellon & Yap (2012) showed that participants answered
with overpricing pricing and for both business and government offices, this was the response with
the greatest frequency of the unfair trade practices. The researchers explained that this is not
unexpected because changes in pricing can easily be felt as compared to other UTPs (Medalla,
2002).
Article 102 of the Treaty on the Functioning of the European Union (TFEU) regulates
unilateral market power in EU competition law. This was used to prohibit excessive prices that are
too high in contrary to predatory pricing, the abuse of excessive pricing that has continued to
remain conceptually and practically underdeveloped at EU level (TFEU, 2010). Pricing beyond
the consumer’s desire to pay can also decrease sales (Toftoy, 2019).

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In the study of Eyster, Madarasz & Michaillat (2017), there are theories that assume that a
price is considered fair if it involves a small markup over marginal costs. The researchers argued
that due to greater demand, price rises and when the price rises, cost increases (p. 1, para. 3).
According to the European Court of Justice (ECJ) in United Brands, the price is excessive
if it does not have reasonable connection to the economic value of the product and this can be
identified by a twofold test: it should be demonstrated that (i) the price-cost margin is excessive
and (ii) the price enforced is excessive it is either overprice in itself or when compared to
competing products (para. 250-252). It was argued that even if it were possible to prove that a
price-cost margin is excessive, there is little guidance as to whether a price is overpriced when
comparisons are drawn, or if it is possible to make such comparisons at all (Akman, n.d., p. 163).
Similarly, Motta and de Streel (2006) discussed the pros and cons of the different
indicators that have been used to find excessive prices and recommend that‚ “antitrust authorities
and courts should carry out excessive pricing tests.” (p. 10, para. 1) In the Philippines, the
Department of Trade and Industry mentioned that there is a law that covers the excessive pricing
which is the Price Act. It is a policy of the State to ensure the availability of necessities and prime
commodities at reasonable prices without denying legitimate business a fair return on investment.
When a price is overpricess relative to another, it is natural to be used to define a price as
overprice in the second stage of the United Brands test if it is consistent with the aims of an
excessive pricing prohibition (Garod, n.d.). Treaty on the Functioning of the European Union
(2014) shows that in general, it is aligned with the goals of an effective prohibition of excessive
prices, because it states that, other things equal, a higher price is overprice if caused by a lack of
competition but it is not if due to the firm’s production costs (TFEU, 2014).

The comparison of the procedure of Treaty on the Functioning of the European Union
(2014) with the case law shows that European competition law enforcers have followed similar
arguments in their attempts to define prices as overprice when compared to others, but differences
occur in attempts to define prices as overprice in themselves. In addition, having the lowest price
among the competitors will immediately catch the attention of the consumers to the business
(Ward, 2019).

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Sampson (2018) defines grocery store as an establishment that exclusively sells food and
drink items to patrons. In addition, it is a self-service shop and designed to satisfy a customer’s
basic needs for dry food, canned food, spices, fruits, and vegetables.
According to Euromonitor International’s Grocery Retailers in the Philippines (2017),
grocery retailers remain the major source of food and household consumables, and players will
strive to adapt to consumers’ needs by opening stores in more accessible locations and increasing
their presence in underserved markets.
According to the Food Consumption Survey of the Food and Nutrition Research Institute
of the Department of Science and Technology (DOST), there are commonly consumed food
products among Filipino households such as: rice, canned sardines, instant noodles, powdered
milk, and instant coffee (as released by Rappler, 2013). As described by the Department Trade of
Industry and Department of Agriculture (2009), these products are classified as necessities. In
addition, the Department of Trade and Industry (2018) listed the suggested retail price (SRP) for
each product: dinorado local rice (1 kilo costs P47.00), 555 tuna sardines: (155 grams costs
P17.85), lucky me pancit canton: original (80 grams costs P7.50), Bear Brand (150 grams costs
P50.00), and great taste white coffee twin pack (33 grams costs P7.85)
Under the Implementing Rules and Regulations (IRR) of Republic Act (R.A.) No.7581,
otherwise known as the Price Act of 1992, the DA may issue SRP for any or all basic necessities
and prime commodities under its jurisdiction for the information and guidance of producers,
retailers, and consumers. The Department of Agriculture has also stated in several media
interviews that violators of the SRP may be charged with profiteering or “find their shops closed
down as well.” The Price Act defines profiteering as “the sale or offering for sale at a price grossly
in excess of its true worth”.

According to the Study of Suggested Retail Price (2015) suppliers could also initiate their
own price limits called “resale price maintenance” or RPM. Distinct from the government’s SRP,
the RPM is a form of a vertical restraint and is generally prohibited in most jurisdictions. If the
Department of Trade and Industry released a suggested retail price lists in their products, and the
sellers increase 10 percent of its price in the immediately preceding month then it will have a

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violation. The prima facie evidence provision shall not apply in the case of agricultural crops, fresh
fish, fresh marine products, and other seasonal products.

With this process, the DTI could technically deny, reduce, or modify the proposed price
increase, or even set constant the unspecified margins of suppliers and sellers. Aside from a show-
cause order, the DTI may also issue a Notice of Violation (NOV) to owners of businesses whose
retail prices are more than the government recommended rates. These establishments are directed
to comply and adjust their rates and submit a written explanation within 48 hours upon receipt of
the NOV.

Setting price control measures is one of the ways a government can directly maintain price
levels.30 It is a form of market intervention on prices of essential commodities and services that
are necessary to the survival and well-being of the population or to the continuance of economic
activity.

Implementing agencies should continue to monitor the prices of necessities and prime
commodities by requesting manufacturers and retailers to regularly submit their retail prices.
However, relevant agencies should eliminate any requirement to seek approval prior to price
increase since this will discourage manufacturers from freely setting prices according to market
dynamics. Rather, they should expand proactive market monitoring actions.

Since manufacturers also issue their own SRP, a pricing practice guide should be developed
by the implementing agencies as a means to assist retailers in applying manufacturer’s SRP
appropriately, including advertisements and product packaging, and to protect the public from
misleading information.

There are no adequate rules or guidelines on the imposition of SRP, i.e., no prescribed
period, process, standards, bases or conditions to guide an agency in determining SRP, defining
reasonable price increase or decrease that is acceptable to the agency.

In the case of DTI, there is an enforcement procedure against noncompliance with SRP,
such as the 30-day advance notice to the agency to increase prices, denial or modification of the

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proposed price increase, and the issuance of a notice to explain served to business establishments
with prices above the government-recommended rates.

According to the DTI, the SRP is actually set by manufacturers. The DTI evaluates the
reasonableness of any change or increase in the SRP based on the changes in the prices of raw
materials and other production costs. The DTI’s published SRP is simply the modal price value of
a product in a sampled market. In formulating the SRP, reference is made to the regular price
monitoring report on basic necessities and prime commodities which may be collected by regional
and provincial price monitoring units through inspection of price tags, interviews of stakeholders
and surveys. Moreover, when warranted, the causes of price changes must also be indicated. Thus,
suppliers and retailers can also be compelled to provide production and inventory reports.

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METHODOLOGY

Research Design

The study utilized quantitative-descriptive research design to describe the demographic

characteristics of the participants and to quantify selected pricing practices of the grocery store
owners. The researchers used a structured survey questionnaire to collect information about the
pricing practices of selected grocery store owners in General Trias City, Cavite.

Sources of Data

The researchers used two types of data. Primary data include the answers of the grocery
store owners from the survey questionnaires whereas secondary sources of data are from book,
websites, online articles, journals, and other scholarly writings.

Participants of the Study

A total of sixty-five (65) selected grocery store owners were chosen in the selected
barangays in General Trias City, Cavite to answer the survey questionnaires.
Barangay Arnaldo, Barangay Bacao II, Barangay Biclatan, Barangay Buenavista II,
Barangay Corregidor, Barangay Javalera, Barangay Manggahan, Barangay Pasong Camachile I,
Barangay Pasong Camachile II, Barangay Pasong Kawayan II, Barangay Sampalucan, Barangay
Santiago and Barangay San Francisco in General Trias City, Cavite were the chosen place to
conduct the study.

Data Gathered

The researchers collected the data regarding the pricing practices of the grocery store
owners in General Trias City, Cavite. These include the following: first was the demographic

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profile of participants in terms of location, length of business operations, and estimated monthly
net profit; second was the pricing strategies of selected grocery store owners; third was the level
of factors that affect the pricing of products of selected grocery store owners using the 4-point
likert scale. The 4-point likert scale; 1- Never, 2- Seldom, 3- Often, and 4- Always and; fourth was
to the pricing performance analysis

Data Gathering Procedures

The study used non-probability sampling method specifically convenience sampling and
purposive sampling. Convenience sampling was used for selecting the sample participants from a
particular group of individuals. Purposive sampling was also used to get information related to the
problem from the grocery owners.
1. The researchers made a request letter to the municipality (Business Permit and Licensing
Office) to acquire the number of registered grocery stores in General Trias City, Cavite.
2. After the lists of registered grocery stores were given, the researchers made questionnaire
regarding the pricing practices of selected grocery store owners.
3. The questionnaire was validated by three professionals, Ms. Lynette P. Rue, Dr.
Elizabeth Dumlao, and Mr. Leymar Toliba, who is also our accountant validator.
4. The researchers gathered information from 65 participants from 13 different barangays
of General Trias City, Cavite.
5. The data gathered was tabulated, organized, analyzed, and interpreted by the researchers.
Afterwards, it was checked and validated by the statistician and the accountant.

Research Instrument

The researchers designed a structured survey questionnaire which was used in gathering
data about the pricing practices of selected grocery store owners from selected barangays in
General Trias City, Cavite. The structured survey questionnaire was self-made. It also served as
the basis of the study. Thus, the structure survey was the main source of data of the study. There

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was a letter for the participants included in the survey questionnaire, indicating the title of the
study, the purpose of the research questionnaire and the name of the researchers. The survey
questionnaire used two different languages such as Filipino and English for the convenience of the
participants. The participants checked the box that corresponds to their answers, except for their
names and location. The first part of the survey questionnaire was the business profile of the
participants which sought to identify the participants’ name, location, business status, length of
business operations, and estimated monthly net profit. The second part sough to determine the
pricing strategies used by selected grocery store owners. The third part sought to determine the
level of factors that affect the pricing of their product as determined by the factors using the 4-
point likert scale: 1-never, 2-seldom, 3-often, and 4-always.

Statistical Treatment of Data

The data was gathered and was carefully evaluated and analyzed by the researchers through
the assistance of a statistician.
The statistical tools that were used to treat the data to be gathered were:
Frequency
This was used to tally the items related to the business profile of the participants such as
location, business status, length of business operations, and estimated monthly net profit. It is also
a statistical tool that showed the number of times the respondents chose a specific answer from the
survey questionnaire.
Mean
Mean is the representation of the entire data set. It is necessary to be computed to identify
the level of awareness of the respondents. The mean range that was used in this study is 1-1.75 for
never, 1.76-2.50 for seldom, 2.51-3.25 for often and 3.26-4 for always.
Percentage
This was utilized to get the value of an item in relation to the business profile of the
participants and to get the percentage of the pricing practices of selected grocery store owners. The

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data was calculated by taking the frequency in the category divided by total number of the sample
size and multiplying it by 100%.

RESULTS AND DISCUSSIONS

Business Profile

Table 1 shows the data that was gathered from 65 participants of 13 barangays in General
Trias City, Cavite. Barangay Sampalucan has the greatest number of grocery stores.

Table 1. Distribution in Terms of Location

BARANGAY FREQUENCY PERCENTAGE

Arnaldo 1 1.54

Bacao II 3 4.62

Biclatan 2 3.08

Buenavista II 2 3.08

Corregidor 2 3.08

Javalera 1 1.54

Manggahan 5 7.69

Pasong Camachile I 4 6.15

Pasong Camachile II 4 6.15

Pasong Kawayan II 8 12.31

Sampalucan 18 27.69

San Francisco 8 12.31

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Santiago 7 10.77

TOTAL 65 100.00

Table 2 shows that majority (55.38%) of the participants of this study, own the place of
their grocery stores and the rest (44.62%) of the participants rent the place of the grocery stores.

Table 2. Distribution in Terms of Business Status

RENT OR OWNED FREQUENCY PERCENTAGE

Rent 29 44.62
Owned 36 55.38

TOTAL 65 100.00

Table 3 shows that majority (41.54%) of the participants of this study have been operating
their business for 1-5 years and the least (10.77%) portion are operating their business below one
year.

Table 3. Distribution in Terms of Length of Business Operations

LENGTH OF BUSINESS FREQUENCY PERCENTAGE
OPERATIONS
Below 1 Year 7 10.77

1-5 Years 27 41.54

6-10 Years 15 23.08

Above 11 Years 16 24.62

TOTAL 65 100.00

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Table 4 shows that majority (43.08%) of the participants have an estimated monthly net
profit of above 25,000 php. The least (10.77) of them have 20,001 php-25,000 php estimated
monthly net profit.

Table 4. Distribution in Terms of Estimated Monthly Net Profit

ESTIMATED MONTHLY FREQUENCY PERCENTAGE
NET PROFIT
Less Than 15,000 php 20 30.77

15,000 php–20,000 php 10 15.38

20,001 php-25,000 php 7 10.77

Above 25,000 php 28 43.08

TOTAL 65 100.00

Table 5 shows the pricing strategies used by selected grocery store owners. Majority of the
participants used markup pricing strategy with a frequency of 65. This I followed by perceived
value pricing with a frequency of 31, promotional pricing strategy with a frequency of 30. On the
other hand, Predatory pricing has a frequency of 10, followed by the loss leader pricing with a
frequency of 20 and competition-based pricing with a frequency of 21.

Overall, most participants have chosen the strategy of markup pricing, as their strategy in
pricing their products.

Table 5. Ranking in Terms of Pricing Strategies

PRICING STRATEGIES FREQUENCY RANKING

Markup Pricing 65 1

Competition Based Pricing 21 7

Promotional Pricing 30 3

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Price Skimming 26 5

Psychological Pricing 25 6

Loss Leader Pricing 20 8

Predatory Pricing 10 9

Going Rate Pricing 27 4

Perceived Value Pricing 31 2

Pricing Strategies used by the Owners as Determined by Following Factors

Table 6 shows that the cost of the commodity, utilities, and administrative and selling cost
are seldomly considered the cost factor before pricing the products.

Table 6. Level of Factors for Cost

STATEMENTS MEAN DESCRIPTIVE RATING

1. Do you consider the cost of 2.49 Seldom

commodity in setting your price?
2. Do you consider the cost like 2.29 Seldom
utilities, delivery charges, etc. to
set up your price?
3. Do you consider administrative and 2.26 Seldom
selling cost such as salary to set up
you price?

GRAND MEAN 2.35 Seldom

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Table 7 shows that the consumers’ acceptability for the price of the product, price lowering
of products for a short period of time, and price reducing of products are seldomly considered by
the participants.

Table 7. Level of Factors for Consumers/Market Demand

STATEMENTS MEAN DESCRIPTIVE RATING

1. Do you consider consumers’ 3.15 Often

acceptability of the product
at a certain price?
2. Do you consider lowering of 2.20 Seldom
prices for a short period of time
to increase acceptability rate?
3. Do you consider of setting up 1.86 Seldom
the price at its highest and
reducing it overtime to increase acceptability rate?

GRAND MEAN 2.40 Seldom

Table 8 shows that the amount of net profit to be earned at the end of the period, addition
of variable markup to attain the desired net profit, and setting of fixed mark up across the border
to attain the desired pricing are seldomly considered by the participants before pricing their
products.

Table 8. Level of Factors for Profit

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STATEMENTS MEAN DESCRIPTIVE RATING

1. Do you consider the amount of 1.97 Seldom

net profit to be earned at the end
of the period before setting the
price?
2. Do you add a variable markup to 2.31 Seldom attain the
desired net profit?
3. Do you set a fixed markup across 2.23 Seldom the border
to attain the desired
profit?

GRAND MEAN 2.17 Seldom

Table 9 shows that the price set by the competitors, the price promotion made by the
competitors, and the competitors’ capability to supply the product are never considered by the
participants before setting up their products.

Table 9. Level of Factors for Competitors

STATEMENTS MEAN DESCRIPTIVE RATING

1. Do you consider the price set by 1.80 Seldom

the competitors before setting up
your price?
2. Do you check price promotion 1.77 Seldom made by the
competitors before
setting up your price?
3. Do you check the competitors’ 1.52 Never
capability to supply the product?

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GRAND MEAN 1.70 Never

Price Cost Margin

Table 10 shows that 12 participants have a price cost margin of 8.33%, followed by price
cost margin of 10.91% and 11.03% with both 4 participants.

Most of the grocery owners selling price has 8.33% of its sales that can be allocated for
other expenses.

Table 10. Price Cost Margin for Rice

FREQUENCY COST SELLING AMOUNT PRICE COST
PRICES (Php) ADDED MARGIN

(Php) (%)
(Php)

1 55.00 59.00 4.00 6.78

4 51.60 58.00 6.40 11.03

1 51.00 57.00 6.00 10.53

1 50.00 56.00 6.00 10.71

4 49.00 55.00 6.00 10.91

2 48.50 53.00 4.50 8.49

1 48.00 52.00 4.00 7.69

1 47.50 51.00 3.50 6.86

2 46.00 50.00 4.00 8.00

1 45.00 49.00 4.00 8.16

12 48.00 44.00 4.00 8.33

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Table 11 shows that 15 participants set a price cost margin of 5.56%, followed by price
cost margin of 8.33% with 14 participants and 4.00% with 12 participants.

Most of the grocery owners selling price has 5.56% of its sales that can be allocated for
other expenses.

Table 11. Price Cost Margin for Sardines

FREQUENCY COST SELLING AMOUNT PRICE COST
PRICES ADDED MARGIN

(Php) (Php) (%)

(Php)

1 25.65 29.00 3.35 11.55

4 24.75 27.00 2.25 8.33

3 24.50 26.00 1.50 5.77

12 24.00 25.00 1.00 4.00

14 22.00 24.00 2.00 8.33

9 22.50 23.00 0.50 2.17

2 20.00 21.50 1.50 6.98

5 19.00 20.00 1.00 5.00

15 17.00 18.00 1.00 5.56

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Table 12 shows that 36 participants set a price cost margin of 11.54%, followed by 17
participants with 8.33% price cost margin, and 6 participants with 15.71% price cost margin.

Most of the grocery owners selling price has 11.54% of its sales that can be allocated for
other expenses.

Table 12. Price Cost Margin for Instant Noodles

FREQUENCY COST SELLING AMOUNT PRICE COST

PRICES ADDED MARGIN

(Php) (Php) (%)

(Php)

2 13.00 20.00 7.00 35

3 12.00 15.00 3.00 20

6 11.80 14.00 2.20 15.71

36 11.50 13.00 1.50 11.54

17 11.00 12.00 1.00 8.33

1 7.00 9.00 2.00 22.22

Table 13 shows that 19 participants have a price cost margin of 5.00%, followed by price
cost margin of 7.27% with 13 participants and 6.73% with 12 participants.

Most of the grocery owners selling price has 5.00% of its sales that can be allocated for
other expenses.

Table 13. Price Cost Margin for Powdered Milk

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FREQUENCY COST SELLING AMOUNT PRICE COST

PRICES MARGIN
ADDED
(Php) (%)
(Php) (Php)

1 53.00 58.00 5.00 8.62

1 52.50 56.00 3.50 6.25

13 51.00 55.00 4.00 7.27

3 50.00 54.00 4.00 7.41

6 49.00 53.00 4.00 7.55

12 48.50 52.00 3.50 6.73

4 48.00 51.00 3.00 5.88

19 47.50 50.00 2.50 5.00

Table 14 shows that 35 participants have a price cost margin of 20.00%, followed by price
cost margin of 18.18% with 20 participants and 18.33% with 10 participants.

Most of the grocery owners selling price has 20.00% of its sales that can be allocated for
other expenses.

Table 14. Price Cost Margin for Instant Coffee

FREQUENCY COST SELLING AMOUNT PRICE COST
PRICES ADDED MARGIN

(Php) (Php) (%)

(Php)

10 9.80 12.00 2.20 18.33

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20 9.00 11.00 2.00 18.18

35 8.00 10.00 2.00 20.00

Price Enforcement Compared to Competing Products

Table 15 shows that 45.15% or 30 of the participants have their selling prices above the
suggested retail price of Php 47.00 for the rice. On the other hand, 53.85% or 35 of the participants
do not sell the product.

Table 15. Price Enforcement for Rice

FREQUENCY SUGGESTED SELLING VERBAL
PRICES
RETAIL PRICE INTERPRETATION
(Php)
(Php)

1 47.00 59.00 Above the Suggested Retail Price

4 47.00 58.00 Above the Suggested Retail Price

1 47.00 57.00 Above the Suggested Retail Price

1 47.00 56.00 Above the Suggested Retail Price

4 47.00 55.00 Above the Suggested Retail Price

2 47.00 53.00 Above the Suggested Retail Price

1 47.00 52.00 Above the Suggested Retail Price

1 47.00 51.00 Above the Suggested Retail Price

2 47.00 50.00 Above the Suggested Retail Price

1 47.00 49.00 Above the Suggested Retail Price

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12 47.00 48.00 Above the Suggested Retail Price

Table 16 shows that all the participants have their selling prices above the suggested retail
price of Php 17.85 for sardines.

Table 16. Price Enforcement for Sardines

FREQUENCY SUGGESTED SELLING VERBAL INTERPRETATION

RETAIL PRICE PRICES

(Php) (Php)

1 17.85 29.00 Above the Suggested Retail Price

4 17.85 27.00 Above the Suggested Retail Price

3 17.85 26.00 Above the Suggested Retail Price

12 17.85 25.00 Above the Suggested Retail Price

14 17.85 24.00 Above the Suggested Retail Price

9 17.85 23.00 Above the Suggested Retail Price

2 17.85 21.50 Above the Suggested Retail Price

5 17.85 20.00 Above the Suggested Retail Price

15 17.85 18.00 Above the Suggested Retail Price

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Table 17 shows that all the 65 participants have their selling prices above the suggested
retail price of Php 7.50 for the instant noodles.

Table 17. Price Enforcement Instant Noodles

FREQUENCY SUGGESTED SELLING VERBAL
PRICES INTERPRETATION
RETAIL PRICE
(Php)
(Php)

2 7.50 20.00 Above the Suggested Retail Price

3 7.50 15.00 Above the Suggested Retail Price

6 7.50 14.00 Above the Suggested Retail Price

36 7.50 13.00 Above the Suggested Retail Price

17 7.50 12.00 Above the Suggested Retail Price

1 7.50 9.00 Above the Suggested Retail Price

Table 18 shows that 61.54% of the participants have their selling prices above the
suggested retail price of Php 43.50 for powdered milk and 29.23% of the participants have
complied to the suggested retail price. On the other hand, the remaining 9.23% of the participants
do not sell the product.

Table 18. Price Enforcement for Powdered Milk

FREQUENCY SUGGESTED SELLING VERBAL INTERPRETATION

RETAIL PRICE PRICES

(Php) (Php)

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1 43.50 58.00 Above the Suggested Retail Price

1 43.50 56.00 Above the Suggested Retail Price

13 43.50 55.00 Above the Suggested Retail Price

3 43.50 54.00 Above the Suggested Retail Price

6 43.50 53.00 Above the Suggested Retail Price

12 43.50 52.00 Above the Suggested Retail Price

4 43.50 51.00 Above the Suggested Retail Price

19 43.50 50.00 Above the Suggested Retail Price

Table 19 shows that (100%) of the participants have their selling prices above the suggested
retail price of Php 7.85 for the instant coffee.

Table 19. Price Enforcement for Instant Coffee

FREQUENCY SUGGESTED SELLING VERBAL INTERPRETATION

RETAIL PRICE PRICES

(Php) (Php)

10 7.85 12.00 Above the Suggested Retail Price

33
20 7.85 11.00 Above the Suggested Retail Price

35 7.85 10.00 Above the Suggested Retail Price

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SUMMARY, CONCLUSION AND RECOMMENDATIONS

SUMMARY

The study was conducted to identify the pricing practices of selected grocery store owners
in General Trias City, Cavite. Specifically, this study aims to determine (a) the business profile of
the participants in terms of location, business status, length of business operations, and estimated
monthly net profit; (b) the pricing strategies used by selected grocery store owners; (c) the level of
factors that affect the pricing of the products; (d) the price performance analysis (price cost margin
and price enforcement compared to competing product)
The study was conducted in General Trias City, Cavite from November 2019 to January
2020.
The study resulted that majority of the participants owned the place where their grocery
store is located, has 1-5 years of business operations, and has an estimated monthly net profit of
above 25, 000 php. The ranking of the pricing strategies used by the grocery store owners are, rank
1: markup pricing, rank 2: perceived value pricing and rank 3: promotional pricing. On the other
hand, they seldomly consider the factors that affect their pricing of products. In addition, the price
cost margin for rice (8.33%), sardines (5.56%), noodles (11.54%), powdered milk (5.00%), and
instant coffee (20.00%). For the price enforcement compared to competing products resulted that
majority of the participants put their selling prices above the suggested retail prices.
Quantitative-descriptive research design was used in this study to collect information about
the pricing practices of selected grocery store owners through survey questionnaire.
The statistical tools used to analyze and interpret data were mean, percentage, and
frequency. The data gathered were analyzed and interpreted by the researchers to draw the
conclusion of the study.

CONCLUSION

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Majority of the participants of this study owned the place where their grocery store is
located, has 1-5 years of business operation, and has an estimated monthly net profit of above
25,000 php.
The ranking of the pricing strategies used by the grocery store owners are, rank 1: markup
pricing, rank 2: perceived value pricing and rank 3: promotional pricing.
This study found out that most of the participants seldomly considered factors of cost,
consumers/market demand, profit, and competitors before pricing their products with a mean of
2.18.

In addition, most of the grocery store owners’ have a price cost margin of 8.33% of its sales
can be allocated for other expenses for rice. On the other hand, most of selected grocery owners’
selling price has 5.56% of its sales that can be allocated for other expenses for sardines. For instant
noodles, most of the grocery owners selling price has 11.54% of its sales that can be allocated for
other expenses. For powdered milk, most of the grocery owners’ selling price has 5.00% of its
sales that can be allocated for other expenses. Lastly, for instant coffee most of the grocery owners’
selling price has 20.00% of its sales that can be allocated for other expenses.

The overall result for the price enforcement compared to the competing products is that
majority of the grocery store owners put their selling prices above the suggested retail price.

In conclusion, to determine if there is any increase or decrease to the price of the product,
the participants preferred price enforcement compared to the competing products tool over price
cost margin.

RECOMMENDATIONS

In line with the findings of this research study, the researchers recommend improving the
pricing practices in General Trias City, Cavite to the following:
1. For the Department of Trade and Industry, the institution must conduct a consistent
monthly regular monitoring of prices of the products in grocery stores in which they

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can issue certification as an evidence. They may also conduct seminars regarding the
information on the suggested retail prices to the grocery store owners.
2. For the grocery store owners, they should be aware of the information on the nature of
the suggested retail prices of various products.
3. For the future researchers, they may conduct a study that identifies the reason/s of the
grocery store owner in choosing their pricing strategies. They may conduct study
regarding the correlational study between the socio demographic profile of the owners
and their pricing practices. In addition, they may conduct a correlational study on the
pricing performance analysis such as price cost margin and price enforcement
compared to the competing products. They may also conduct study regarding pricing
practices in connection to the suppliers.

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Yap, A., Gonzales, K. G., Rosellon, M. D., & Yap, J. T. (n.d.). Unfair Trade Practies in the
Philippines, 1–60. Retrieved from https://dirp3.pids.gov.ph/ris/dps/ pidsdps1239.pdf
Zimbroff, A. (2015). Starting a new business: Pre-launch research. University of Nebraska–
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ublicationId=1692

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APPENDIX FIGURES

Appendix Figure 1. Data gathering in Barangay San Francisco with our technical critic

Asian Journal of Multidisciplinary Research & Review (AJMRR)

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© 2015-2021 All Rights Reserved by The Law Brigade Publishers
An Open Access Journal from The Law Brigade Publishers 36

Appendix Figure 2. Data Gathering in Barangay Sampalucan

Appendix Figure 3. Data gathering in Barangay Manggahan

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© 2015-2021 All Rights Reserved by The Law Brigade Publishers
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Appendix Figure 4. Data gathering in Barangay Santiago

Appendix Figure 5. Data gathering in Barangay Corregidor

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© 2015-2021 All Rights Reserved by The Law Brigade Publishers
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Appendix Figure 6. Data gathering in Barangay Corregidor with our research adviser

Appendix Figure 7. Validation of research questionnaire with Dr. Elizabeth Dumlao

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© 2015-2021 All Rights Reserved by The Law Brigade Publishers
An Open Access Journal from The Law Brigade Publishers 39

Appendix Figure 8. Validation of research questionnaire with Mr. Leymar Toliba

Appendix Figure 9. Validation of research questionnaire with Ms. Lynette Rue

Asian Journal of Multidisciplinary Research & Review (AJMRR)

ISSN 2582 8088
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© 2015-2021 All Rights Reserved by The Law Brigade Publishers
An Open Access Journal from The Law Brigade Publishers 40

APPENDICES

Appendix 1. Certificate of Validation

Asian Journal of Multidisciplinary Research & Review (AJMRR)

ISSN 2582 8088
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© 2015-2021 All Rights Reserved by The Law Brigade Publishers
An Open Access Journal from The Law Brigade Publishers 41

Appendix 2. Certificate of Validation

Asian Journal of Multidisciplinary Research & Review (AJMRR)

ISSN 2582 8088
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© 2015-2021 All Rights Reserved by The Law Brigade Publishers
An Open Access Journal from The Law Brigade Publishers 42

Appendix 3. Certificate of Validation

Asian Journal of Multidisciplinary Research & Review (AJMRR)

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© 2015-2021 All Rights Reserved by The Law Brigade Publishers
An Open Access Journal from The Law Brigade Publishers 43

Appendix 6. Certificate of Accountant

Asian Journal of Multidisciplinary Research & Review (AJMRR)

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Appendix 7. Survey Questionnaires

Asian Journal of Multidisciplinary Research & Review (AJMRR)

ISSN 2582 8088
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© 2015-2021 All Rights Reserved by The Law Brigade Publishers
An Open Access Journal from The Law Brigade Publishers 45

Asian Journal of Multidisciplinary Research & Review (AJMRR)

ISSN 2582 8088
Volume 2 Issue 1 – March 2021
© 2015-2021 All Rights Reserved by The Law Brigade Publishers
An Open Access Journal from The Law Brigade Publishers 46

Appendix 8. List of the Grocery Stores in General Trias City, Cavite

Asian Journal of Multidisciplinary Research & Review (AJMRR)

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© 2015-2021 All Rights Reserved by The Law Brigade Publishers
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Appendix 9. Letter for the Participants

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Appendix 13. Survey Questionnaires

Asian Journal of Multidisciplinary Research & Review (AJMRR)

ISSN 2582 8088
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© 2015-2021 All Rights Reserved by The Law Brigade Publishers