BEAS PRICING DILEMMA

Mr. Jay de los Reyes

Marketing Manager current prices are lower than similar products in the market considers this a barrier to better image building.

Ms. Bea Lim-Marketing Assistant

planning to make some revisions in the marketing strategies for Prime Meat products does not fully agree that prices are the only basis for creating product image current prices must be maintained to attract a bigger market considers Mr. Jays comments a useful input in pricing strategy formulation contemplating on a pricing policy that would have a long-term beneficial effect to the company.

Company Background

Prime Meat, Inc. is a spin-off from the big feedmilling business of the LCM company located in Lipa City, Batangas 85 km away from Manila is considered a first class city.

OPPORTUNITIES

The meat division was separated from the mother company to give it more independence in formulating strategies and to enable it to grow as a distinct strategic business unit planning to transfer to a larger plant with a 30 metric ton production capacity per month in Santo Tomas, the town next to the capital city.

With the planned transfer to Santo Tomas, their operation will be largely mechanized

THREAT

Prime Meat Inc. is located about 85 km away from Manila

STRENGTHS
- Their slaughtering facility has an AA accreditation from the National Meat Inspection Committee -The plant utilizes machines and equipment in the actual slaughtering -Has five administrative staff, three delivery

personnel and twelve production workers

Production volume is 10 metric tons per month for double shifts and 8 tons per month for regular shifts Prime Meat, Inc. has a total of 14 processed meat items and 3 carrier products which has the biggest share of sales in the product line

WEAKNESSES

Prime Meat Inc. is currently operating as a small-scale processing plant with an area of 240 sq. m. Manual labor is used in the actual process and handling of the product Christmas ham, embutido, bologna bacon and sweet ham are considered seasonal with only a small share in the total sales.

PRODUCT LIFE CYCLE

Carrier products are hotdogs, tocino, tapa and longanisa. These products have the biggest share of sales in the product line Cheesedog, chicken longanisa, hamburger, sisig, glazed ham and smoked longanisa are regular products Christmas ham, embutido, bologna bacon and sweet ham are considered seasonal with only a small share in the total sales

TARGET MARKETS

main consumers are the members of the LCM cooperative Class B to class C levels groups of consumers

PRODUCT POSITIONING

Prime Meat Inc. products are currently positioned for the Class B to Class C, income levels groups of consumers. Its main competitors are Lipeos Pride, Carmens, Emma Homemade Meat Products, Titas, Mekeni and Pampangas Best. These are the brands that have more or less the same offering and the same quality as their products.

Marketing Strategies

Product Strategy Pricing Stategy Promotional Strategy Distribution Stategy

Product Strategy

offers the best quality product that their AA accredited plant produce aim for the best quality processed meats that their consumer can avail processed meat are made from the best quality raw materials straight from the members hog produce flavored with imported spices to enhance the taste.

All of the processed meat products are packaged in polyethylene or plastic bags bearing the Prime Inc. logo, product type, ingredients, and best before date of the particular product Processed meats are offered at 200 gram, 250 gram, 450 gram and one kg packs.

Pricing Strategy

Uses mark-up pricing 15% mark up for all products Consider raw materials, packaging, labor and overhead in the calculations of mark up

Promotional Strategy

Outright discount of 2.5% for all members of the LCM cooperative and cash purchases Pick up subsidy (one time pick up) of P3.00 for a minimum purchase of 35 kilos Volume discounts 35 -50 kilos 3% 51-100 kilos 4% 101-200 kilos 5% over 200 kilos 6% plus P2.00 per kg

Distribution Strategy

Distributes their products through LCM branches all over Southern Luzon and portions of Central Luzon Each branch have regular dealers and walk-in dealers Dealers follow certain terms & conditions set by the firm There are 23 outlets

Strengths & Weaknesses of the Current Strategies

Favorite brand of tocino is Pampangas Best followed by Prime Meat Favorite brand of Hotdogs is Purefoods Tender Juicy followed by Swift Hotdogs Lipenos Pride was best brand for tocino Prime Meat hotdog was not considered as a favorite hotdog brand

CASE PROBLEM
What would be the pricing policy that will have a long-term beneficial effect to the company?

CASE OBJECTIVE

To create a better image for the products, considering their acceptability in the market, through pricing.

ALTERNATIVE SOLUTIONS

One alternative made by Bea was conducting a survey/storecheck to determine the prices of competing products in the market Conduct product sampling and taste test to determine the price expectation of the consumers Increase production to be able to capture a bigger market share

Hotdog Brands w/ comparative prices in the market

Manufacturer Holiday Bingo Beefies Swift sweet & juicy Prime Meat (450g) Prices (500g) P38.00 39.00 40.50 -50.25 49.50 -51.00 43.50 -45.00

Evaluation Results

Favorite brand of tocino is Pampangas Best followed by Prime Meat Favorite brand of Hotdogs is Purefoods Tender juicy followed by Swift Lipenos Pride was considered the best brand for tocino Prime meat hotdog was not considered as a favorite brand by consumers

Evaluation Cont.

Consumers are familiar with the prices of the different tocino and hotdog brands Consumers compare prices and quality of tocino & hotdogs Housewives are the main decision maker in buying tocino Children are the powerful influencers in hotdog buying Price of a product must be consumeroriented

RECOMMENDATIONS

Ensure that consumers are satisfied with what they get from the product relative to what they pay Based on the store check conducted by Bea, consumers have the tendency to compare prices and quality

Price of the product must be consumer-oriented Consumer satisfaction should be attained relative to what they pay

STRATEGIES(proposed)

TARGET MARKETS(changes) PRODUCT POSITIONING(proposed) MARKETING MIX(proposed changes on product, price, place &promotion strategies)

Consumers are familiar with the prices of the different tocino and hotdog brands Consumers compare prices and quality of tocino & hotdogs Housewives are the main decision maker in buying tocino Children are the powerful influencers in hotdog buying Price of a product must be consumer-oriented Ensure that consumers are satisfied with what they get from the product relative to what they pay

FUTURE TRENDS

CONTINGENCY PLANS

LESSONS