BEA’S PRICING BEA’S PRICING DILEMMADILEMMA

Mr. Jay de los ReyesMr. Jay de los Reyes

Marketing Manager Marketing Manager current prices are lower than similar current prices are lower than similar

products in the marketproducts in the market considers this a barrier to better considers this a barrier to better

image building. image building.

Ms. Bea Lim-Marketing AssistantMs. Bea Lim-Marketing Assistant planning to make some revisions in the planning to make some revisions in the

marketing strategies for Prime Meat marketing strategies for Prime Meat products products

does not fully agree that prices are the does not fully agree that prices are the only basis for creating product imageonly basis for creating product image

current prices must be maintained to current prices must be maintained to attract a bigger marketattract a bigger market

considers Mr. Jay’s comments a useful considers Mr. Jay’s comments a useful input in pricing strategy formulation input in pricing strategy formulation

contemplating on a pricing policy that contemplating on a pricing policy that would have a long-term beneficial effect to would have a long-term beneficial effect to the company. the company.

Company BackgroundCompany Background

Prime Meat, Inc. is a spin-off from the Prime Meat, Inc. is a spin-off from the big feedmilling business of the LCM big feedmilling business of the LCM companycompany

located in Lipa City, Batangaslocated in Lipa City, Batangas 85 km away from Manila85 km away from Manila is considered a first class city. is considered a first class city.

OPPORTUNITIESOPPORTUNITIES

The meat division was separated from The meat division was separated from

the mother company to give it more the mother company to give it more

independence in formulating strategies independence in formulating strategies

and to enable it to grow as a distinct and to enable it to grow as a distinct

strategic business unitstrategic business unit planning to transfer to a larger plant with planning to transfer to a larger plant with

a 30 metric ton production capacity per a 30 metric ton production capacity per

month in Santo Tomas, the town next to month in Santo Tomas, the town next to

the capital city.the capital city.

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

THREATTHREAT

Prime Meat Inc. is located about Prime Meat Inc. is located about 85 km away from Manila85 km away from Manila

STRENGTHSSTRENGTHS

- Their slaughtering facility has an AA - Their slaughtering facility has an AA

accreditation from the National Meat accreditation from the National Meat

Inspection CommitteeInspection Committee

-The plant utilizes machines and equipment in -The plant utilizes machines and equipment in

the actual slaughteringthe actual slaughtering

-Has five administrative staff, three delivery -Has five administrative staff, three delivery

personnel and twelve production workers personnel and twelve production workers

Production volume is 10 metric tons Production volume is 10 metric tons per month for double shifts and 8 per month for double shifts and 8 tons per month for regular shiftstons per month for regular shifts

Prime Meat, Inc. has a total of 14 Prime Meat, Inc. has a total of 14 processed meat items and processed meat items and

3 carrier products which has the 3 carrier products which has the biggest share of sales in the product biggest share of sales in the product line line

WEAKNESSESWEAKNESSES

Prime Meat Inc. is currently operating Prime Meat Inc. is currently operating as a small-scale processing plant as a small-scale processing plant with an area of 240 sq. m. with an area of 240 sq. m.

Manual labor is used in the actual Manual labor is used in the actual process and handling of the productprocess and handling of the product

Christmas ham, embutido, bologna Christmas ham, embutido, bologna bacon and sweet ham are considered bacon and sweet ham are considered seasonal with only a small share in seasonal with only a small share in the total sales.the total sales.

PRODUCT LIFE CYCLEPRODUCT LIFE CYCLE

Carrier products are hotdogs, tocino, tapa Carrier products are hotdogs, tocino, tapa and longanisa. These products have the and longanisa. These products have the biggest share of sales in the product linebiggest share of sales in the product line

Cheesedog, chicken longanisa, Cheesedog, chicken longanisa, hamburger, sisig, glazed ham and smoked hamburger, sisig, glazed ham and smoked longanisa are regular productslonganisa are regular products

Christmas ham, embutido, bologna bacon Christmas ham, embutido, bologna bacon and sweet ham are considered seasonal and sweet ham are considered seasonal with only a small share in the total saleswith only a small share in the total sales

TARGET MARKETSTARGET MARKETS

main consumers are the members of main consumers are the members of the LCM cooperative the LCM cooperative

Class B to class C levels groups of Class B to class C levels groups of consumersconsumers

PRODUCT POSITIONINGPRODUCT POSITIONING

Prime Meat Inc. products are currently Prime Meat Inc. products are currently positioned for the Class B to Class C, positioned for the Class B to Class C, income levels groups of consumers. income levels groups of consumers.

Its main competitors are Lipeño’s Pride, Its main competitors are Lipeño’s Pride, Carmen’s, Emma Homemade Meat Carmen’s, Emma Homemade Meat Products, Tita’s, Mekeni and Pampanga’s Products, Tita’s, Mekeni and Pampanga’s Best. These are the brands that have Best. These are the brands that have more or less the same offering and the more or less the same offering and the same quality as their products.same quality as their products.

Marketing StrategiesMarketing Strategies

Product StrategyProduct Strategy Pricing StategyPricing Stategy Promotional StrategyPromotional Strategy Distribution StategyDistribution Stategy

Product StrategyProduct Strategy

offers the best quality product that offers the best quality product that their AA accredited plant producetheir AA accredited plant produce

aim for the best quality processed aim for the best quality processed meats that their consumer can availmeats that their consumer can avail

processed meat are made from the processed meat are made from the best quality raw materials straight best quality raw materials straight from the members hog producefrom the members hog produce

flavored with imported spices to flavored with imported spices to enhance the taste.enhance the taste.

All of the processed meat products All of the processed meat products are packaged in polyethylene or are packaged in polyethylene or plastic bags bearing the Prime Inc. plastic bags bearing the Prime Inc. logo, product type, ingredients, and logo, product type, ingredients, and best before date of the particular best before date of the particular productproduct

Processed meats are offered at 200 Processed meats are offered at 200 gram, 250 gram, 450 gram and one gram, 250 gram, 450 gram and one kg packs.kg packs.

Pricing StrategyPricing Strategy

Uses mark-up pricing Uses mark-up pricing 15% mark up for all products15% mark up for all products Consider raw materials, packaging, Consider raw materials, packaging,

labor and overhead in the labor and overhead in the calculations of mark upcalculations of mark up

Promotional StrategyPromotional Strategy

Outright discount of 2.5% for all members Outright discount of 2.5% for all members of the LCM cooperative and cash of the LCM cooperative and cash purchasespurchases

Pick up subsidy (one time pick up) of P3.00 Pick up subsidy (one time pick up) of P3.00 for a minimum purchase of 35 kilosfor a minimum purchase of 35 kilos

Volume discounts Volume discounts 35 -50 kilos 3%35 -50 kilos 3% 51-100 kilos 4%51-100 kilos 4% 101-200 kilos 5%101-200 kilos 5% over 200 kilos 6% plus P2.00 per kgover 200 kilos 6% plus P2.00 per kg

Distribution StrategyDistribution Strategy

Distributes their products through Distributes their products through LCM branches all over Southern LCM branches all over Southern Luzon and portions of Central LuzonLuzon and portions of Central Luzon

Each branch have regular dealers Each branch have regular dealers and walk-in dealersand walk-in dealers

Dealers follow certain terms & Dealers follow certain terms & conditions set by the firmconditions set by the firm

There are 23 outletsThere are 23 outlets

Strengths & Weaknesses of the Strengths & Weaknesses of the Current StrategiesCurrent Strategies

Favorite brand of tocino is Pampanga’s Favorite brand of tocino is Pampanga’s Best followed by Prime MeatBest followed by Prime Meat

Favorite brand of Hotdogs is Purefoods Favorite brand of Hotdogs is Purefoods Tender Juicy followed by Swift HotdogsTender Juicy followed by Swift Hotdogs

Lipeno’s Pride was best brand for tocinoLipeno’s Pride was best brand for tocino Prime Meat hotdog was not considered as Prime Meat hotdog was not considered as

a favorite hotdog brand a favorite hotdog brand

CASE PROBLEMCASE PROBLEM

What would be the pricing policy What would be the pricing policy

that will have a long-term that will have a long-term

beneficial effect to the company?beneficial effect to the company?

CASE OBJECTIVECASE OBJECTIVE

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

ALTERNATIVE SOLUTIONSALTERNATIVE SOLUTIONS

One alternative made by Bea was One alternative made by Bea was conducting a survey/storecheck to conducting a survey/storecheck to determine the prices of competing determine the prices of competing products in the marketproducts in the market

Conduct product sampling and taste Conduct product sampling and taste test to determine the price test to determine the price expectation of the consumersexpectation of the consumers

Increase production to be able to Increase production to be able to capture a bigger market sharecapture a bigger market share

Hotdog Brands w/ comparative Hotdog Brands w/ comparative prices in the marketprices in the market

Manufacturer Prices (500g)Manufacturer Prices (500g)

Holiday Bingo P38.00 – 39.00Holiday Bingo P38.00 – 39.00

Beefies 40.50 -50.25Beefies 40.50 -50.25

Swift sweet & juicy 49.50 -51.00Swift sweet & juicy 49.50 -51.00

Prime Meat (450g) 43.50 -45.00 Prime Meat (450g) 43.50 -45.00

Evaluation ResultsEvaluation Results Favorite brand of tocino is Favorite brand of tocino is

Pampanga’s Best followed by Prime Pampanga’s Best followed by Prime MeatMeat

Favorite brand of Hotdogs is Favorite brand of Hotdogs is Purefoods Tender juicy followed by Purefoods Tender juicy followed by SwiftSwift

Lipeno’s Pride was considered the Lipeno’s Pride was considered the best brand for tocino best brand for tocino

Prime meat hotdog was not Prime meat hotdog was not considered as a favorite brand by considered as a favorite brand by consumersconsumers

Evaluation Cont.Evaluation Cont.

Consumers are familiar with the prices of Consumers are familiar with the prices of the different tocino and hotdog brandsthe different tocino and hotdog brands

Consumers compare prices and quality of Consumers compare prices and quality of tocino & hotdogstocino & hotdogs

Housewives are the main decision maker Housewives are the main decision maker in buying tocinoin buying tocino

Children are the powerful influencers in Children are the powerful influencers in hotdog buyinghotdog buying

Price of a product must be consumer-Price of a product must be consumer-orientedoriented

RECOMMENDATIONSRECOMMENDATIONS

Ensure that consumers are satisfied Ensure that consumers are satisfied with what they get from the product with what they get from the product relative to what they payrelative to what they pay

Based on the store check conducted Based on the store check conducted by Bea, consumers have the by Bea, consumers have the tendency to compare prices and tendency to compare prices and qualityquality

Price of the product must be Price of the product must be consumer-oriented consumer-oriented

Consumer satisfaction should be Consumer satisfaction should be attained relative to what they payattained relative to what they pay

STRATEGIES(proposed)STRATEGIES(proposed)

TARGET MARKETS(changes)TARGET MARKETS(changes) PRODUCT POSITIONING(proposed)PRODUCT POSITIONING(proposed) MARKETING MIX(proposed changes MARKETING MIX(proposed changes

on product, price, place &promotion on product, price, place &promotion strategies)strategies)

Consumers are familiar with the prices of the Consumers are familiar with the prices of the different tocino and hotdog brandsdifferent tocino and hotdog brands

Consumers compare prices and quality of tocino Consumers compare prices and quality of tocino & hotdogs& hotdogs

Housewives are the main decision maker in Housewives are the main decision maker in buying tocinobuying tocino

Children are the powerful influencers in hotdog Children are the powerful influencers in hotdog buyingbuying

Price of a product must be consumer-orientedPrice of a product must be consumer-oriented Ensure that consumers are satisfied with what Ensure that consumers are satisfied with what

they get from the product relative to what they they get from the product relative to what they paypay

FUTURE TRENDSFUTURE TRENDS

CONTINGENCY PLANSCONTINGENCY PLANS

LESSONSLESSONS