Bea's Pricing Dilemma - Prime Meat Inc

1. Bea’s Pricing Dilemma^[1]

Ms. Bea Lim, the Marketing Assistant of Prime Meat, Inc. is planning to make some revisions in the marketing strategies for Prime Meat products. The Executives of the company want to create a better image for their products considering their acceptability in the market.  Mr. Jay de los Reyes, the Marketing Manager has commented that current prices are lower than similar products in the market, this he considers as a barrier to better image building.  Bea, does not fully agree that prices are the only basis for creating product image.  She still believes that since their company is still small and growing, current prices must be maintained to attract a bigger market.  However, she considers Mr. Jay’s comments a useful input in pricing strategy formulation.  She is contemplating on a pricing policy that would have a long-term beneficial effect to the company.

1. Company Background

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

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.   With the separation from the LCM Company, they are also 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.

Prime Meat Inc. is currently operating as a small-scale processing plant with an area of 240 sq. m. At present, they have five administrative staff, three delivery personnel and twelve production workers. Their slaughtering facility has an AA accreditation from the National Meat Inspection Committee. An AA accredited slaughtering facility is semi-mechanized. The plant utilizes machines and equipment in the actual slaughtering and manual labor is used in the actual process and handling of the product.  With the planned transfer to Santo Tomas, their operation will be largely mechanized.

 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. Their product line consists of the following: bacon, bologna, cheesedog, chicken longanisa, embutido, hamburger, hotdogs, pork tapa, pork tocino, sisig, skinless longanisa, glazed ham, sweet ham smoked longanisa and Christmas ham.

Among its product offerings, Prime Meat Inc.’s carrier products are hotdogs, tocino, tapa and longanisa. These products have the biggest share of sales in the product line. Other products are such as the Christmas ham, embutido, bologna bacon and sweet ham are considered seasonal with only a small share in the total sales.