Beas Pricing Dilemma Essay
And dealers follow certain terms and conditions set by the firm. These are all contained in a signed dealership contract. The Figure 1 below shows the distribution of outlets. 3. Pricing Strategy The company uses mark-up pricing to determine what is the suitable price for their products. Raw materials, packaging, labor, and overhead in cost calculations are the factors considered in pricing a product. The company used 15% mark-up policy for the pricing of all their products which is prime meat. A taste and product sampling was conducted by Ms.
Bea Limit to determine the price expectation of the consumers. The outcome is that, Prime Meats Tocsin and Hotdogs are perceived to have higher prices than the current prices. A gag Tocsin is priced POP. O while a gag Hotdogs is priced POP. O. This means that consumers, with respect to the satisfaction they get from those products, are willing to pay at those price levels. 4. Promotional Strategy The company does several promotion strategies in marketing its product. For the members of the LLC cooperative, they provide an outright discount of 2. % regardless of volume on their products. For the buyers, they can either avail of pick up subsidy for a minimum of 35 kilos at PA. O per kilo, or volume discounts from 3% to as much of 6%. Aside from the discount to the price, the company also used streamers located along the highways and bandmasters. They also advertise through the use of radio. And lately they have billboard located along South Luzon Expressway. And few months ago, they shot a TV commercial which is televised by the ABS-CB Regional Network Battings TV 10. Ill. The Case Problem How can Prime Meat Inc. Improve the image of their products, focusing on hotdogs and tocsin using a new pricing scheme or policy, including costumers perceived value and mark-up price that would give a long-term beneficial effect to the company? IV. Case Objective The analysis of the case aims to develop a favorable price for the Prime Meat Inc. Products so that it could give a long-term beneficial effect to the company. Specific objective should therefore be proposed and a suitable marketing mix that highlights the pricing strategy and would address the issue on building a better brand image is suggested.
V. Alternative Solutions to the Problem A. Ms. Bea Limit will make use Of the perceived value pricing strategy. Price will be based on Ms. Bea Limb’s market research. And based on the survey, the customer are willing to pay a higher price for the best seller products. Majority of them are willing to pay POP. 00 and POP. O for tocsin and hotdogs respectively as compared to those products current price POP. 50 Implementation of the increase in prices will lead to high quality perception because of the price-quality effect.
In the long run, they will become less price sensitive and see Prime Meat as high quality brand, determined price will be more or less accepted by the market. But, since the research was solely conducted in Lip City, the said increase in the prices of Prime Meat’s hotdogs and tocsin may not be well accepted by customers outside the city. And this may result into a lower market share. B. Ms. Bea Limit should increase the current mark-up policy. From 1 5%, the company can raise mark-up to 25% probably or higher, as long as the resulting price will not be higher than or equal to the market leader’s prices.
This alternative solution can capture larger market due to the price quality effect. In the long run, Prime Meat will increase its market share and have a better image. But in the other hand, consumers may not positively respond to it. Also, this alternative could be risky since mark-up pricing does not consider the demand. C. Ms. Bea Limit will make use of Routine or Everyday Low price. Prime Meat Inc. Ill notify the market with the perception that they can get more than what they pay for. Through this alternative, the company will encourage market growth and increase the market share of their products.
Prime Meat Inc. Will project a high quality image on the minds of its Consumers. This would attract more consumer especially those who are price-sensitive or those who belong to the lower class who want high quality products at a low price. But, since Mr.. Jay De Los Rexes strongly believes that the current prices serve as barrier to building better brand image, this alternative may hardly be acceptable to him. The consequences are company will earn less profit and consumers may perceive or associate a low price to a low quality product, even if they are not. VI.
Recommendation It would be best for Prime Meat Inc. To use the perceived value pricing strategy wherein their current prices for tocsin and hotdogs will be increased by prices in relation to the results of the price expectation test conducted by Ms. Bea Limit. Preferred price for gag pack of tocsin is POP. O and POP. O for hotdogs. Furthermore, since the consumers are willing to pay more for their products, he previously mentioned prices would be applied to Prime Meats current prices. This implies that the current retail price for tocsin and hotdogs which is approximately POP. 0 will increase by Pl . 50 and PA. 50 respectively. On the other hand, the remaining processed meat products (e. G sigh, bacon) will remain as ease. With this, an image of better and higher quality product will be perceived in the minds of the possible buyers. VII. Proposed Strategies or Plans A. Target Market Class B to Class C income level groups of consumers will still be the target market of Prime Meat Inc. B. Product Positioning Although the prices for tocsin and hotdogs are proposed to increased, prices are still lower compared to some of their leading competitors. Prime Meat Inc. Ill stick to its product and brand position of having high quality processed meat products that are still of low prices. C. Marketing Mix 1. Product Prime Meat Inc. ‘s fourteen product lines will be maintained, especially thee carrier products. In relation to the recommended price increase, the packaging of the products should be improved to complement the quality and price offered to the consumer. 2. Price The implementation Of the perceived Value pricing Strategy entails the increase of the company’s current prices, Price increases will only be apply for tocsin and hotdogs.
It is then proposed that POP. O will be the price of a gag pack tocsin and POP. O for hotdogs. The prices of the other products would not be changed and the dealers price for tocsin and hotdogs will have POP. 50 as their new price. 3. Place The distribution system of the company will be maintained. There will be r changes in the number of outlets specified in the case. In terms of its plan transfer to Santos Atoms, Prime Meat can consider other alternatives grading the relocation because in Lip city, the potential market for tocsin is 89. 12 metric tons per month and an estimated potential market for hotdogs is 95. 14 metric tons per month. 4. Promotion Given that the company will pursue their transfer or relocation, it is proposed that Prime Meat will have more promotions specially in their new location. The company has been engaging in various kinds of promotional pricing strategies and they have served the company well in terms of popularizing I products. However, most of its strategies are only exclusive in Battings.