A Strategic Business Plan for Premium Pork Products Inc Essay

PURPOSE

 

Premium Pork Products, headquartered in Hamlet, North Carolina is one of the major suppliers of bulk pork products to meat wholesalers and meat departments of supermarkets in the United States of America. For quite some time, the company is having problems in the developing a business strategy that his market-based for the PPP. Generally, this report shall focus on the development of these kinds of strategies that could ensure that the firm would find new ways to spend their money; to ensure that they could tap other potentials for their business, considering the thin margins that they have on bulk pork products that were mainly the sources of their income. Generally, the development of these new business strategies could help in the turning the business around, and at the same time, define new markets in which they could do their business.

 

MANAGEMENT SUMMARY

 

As it has been mentioned, Premium Pork Products Inc. is one of the major suppliers of bulk pork products to meat wholesalers and meat departments of supermarkets. However, as it has also been made clear, the firm is finding new ways by which they could spend money through the incorporation of corporate strategies. The firm is in need of taking action to provide PPP with a new direction as their margins on bulk pork products that they have been selling for the past few years are generally thinning.

 

Premium Pork Products or PPP is part of one of the hugest industries in the world as they are producing the most widely eaten meat in the world. The United States, the country wherein the firm is based ranks second in the supply of pork ranks second in the production of this meat, next to China, the top producer and consumer of the said meat. Although this is the case, PPP is still at a position of disadvantage as they are only focused on what is considered to be a low profit side of the business – the production of bulk pork products. As a result, they want to reduce their dependence on this and tap other opportunities that could significantly increase income.

 

Generally, they do not earn so much from the production of bulk pork products as they know that the orders they get are from wholesalers and supermarket meat buyers who then in turn, cut, package and price the pork individually for retail sale are generating more income than them. Other problems associated with their current business strategy are overproduction and the price of hog prices that has the tendency to go way down.

 

The company is also in the process of considering the reinvention of their business. This means that they are looking for a new business model that could help in the development of the so-called pork based convenience foods. As a result, the development of business strategies would also focus on the creation of branded items for the frozen food department and the refrigerated meat cases of supermarkets. Hence, they are now considering in pushing towards the trend in consumer products to reduce their dependency on bulk pork products.

 

There is no doubt that the firm could afford the application of new strategies. In fact, the financial situation of the PPP is in good shape and could definitely help them in entering new markets. However, the firm is careful in ensuring that the money they will soon be shelling out would be put to good use.

 

The company also wants to enter the Frozen Food Industry considering the fast paced life that people in the United States are having. Their lifestyle is slowly shifting from cooking their meals from scratch to buying prepared, frozen food from the groceries which they could just heat and reheat. In spite of this, the company is busy in making developing strategies by which they could enter the aspect of this industry easily considering that chicken based products lead the frozen food industry, followed by those which are beef based, and finally, those which are pork based.

 

In line with this, the annual volume of consumption for beef, chicken and pork together with the trends that come along shall be examined especially the preference of consumers.

 

Considering the number of businesses that are currently playing in the field that PPP is trying to enter, the company would also be looking into the graphics that their competitors use that help in making their products stand out in such a limited space.

 

Through the analysis of the aforementioned, a clear business strategy could be drafted in order to ensure that the PPP would be able to enter new markets easily thus aiding them in the generation of new profits.

 
INTRODUCTION

 

 

As it has been mentioned, the company aims to increase their profits by simply going beyond their traditional source of income – relying on bulk pork products (USDA Economic Research Service, 2005). This plan shall simply focus on the development of marketing strategies that could help so much in the betterment of the PPP as one of the leading suppliers of pork products in the United States, thus giving it a new direction, a new life. Figure 1 shows the other top producers of pork in the United States,

 

20 largest pork producers in the United States
2006 Rank
2005 Rank
Name of Operation
Headquarters
# Sows 2006
# Sows 2005
Comments
1
1
Smithfield Foods
Smithfield, VA
1,200,115
960,000
995,325 in U.S., rest international. Bought Premium Standard Farms in Sept.
2
NA
Seaboard Foods
Shawnee Mission, KS
213,600
213,600
Includes Christensen, Hanor, TriOak, New Fashion, Eichelberger, Allied Producers’.
3
3
Seaboard Farms
Shawnee Mission, KS
213,600
213,600
No plans for more sows. Marketing pork for Triumph Foods.
4
4
Iowa Select Farms
Iowa Falls, IA
150,000
150,000
Building finishing barns. No plans for sow growth.
5
6
Prestage Farms
Clinton, NC
140,000
140,000
Building finishing barns in Iowa. Shipping weaned pigs from MS to IA.
6
8
The Pipestone System
Pipestone, MN
130,000
110,000
Most growth comes from existing sites that Pipestone is now managing.
7
13
The Maschhoffs
Carlyle, IL
116,000
115,000
Added one 6,000-sow farm, but removed some old Land O’Lakes farms.
8
9
Cargill
Minneapolis, MN
87,000
94,000
Sow reduction due to natural attrition.
9
10
Maxwell Foods, Inc.
Goldsboro, NC
76,000
76,000
Plan to build three 5,000-sow farms in Indiana by late 2007..Òr
10
13
AMVC Management
Audubon, IA.
75,000
65,000
Includes Natural Pork Production II. Acquired a sow farm in Indiana.
11
12
Tyson Foods
Springdale, AR
70,000
70,000
No changes
12
15
Progressive Swine Tech.
Columbus, NE
55,200
50,000
Built a 5,200-sow farm. Also adding finishing.r
13
14
Hormel Foods
Austin, MN
51,000
51,000
Adding 10,000 sows in Wyoming.
14
16
Nebraska Pork Partners
Columbus, NE
45,000
45,000
No plans for expansion, but looking for opportunities.
15
18
Wakefield Pork
Gaylord, MN
41,000
38,600
Added one 2,400-sow farm.
16
17
Hatfield Quality Meats
Hatfield, PA
36,100
41,100
Exited some farms. Sow expansion planned for PA and IN in 2007.
17
20
Whitestone Farms
Burnsville, MN
35,000
35,000
No expansion planned.h.
18
22
Texas Farm
Perryton, TX
33,500
29,000
Not expanding at this time.
19
21
Holden Farms
Northfield, MN
32,000
30,000
Added 2,000 sows
20
22
Coharie Farms
Clinton, NC
31,000
29,000
All growth is internal.

TOTALS
3,017,315
2,693,650
Growth of 323,665 sows.
Source: Successful Farming, 2006.

 

The plan aims to target the commodity businesses with the introduction of new products, more specifically, the introduction of branded products that could be included in the frozen food department and the refrigerated meat cases of the supermarkets. It is through this that they would slowly turn away from their heavy dependence on the wholesaling of pork products.

 

In entering the commodity business, the marketing plan should be able to include good packaging strategies as this is the only means by which the producers could attract consumers to patronize their products (Bakema and Novack, 2001). It also aims to target those people who are living a fast paced lifestyle who have are no longer interested in preparing dishes from scratch, buying those that are in supermarket freezers that could be simply heated/reheated (Olins, 2003)

.

 

Furthermore, this plan shall focus on the finding out why more people prefer chicken or beef based dishes rather than pork based. Upon doing this, a marketing strategy shall be devised in such a way that it could help the company in addressing the wants and needs of potential consumers. At the same time, this research and the development of the strategy could over turn the situation, thus making more people demand for pork based dishes.

 

BACKGROUND AND TRENDS

 

 

Rapidly emerging in the United States is a new meat industry now that food retailers, meat processors, farms and ranches come together into fewer and larger business. The consolidation of the industry was seen to trigger alarms for the new giants of the industry in retailing and processing that caused food prices for consumers to increase and the prices of livestock goes down for the producers (USDA Economic Research Service, 2005)

.

 

For about a half century, the poultry industry dominated the supply chain structure of the country. Recently, they broilers are producing in supply chain arrangement. Nowadays, the hog industry is catching up. In the 1980s however, the number of hog farms in the country went down from about 500,000 to 85,000. As mentioned, one of the trends in this industry is the consolidation of producers, processes and retailers into fewer yet larger businesses. The hog industry is also shifting into supply chains (Gregory, 2003)

.

 

There are two reasons why the meat industry of the United States is transforming it to a more compact structure: these are the two powerful economic forces known as food demand and technology. The demand for food is relatively changing toward food products that are easier to prepare yet at the same time, promises safe eating, improved nutrition and greater consistency.

 

In line with this, the industry is exerting efforts to ensure that they fulfill the ever changing needs of the consumers and at the same time, maintain their place in the competitive stage by cutting down costs. As a result, fewer yet larger businesses arise which are characterized by the consolidation in food retailing, meat processing and the production of livestock.

 

Food Retailing

 

 

Generally, there are two trends why food retailing is very popular in the United States in the recent decades. First of these two is the slow growth of the US markets as food spending is increasing in a faster rate than the incomes of the consumers. Because of this, the share of income spent on food declined from 14 percent to less than 11 percent.

 

Secondly, people are more inclined to buy food products that have already been conveniently prepared that are of consistent quality. Whilst the percentage of income devoted to food expenditure decreases, the share of food expenditures that pays for processing, packaging, and transportation is climbing. Conversely, the share of pay for raw far commodities is generally decreasing (Economic Research Service/USDA, 1996)

. Aside from this, the consumers are also inclined to spend more money in restaurants and other dining establishments as it is convenient for them since they no longer have to prepare their food.

 

Demographic factors account much of consumers’ fondness for dining convenience. One of these demographic factors is the increasing number of women who are joining the American workforce. Because of this, household incomes are continuously climbing and at the same time, their schedules are tightening. Therefore, more consumers prefer food products that had been prepared for their convenience (Otto and Lawrence, 2003)

.

 

The constant search for more convenient dining options increased the competition between the traditional food retailers and restaurants as well as the other establishments that are into food service as they offer prepared or ready-to-eat foods. In the late 1900s, more than 80 percent of the supermarkets are selling prepared foods including sandwiches, pizza or pasta dishes. At the same time, some of the observers of the industry noted that one of the areas for the development of new products is the category known as convenient meal solutions which offer their customers timesaving approaches to meal preparation (Bakema and Novack, 2001)

.

 

The food retailers not only face competition with the different food service providers (i.e. restaurants) but with supermarkets and other mass merchandisers as well. These mass merchandisers make use of advancements in information technology, distribution systems and inventory control to make sure that they stay alive in the midst of a competition. One of the strategies they apply is Efficient Consumer Response or ECR. ECR aims at improving the flow of the products between the manufacturers and retailers. Generally, this objective aims to make sure that the items will reach the shelf before the consumers arrive to purchase (Bakema and Novack, 2001)

.

 
Meat Processing

Just like food retailing, the demand of the consumers and the various producers’ aim to trim down their costs led to the development of the meat processing industry. This is highly necessary especially because the poultry industry joined in the competition for the beef and pork industries (Bakema and Novack, 2001)

.

 

Without a doubt, it is the poultry industry that was very successful in the development of new products that not only promised convenience but also nutrition to their consumers. At the same time, they priced it in a manner that is very attractive to their patrons. As a result, they earned a greater market share which threatened that of the place of the beef industry. At the same time, the consumption of pork remained flat (Bakema and Novack, 2001)

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Figure 2. Market Share of Top Four Processing Firms

Source:

 
ANALYSIS

 

 

Strengths

 

The business is one of the leading retailers of pork. Thus, the company has a steady supply of meat products that they can use as they enter the frozen food and meat processing industries.
The financial status of the company is in good shape. As a result, they have the necessary resources needed in their decision to tap other market opportunities.
The company has one item in the meat case, their famous country hams under the Premium Pork Products label.
There are few pork-based dinners.
Weaknesses

 

The firm focuses so much on bulk pork products, only having a little experience with regard to food retailing and meat processing.
The frozen food industry is dominated by chicken-based products.
Opportunities

 

The demand for food is relatively changing toward food products that are easier to prepare yet at the same time, promises safe eating, improved nutrition and greater consistency.
Just like food retailing, the demand of the consumers and the various producers’ aim to trim down their costs led to the development of the meat processing industry.
Threats

The constant search for more convenient dining options increased the competition between the traditional food retailers and restaurants as well as the other establishments that are into food service as they offer prepared or ready-to-eat foods.
The food retailers not only face competition with the different food service providers (i.e. restaurants) but with supermarkets and other mass merchandisers as well.
The poultry industry dominates the frozen food and market processing industries thus even participating in the competition between the beef and pork industries.
 

VISION

 

The vision for PPP is to cut their dependence on bulk wholesaling of pork products through entering new markets and tapping other opportunities: the frozen food and meat processing markets. By doing so, PPP will increase their profits as their margins in bulk wholesaling is gradually decreasing.

 
GOALS

 

Generally, the goal of the Premium Pork Products is to look for other opportunities as the profit they receive from their reliance on bulk pork products is slowly decreasing. It aims to create branded items for the frozen food department and the refrigerated meat cases of supermarkets.

 

OBJECTIVES

 

This business plan aims to create a new business model that could help in paving the way for the creation of branded items for the frozen food department and the refrigerated meat cases of supermarkets. In doing this, it is also aimed that the company would increase their margin by about 50%.

 

STRATEGIES

 

Generally, as the firm will tap the frozen food and processed meat industries, they must focus on the packaging of their food products to ensure that what they are producing could attract the consumers even if they are contained in a small space like that of the freezer or refrigerated cases. It would focus on consumer packaging marketing to ensure that the products that the PPP shall develop could easily catch the eyes of the customers.

 

Branding is an essential part of marketing which generally develops different labels of ownership such as: name, term, design and symbol. In recent times, it does so much for people as they have the tendency to reflect and engage the aspiration of a certain company. Branding and packaging could increase the competitiveness of a certain firm or organization in a certain market where they are in (Olins, 2003).

 

Consumer package marketing, which PPP shall be using in entering the refrigerated market case and food processing industries, the brand image that they would be using is of vital importance as its attributes a certain personality and image to their products which could then be planted onto the consciousness of the firms’ consumers.

 

It is through their popularity in the marketplace that a certain brand achieves brand recognition. In the case of PPP, they must be able to package their products in a unique way that the consumers would be able to recognize them without the name of the producer .

 

IMPLEMENTATION

 

The strategy presented above shall be implemented through hiring creative consultants that would take care of the package design to ensure that their products would stand out when placed inside the refrigerated cases. The team that would focus on the package design must be able to adhere by the requirements of good packaging as mentioned in these are the following:

 

functional – to effectively contain and protect the contents
provide convenience during distribution, sale, opening, use, reuse, etc.
be environmentally responsible
be cost effective
appropriately designed for target market
eye-catching
communicate attributes and recommended use of the product and package
complaint with retailers’ requirements
promotes image of enterprise
distinguishable from competitors’ products
meet legal requirements for product and packaging
point of difference in service and supply of product
for a perfect product, perfect color.
 

OPERATIONAL PLANS

 

For the next fiscal year, the business must be able to specify how they would enter the refrigerated market case and meat processing industries. Without a doubt, as stated in the analysis, this would not be too hard for them since they are already suppliers of pork products.

 

PPP must know what product they will include in the industry. Would they still focus on hams or newer products? Upon discovering their best assets, the company must be able to hire the best creative designers that could start working on their package design.

 

FINANCE

 

Generally, the firm does not have any problem with regard to financing their new strategies. As the trends in the US meat industry nowadays show, people are more inclined to buy conveniently prepared food products. As a result, adopting these new marketing strategies could more or less increase the profit of this company by 50% as they would not longer be depending too much on the wholesale of bulk pork products.

 

CONINGENCY PLANS

 

Advertising through mass media was considered for this business strategy. However, this was not considered as the company should be focusing more on the package design of their products. It is through packaging that the company could first establish their products. It is only after the development of a good product design that the company should turn towards advertisement to further improve the visibility of their new commodities.

 

CONTROL, REVIEW, REVISION

 

The program discussed above would be implemented by the top executives of the company. They will monitor their improvement as compared with that of their performance before entering the market. As the company aims to increase their profits by 50%, they must slowly watch this within half a year. If in any case that they do not meet this objective, then the company must be able to engage in advertising to ensure that their products attract the patrons of the biggest supermarkets.
References

Bakerna, A. and Novack, N. (2001). The New U.S. Meat Industy. The Main Street Economist: Commentary on the rural Economy. Center for the Study of Rural America.

 

Birkin, M. (1994). Assessing Brand Value. Brand Power.

 

Economic Research Service/USDA. (1996). The US as a Key Player in Pork Export Markets. Agricultural Outlook.

 

Gregory, J. (2003). Best of Branding.

 

Informa Economics, Inc. (2005). The Changing Pork Industry and Implications for Future Growth. Retrieved March 10, 2008 from http://www.in.gov/ai/errors/isda_404.html

 

Miller and Muir (2004). The Business of Brands.

 

Olins, W. (2003). On Brand. London: Thames and Hudson.

 

Otto, D. and Lawrence, J. (2003). The United States Pork Industry 2003: Patterns and Economic Importance. Iowa: Iowa State University.

 

Schmidt, Klaus and Ludlow, C. (2002). Inclusive Branding: The Why and How of a Holistic Approach to Brands. Basingstoke: Palgrave Macmillan.

 

USDA Economic Research Service. (2005). US Pork Outlook Report  – July 2005. Retrieved March 10, 2008 from http://www.in.gov/ai/errors/isda_404.html

 

 

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