Study of the marketing mix of a Chilean company in the meat market

Definition of AASA Companies.

The AASA organization was born in 1982, when a group of private investors acquired Frigorífico Lo Valledor, which after more than 20 years of effort has managed to position itself as the absolute leader in the slaughter of cattle, and in the production and marketing of meat products in Chile.

The modern vision with which AASA Companies faces their business areas, as well as the emphasis on the incorporation of the most modern Marketing techniques, the development of new products, the constant concern for quality and service to our clients; Today they allow us to be the largest conglomerate of refrigerators in the country, projecting into the future towards the extension of new business lines, the expansion of our productive capacity and a constant renewal of our equipment.

Company AASA, leader in the meat industry in Chile, is made up of 15 subsidiary and related companies, where a human team consisting of more than 1,500 people works, has modern processing plants strategically distributed throughout Chile, aware of the highest demand in the markets in terms of quality control, this holding company has incorporated great technology in its facilities and has renewed, in less than a decade, almost all of its infrastructure as a way of operating under global insurance standards of quality in each of its stages of production.

Its mission and vision:

“We are an organization specialized in satisfying food needs based on a superior product with high nutritional value, such as meat. Our daily performance and development is based on human and business values, where honesty, trust and loyalty prevail, always striving to be the leaders of our business in all its aspects, especially in terms of the quality of our products, good service., innovation and profitability. "

“To become the best and most efficient organization of the meat industry in Chile and throughout the region, implementing strategies that allow us to face new markets, both national and international, in an agile manner, in order to effectively comply with the objectives set. ”

In Chile:

From the Atacama desert in the north to Patagonia in the south, Empresas AASA is present for 5,000 kilometers, delivering quality and services to its clients.

It has 2 bovine and pig production facilities, five modern processing plants, four distribution centers strategically distributed throughout the country, as we have said before, and a network of local centers for the direct sale of its clients., which allows them to have the widest national coverage in the field, allowing them to anticipate the tastes and needs of customers.

In this way they are not only found in the main consumption centers of the country, but also, distributed near the most important ports in all of Chile, (Iquique, Antofagasta, Talcahuano, Valparaíso.) And with roads with international connections.

Additionally, AASA has its own transport fleet, equipped with modern refrigerated trucks that dispatch according to the specific needs of each client in the area, as well as the direct requirements of all its own distribution plants.

Foreign trade:

Empresas AASA develops its foreign trade through its subsidiary Vallimport (located as a strategic center in Satgo.), Importing beef cuts or exporting products such as leather, frozen pork and suckling pigs exported to Italy, Argentina, Brazil, and Uruguay. and Ecuador. Additionally through its subsidiary Biosan, which carries out exports of Bile, Plasma and Hemoglobin.

The company is currently oriented to develop a more active internalization process, which allows it to participate more in the globalization process of the markets, increasing both export levels, as well as including new products derived from the pig slaughter with higher added value. to other markets, especially attention to Europe and Asia.

To carry out this task, Empresas AASA has invested in the construction of a modern pig dressing room, which has the most advanced technology, high levels of quality and hygiene, and capacity according to the needs of these markets.

AGROLOMAS

Located 500 kilometers south of the capital, and near the city of concepción, the Agrolomas refrigerator is located. Its coastal enclave, outside the central route of our country, and with a sales strategy concentrated in Region VIII, allows the Holding to be close to an important port (Talcahuano) and obtain a presence in the second center of greatest consumption in the country.. Importing its environment with quality products, the Agrolomas plant directly serves customers throughout this Region.

With the proven support of AASA, Agrolomas manages to compete directly, and with the best prices in the area, with a small number, but with great drive, of competitors, guaranteeing customers excellent service and first-class products.

NOTIONS FOR ANALYSIS

AND INTRODUCTION TO THE MEAT MARKET.

When choosing a product, the idea of Marketing is that consumers do not buy goods for the good itself, but for the service that the good brings, that is to say that from one point of view, Marketing does not create a need that these issues are not controllable, but rather influence people's decisions and wishes.

Before dedicating ourselves to analyzing a product, its operation, its market entry strategies and its characteristics, we must ask ourselves a question: What about the social environment in Chile? To answer we will make a brief review of the situation in which Chile and its neighbors find themselves.

The evolution of the Chilean economy in recent years is marked by two facts. The first is the external crisis, which began in Asia in the second half of 1997 and reached its greatest impact on global economic activity between the second half of 1998 and the first half of 1999. The second fact is the depth and length of the effects of this crisis in our neighboring countries like Argentina.

To these changes we must add the perspective of the international meat market, in 2001, it was characterized by having the lowest growth in production in recent years added to a stationary commercial volume. International meat prices fell 2 points.

Although the European markets have experienced a recovery of 2.5% compared to 2001, the growing concern about animal diseases, which has dragged on since 1999, has contributed to the per-capita consumption of the international population dropping close to 38, 7 kilograms. “A recovery in the production and total consumption of meats is expected by 2 to 3%, all of this as the fear of food safety in Europe decreases.

Types of Agrolomas packaging:

PRESENTATION AND PACKING TABLE
FEATURES	CONTAINER	DURATION	PRESENTATION
Empty	Heat Shrink Bags with High Oxygen Barrier	45 days at 0 ° C	Cardboard boxes of 20 Kgs. Cardboard boxes of 08 Kgs. Cardboard boxes of 03 Kgs.
Cool	Low-density polyethylene bag (0.1 micron)	7 days at 5 ° C	Cardboard trays of 20 kgs.
Frozen	Bag	1 year at -18 ° C	Cardboard boxes of 20 Kgs.

The qualities of Agrolomas packaging summarize the three most important aspects of almost all international markets:

The tags:

As already mentioned before, the national recognition of companies related to AASA, manages to position Agrolomas as a leading brand in the local market, with quality labeling that clearly translates nutritional aspects, ingredients and category.

The aesthetics of the packaging:

In this aspect, Agrolomas does not carry out a very consistent practice with respect to other types of products, so it can lead to losing potential customers, that is, not attracting people who like an aesthetically attractive product.

In general, it is the housewife who makes the purchases and through a survey carried out in 2 of the most important supermarkets in Chillán, (Santa Isabel and Unimarc), where it was asked what were the brands of products related to meat, who remembered the most for their good presence ?, 56% of the respondents were inclined to products packaged in the same supermarket.

Asked Mr. Cifuentes about the results of this survey, he clarified the following:

"The vast majority of the products that Unimarc sells are from Agrolomas, what happens is that this type of supermarket buys in large quantities and not only here in Chillán, but also in all of Chile (referring not only to Agrolomas, but also to the other refrigerators owned by AASA in all of Chile), so our main concern is not in how beautiful it looks but in the quality we deliver "," Our main concern is that the consumer feels satisfied with the quality of our meats and that they reach you under the standards specified by the SAG and the Ministry of Agriculture. "

From this last statement the last important aspect is extracted, which is:

The importance of taking into account climatic conditions:

Frigorífico Agrolomas has among its assets a fleet of refrigerated trucks that allow it to transport its products in extremely cold conditions under the same quality parameters to any part of Chile, as well as its vacuum packaging process, which, as shown in the table No. 5, maintains its quality for a longer time and the climatic aspect “in the production and transfer process” the climate is no longer a concern for them.

In addition, Agrolomas adopts as its own decision the replacement of any product that, due to the transfer process, suffers any deterioration and / or breakage. As the transfer process in some cases is long, different types of braking are determined when the route is greater than 500 Kilometers:

For products that travel less than 500 kilometers and in a single day, Nylon type 2 and vacuum process are used.

For products that travel more than 500 kilometers or their transfer takes more than a day, the cold packaging process is twofold.

In the same way that Agrolomas is concerned with the conditions of the packaging and / or packaging, it also does so with respect to the delivery of a guarantee that provides the consumer with a real conviction of its products.

For example:

Agrolomas has an express guarantee, on the packaging of its by-products, when it says: "100% meat" which assures meat consumers that this product really is 100% meat.

The comprehensive guarantee offered by Agrolomas, both explicit and implicit (discussed above), provides the consumer with a proven source of protection and quality.

Churrasco de posta rosada:

As it is known that no company relies only on their own ideas for the generation of products, Agrolomas has been developing new varieties of products for some time in order to satisfy the changing needs of its consumers, which is why they carried out a survey at the of its buyers par excellence, during the month of February 2002, of this survey and its results Mario Cifuentes speaks:

“The development of our product line, (understanding only the sale of beef), over time has been falling a little behind, in relation to the changing requirements of our customers, imagine! That 7 years ago it was not even necessary to sell frozen or cold-packed.

As a leading company it is necessary that we are always at the forefront, compared to other producers and distributors.

For this reason, a review of the products we deliver daily was carried out to find out what the new market demands were, and based on this survey we learned about the new requirements.

In other words, did they create new products?

No, no, Agrolomas has always been delivering this type of product. What we do now is redefine our packaging line to adapt it to new orders. For example: we have always sold the pink post, what happens is that before we sold it as a whole and in large quantities. Now it is delivered to merchants frozen, in boxes and with different weights, in this way a small merchant who could not buy 600 kilos of post, for not having adequate maintenance equipment, can now buy the amount that he will sell in a week, period.

In the same way with the big distributors of our products, when we deliver this type of service, we make their job easier, because they are cut off to arrive and sell. ”

After the market test of this product carried out by Agrolomas, which covered regions IV to IX, its acceptance was general.

The following is the way in which this product can be found in the different supermarkets:

Churrasco posta rosada:

Feature: Frozen

Packaging: boxes with polyethylene film.

Weight for you: can be found in 30, 60, 100, 120 grams.

Presentation: boxes of 3 and 7 kilos.

Simple presentation: every 3, 5, 7 you in the different weights.

After this analysis, it is possible to understand what type of product, what are its origins, characteristics and production process.

Next we will refer to the following key concept to make an analysis of a company:

The price.

The price:

According to Pride, "price is a fundamental component in the marketing mix, because customers are concerned about the value obtained in an exchange." From this we can understand that the price helps in the satisfactory exchange process between buyers and sellers.

Price is always an important aspect in marketing, but for this item it is especially important since the meat market is not going through a good time, as we had already seen in the study of the social environment, in the first part of this work..

AASA does not have a long-term structure in its pricing due to the characteristics of the market, which means that this alleged pricing is done in Satgo. between Lo Valledor and Frigorífico O'Higgins, in weekly meetings, for being the companies with the highest volume of sales. Agrolomas, being part of Lo Valledor, uses its prices.

The price is fixed, it comes with a profit margin so that it can maintain a relatively competitive price, and it uses different types of fixation, which we will mention below:

Price discrimination: that is, they charge different prices to different customers for the same product, to encourage the purchase of their products for a larger volume than the customer had in mind to buy, which is also known as volume discounts.

Seasonal discounts: for example, it makes an additional 20% discount on the normal price of each kilo of beef from Unimarc, so Unimarc buys a larger amount than it had budgeted for and what it generally buys. Most likely, Unimarc will move this offer and run a constant promotion for a period of 7 days, and then raise the price to the average value for a higher profit margin.

Absorption of freight costs: which means that Agrolomas absorbs the cost of freight, which, compared to its competitors, charges or adds it to the sale price, thus generating a difference in the comparison that the final customer perceives.

Zonal prices: the use of this type of prices is done only in sectors of the Eighth Region where the distribution process is complicated.

Price packages: the price system is used for the client to buy a certain quantity of products that he had no intention of buying. Asked more about the subject, Mr. Cifuentes states: “It is a fact that in the meat market, the buyer generally does not“ showcase ”but goes directly to buy what he needs, but in this way we can inject the products we have in inventory, like the ones we have in greater quantity ”

These types of systems, Agrolomas takes as a basis for determining prices, but according to Mr. Cifuentes, he analyzes his price system in the following way: “As I have already explained to you before, our prices are set in a very different way from slab other types of products on the market, for us the demand of customers is very important because it is a market, apart from changing, also unstable therefore I believe that the system that best suits us, as it is generally said in Marketing, is demand-driven pricing "

This type of system is very complicated according to Pride, who states that in order to develop this system, the seller or marketer must be fairly informed of what is happening in the meat market, as well as the demand that exists for their products.

To estimate demand-oriented prices, Agrolomas made a study where the following concepts were defined, which according to Mr. Cifuentes are imperative:

"In order to evaluate the opportunities that the market offers us by working in this way, the first thing that you must take into account is the total demand for it, and to make a correct evaluation you must keep in mind the following points":

Product: a clear definition of this word and its scope must be taken into account.

Total Volume: Those that can be measured in physical, monetary and relative volumes.

Customer groups: the important thing here is knowing how to segment the market.

The sector in which it is located: that is, with the boundaries of the well-defined market segment.

Time period: refers to a certain period of time.

The environment: Factors that cannot be controlled and that affect market demand.

The factors that can be controlled and the advertising programs that and the strategies that managers to forecast the different types of changes

These are one of the most relevant points, according to Agrolomas, to determine the prices that will be treated during the fortnight or the week.

All these strategies, complemented by solid support, have made Agrolomas the leading company in the market in the Central part of the country.

To get a more specific idea of the prices of Agrolomas in part II of this work, comparative prices are presented between Chile and Argentina, Agrolomas and its competitors, both in national values and in dollars.

Next we will define “La Plaza”, another important aspect in the Marketing Mix. Of this business.

All organizations, whether they produce tangibles or intangibles, have an interest in decisions about the plaza (also called channel, site, delivery, distribution, location, or coverage). That is, how they make offers available to users and make them accessible to them. The plaza is an element of the marketing mix that has received little attention in or regarding services because it has always been treated as something related to the movement of physical elements.

The usual generalization made about product distribution is that direct selling is the most frequent method and that channels are short. Direct selling is certainly prevalent in some product and service markets, but many product channels contain one or more intermediaries. It would be incorrect to say that direct selling is the only method of distribution in the markets. Intermediaries are common. Some of these intermediaries take their own risks; others perform functions that change ownership and still others perform functions that allow physical movement. In reality, there is no uniformity in the functions performed by intermediaries.But this lack of uniformity should not ignore the fundamental truth that organizations operating in the product market have two main channel options. These options are:

Direct selling : Direct selling may be the chosen method of distribution for a product by choice or due to the inseparability of the product and the supplier. When selecting direct sales by choice, the seller does so possibly to take advantage of marketing, such as maintaining better control of the product, obtaining noticeable differentiation of the product, or keeping direct information from customers about their needs.

Naturally, direct sales can be carried out by the customer going to the service provider or the provider going to the customer. Many personal and commercial services are characterized by the direct channel between the organization and the client. Direct channels on your needs.

Sales through intermediaries: The most frequently used channel in service organizations is the one that operates through intermediaries. Service channel structures vary considerably, and some are very complex.

In this type of sales there are many, such as:

Concessionaires: Intermediaries trained to perform or offer a service and / or product with authorization to sell it.

Institutional intermediaries: They are in the markets where the products have to be or are supplied by the stock market or advertising.

Wholesalers and retailers: Where all the distributors of the products are found, either for sales in large quantities or few.

Let's analyze, then, the Plaza de Agrolomas.

As we have said before, Agrolomas is located 500 kilometers south of the capital, and close to the city of Concepción, its coastal enclave, off the central route of our country, and with a sales strategy focused on VIII Region, allows the Holding to be close to an important port (Talcahuano) and obtain a presence in the second center of greatest consumption in the country. Importing its environment with quality products, the Agrolomas plant directly serves customers throughout this region.

Here two factors act as centralizing forces: supply conditions and tradition. The reasons that stimulate this location include the associated status that comes from being close to Concepción; the high intensity of demand in the area; Willingness of the client to obtain this type of product and the historical development of complementary services that Agrolomas has provided for years.

The ultimate importance of location in many Agrolomas operations results in more systematic methods. Intuition, for Mr. Cifuentes, “continues to play its role as part of decision-making, but is increasingly complemented by more careful and methodical analysis in the field of our products. Sellers of our products are increasingly aware of the importance of location and channel choice in the marketing mix. ”

However, what is definitive about the products offered by Agrolomas is their "accessibility" or "availability" for the customer when the product is required. In this sense, location refers not only to physical proximity, although this may be important in some companies, which are subsidiaries of AASA's holding company, in order to be closer to customers. An important element in the design of these services is then the communication system that exists in Agrolomas, which allows a quick response to customer calls.

The type of distribution channel that Agrolomas occupies is Channel C, due to its relationship with hundreds of clients that would otherwise be difficult to access.

Furthermore, in order to reach all points of sale, Agrolomas uses intensive distribution, both for wholesale and retail clients, making it one of the main strengths of the commercial area.

The most important Wholesale customers of Agrolomas in the Eighth Region are Unimarc and Sta. Isabel, which together cover more than 65% of the production and distribution of this company.

On the other hand, there are butchers, sales centers in distant areas and small businesses, with 35% of total sales.

Summarizing the clients that Agrolomas has are everything that is a chain of restaurants, schools, casinos and rotisseries as well as its clients on a large scale.

It is also worth highlighting the competitors that Agrolomas has as a producer and distributor of meat in the Eighth region, and analyzing the amount of market that this company has absorbed, so we will see below which are the direct competitors of AASA in this region and its system competition to try to take away a percentage of customers and how Agrolomas reacts to prevent this attacks from the competition.

Among the direct competitors are:

Ñuble Meats: With its facilities in the City of Chillán, it has the highest technology within the environment of Agrolomas competitors. The Elaborated Products have their own Factory, it boasts a demanding process of quality, hygiene and presentation.

The main products obtained from this plant are:

Burgers, Longanizas, Churrascos and Ground Beef among others

Carnes Ñuble has taken important steps that reveal the constant concern to effectively serve the needs of consumers, who every day ask for a product of the highest level and at an adequate price.

The price of the Churrasco de Posta rosa product that Carnes Ñuble handles for wholesale is $ 1,810 x Kg.

Procarne: The Procarne product line includes portioned beef steaks of different quality typifications, a variety of hamburger formulations and formats. Vacuum meats, escalopes, anticuchos, medallions, cubes and a variety of special products such as churrasco de posta rosada. In general, Procarne is able to satisfy all those who need beef.

The price of the Churrasco de Posta rosa product that Procarne manages for wholesale is $ 1,750 x Kg.

Frigo.Temuco: It was conceived as a project of Fundación Chile, whose original goal was to promote the modernization of the beef industry in our country.

The price of the Churrasco de Posta rosa product that Frigorífico Temuco handles for wholesale is $ 1,850 x Kg.

The price of the Churrasco de Posta rosa product that Frigorífico Agrolomas manages for sale to wholesalers and retailers this week of developed this work is $ 1,895 x Kg., This price has budgeted the freight charge that the other competitors do not have incorporated.

In table N ° 7 we will see the current state of Agrolomas.

Main cold-storage plants in Chile and their slaughter production

Region	Country Ranking	Slaughterhouse	Task (Cab./año)	Task (Cab./sem)	% of the Country	% of the Region
RM	one	Lo valledor	131,390	2,527	12	26
	two	Friosa	91,385	1,757	8	18
	3	Darc (ex Aybar)	74,092	1,425	7	fifteen
	7	Sofacar	43,656	840	4	9
	9	Camer	32,456	624	3	7
	13	Mountain range	25,800	496	4	5
V	6	With with	44,698	860	4	57
SAW	14	Comafri	20,683	398	two	fifty
VII	16	Talca	14,493	279	one	26
	19	War	11,349	218	one	twenty
	26	Chilean meat	7,815	150	one	14
VIII	8	Agrolomas	32,576	626	3	29
	10	Ñuble meats	29,229	562	3	26
IX	4	Temuco	73,505	1,414	7	67
X	5	Frigosor	57,213	1,100	5	40
	eleven	Frival	27,679	532	3	19
	12	Ganasur	27,129	522	two	19
Subtotal			745,148	14,330	68
Others			349,536	6,722	32
Total			1,094,684	21,052	100

Source: SAG, Odepa

Evolution of meat consumption in Chile

Source: SAG, Odepa.

We only have to analyze the last point, which is the promotion:

According to Pride, promotion refers to communication that facilitates exchanges by influencing the audience to accept a product.

The promotion in the products can be done through four traditional ways, in order to influence sales:

These forms are:

Advertising: defined as any paid form of non-personal presentation and promotion of services and / or products through a specific individual or organization.

Personal sale: defined as the personal presentation of the services and / or products in a conversation with one or more future buyers for the purpose of making sales.

Public Relations (Publicity): defined as the non-personal stimulation of demand for a service and / or product obtaining commercially important news about it, in any medium or obtaining its favorable presentation in some medium that is not paid by the product sponsor.

Sales Promotion: Marketing activities other than advertising, personal selling and public relations that stimulate customer purchases and the use and improvement of dealer effectiveness.

These types of promotion can be one of the most effective tools for influencing and communicating with customers.

At this point it is worth making a small “break” to understand how little promotion this company uses.

As previously mentioned in this work, Agrolomas is an AASA company, with proven support at the national level, it is for this reason that Mr. Cifuentes was asked the reasons why Agrolomas does not strongly use a promotion process, rather, a system where personal sales and customer relationships are the only means used. He referred to it this way:

"As you must be studying, the objectives of the promotion are for the consumer to know the product, to reinforce the demand for it, to try to keep regular customers and call" potentials ", and to fight against the positioning of your competitors, among others that I do not remember at this time. But for Agrolomas these types of problems do not affect us, since we have a solid position in the market, we are leaders, first because of the volume of sales that our company generates locally and second because of the amount sold throughout the country ”

Our policy is to allocate these resources that for us in this area do not influence us greatly, in others such as technology and development, so that the product reaches the consumer under our quality parameters, as well as those of the SAG that for these purposes it's very rigorous. ”

Agrolomas uses personal sales as a promotional tool, in addition to the typification of the product packaging detailed above and the logos of the trucks of its companies that travel throughout Chile.

GENERAL ANALYSIS AND CONCLUSIONS.

This study of the Agrolomas Company with its product “Churrasco de posta rosada”, has revealed several aspects and points of view that generally one as a student does not perceive with the naked eye.

In the first place, it is necessary to recognize the solidity of this company in terms of the market in general, which as we know has manifested a tendency to instability at least in recent years.

This solidity has made AASA, together with Agrolomas, one of the 25 leading companies in development and investment in technology.

As a leading company, it has maintained a constant and close relationship with its customers, favoring "us", the final consumers of meat in terms of prices and quality, by competing with another company that can and is also doing so, delivering similar quality., as is Carnes Ñuble.

The idea of investing more in technology than in advertising should be analyzed a little more in detail, due to the great advance that Carnes Ñuble has had in recent periods, positioning itself in a good way and managing to compete in the same way with these large companies.. A vote of recognition for Carnes Ñuble.

This study has also made it clear that over time the demand for meats should become more stable, due to the establishment of the international market, and the prohibitions on the internalization of Argentine meats. Situation that gives a greater possibility to the smallest producers who see in this way an entrance that was previously occupied by Argentine producers.

It seems that one of the most important condiments to stay in the meat market is to increase efficiency, carefully controlling all the processes that go from production to marketing and to minimize costs.

New regulations on labeling, quality and process standards have increased sales volume and raised the image of red meat.

It is also important to highlight that the distribution system used by Agrolomas is far one of the factors that make this company a leader in the eighth region, in terms of speed and the great possibility of covering the entire region, a situation that for its others competitors is impossible.

It is necessary to clarify that the distribution system of Agrolomas, although it is a remarkable point, also has some imperfections, such as for example that the trucks they distribute are with cold equipment at –1 ° C, which is not the most suitable for this, trucks are needed. with cold equipment –10C ° at least.

BIBLIOGRAPHY AND INTERNETGRAPHY

"Marketing, concepts and strategies", William M. Pride ninth edition. "Marketing management", Kotler, fourth edition. "Marketing", from Lamb Fourth edition. Statistical data and commercial reports provided by Agrolomas.Expert - gestiopolis.com

1 extracted in its entirety from the letter from AASA companies to its workers during the end of the 2001-2002 period.

Measure to be read repeatedly throughout this work, which means in simple words when an animal is halved and weighed hot (immediately after slaughter)

The statistical data obtained in this work can be used freely in: “News from the beef markets, coordination Merc. Win SAGPya ”

source: FAO

rounded data including fresh, chilled, frozen prepared and canned meats; excluding shipments of live meat, offal (interior) between countries.

Note "magazine of the field", Satgo. September 17, 2001

Note "magazine of the field", Satgo. September 07, 2001

Definitions taken from the book “Marketing”, by Lamb, p. 282. Fourth edition .

Total meat that the percentage of the animal's skeleton has been removed.

It has to do with all the interiors of an animal.

The terms used in this box (in the products section) refer to the types of cuts that are commonly used.

Interview conducted on May 10 and which will be expanded as this work develops and will be available at the end of this

Recall that a consumer convenience product is one that directly meets the diverse needs of consumers and is relatively inexpensive and affordable.

Remember that there are only two types of image, one positive and the other negative, so the company must emphasize this.