Perdue Farms, Incorporated
19 Pages Posted: 21 Oct 2008
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Perdue Farms, Incorporated
Date Written: April 2, 1991
Abstract
Perdue Farms, the highly successful marketer of brand-name chicken, is considering the introduction of a chicken hot dog to the market. The decision is complicated by a variety of factors, including top management's concerns and conditions, potential ramifications of the hot dog for the company's high-quality image, the uncertainty of market response, uncertainties about how to position the new product, potential consumer objections to use of mechanically deboned meat, and the uncertainty of profitability at recommended levels of marketing costs.
Excerpt
UVA-M-0189
PERDUE FARMS, INCORPORATED
Late in the summer of 1976, Don Mabe, executive vice president of Perdue Farms, Incorporated, called the assistant divisional controller, Mike Moriarty. “Mike, I want you to make this decision on whether or not we should get into chicken hot dogs,” Mabe said. Moriarty, a young MBA who was rising in the company, eagerly undertook research to bring himself up to date on Perdue's possible entry into the processed meat market. But a month later, Moriarty was still undecided. Although he was convinced that Perdue had developed a superior chicken hot dog, he was uncertain of the demand for the product. Perdue's supply of birds might not be sufficient to meet demand for the franks, so outside purchases might be required. In addition, Perdue could do only preliminary processing of live chickens in its own plant; the company lacked final processing capability for hot dogs and would therefore, have to depend on other meat processors to produce the franks.
Moriarty was also worried that advertising costs might make the entire project unprofitable if the advertising agency's projections were correct. In any event, he was unsure whether to advertise Perdue's new chicken product as a totally new product or to try to promote the product as an alternative to hot dogs made of other meat. In addition, Moriarty wanted to protect Perdue's widely respected image and wondered if a line of hot dogs would damage that image of quality. Finally, consumer groups were pressuring the U.S. Department of Agriculture (USDA) to halt use of mechanically deboned meat (MDM) in consumer products. They alleged that MDM was nutritionally inferior and contained possibly harmful bone bits. Moriarty was concerned that at best, the planned use of MDM in Perdue's hot dog would cheapen its image. At worst, a USDA ban might force Perdue to rethink the whole hot dog idea.
Company History
Perdue, Inc. was founded in 1920 by Arthur W. Perdue to sell hatching eggs to chicken farmers in and around Salisbury, Maryland. In 1933, the company began to sell live chickens—“broilers”—for human consumption. Five years later, Arthur's son Frank joined the business at the age of 19. He became president 10 years later.
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Keywords: consumer marketing, market analysis, new-product introduction, new-product marketing, product positioning
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