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CORRELATIONAL STUDY: PRODUCT PRICING AND FINANCIAL

STABILITY OF MEATSHOP BUSINESSES AMIDST THE PANDEMIC

BORERO, Benedict F.

COMBIS, John Patrick B.

FRANCE, Miguel Bryan N.

Independent Variable: The financial stability of meat shop businesses amidst the

pandemic.

Dependent Variable: The product pricing of meat shop businesses amidst the

pandemic.
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CHAPTER 1

THE PROBLEM AND ITS SETTING

Introduction

The outbreak of the novel coronavirus disease 2019 or COVID-19 has severely damaged

every country. The continuously increasing number of people who got infected by COVID-19 is

still the main concern in every country, especially here in the Philippines. Most of the countries-

imposed restrictions in which businesses as well as economies were greatly affected. In an

article written by Flaminiano (2020) from CNN Philippines, he noted that the International

Labor Organization (ILO) estimates that almost 25 million jobs worldwide may be lost because

of the COVID-19 pandemic, the majority of which could come from micro, small, and medium

enterprises (MSMEs) that account for up to 70% of employment across regions. Furthermore,

the impact of the pandemic will be more damaging to small businesses since large firms are

more resilient than MSMEs in times of recession (Flaminiano, 2020). Small businesses are one

of the most affected entities in the business sector during this pandemic due to restrictions

imposed by the government. Many businesses up until now are having a hard time thinking of

whether their business will survive these trying times.

Meat shops that buy and sell meat as an essential product are one of those in the

business sector that are greatly affected. Due to the restrictions and guidelines implemented by

the government, meat shop businesses have a hard time trying to recover from their losses.

Slowdown of productions, transportation restrictions, limited number of workers allowed, and

shortage of raw materials or supplies are some of the main problems they encounter, all of
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which affect the behavior of their products’ prices. Hence, it is not only the meat shop

businesses which are affected but also the consumers. Considering the consumers’ purchasing

decision, the pricing of the products should still be favorable as much as possible with what

consumers can only afford. This is another challenge for those surviving meat shop businesses.

The objectives of this research are to show the relationship between product pricing

and the financial stability of meat shop businesses amidst pandemic, to determine the factors

affecting the product pricing and financial stability of businesses as perceived by the

respondents of this study, and to understand the reasons behind the rapid price increase of

meat products. This study aims to help the researchers, the meat shop business owners, other

business owners from other sectors, business students, and future researchers to further aware

of the current pandemic situation and learn from it in terms of managing businesses in times of

crises.

Background of the Study 

The previous year left severe damage to the country as the COVID-19

pandemic challenged the Philippines in various aspects. The country’s economic growth is one

aspect to mention, with a large number of employees forced to quit their jobs because of the

lockdowns implemented, and many companies as well as businesses were also forced to close

and stop their operations. These events bring relevant influence with companies and

businesses’ stability in terms of their product or service pricing and financial strategies. 

Product pricing is the process by which business owners establish a selling price for a

certain product (Entrepreneur.com, 2021), while price is defined as the amount of money
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charged for a product or service (Kotler and Armstrong, 2009). It is the amount of all the values

that customers pay in exchange for the benefit of using the product or service (Anderson and

Narus, 2014). Thus, sustaining the price of a product has a significant effect on every buyer

when purchasing, and the price that business owners charge their customers also has a direct

effect on the business’ success.

Before setting a price, it is a must to know the costs of running a business. The price of

the product also determines the success of the business. If the price value fails to cover the

costs, the result of the cash flow will be cumulatively negative, and having a negative cash flow

can lead to financial struggle and business failure. When it comes to the customers’ purchasing

decision, the price of a product also plays a big role since it helps the customers decide whether

they should buy a certain product or not. Through the price, the customers can decide whether

the product or service is worth purchasing. For that reason, it is important for every company

and business to always consider their and their customers’ situations before making decisions.

The challenge for every company or business is to establish a product price which meets both

the value perception of the customers and the needs of the company or business itself.  

Financial stability is defined as the ability of the financial system to facilitate and

enhance economic processes, manage risks, and absorb shocks (Schinasi, 2005). Moreover,

financial stability is considered a continuum, changeable over time, and consistent with

multiple combinations of finance’s constituent elements (Schinasi, 2005). Stabilizing finances

has a huge role in allocating funds, resources, productive investment opportunities, and

managing risk since an economy is dynamic, where businesses grow, expand, and fail. The
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stability of certain businesses measures whether they can function through both thriving and

terrible events happening within the economy—a condition in which the absorption of risk does

not have a significant impact on a company or business' long-term growth without looking

forward to getting financial assistance from other institutions. This is a challenge for every

company and business: how they can operate smoothly and effectively in the face of an

uncertain economy.  

The COVID-19 pandemic, as well as other unprecedented events and natural disasters

that happened in the previous year, affected the country’s product pricing. When the product

supply decreases, the prices of the products sold in the market increases. Meat, which is

considered a necessity, is one of the said products that faced these kinds of changes. Many

consumers enjoy eating meat but because of the sudden price increase, the purchasing habit of

the consumers was influenced. 

This research seeks to focus on the correlation between the product pricing and

financial stability of meat shop businesses located in Pacita Complex in San Pedro, Laguna

during the current pandemic. It also aims to recognize how meat shop businesses have

stabilized its finances, as well as the status of the businesses’ economic profile as the crisis.

Knowing the effect of product pricing and financial stability towards each other and to the meat

shop businesses themselves will help both the owners and customers in these ways: it is

important for every business owner to be knowledgeable of these factors in order to track the

growth and loss of the store; and on the other hand, consumers are also encouraged to know

how product pricing works nowadays for them to understand the reasons behind every price

change. 
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Statement of the Problem

The purpose of the study is to determine the relationship between the product price

and financial stability of selected meat shop businesses in Pacita Complex in San Pedro, Laguna

during the COVID-19 pandemic. Furthermore, the researchers intend to answer the following

questions:

1. What is the business profile of the selected respondents in terms of: 

1.1. Operating hours  

1.2. Period of Existence or Years of Establishment

2. What are the factors affecting product pricing amidst the COVID-19 pandemic as

perceived by the respondents?

3. What are the factors affecting financial stability amidst the COVID -19 pandemic

as perceived by the respondents?

4. Is there a significant relationship between the factors affecting the product price

and financial stability of meat shop businesses amidst the COVID-19 pandemic?

Hypothesis 
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The researchers believe that the following statement is precise enough to support the

completion of the study:  there is no significant relationship between product pricing and

financial stability of meat shop businesses in the midst of the COVID-19 pandemic. The

researchers formulate that the said null hypothesis has a significance level of 0.05.

Theoretical Framework

Pricing Principle

There are three fundamental pricing principles as inferred by Kurs and Toebbens: cost-

plus pricing, competitive pricing, and value-based pricing (2012). Cost-plus pricing lists the

prices that are mostly driven by the company or business’ own cost structures which could

possibly also be heavy on unwarranted overheads. On the other hand, competitive pricing is the

list of prices that is mostly driven by the competitors’ prices followed by the company or

business’ own cost structures. Lastly, value-based pricing is the list of prices which is mostly

driven by the balanced consideration of three variables: the customers’ ability and willingness

to pay, the competitors’ price levels, and the company or business’ own cost structure and

current price levels.

Pricing Practices

Pricing practices, according to Rapaccini and Visintin (n.d.), investigate specific factors

with regard to setting prices. These factors include: (a) the business factor that focuses on the

company or business’ strategies and objectives; (b) the productive factor that focuses on the

delivery processes and cost, sourcing strategies; (c) the market factor which concentrates on

the demand and supply of goods, their qualifiers, the barriers to their entry and exit, and
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information on asymmetry, complementary, and succedaneums goods; (d) the institutional

factor which focuses on laws and market regulations; and (e) the relational factor which focuses

on the portfolio of products and product services, as well as the customers’ willingness and

expectations.

Financial Stability

They define financial “instability” instead of “stability”, and others prefer to define the

problem as one of managing systemic risk rather than as maintaining or safeguarding financial

stability. But with regard to financial stability, it is deemed as a situation in which the financial

system is capable of satisfactorily performing its three key functions simultaneously (Schinasi,

2005). The first function in the financial system is efficiently and smoothly facilitating the

intertemporal allocation of resources from savers to investors, and the allocation of economic

resources generally. Secondly, it includes the situation in which forward-looking financial risks

are being assessed and priced reasonably accurately and are being relatively well managed.

Thirdly, the financial system is in such condition that it can comfortably if not smoothly absorb

financial and real economic surprises and shocks.

The aforementioned principle, practices, and theories have relevant insights to the

researchers’ study of product pricing and financial stability relationships amidst the pandemic.

Firstly, the pricing principle’s value-based pricing is the principle or strategies use by the entities

because it understands the value that the customer segment derives from obtaining the

product (Kurz and Toebbens, 2012). Meanwhile, the pricing practices according to a paper on
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neoclassical economics by Rapaccini and Visintin (n.d.) help the researchers in knowing and

understanding the different factors that may affect the pricing strategies of business entities.

Lastly, financial stability (Schinasi, 2005) serves as a guide in understanding the financial system

of business entities, the allocation of their resources, and their management of risk, all of which

are key factors in sustaining business finances.

Conceptual Framework

The researchers use the Input-Output Model, as shown in Figure 1, to present the

conceptual framework of the study. The Input-Output (IPO) Model is a functional graph that

identifies the process, viewed as a series of boxes, that will transform inputs to outputs. This

will present what the researchers have planned, and will explain the whole process of the

study.

The COVID-19 pandemic challenges every business globally, and businesses in the

Philippines are not an exemption. The event brings a great impact to every company and

business in terms of their product pricing and financial stability. With these two as the

variables, the researchers came up with a correlational study that will determine the

relationship between the product pricing and financial stability of different meat shop

businesses located in Pacita Complex in San Pedro, Laguna, during the current pandemic. 

To start the study, the researchers will conduct information research for them to be

familiar with the concepts of product pricing and financial stability, and the factors that affect

their changes.  Further research will also be done to know if there is an existing study, aligned

with the chosen topic, to prove the relation of the given variables. Continuing with the study,
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the researchers will conduct interviews and surveys with their chosen respondents—meat shop

business owners located in Pacita Complex, San Pedro, Laguna—to complete the needed data.

The data gathered will then be analyzed to conclude the research and generate the result. 

With this process, the researchers will determine the relationship between the product

pricing and financial stability of different meat shop businesses located in Pacita Complex, San

Pedro, Laguna, during the current pandemic. At the end of the study, the researchers will be

able to determine the relationship between the two variables, and propose some

recommendations that will help both the business owners and consumers. For the business

What are the factor/s that affect the changes in product pricing and
financial stability of meatshop businesses during the pandemic?

Is there a significant relationship between the product pricing and stability

INPUT of meatshop businesses?

Gathering of the initial data about the two variables: product pricing and
financial stability.

Conduction of surveys and interviews with the respondents for the

completion of the needed data.
PROCESS
Analyzation of the collected data.

The relationship between the product pricing and financial stability of the
meatshop businesses.

The factors that affect the changes of the product pricing and financial
stability during the current pandemic.

Recommendation for the business owners regarding how they can

OUTPUT improve their financial management.

Informations that will help the consumers be knowledgeble on how

product pricing works.
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owners, the research may be able to provide suggestions that will help them with the

management of their operations and finances. For the consumers, the study may help them

know how product pricing really works.

Figure 1: Conceptual Framework

Scope and Limitation

This study will focus on determining the relationship between the product pricing and

financial stability of selected meat shop businesses in Pacita Complex, San Pedro City, Laguna. It

aims to understand how the net income of meat shop businesses are related to the price of

their products. The research will run for three to six months with 15 selected meat shop

businesses as respondents. The study is limited only to the meat shop businesses in Pacita

Complex, San Pedro City, Laguna.  Questionnaires will be used to gather important data that

will help the researchers in accomplishing the objectives of this study. The given questions are

composed of only those that ask for relevant information that will be useful in the study such as

the net income of the business and the prices of meat before and during pandemic.

In addition, the respondents of the study will be the operating team of meat shop

businesses inside Pacita Complex, San Pedro, Laguna. One of the challenges that the

researchers may encounter during the conduction of the study is that some of the meat shop

businesses may have decided to stop their operations and close due to the price ceiling that the

government imposed in the prices of meat products. Therefore, the researchers may only have
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a limited number of participants in contrast with the number of target respondents of this

study.  

Significance of the Study 

This study aims to determine the correlation between product pricing and financial

stability of selected meat shop businesses in a specific area in San Pedro, Laguna amidst the

COVID-19 pandemic. The results of this study will be beneficial to the following: 

Meat Shop Businesses – This study will benefit the meat shop businesses in terms of learning

strategies and techniques that can be used to develop and create innovative ideas especially in

dealing with this kind of situation. 

Business Owners – This study will provide benefit to business owners because in addition to

the findings of the study which will show the relationship of product pricing and financial

stability of meat shop businesses amidst a difficult situation, they may also gain insights in

terms of managing their finances and improving their business operations. 

Consumer – This study will help consumers gain knowledge when it comes to the product

pricing practices of businesses and the factors considered before setting them.

Business Students – This study will benefit business students to gain awareness of the effects

of the COVID-19 pandemic to the business sector.

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Future Researchers – This study will help future researchers to develop further researches

about product pricing in correlation to other factors. This paper will serve as a reference and

foundation in establishing future studies. 

Definition of Terms 

There are some terms in this study that may either be unfamiliar to the readers or are

not commonly used. To better understand the terms used, the following are hereby defined

operationally: 

Customers – An individual or business that purchases another company's goods or services

(Investopedia, 2020). 

Financial – Something relating to money or how money is managed (Cambridge

Dictionary, 2021). 

Financial Stability – The ability of the financial system to facilitate and enhance economic

processes, manage risks, and absorb shocks (IMF eLIBRARY, 2005). 

Lockdown – An emergency measure or condition in which people are temporarily prevented

from entering or leaving a restricted area or building (such as a school) during a threat of

danger (Merriam Webster, 2021). 

Market – A place where two parties can gather to facilitate the exchange of goods and services,

it may be physical like a retail outlet or virtual like an online market (Investopedia, 2020).
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Meat shop – Sometimes called a butcher shop, a shop in which meat, poultry, and sometimes

fish are sold (Dictionary.com, 2021). 

Pandemic – An outbreak of a disease that occurs over a wide geographic area (such as

multiple countries or continents) and typically affects a significant proportion of the population

(Merriam Webster, 2021). 

Price – The monetary value of a good, service or resource established during a transaction

(Economics Online, 2021).  

Price ceiling – The mandated maximum amount a seller is allowed to charge for a product

or service (Investopedia, 2020). 

Product – Something (such as a service) that is marketed or sold as a commodity

(Merriam Webster, 2021).

Product Pricing – To establish a selling price for a product (Entrepreneur.com, 2021).

Stability – A situation in which something is not likely to move or change (Cambridge

Dictionary, 2021).
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References

Agarwal, R. (2018, August 20). Pricing the Product — Pricing Principles - Rupesh Agarwal.

Medium. https://rupeshagarwal.medium.com/pricing-the-product-pricing-principles-

2627216b7dc2

Anderson and Narus. (2014, August 01). Business marketing: Understand what customers value.

Retrieved April 10, 2021, from https://hbr.org/1998/11/business-marketing-understand-

what-customers-value

Cashing in on Customers. (2021, March 29). Investopedia.

https://www.investopedia.com/terms/c/customer.asp

Definition of butcher shop | Dictionary.com. (n.d.). Www.Dictionary.Com.

https://www.dictionary.com/browse/butcher-shop
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How will small businesses survive in this crisis? (n.d.). Cnn. Retrieved April 4, 2021, from

https://www.cnnphilippines.com/life/culture/business-life/2020/4/17/SME-business-

pandemic.html

Krylovskiy, N. (2020, January 29). Price - definition. Economics Online | Economics Online.

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%20%E2%80%9Cthe,all%20other%20elements%20represents%20costs.

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https://www.merriam-webster.com/dictionary/pandemic
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Price Ceiling. (n.d.). Investopedia. https://www.investopedia.com/terms/p/price-ceiling.asp

Pricing a Product Definition - Entrepreneur Small Business Encyclopedia. (n.d.). Entrepreneur.

https://www.entrepreneur.com/encyclopedia/pricing-a-product

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webster.com/dictionary/product

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https://dictionary.cambridge.org/dictionary/english/stability

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9781589064409/ch05.xml?language=en&redirect=true

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https://www.investopedia.com/terms/m/market.asp
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Ratings for Members

Name Rating Remarks

Borero, Benedict F. 10/10 He helps a lot in the progress
of the research whenever we
need ideas regarding the
study, he makes sure that he
contributes as much as he
can.
France, Miguel Bryan N. 10/10 Likewise, he did his part as a
member of our group he
contributes the things that is
needed to accomplish the
chapter 1 of our study.