Class or Mass – Case Analysis By John Scott A. Executive Summary Neptune Gourmet Seafood is facing two major issues – an excess inventory problem and shrinking contribution margins. Due to increased efficiency and investments in technologically advanced ships the company’s finished goods inventory has shot up to a 60 days supply – twice the normal level. In addition, the company’s margins have shrunk by 10% in the past year due to rising costs and growing competition. The company is looking to increase profitability and find a long-term solution to the inventory problem. My recommendation is for the company to stay focused on its main competitive advantage of supplying a high-end premium quality product. Neptune Gourmet should target new …show more content…
The main differences are summarized below: Excess inventory – cut prices 50%, 10%, or not all How to expand – new mass market brand or private label product New Markets – Domestic or International (South and Central America) In addition, there are concerns about how competitors and the U.S. Association of Seafood Processors and Distributors will respond to their decisions. Neptune cannot afford to start a price war with its competitors and the risk of losing the Gold Seal of Approval could damage the reputation of the company. The analysis will focus on three questions – 1) the strategic direction for Neptune Gourmet 2) how to best utilize the excess inventory 3) maintaining and utilizing Neptune’s competitive advantage in the long term. A complete SWOT Analysis is provided in appendix C. D. Opportunities and Threats The case presents multiple possible opportunities for growth and expansion. The key questions to answer are where to expand and how to expand (see full market expansion grid in appendix D). One option is to target price-conscious consumers in the U.S through either private label products or a new mass- market line. The risk associated with this option is the possibility of cannibalizing sales of the higher priced product and starting a price war with competitors that would damage margins. In addition, a low priced
Lastly, the company suggest to expand their current inventory through increasing production and capacity. With the increase in production rate the company can gain more consumers as a whole through supply and demand. Doing this would give the company an opportunity for more exposure and perhaps better brand recognition.
recommendation is to consider launching a new brand at a lower price to target value-minded
The competitive environment in the value added seafood industry, while not significantly threatening, does still have its challenges. Addison and Rathle acknowledge that there is not a large competitive market for their specific area, although there are four or five that market gumbo. They acknowledgee that their largest competitors are all the other food items in the store that can be purchased. This also relates to marketing competition as Azalea used a food broker and administrative
Opportunity: U.S. seafood market grew rapidly in recent years, and the biggest part of seafood sales is fresh seafood, which is 54% of all seafood retail sales. The king crab of Phillips belongs to fresh seafood, which means it has huge market potential. Customers tend to buy food that is easy-cooked and fresh, which is a feature of the king crab product. The IBSS is a nation-wide trade show which could attract a lot of exhibitors and attendance. Making use of this platform could help Phillips to build its reputation and promote its products at the same time. Threat: Just because the IBSS could attract a large amount of exhibitors, the competition during the trade show is fierce. Though there are so many potential customers would appear at the trade show, how could Phillips beat the competitors and attracts enough customers to its booth. Another threat for king crab is the possible rejection of the retailers because they would feel risky to replace an old product with a new product. Pros and Cons of Alternative Strategies
Sustainable fishing: The company works with fisheries to source only sustainable seafood, and all of their sea products are rated by the Monterey Bay Aquarium Seafood Watch.
A. Executive Summary: Neptune Gourmet Seafood is having issues with what appears to be a temporary problem of excess inventory. Due to new coastal laws, investments in new freezer trawlers and fishing technology, Neptune has increased their average catch size. The demand in high-end market hasn’t been able to catch up with the increasing supply, and Neptune has been struggling with making a decision on how to deplete excess inventory (60 days) of their “Gold Label” branding. My recommendation is to launch a new mass-market product under a different product name to deplete the excess inventory for the short-run, and to capture more of the North American seafood market share in the long-run. Finally, in the
Large untapped market? With a penetration rate of 7.5%, such a plan may lead to a
Partnering with the ever-growing sustainable seafood movement within the food service industry is the most viable option for Planet Shrimp. The restaurant industry incorporates a variety of educational platforms, including trade shows, food festivals, restaurant trade publications, food sections in newspapers and chef blogs, TV shows and cookbooks. This strategy is the most experiential of the three alternatives, which ensures that the everyday consumer will have a higher chance of recall. It is durable in the sense that long-term growth can be sustained through an expanding network of stakeholders in the restaurant industry, from organizations such as Slow Food to well-known chefs.
Excerpted from HBR Case Studies: Class — or Mass?, by Idalene F. Kesner & Rockney Walters. Reprinted with permission from Harvard Business Press. All Rights Reserved.
There are some other suggestion which I thought would be better for this company to considers and take actions for their excess inventory.
Another non-pricing strategy that a firm may adopt is developing their products so that their products are unique compared to rival firms products and customers would rather buy the unique products than the ordinary ones. For example, in the textile industry, people usually look for a particular type of fashion E.G. collared or non-collared, tight T-shirts or maybe even short-sleeved shirts as compared to long sleeve shirts. Firm in the textile industry can change their products to suite the tastes and fashions
In general, customers are willing to pay a premium for a product that meets their needs more specifically than does a competing product.
To get a full understanding of the case, first we need to put information into order. By understanding the strength, weaknesses, opportunities and threats to Xavier’s shrimp business, the greater picture will help us to get closer to a solution to
On the level of the end product there is very intense rivalry without a lot of cooperation. Every seafood brand will try to be the preferred brand for its customers.
The recent spectacular achievements would not last if the seafood industry does not restructure themselves, said Dr. Nguyen Huu Dung, VASEP Vice President. “The fast growth in volume negatively affected the quality. As the external condition changes, enterprises will fall into hardship. Therefore, it is crucial that the enterprises and government evaluate themselves and the situation,” said Dung.