Neptune Gourmet Seafoods is the North Americas third greatest seafood company. They are having tagline THE VERY BEST Sea food on the Drinking water Planet" plus they stick to that. In order to preserve the business high grade image, Neptune acquired made a huge investment in new technology to improve catching operations to become more efficiently. However, it has leads to the problem of piling up the inventory. The problem of unnecessary inventory can cause numerous deficiencies such as limited up of cash and lack of margins. To handle this issue, Rita Sanchez arises with a technique of reducing the price in the advanced make of Neptune called Neptune Platinum. Jim Hargrove, the marketing director of Neptune Gourmet Seafoods, refuse the proposal, because he worried that the price chop strategy will affect the top quality product image. To be able to maintain the Neptune's reputation, Sanchez suggested an idea of launching a fresh mass-market brand. This assists Neptune reduce the inventory with the addition of more customers for Neptune especially to those customer who sensitive to price. However, Hargrove fears that an inexpensive brand would cannibalize the business's premium lines and also lead to price war by its competitors. This matter was taken up for talk at the Marketing and Operations Council assembly of Neptune. Through the meeting, each exec has different point of view, some agree with Sanchez while others take the medial side of Hargrove in disagreement of the proposal.
Neptune Gourmet seafood is didn't analyze the situation appropriately and was actually suffering from marketing myopia. They are really concentrated only on the source side by progressively invest in enhance their product and offer, but they cannot view the problems due to market area. Neptune is now accumulating surplus inventory. This means that the company is facing a problem with oversupply for existing demand. Therefore, Neptune has to come up the answers to dispose this excessive inventory and also profitably exploit a resource increase.
Criteria of the Problem
Neptune needs to find the most efficient solution to sell its excess inventory without impacting on its brand image.
Options to the Problem
Market penetration- Go for a lessen price of around 40- 50%
Product development- Kick off a fresh brand (Neptune's Metallic) with good deal than the existing brand (Neptune's Silver) to existing market
Market development - Expose the prevailing brand (Neptune's Yellow metal) to a fresh market
Diversification- Launch a fresh brand with low price than the existing brand to new market (such as South America and Central America)
Evaluation of the options
Options 1: Get a lessen price of around 40- 50%
Lowering the purchase price may seem to be a viable solution; it could be a quick strategy to gain high sales size.
Dropping the price may only be a temporary or short-term way to Neptune. The customer may expect the costs to stay low for an extended term. They aren't ready for the subsequent rise in the price and when it happens they might transition to a competitor's product.
When an organization lowers its prices, it will send wrong signs to customers that it's been overcharging them before.
If Neptune made a decrease in price, their competitor will attempt to meet up with the challenge by reduce their price as well; this may lead to a cost war on the market.
It may demolish the image of Neptune; customer will think there's something amiss with the fish.
Options 2: Start a new brand (Neptune's Magic) with good deal than the existing brand (Neptune's Platinum) to existing market
Launching a new mass-market brand is a long-term strategy that may enhance Neptune's income without endangering its hard-earned brand collateral.
Launch a fresh brand could create chance of Neptune to generate new customer.
Launch a fresh low-price brand and catch as much share of price conscious customers before any other player made entrance into this section.
It could broaden the pie for the whole seafoods industry as well as carve out a generous slice for itself.
It allows Neptune to use at its full capacity providing all sections.
The new brand may cause negative impact to their existing brand or cannibalize the company's premium series.
Options 3: Add the existing brand to a fresh market
It can sell to prospects areas that don't have seafood supply.
It can help Neptune increase demand by attract new customer from the new physical area.
This could consolidate Neptune position at other market as well as make it a nation player.
It may contain risk since they have no experience on the new market.
It often requires a very long time for the customer in new market to recognize Neptune product.
It may be costly to introduce and connect Neptune's product and also to enter the new market.
Options 4: Launch a fresh brand with low price than the prevailing brand to new market (such as SOUTH USA and Central America)
By target another different portion with new brand so the sales will never be cannibalized with the existing brand and trustworthiness of the premium-line will never be affected.
Increase market power, surplus gained by yet another way that competitor might not exactly be able to.
It may contain risky because they do not have experience on the new market and the new low-price product may be not accepted by the client.
It may be high cost and takes time to get into the new market.
After analyze the benefits and downsides of the 4 different alternatives, we can see that launch a new mass-market brand will be the most attractive decision. However, the decision of the case needs to rely upon the situations: whether it's an industry vast sensation or it is Neptune's specific problem.
If it is merely the Neptune's specific and short-term problem, then I indicate Neptune advertising their excess inventory to wholesalers working without their brand in some other market places so that it will not diluting their brand collateral. If it's industry wide occurrence, then I would like to recommendation Neptune to get a proactive proper by launch a fresh lower-price product because it is for certain that future battle between your players depends on price. By introducing a fresh brand, it not only helps Neptune address its immediate inventory problem but also allow Neptune to maintain its competitive benefit and better contend with their competitor in the foreseeable future.
If Neptune launches a new branch with a completely new look and cheap than its existing brand (Neptune's Platinum), Neptune could release a advertising campaign to expose and connect their new-line to the customer. They can boost the consumer's usage by educate them about the nutritious, taste and good thing about the seafood that they produced. Furthermore, by releasing this campaign combined with positive value of mouth area, when people pay attention to their relatives and buddies about the Neptune's product, Neptune can in a position to reach more customers and encourage them to consume more of the merchandise.
Neptune should highlight the differences between the new brand and Neptune's Platinum to avoid muddying Neptune's premium image. However, the business should not label their new-line as low-price product; it will position it as another high-quality product but with a cheaper price. Furthermore, Neptune can label the new brand bundle with 'Supplied by Neptune, ' which would offer an implicit quality confidence to consumers. To advertise the new brand, Neptune can place it at the entry-level customers shop and sell it through mass-market countrywide or local supermarkets and big pack merchants that sell fresh-food.
Besides launch a new mass-market brand, Neptune can create incremental sales in another way. Neptune could encourage restaurants and wholesalers to buy more by offer a discount to them when they buys extra levels of what that they had purchased in the previous order. Since it only applies to additional sales, Neptune only sacrifices little profits out of this strategy unlike the first options that suggest by Sanchez which will cause a huge damage for the business.
In my estimation, the pileup of inventory is not really a short-term problem to Neptune. It is because the excess inventory is cause by the investment in new technology combined with aftereffect of new fishing rules. Therefore, I would suggest Neptune to launch a fresh mass-market brand to cope with this unnecessary inventory for a long-term purpose. If Neptune concerned that it will affect the trustworthiness of its premium line or cannibalizing the existing brand, then maybe they can go for the entirely different market places to unveiling this new brand.
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