Class- or Mass?: Case QuestionsNeptune Gourmet is facing the problem of an inventory pileup. The company needs a way to sell the excess inventory. At the same time many new ships were purchased and expected to operate, which increases supply. Rita Sanchez proposes a cut in prices of the product by fifty percent. This price cut poses a problem due to the fact the Neptune Seafood is a premium product and usually sells for a higher price than the competition. In order to maintain the premium product image Sanchez proposes starting a mass market brand to decrease inventory. There are many variables but some of the bigger ones include; creating the separate brand at all and whether or not the new brand would be associated or separate from the current Neptune brand. Some executives agree with Sanchez while others take the side of Jim Hargrove in disagreement of the proposal.
The dilemma is whether the company should start a new brand and price it at fifty percent of the Neptune Gold brand in order to increase sales and decrease inventory. The executives have many conflicting opinions about the effects on the image of the Neptune brand if this method of inventory reduction is carried out. The goal of research for Neptune is to determine the effects on the consumer’s views if a new brand is implemented.
How well would a new brand perform entering the current market? Is there already a popular brand on the market that has the low cost segment secured? Neptune should look into what their competition would be in an almost new market. This new brand would likely be seen as lower quality due to the price. With the Neptune name associated the quality image would be strengthened for the lower price product. As mentioned in the case would the grocers fail to stock the product for fear of competition with the stores own private label product?Should the brand be associated with the current Neptune Gold brand or would that hurt the current premium product image.
If the name of the new less expensive brand was Neptune Silver, as suggested, but had the quality of Neptune Gold would customers be lost to the lower priced product. Would the lower priced product increase the market size into a lower income bracket? Again, what is the market currently like for low priced seafood? One of the important strengths of Neptune is the fact that all of their products have the Association of Seafood Processors and Distributors “Gold Seal of Approval”.
If this new brand didn’t have that seal would that also affect the company image?If this is a feasible investment what effects would flooding the market with a low priced product cause. Will other companies with inventory pile-ups respond and cause a price war? The other companies in the market are bound to do something in response to the low prices. If Neptune chooses to do nothing with the stockpiled inventory another company is likely to sell at a very low price to decrease inventory first. Is it a good idea to be a first mover and capture the low priced market early?Also, would targeting South and Central America be a favorable option? In a country where the lower price by U.S. standards wouldn’t seem quite as low, Neptune could keep its premium status while still decreasing inventory. In addition, expanding into other countries could prove to be a profitable venture. At the same time hopefully the expansion could increase demand and decrease the surplus of inventory. Overall would the venture be profitable? More precisely is the infrastructure in South and Central America suited for distribution or would this cost reduce the feasibility of the investment.
A market analysis would be a good starting approach to researching this plan of action. The first step is to define your target market. You need to know exactly what the consumers are like, and how large the market is for the lower price product. Here you could find out who is going to buy the product and how much demand there will be. Projections could be made on the affect to the market and what policies are in place that could decrease profitability. In solving the marketability issue this method along with a SWOT analysis would be very useful.
With the problem Neptune is facing in regards to product image, I would use an exploratory approach to learning about the consumer. I would host focus groups to try and determine how the inexpensive brand is associated to the Neptune Gold brand. This would help determine if the brand should be associated closely with Neptune Gold or held distant from the core product.
Should Neptune expand into Southern and Central America? Exploratory in-depth interviews would be a quality option for determining if the market would accept the product or not. You could look for some secondary information on how other similarly priced seafood products performed in that region.
The individual would be the best for a focus group in determining the product image dilemma. It could be determined if different financial groups would react differently to the new brand. For example; would the less expensive brand be substituted by the middle class individuals to save money?With a market analysis most of the information would be secondary. The research would involve finding the right data to give the best idea of how well a new product would do in the market. It’s possible that other institutions could be approached in search of information. This would give quality information on where and what would work best for Neptune.
With the foreign market problem the research should be done on the retailers and suppliers for the most effective information. These people could tell you pricing and sales information of products currently sold in South and Central America. Also, culture in other countries has to be considered. Most of what you would need to know to enter a new market, the suppliers and retailers could convey through interviews.