Class or Mass Essay

3213 Words Jan 22nd, 2014 13 Pages
CLASS OR MASS CASE ANALYSIS
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
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He argued Neptune cannot sustain a 40-50% discount due to the their contribution margin having fallen from 25% to 20% from 2004 to 2006. He also expressed that the price cut will destroy their brand image, erode brand equity, and could initiate a price war with competitors. * Rita Sanchez expressed that with the $63 million invested in the six new fishing vessels, there is no way that they’re going to sit idle and inventory will only continue to grow. She refuted Hargrove expressing the surplus of inventory are sunk costs and that it would be better to sell them at a loss than for nothing.
C. Importance of Decision: While the decision for what Neptune should do with it’s excess inventory is important for Neptune’s ST financial status, the decision to launch a new low-end product line will better position Neptune for future LT success. Neptune’s commitment to product improvement has allowed them to have a strong supply of quality product, however, the demand growth in the high-end segment doesn’t align with the increase of supply (See graph on Appendix F1). By launching a mass-market product line, while continuing to manage their high-end Gold product, Neptune could could potentially raise their market share of the $20 billion North American seafood industry that has been projected to grow by 4.1% the in 2007 and 5% in 2008 (See full details in
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