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Class- or Mass

Written Analysis and Communication I

Submitted to: Prof. Manaswini Acharya

Submitted by: Roll No.- 12PGDM-090 Section- B Date of Submission: Nov 5, 2012

. After much analysis my recommendation would be to slash prices in a phased and methodical manner so as to protect our image as well as solve the excessive inventory problem.From To Date : Joseph Anton : Mr. The major criterions used for evaluation are our corporate brand and long term profitability and sales. Dan Wilson : 20th March 1994 Subject: Managing excess inventory issue This report includes a detailed analysis of the situation at hand and the different options available.

Launching a new low price brand would cannibalize their premium brand so they should go in for a price reduction. Word Count: 99 .Executive Summary Neptune Gourmet Seafood is one of the largest seafood producers in North America. It is an upmarket brand charging a premium of over 25% over its competitors. Recently they made huge investment in technology to improve catching processes which lead to an increased inventory. This could be done in phases wherein they could employ an extensive marketing of their cost leadership and increased quality standards. They are now faced with the solution of this problem of excess inventory handling.

1 2 3 4 5 6 7 Situation Analysis Problem Statement Options Criteria Evaluations of options Recommendations Action Plan 1 1 1 2 2 3 3 .Table of Contents Serial No. Contents Page No.

ensured that only mature fish were caught and that the nets were not overfilled. Neptune had emerged as the supplier of choice to the best restaurants within 250miles of its Fort Lauderdale headquarters as well as to the biggest cruise lines. Sell excess inventory to a wholesaler in some other market at lower price. manipulated fishing gear. It has nearly 4% market share. The capital infusion allowed Neptune to invest $9 million in six freezer trawlers of the kind Hargrove had visited. As a result. Reduce the prices of the existing premium brand by 40-50% 2. thus reducing damage to the haul. along with new fishing equipment. which together accounted for a third of the company’s sales. People who are brand loyal and are connoisseurs of good sea food would see this as bold step and would understand the reasons of price cuts at the same quality. In fact. This resulted in an increased inventory problem. And. Stanley Renser. the company’s largest shareholder. Problem Statement Management of excessive inventory without affecting the brand image and profitability. Neptune was an upmarket premium brand. Neptune increasingly landed only top-quality catches. and reported data to shore. Those ships’ autopilot mechanisms guided them to the best fishing grounds. befitting the humble origins of founder John Renser.Page |1 Situational Analysis Neptune Gourmet Seafood is North America's third-largest seafood producer. Options 1. Another 33% came from wholesalers that distributed the company’s products to restaurants all over the United States. approximately 4% of Neptune’s sales came from a fish market outside Fort Lauderdale that the company owned and operated. landed catches. Other systems. The major factor’s to be considered while addressing this situation is the current brand image of Neptune and how it would affect/change when it implements the choice of decision it makes. although doing so had shrunk his share to 10%. Neptune invested heavily to stay ahead of rivals. . Economies of scales could be exploited when undergoing this approach of price cutting. sushi bars from New York to Los Angeles increasingly bought Neptune’s frozen fish instead of buying fresh fish and freezing it themselves. had recently expanded the firm’s equity base.

by selling excess inventory as one time order at lower price in different market however it is a short term solution and the wholesalers would also be wary of a premium player selling its stock at such high discounts. customers would prefer Neptune’s brand rather than going for other brands.Page |2 3. 2. Other players could use this as an opportunity to drive away the premium customers of Neptune at the same time compete in the low price segment. customer loyalty would be retained. Neptune could benefit from being the first mover in this situation. It would initiate a price war but due to increased demands and the benefit of being a premium seller. Launch a low price brand 4. The brand image would not suffer much but the revenue lost in the disposal would not be accountable. Dumping the excessive inventory would not be a wise option as all the cost incurred in improving the catching process and the stocking cost would be lost. . 3. It looks to be a viable option. Dump excess inventory Criteria The two basic criterions used to analyze the options are   Neptune’s brand image as a premium segment player Long term profitability and sales Evaluation of options 1. 4. The reduction in the prices would lead to two things. This could dent Neptune’s image and could lead to problems in the future. Launching a new low price brand would be a challenging preposition as it would face competition from all corners and it would be difficult to counter it. The brand image of Neptune being the premium segment player would be eroded but at the same time ensuring that the quality is same as before.

3. A repositioning of the existing brand could be done through innovative advertising. They should undertake a marketing strategy to educate its different customers of their price reduction reasoning and improved quality. Action Plan Neptune should undertake the following steps: 1. To take care of profitability bulk offers could be given to major customers which would not only solve the excessive inventory problem but also reduced profitability.Page |3 Recommendations Neptune should go in for the price cuts considering all the criterions for evaluation. Word Count: 945 . Once the other players follow in on those lines. 2. This could be pursued differently for different consumers. the customers will no longer doubt the quality of seafood supplied by Neptune and realise the cost cuts are indeed due to better and improved technology. Then Neptune would benefit from its differentiating factor of being a premium player transitioning to a low-mid segment player. First mover’s advantage could be exploited in obtaining the first share of the market. Neptune has created its upmarket image and should aggressively pursue cost leadership along with quality which would lead to increased market share and customer delight.