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Neptune Gourmet Seafood¡¦S Supply Problem

Abstract

Neptune Gourmet Seafood is facing a problem with oversupply for existing demand. It can either decrease supply to match demand or increase demand to match supply. I recommend the latter. I further recommend the way to increase demand is for Neptune to increase its marketing efforts in its existing markets and to penetrate other markets it currently is not in.

The Competitive Environment

Neptune is a 40-year-old, $820,000,000 company, specializing in quality shell and non-shell seafood in a $20 million industry. It is North America¡¦s third-largest seafood producer, but that designation is misleading, because its revenues account for only 4.1% of the total market. As such it is but one of many firms operating in the seafood processing industry, one whose market structure could be termed monopolistic competition. The industry is not limited to North American firms such as Neptune, but also includes companies from China, Peru, Chile, and Japan, competition from which has pushed Neptune to upgrade its fishing fleet and which also has helped shrink the company¡¦s margins by 10%.. Neptune markets to the high end of the market, differentiating itself from the competition by its quality, selling its high-end brand at 25-30% above the rest of the market. Their years of experience coupled with the company¡¦s value development pose a threat to any new firm trying to enter the market. It is the only member company of the U.S. Association of Seafood Processors and Distributors (ASPD) to receive the association¡¦s Gold Seal of Approval on all its products (Kesner and Walters, 2005). Neptune currently markets its seafood to individual consumers, restaurants, wholesalers, grocers and grocery chains, and transportation and leisure cruise operators. The top restaurants within 250 miles of the company¡¦s headquarters in Fort Lauderdale, Florida and the biggest cruise lines account for 33% of the company¡¦s sales. The 33% goes to wholesalers who distribute to...