From domestic success to a global product
The idea is to develop a brand for selling seafood from locally based outlets with the vision of a global product depending on the success of the product locally. The brand name of the outlets is “Sea Gull Products.” The long-run vision is to make a successful brand such as Kentucky chicken with the ability to be recognized globally. Philips Foods, Inc. first experienced success in Maryland before expanding to other states (Clow & Baack, 2012).
The brand is a global product that tests the market with a few retail outlets from different cities in the U.S. This is used to measure the “various marketing mix combinations considered under experimental conditions” (Sandhusen, 2008 p. 375). Following the success in a few chosen cities, the brand may increase its presence globally by opening more outlets. Global products benefit from increased sales volume, economies of scale, and the ability to transfer successful techniques from one region to another (Sandhusen, 2008). Expertise and advantages achieved in one area apply to other segments.
Pricing
Penetration pricing is the best pricing strategy in this case. It helps to capture a market share from existing brands and the untapped market segments. According to Paley (2005), Japanese companies such as Nissan were able to beat competitors by entering markets with prices that were as low as 40% that of competitors. For seafood products retailing under cost-push prices, such low prices are unlikely. Penetration pricing offers the advantage of gaining a market share quickly in a specific market. However, the benefits are reduced if competitors react to lower prices, as in the case of Cummins versus Nissan and Komatsu (Paley, 2005). Slide-down pricing is a case where prices are lowered so as to increase consumer demand. De Wit & Meyer (2010) point out that “people around the world are willing to sacrifice preferences in product features, design, and the like for lower prices” (p. 570). However, the use of low price positioning is considered susceptible to new entrants, and the development of new technologies that reduce costs. Penetration pricing is the best for the product as high profits will rely on high sales volume.
Pull and push strategy
Cummins Engines Inc. was able to agree with suppliers to lower costs by 18% while the company reduced its costs by a third. This was to hinder the Japanese companies from entering the market successfully. Paley (2005) notices that the Japanese automobile companies “found a poorly served and emerging markets … developed a quality product and were prepared to expand their product lines” (p. 318). In this case, the Cummins’ managers were successful in reducing prices because of cooperation with their suppliers. Reducing costs eliminated the low pricing advantage used by Japanese companies. “Sea Gull Products” can cooperate with suppliers by carrying out more research on efficiency, and economies of scale to reduce supplier prices. The most effective way to reduce product prices is to first obtain raw materials at a lower cost. The success of the brand means that even suppliers would have more to sell.
Distribution channel
In Northern America, the leading suppliers of seafood products include companies such as Trident Seafoods and High Liner Seafoods. The challenge faced in the seafood industry is the cost of raw materials that have been rising over the years. The increase in revenues is partly accounted for by the cost-push increase in prices (Wright ed., 2011). Some of the products affected by increasing costs are shrimp, whitefish, tuna, and salmon. Supplies of some seafood such as shrimp relies partly on imports to the U.S. The prices have been shifting up and down depending on supplies, and the situation found in the supplying countries such as Japan, and Thailand. The flood that was experienced in Thailand in 2011 reduced supplies of seafood that year. Thailand is the leading exporter of shrimp to the U.S., while Canada is the overall leading supplier of seafood to the U.S. Shrimp is also farm-raised to meet consumer demand. In 2012, the prices were expected to be steady or drop because of an influx of supplies from India and Vietnam (Wright ed., 2012). It is reported that 84% of the seafood consumed in the U.S is obtained from imports, and out of this 50% is from farms (Consumer Trends The American Seafood Market, 2010).
It is expected that most of the customers will seek to purchase cooked seafood. Wright (e.d., 2011) notes that “roughly two-thirds of all seafood consumed in the United States is eaten in restaurants” (para. 5). The U.S. is the third-largest consumer of seafood after Japan and China. The leading retail chain in the U.S is the Darden Restaurant Group, which has 680 outlets, and estimated revenue of $2,400 millions annually (Consumer Trends The American Seafood Market, 2010). “Sea Gull Products” will operate several retail outlets considering that two thirds of seafood are consumed on the retail outlets.
In retailing, Philips Foods, Inc. products are sold in over 10,000 retail outlets in the U.S. The company relies on preparing the seafood themselves so as to maintain high preparation standards, and quality packaging (Clow & Baack, 2012). Some brands may choose brand-dedicated retail stores. In this case, the retail outlets only sell the products of one firm. Aveda Personal Care products are sold through its twenty outlets found in Lexington, Kentucky. “Sea Gull Products” would consider the same channel as Philips Foods, Inc. The advantage gained from selling through undedicated outlets is that there is increased availability of products in many areas while sparing the cost of opening outlets. Some of the retailers are supermarkets.
Branding
Branding requires distinction in product design. According to Clow & Baack (2012), Philips Foods, Inc. “was the first to perfect a method of Pasteur and can crab meat while preserving a fresh-like product taste and texture” (p. 235). Philips Foods, Inc. had created a distinction on pasteurized “King Crab” in 2006 which is rated as the most important product they have ever launched (Clow & Baack, 2012).
The importance of websites in trade includes purchase, advertising, customer feedback, and information on trends. A firm entering the food market may review trade publications such as “Food Arts”, and “Food Engineering”. Schultz et al. (2009) also notes that there is need to get information from “must-visit Websites such as www.foodservice.com” (p. 101). De Wit & Meyer (2010) point out that global products rely mainly on “availability of international infrastructure of communications and distribution” (p. 572).
Global products and brands take the advantage of standardization. Globalization requires that firms consider cultures of different groups by dividing them into segments. Global products such as Coca Cola modify products to suit different market segments (De Wit & Meyer, 2010). “Sea Gull Products” will lower costs by taking advantage of locally available products in each segment, and modify them to suit the brand.
List of References
Clow, K. E., & Baack, D. (2012). Cases in Marketing Management. London, UK: SAGE Publications.
Consumer Trends The American Seafood Market. (2010). International Markets Bureau Market Indicator Report. Web.
De Wit, B., & Meyer, R. (2010). Strategy: Process, Content, Context. Hampshire, UK: Cengage Learning EMEA.
Paley, N. (2005). Manager’s Guide to Competitive Marketing Strategies. London, UK: Thorogood Publishing.
Sandhusen, R. L. (2008). Marketing. New York, U.S.A.: Baron Educational Series.
Schultz, D. E., et al. (2009). Building Customer-Brand Relationships. New York, U.S.A: M.E. Sharpe.
Wright, J.ed. (May, 2012) Glut of White Shrimp Likely to Drop U.S. Prices. Web.
Wright, J. ed. (May, 2011). North America’s Top 20 Seafood Suppliers. Web.