Neptune Case Study

After a detailed analysis of Neptune Gourmet Seafood Company’s excess inventory problem leading in the increase in the cost, the following measures can be taken to take charge over the situation, namely

Establishing private brands

Entering into new market

Price Cuts

Establishing private brands: Neptune has a well-established distribution network, which can be effectively used for private brand creation. This will help in keeping the goodwill intact with Neptune and also not affect its market since the private brand will cater to a different market segment then that of Neptune Gourmet Seafood, which is being currently sold at 30% premium. Furthermore Neptune Gourmet Seafood can take over the private brand at a later stage to eliminate in-house competition and also capture bigger market. Besides these advantages there are few loopholes in creating private brands, one of them being, flooding the seafood market which will lead to excessive supply and erode profit margins and also lead to price wars.

Entering into new markets (Market Development): Neptune can enter in neighboring countries like Canada and Mexico in order to develop its market. Since Neptune has a major market share in USA it will be difficult to further penetrate its market in USA or rather it will be easy for Neptune to develop its market in the neighboring countries. The benefits from this approach will help to increase the customer base and brand equity of Neptune. This will also help to resolve the long-term problem of excess inventory. The transportation cost and initial set up cost will tend to be on a higher side. This could be due to trade and tariff regulations, establishing new distribution networks, cost of marketing its brand. This will lead to increase in the total cost or the marginal cost will be higher than the marginal revenue leading into losses. Thus opening a second location will require heavy up front costs that will most likely require selling equity or taking on debt....