Transcript Lobster marketing strategy Issues and options

Lobster marketing strategy
Issues and options
Presentation to
Lobster Council of Canada
Charlottetown, July 6, 2010
By
Gardner Pinfold
Revenue Management Limited
Market Research Associates
Why we are here…
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Gain common understanding of situation factors affecting industry performance
Discuss marketing strategy opportunities and actions
Examine marketability constraints challenges and options
Identify next steps in the process what, how, when, where
Overall industry objectives
 Build value throughout the value chain
• Produce for highest valued markets &
market segments
• Extract greater share of final product
value
The industry picture: not pretty
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Revenue down by $200 million since 2006
Lobster supply up by 25% since 2003
US$ worth 40% less in 2010 vs. 2002
Global recession drives down lobster prices
Wholesale prices down by 40% since 2003
Shore prices down by 35% since 2003
Industry engaged mainly in opportunistic selling
Lobster has become price-volume business
Industry working on narrow to negative margins
Industry revenues down 20%
Atlantic Canada lobster industry revenues: 2000-2009
1,200,000,000
1,000,000,000
CAN$
800,000,000
Total
Live
Processed
600,000,000
400,000,000
200,000,000
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Source: Statistics Canada
Supply up 25% since 2003
Canada and U.S. lobster landings, 1990-2009
120,000
100,000
tonnes
80,000
U.S.
Canada
Total
60,000
40,000
20,000
0
1990
1993
1996
1999
2002
2005
2008
Source: NMFS; DFO
Foreign currency worth less
Value of foreign currencies vs. Canadian dollar (1997-100)
1.40
1.20
1997=100
1.00
US
EU
Japan
UK
S. Korea
0.80
0.60
0.40
0.20
0.00
1997
1999
2001
2003
2005
2007
2009
Source: Bank of Canada
U.S. $ down 40% since 2003
Export price of live lobster to U.S.
12.00
10.00
6.00
CAN$/lb
US$/lb
4.00
2.00
20
09
20
08
20
07
20
06
20
05
20
04
20
03
0.00
20
02
$/lb
8.00
Source: U.S. Dept. of Commerce and Bank of Canada
Prices reflect currency shifts
Lobster shore prices - Canada & U.S. (Can $)
7.00
6.00
$/lb
5.00
NS
NB
PEI
Maine
4.00
3.00
2.00
1.00
0.00
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
Source: DFO, NMFS
Harvester revenue 70-75% of export price
10.00
9.00
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
U.S. wholesale price
Shipper/distributor revenue
Harvester revenue
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
CDN$/lb for 1.25 lb lobster
Harvester & shipper shares of U.S. wholesale price
Prepared by Gardner Pinfold
Source: DFO and Urner Barry
Harvesters share rises as industry
revenue drops
Harvester & processor shares of U.S. wholesale price
25.00
CAN$/lb wt avg for tail/CKL meat pack
U.S. wholesale price
Distributor gross margin
20.00
Processor gross margin
15.00
10.00
Processor cost (shore price adjusted for 37% yield)
5.00
Shore price
0.00
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Source: DFO, Urner Barry, Bank of Canada, Industry
Price sensitive to supply
Canada and U.S. lobster supply & price, 2007-2009
18,000
14.00
12.00
Price (right axis)
14,000
10.00
Supply (left axis)
12,000
10,000
8.00
8,000
6.00
6,000
U.S. $/lb
tonnes of market lobster
16,000
4.00
4,000
2.00
2,000
0
0.00
Jan
May
Sep
Jan
U.S.
May
Canada
Sep
Jan
U.S. wholesale
May
Sep
Source: DFO, NMFS, Urner Barry
Export value to US declines
Canada live lobster exports to U.S.
450,000,000
CDN $
400,000,000
350,000,000
300,000,000
250,000,000
200,000,000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2007
2008
2009
Canada frozen lobster exports to U.S.
CDN $
350,000,000
300,000,000
250,000,000
200,000,000
2000
2001
2002
2003
2004
2005
2006
Key markets retreat from live
Canada live lobster exports by country (excl U.S.)
25,000,000
Belgium
Korea, South
France
Japan
Hong Kong
Netherlands
Spain
United Kingdom
Germany
Italy
China
United Arab Emirates
Sweden
Denmark
20,000,000
CDN $
15,000,000
10,000,000
5,000,000
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Source: Statistics Canada
Wide fluctuations in frozen markets
Canada frozen lobster exports by country (excl U.S.)
30,000,000
25,000,000
Japan
France
United Kingdom
Germany
Spain
Italy
Belgium
Korea, South
Sweden
Hong Kong
China
Netherlands
CDN $
20,000,000
15,000,000
10,000,000
5,000,000
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Source: Statistics Canada
Industry structure: wasteful &
destructive competition
 Competitive fishing - excessive capacity/race to maximize
catch/short season/gluts/poor quality
 Port market - industry structure guarantees uniform shore price
regardless of quantity & quality
 Insecure supply - induces investment in capacity to meet
seasonal peaks and volume-driven pricing to maximize capacity
utilization. Difficult to plan when supply unstable & price unknown
 Industry fragmentation - shippers/processors lack market
power/knowledge and bargain away margins to larger and more
powerful distributors/customers
 Selling not marketing - many companies diminish the value of
the product by selling opportunistically out of desperation. Very
few have the size and resources to market effectively.
Salmon: consolidation moves industry
from volume to market driven
Global farmed salmon production and price trends, 1990-2010
9.00
1,600
8.00
1,400
7.00
6.00
$U.S./kg
1,000
5.00
800
4.00
600
3.00
400
2.00
200
1.00
0.00
Jan-90
thousands of tonnes
1,200
0
Jan-92
Jan-94
Jan-96
Jan-98
Jan-00
Tonnes
Jan-02
$U.S./kg
Jan-04
Jan-06
Jan-08
Jan-10
Source: FAO and IMF
Summary of Industry Strengths and Opportunities for
Creating and Extracting Value
Resource
Plentiful resource = dependable supply. Effective resource management by DFO ensures dependable
supply. Canada dominates the world supply of lobster – the world superpower of lobster
The inherent quality of the resource has the potential to support higher prices/margins.
Seasonal alignment with Maine maintains price and volumes
Image
Lobster continues to have a premium food image among consumers despite low price cues
Canada has a positive image among international markets. International image of US is less positive
Transport
New Gateway refrigerated cargo facility is the largest north of Miami, and sits next to a runway to fill
a void in the Atlantic Canada supply chain.
Aqualife seafreight is a transportation option that addresses carbon footprint issues and freight cost.
Effectiveness and competitiveness remain to be determined
Location
Proximity to large US market – offers existing market regions that are familiar with lobster and new
markets for development
Access to US is easier than other countries: no tariffs, same language and business environment
Innovation
PEI Processors are working with a product development expert to identify new products
PEI government is funding product development and process efficiencies for that province. This
could form the basis for inter-provincial diffusion of innovation to assist the Atlantic industry if
cooperation can be developed.
Exposure
Selling activity increased in 2009 to decrease inventories. Low prices increased exposure to the
product for more consumers
Barriers to Creating and Extracting Value
Economy
Recent and current recession fear is influencing purchasing and spending at all levels of the value chain
Exchange rates have declined relative to the Canadian dollar, stripping value out of exports
Conserver economies such as the emerging middle class in China have savings rates of 38% low incomes and
no social safety net , while consumer economies such as the US have savings rates of 3.6% but are not
spending on luxury items due to a focus on basics
Existing
Markets
Destructive internal competition is placing Canada at an extreme disadvantage in existing markets which now
know that they can wait for a lower price
Low prices of Canadian lobster products displayed beside lobster from other countries, such as South
America and Australia, position Canadian product as lower quality
Over-reliance on US market - more diversification needed to spread risk and create opportunity
Emerging
Markets
China prefers to control the purchase, so will be focused on achieving low prices. This places Canada in the
position of committing/diverting supply to a lower margin, volume opportunity
There is a long time frame to develop consumption in the emerging middle class in these markets due to low
incomes, entrenched traditions and lack of distribution systems.
Competition
China is a low cost lobster processor that is flooding the EU with low priced product. Against these products,
Canada can expect to struggle without a clear image for quality. Low quality popsicles in the EU and low prices
in Japan due to Canadians undercutting each other are positioning Canada at a POS disadvantage.
Maine is aggressively promoting its lobster domestically and internationally. Maine lobster is known
internationally. Maine will attain MSC before Canada. This will provide a quality cue that will further compete
with Canada
France is creating an interdisciplinary coalition of supply chain participants to supermarkets to generate more
value for the industry and a marketing campaign around Buy Local’ and quality local product
Australia is actively focusing on quality branding and supply management to build demand and to support
prices.
Canada is not perceived to be promoting itself sufficiently – the greater focus is on price vs quality
Barriers to Creating and Extracting Value
Consumers
Middle income consumers are highly price –sensitive, with high unemployment and are trading down to lower
priced food items. Food security is a dominant concern which reduces demand for ‘luxury’ foods
Local foods movements are creating a preference for foods caught or produced locally – support for local
producers as well as low carbon footprint and traceability/transparency are evident.
Food Service
Celebrity chefs in the US are rejecting Canadian seafood due to misinformation about the seal hunt. This issue
has also arisen in the UK.
The raw lobster format is too expensive despite labor and storage advantages
Chefs see frozen lobster as lower quality than live/fresh - taste difference and image difference
Live lobster is time consuming, labor intensive and space – consuming. Mortality and shrink contribute to
high margins on lobster menus. Aversion to shrink has caused potentially unsafe cooking of deads in both
retail and food service
Issues among food service staff with killing lobsters
Retail
Focus on margin growth vs volume - retail buyers are rewarded for increasing the margins - the related loss of
volume/revenue is picked up elsewhere in the store.
Consolidation increases their power to set prices to a fragmented lobster industry
A greater focus on buying direct is causing underutilized importers to buy for re-export, with less emphasis on
quality or origin.
Supermarket lobster is being used as a loss leader which entrenches a low price point - several instances
where lobster is sold for less than cost during promotions
French packaging legislation is becoming more stringent with focused nutritional labeling on the front of the
package and a minimum 3MM font = changes to current packaging. There is also expected to be an extension
of allergy labeling+ place of origin+ major ingredients.
Possible CO2 environmental labeling data (package content, goods and impact on natural resources through
lifecycle to recycling). ADEME calculations of CO2 footprints include GHG emissions at various stages currently CO2 labeling is voluntary. Issue is that CO2 footprint can vary through seasons and storage
Barriers to Creating and Extracting Value
Government
Canadian governments are reluctant to propose changes, given disparate interests and the belief that change
needs to be initiated by industry. DFO takes narrow view: Industry=harvesting. Many industry participants
believe the industry needs external regulation to create change. Creates a leadership vacuum and a potential
stalemate to moving forward.
The value of funding for trade missions and initiatives with uncertain or unequal benefit are areas of
disagreement within the industry.
Logistics
Despite proximity to Halifax International Airport, Air Canada is not perceived as helpful to exporters in Canada
and their foreign importers regarding scheduling, pricing or handling
Flight times out of Logan Airport (Boston) are more accommodating to the needs of food service suppliers who
frequently need emergency shipments later in the day.
FedEx rates have almost doubled in the past 5 years and schedules are not flexible for emergency shipments.
Pick-up from FedEx requires that all other shipments be loaded onto their trucks before lobster can be accessed,
later in the morning of the following day.
Trucking lobster to USA airports requires extra time in transit as well as the time to season the lobster in water
before loading them for air transit. Quality issues are a factor with the need to go through the US
Air freight rates in the US are lower than in Canada
Industry
Issues
A few large firms have the budgets to open markets and invest in product development and process
development that raise the level of the industry. But, unequal cost structures cause the market leaders to be
undermined, followed by the subsequent undermining of the Canadian industry in markets that force prices
down due to low cost operators that enable this behavior.
The Canadian industry is fragmented creating a weakened and unbalanced trading position with powerful,
consolidated customers. Low barriers to entry make make industry consolidation difficult.
Effects of fragmentation make the needed cooperation and collaboration difficult due to lack of trust, destructive
competition that competes away the long term value for the industry, the perception that autonomy = control ,
quality inconsistencies.
Fragmentation, distrust and insecurity generate weakness and poor decision-making. “Panic to buy and panic to
sell” forces prices to the bottom. Inability to plan
The industry believes it doesn’t have the ability to lead change due to real and perceived resistance to change.
Barriers to Creating and Extracting Value
Industry
Issues
Currently, an estimated 10-15% of global buyers are quality buyers. This leaves 85%-90% of buyers who are
looking for the lowest price and are undermining the opportunity for higher margin sales. This erodes the focus
on quality at each level of the value chain
Skepticism about the value of generic marketing
Variable provincial regulations and practices generate an uneven playing field
A price-setting mechanism will only be successful if all provinces agree to participate and a critical mass of
participants is required.
Uneven relationship with DFO - industry definition focuses on harvesting; fails to recognize and address
constraints imposed on shippers and processors
Succession and exit strategies at all levels are uncertain
Access to capital is constrained due to industry instability. Reinvestment capability minimal due to low margins
Lack of industry confidence in the inherent value of the resource = low resistance to privateer pricing and trade
demands. Volume-driven trumps value-driven decision making.
Lack of timely information entrenches the habit of looking backwards for guidance = a backward looking supplydriven industry vs a forward looking, market-driven industry where pre-sell enables market and industry
planning, and improved cost/operating controls
Low barriers to entry into processing and shipping serve to reduce the value of businesses. Consolidation for
greater power is undermined by new entrants, who may have previously caused industry damage through low
balling price - no consequences for irresponsible actions
Unpredictable quality in Fall fishery – issues with quality consistency within the resource and among products
Early adoption of eco-certification and traceability are an opportunity to build an image of proactivity as these
will be required to enter and remain in markets, but the Canadian lobster industry’s lack of a collective
commitment, confusion and conflicting views, positions the Canadian industry as a follower vs a leader.
‘Supply-security’ with accounts receivable by shippers and processors, and cash sales on the wharf add costs
and negative competition.
Loyalty sells for 10 cents a pound - unstable basis for building a sustainable business model
Barriers to Creating and Extracting Value
Shippers
Inability to provide a timely price to customers - lost business is the result based on customer interviews
The industry norm of matching the price generated by one buyer who may be buying low volume - the lack of
confidence to refuse to match- fear of being ‘cut off’.
No guarantee of supply=can’t invest in equipment, build markets, when there is no assurance of product.
Processors
Inability to provide a timely price to customers - lost business results based on customer interviews
The industry norm of matching the price generated by one buyer who may be buying low volume - the lack of
confidence to refuse to match - fear of being ‘cut off’.
No guarantee of supply=can’t invest in equipment, build markets, when there is no assurance of product.
Increased labour costs resulting from having to process ‘gluts’ and associated low quality, crisis processing
(e.g double freezing) in order to manage the volume
Fear that growth and increased margins will attract competition reinforces survival tactics vs strategic planning.
Low margins prevent reinvestment in innovation, product development and process efficiencies
Rigorous food and plant safety standards are costly…but necessary
Buyers
Low barriers to entry into the industry as buyers and inconsistent entry criteria across provinces
Not all buyers are aware of the market’s ability or inability to support prices - causing unsustainable price points
and perceptions of collusion to keep prices low when shippers and processors are subsequently forced to
match prices to access supply
Harvesters
Unaware they are capturing the largest part of the export price
Holding lobster, to await higher prices, in water that is too warm reduces quality and price potential.
Strong resistance to the subject of supply management prevents consideration of the subject. Lack of
understanding of supply/demand dynamics. New season gluts have a downward impact on the value of the full
season
Harvesters who are investing in quality are paid the same as harvesters who are not investing in quality reduces incentive to be quality-focused and to make investments in quality practices
MARKETING STRATEGY
INDUSTRY MARKET- ABILITY
Strategic Options
Status Quo
Marketing Only
Balanced System
Marketing
6 P’s
Marketability
RACE
Market
Focus
Retain
• Fragmentation
• Lack of Control
• Inability to Extract Value
for the Industry
• Develop New Markets
• Branding for Recognition
• Generic Marketing for Demand
• Uncertain basis for supporting
brand claims and demand
• Ability to Support
and Sustain Demand
• Ability to Extract
More Value for the
Industry
Where Are We on the Marketing Ladder?
STRATEGIC MARKETING FOCUS =Globalization
increases competition
6Ps - people, product, price, place/channels,
place/markets, positioning
CUSTOMER FOCUS =More competition - The customer
has a choice. How can WE be that choice?
5Ps- people, product, price place,
positioning/promotion
SALES FOCUS = volume is the measure of success
4 p’s = product, price, place and promotion
PRODUCTION FOCUS=
sell what you have
What Challenges Is Marketing Facing Today?
 Consumer shift driven by necessity
 Consumers are looking for ways to trade down without losing
quality
 Consumers are trading out of fresh and moving to frozen or
canned
 Consumers seeking value by
• Buying less per trip
• Buying more frequently
• Seeking deals/coupons/promotions
 Consumers are buying select items to stock up on specials
 Consumers are changing retail formats
 Consumers are visiting restaurants less and supermarkets more
QuickTime™ and a
decompressor
are needed to see this picture.
Source: Perishables Group 2009
Consumer Shifts Occur Over Time and Geographically
Demographic Boom: 1946-1964
population explosion in Western
world, increases consumption
needs and potential
Cultural Effect: 1970-2000=more
freedom of choice, more
consumption, more options
among more people=more
demand
Environmental Attitude Shift: 2000s,
consideration of consumption
effects=greater discrimination
Consumption Shifts: late
2000s, more meaning,
more discrimination re
consumption in NA and EU
(BUY LESS,BUY BETTER)
Economicdemographic shifts
in China and India:
2000s, emerging
middle –class,
more consumption,
similar to Western
world 10-40 years
ago (BUY MORE,
BUY DIFFERENT
Global Economic
Recession; late 2000s,
new normal and new
normalizer for all
countries (BUY LESS,
BUY HIGHER VALUE)
There will be a need to BALANCE emerging
Consumer economies with existing
Conserver economies
Marketing Objective:
Balancing the Moving Parts That Connect the Industry and the Market
MARKETING STRATEGY
Generate Stability
Demand
Price
Competition
Cooperation
Supply
Quality
Manage Consistency
INDUSTRY MARKETABILITY
The Impacts of Unbalanced Marketing and
Market-ability
AUSTRALIAN MARKETING STRATEGY
INDUSTRY MARKETABILITY
MAINE MARKETING STRATEGY
INDUSTRY MARKETABILITY
CANADIAN MARKETING STRATEGY
INDUSTRY MARKETABILITY
Australia focuses on branding
and supply management
Australian tails sell
for $45.99 pound in
USA and Japan
Maine lobster is actively branded
and meat is selling at
$29.99/pound in USA.
But lack of consistency in
India, for example, has eroded
their position. Domestic
strength and export
weakness.
Canadian lobster is selling
in Japan lower than
wholesale. EU markets
wait for lowest prices to be
offered. US says Canada
is the world lobster
Superpower………..
Marketing Strategy
Building Blocks
People
Strategy
Place/Markets
Strategy
Product
Strategy
Positioning
Strategy
Place/Channels
Strategy
Pricing
Strategy
Marketing is a System of
Strategic Decisions and Priorities
Marketing Options
People
Strategy
Place/Markets
Strategy
% Effort on
Rescue v New
Development
Markets
Affluent 10% x 4+/year
(premium, lower price
Sensitivity)
Middle Class
Mainstream X 1/year
(price/commodity
buyers, high price
sensitivity )
Product
Strategy
% Existing v Emerging
Markets
Logistics
Value Chain Control
% Retail v Food Service
Multi-channeling
Pricing
Strategy
Quality Grading
Long term
v short term
thinking
% Same v New
Innovation v Invention
Canners v Markets
% Live v Frozen v Prepared
Positioning
&
Communication
Strategy
Place/Channels
Strategy
% Marketing for a Premium
v Selling for Volume
Relational v Transactional
Selling
Price maker v
price taker status
Messages
•Canada Brand
•Generic
• Health
•Portion Sizes
•Convenience
•News
Media
•Social/digital
•Print.
•Electronic
•POS
•Packaging
Targets
•Industry
•Trade
• Consumers
Effective Marketing Strategy
starts with Market-Ability
INDUSTRY
MARKET-ABILITY
POSITIONING
PEOPLE
PRICE
PRODUCT
PLACE/CHANNELS
PLACE/MARKETS
Marketing Actions= RACE
Actions that answer the Question:
What do we need to DO differently
to leverage strengths, minimize weaknesses,
create opportunities and eliminate barriers?
REDUCE
•Redirect
•Decrease
•Minimize
ADD
•Expand
• Increase
• Enhance
Weaknesses
Strengths
CREATE
ELIMINATE
•Re-create
• Remove
•Develop New • Stop
•Start
• Terminate
Opportunities
Barriers
Putting It All Together
Reduce
Add
d
d
d
Create
Eliminate
Weaknesses
Strengths
Opportunities
Barriers
People
Positioning
Price
Product
Place
/Channels
Place
/Markets
People
•Harvesters
•Buyers
•Processors
•Shippers
•Customers
•Consumers
Positioning
Reduce
Weaknesses
Add to
Strengths
Create
Opportunities
Eliminate
Barriers
Narrow the focus on the
struggling middle class
target market – the low
price, low margin market
Increase focus on High $
Target Market to take the focus
off price as a barrier.
Create effective and
transparent industry
information dissemination
channels (vertical and
horizontal) to support
understanding, trust and
cooperation.
Eliminate negative
perceptions that undermine
trust (such as conspiracy
theories) with transparency
Create generic consumer –
focused marketing, to
generate demand for
quality that ‘pulls’ quality
through the industry from
wharf to shelf (Pull
marketing)
Eliminate Canada’s
country/supplier anonymity
with a clear commitment to
traceability
Focus on informing all
harvesters about costs in the
industry beyond the wharf and
the connection between
controlling consistency of
quality and supply, in order to
build stability of price and
demand
Reduce opportunities for
misinformed news issues,
such as sealing, that arise
in the absence of
alternative imagery and
knowledge of Canada.
Reverse the slide into
commodity status with a
quality focus
Reduce the current
quantity focus that
defines the Canadian
lobster sales model
Add a strong quality focus
that will redefine the Canadian
position and product in the
marketplace
Add Quality options- Canada
Gold and Silver (aspirational
and accessible), to clarify the
difference between price points
and to position for quality
pricing
Add new communication
channels (social media) to
introduce and support
branding.
Create a compelling value
proposition that drives
more consumers to ask for
and about quality
distinctions
Create an ‘open for
business’ climate in the
industry
Eliminate inconsistent
lobster handling practices
with education
Price
Reduce
Weaknesses
Add to
Strengths
Create
Opportunities
Eliminate
Barriers
Reduce focus on
transactional, low margin
volume selling,
Increase relational selling,
marketing for a premium.
throughout the supply chain
This is a focus on increasing
margins to enable reinvestment and build a
sustainable ROI
Build and implement a pricesetting mechanism focused on
quality, stability, efficiency and
unity.
Eliminate price-taker status,
Price Matching
Undercutting,
Counter-productive
competition,
Short term focus
Reduce price volatility
which causes retailers and
food service to de-list
Increase speed of price
provision to buyers to
increase capacity to plan
Product
Reduce supply to support
higher prices and rebuild
from commodity status –
then manage supply to the
markets developed .
Reduce the supply of low
quality products that are
negative cues for
processed.
Reduce the tendency to
oversupply a product that
‘works’ to avoid flooding
Reduce the incidence of
inconsistent quality product
from Canada that
sets the stage for low
pricing.
Match processing capacity
to the catch through
consolidation (reduces OH
and labor supply costs)
Include an industry- minimum
price mechanism as a base for
incremental quality to incent
harvesters
to uniform quality practices.
Increase consumer exposure
with new lobster products to
increase choice and
frequency.
Build an innovation vs invention
focus - collaborate on value added
formats to diversify risks and
costs.
Increase the distinction
between canners and
markets to create two clear
products and price points,
and to leverage that
Canners are uniquely
Canadian- smaller, good
quality and taste.
Focus on both in-shell product
development, and meat products,
such as claws /knuckles.
Work with McCains or other
value-added companies to develop
the next ‘chicken wing’ product
using lobster
Create a live and processed
product deployment plan that
aligns with market goals
•Less live to existing markets to
increase price
• divert live to new markets to
generate interest (Asia)
•develop processed, convenience
formats for existing markets
already familiar with lobster
Eliminate product –origin
confusion with packaging
and live product markings.
Eliminate gluts that affect
prices through out the
season, increase costs and
threaten quality
Eliminate competitive
fishing that drives up
harvesting costs and results
in unpredictable supply
Place
/Channels
Place
/Markets
Reduce
Weaknesses
Add to
Strengths
Create
Opportunities
Eliminate
Barriers
Reduce reliance on
powerful buyers by
expanding the customer
network
Add new value chain
strategies to increase
control, generate new growth
areas and options for
extracting more value :
Digital channels
Value chain control, workarounds
Multi—channeling
Commit to disciplined
cooperation to create a dominant
market presence consistent with
Canada’s dominant supply status.
Eliminate channel weakness
resulting from industry
fragmentation and negative
competition
Add emerging markets
Focus on selected markets to
build depth
Temporarily redirect supply
from low value markets to
rebuild quality image and
demand
Add new regions in existing
markets (second tier) for a
balanced market portfolio
Another term for this is
‘connected autonomy’ that
recognizes separate entities
working together on selected
initiatives
Eliminate jumping from
market to market
Where To Start?
Marketing Options
People
Strategy
Place/Markets
Strategy
% Effort on
Rescue v New
Development
Markets
Affluent 10% x 4+/year
(premium, lower price
Sensitivity)
Middle Class
Mainstream X 1/year
(price/commodity
buyers, high price
sensitivity )
Product
Strategy
% Existing v Emerging
Markets
Logistics
Value Chain Control
% Retail v Food Service
Multi-channeling
Pricing
Strategy
Quality Grading
Long term
v short term
thinking
% Same v New Products
Innovation v Invention
Canners v Markets
% Live v Frozen v Prepared
Positioning
&
Communication
Strategy
Place/Channels
Strategy
% Marketing for a Premium
v Selling for Volume
Relational v Transactional
Selling
Price maker v
price taker status
Messages
•Canada Brand
•Generic
• Health
•Portion Sizes
•Convenience
•News
Media
•Social/digital
•Print.
•Electronic
•POS
•Packaging
Targets
•Industry
•Trade
• Consumers
Barrier #1 - nothing that matters is
predictable
 Supply
• Size, timing and quality of landings are unknown and
impossible to predict with current management
• Competitive fishing creates pressure to maximize catch
leading to short seasons, gluts, poor quality
• Shippers/processors have no supply security; difficult to
develop production plans to respond to customer needs
 Price
• Shore price set after season starts reflects market power of
distributors & customers
• Industry structure results in race to the top at the wharf and
race to the bottom in the market
• Price rules in the market because lobster is a commodity
and players are volume sellers
Barrier #2: Industry structure
creates/reinforces Barrier #1
 Harvesting: excess capacity & competitive fishing result in high
volumes & short seasons
 Shipping: ease of entry intensifies shore competition & nullifies
effectiveness of price to influence quality & quantity
 Processing: over-capacity creates pressure to cover
overheads, driving volume buying and forcing up shore prices
 Shippers and processors: volume-driven sellers prone to
undercutting to meet cash flow needs
 Volume focus intensifies competitive environment and
undermines investment in market development
 Industry fragmentation: many sellers with volume focus and
limited knowledge mean distributors and customers rule the
market and extract the value
Where to start? Marketability is
the foundation of marketing
Barrier 1 options
Barrier 2 options



Supply (quantity/quality)
• Lower trap limits
• Trip limits
• Quotas (IQ)
• Fleet rationalization (ITQ)
• Adjust season (quality)
Price (shore)
• Negotiate (CB)
• Arbitrate (FO)
• Collaborate
• Formula (PM)
• Auction




Harvesting capacity: provide
fleets with the tools to adjust
Shipping: develop/impose
stringent quality standards.
Regulate entry.
Processing: eliminate all direct
& indirect financial support to
plants. Restrict entry.
Industry fragmentation: allow
vertical integration; provide a
basis for consolidation;
collaborative/joint marketing to
limit destructive competition.
Do nothing: let the Barrier 1
options take effect.