Class or Mass

HBR CA5E STUDY

Stuck with excess inventory, Neptune Gourmet Seafood istoying with the idea of launching a second, inexpensive product line. But if Neptune stoops to conquer, rivals might retaliate with price cuts, and the new line might end up cannibalizing the old.

Class-orMass? by IdaleneF. Kesnerand Rockney Walters

J IM HARGROVE'S Startled expressionwould have been amusing had he not been in such a pitiable state. He was standing in the yacht's magnifi- cently appointed galley, wondering if his stomach would be able to hold down the cola he was pouring into a crystal flute, when his colleague, Rita Sanchez, said something outrageous. Now the drink had spilled down the length of his pleated khakis, and he was sputtering. "You aren't seriously sug- gesting that we reduce prices by 50%. Are you?"

It had been a long day for Hargrove, marketing director of $820 million Nep- tune Gourmet Seafood, North Amer- ica's third-largest seafood producer. When the firm's chairman and CEO, Stanley Renser, had invited his senior managers to sail with him to inspect one of Neptune's new freezer trawlers.

Hargrove had demurred. He hated sail- ing on small boats-they made him sick, he told his boss. Renser had pointed out that the 120-foot yacht he owned wasn't exactly small. Besides, Poseidon II never rolled, even in a storm; the renowned Tommaso Spadolini had designed it. In fact, it was one of the last boats built by Italy's famous Tecnomarine boatyard! Eventually, Renser had won him over, and Hargrove had arrived that Friday morning as eager to see the yacht as he was to visit one of the state-of-the-art fishing vessels on which Neptune had bet its future.

Hargrove hadn't felt seasick all morn- ing. There were no swells that day. Flat and glassy, the ocean glittered in shades of...