Yorktown Technologies

Industry Analysis

        Industry

The consumer market for freshwater ornamental fish and related products in the United States exceeds $700 million annually and is growing at a rate of nearly 9 percent per year. The worldwide market is approaching $2 billion per year. One out of every eight households in the U.S. (14.4 million) has a freshwater fish aquarium. However, there are only a couple hundred freshwater ornamental fish producers in the United States. About 24 regional wholesalers, located throughout the country, distribute freshwater ornamental fish to an estimated 5,000 retail establishments for sale to consumers.

Company

Yorktown Technologies is an ornamental fish producer. Pro forma sales projections indicated the company would generate $4 million in profit in 2004. However, company revenues in 2004 were a disappointing $500,000 and expenses were $620,000, producing an operating loss of more than $120,000. Then, in 2008, the CEO of Yorktown Technologies estimated receiving about $4million of the Industry sales ($700 million), giving the company a market share of .57%. Now, Yorktown Technologies announces their marketing of GloFish, which is a genetically modified ornamental fish. This new fish will be fluorescent, which is a new trend in the freshwater fish market.  

        Trends

Problem/ Decision

Although Yorktown Technologies’ sales have increased every year, they are still far below what was projected. With the introduction of GloFish, a new product, Yorktown Technologies needs to determine an appropriate and new marketing strategy, specifically focused on distribution.

Alternatives/Options

Independent Pet Stores

According to data from the United States Census Bureau, the number of pet stores is declining at an annual rate of 2%. This information tells us that most customers are brand loyal/store loyal and are continuously buying from the same pet store. The less popular stores are slowly going out of business. At the same time, the total sales of pet stores are increasing at an annual rate of 7%.  A key advantage of this distribution route is that sales are continuously increasing each year. The average pet store in the United States has total sales of about $1.7 million (inflated because of large chain stores).

Chain Stores

The majority of the fresh water ornamental fish sold in the United States are purchased from Walmart, PetSmart and PETCO. These three large chains sell freshwater ornamental fish primarily to price-sensitive customers who are not tropical fish enthusiasts. Walmart is not only the largest retailer in the world, but is also the leading retailer of freshwater ornamental fish. All three major chains would not carry the Yorktown Technologies GloFish product when it was introduced.

Kiosks

Studies have shown that collective kiosk sales are about $10 billion annually, with 40% of revenues occurring in November in December. However, renting a mall kiosk will cost Yorktown Technologies anywhere from $12,000 to $36,000 per year.