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Small is beautiful!Market segmentation in aquaculture
Copyright: Green wave ocean farming https://www.greenwave.org/greenwaveorg
Peter KrostUC Westfjords and CRM Kiel
Strandbúnaður 2018, Grand Hótel Reykjavík, 19.-20. mars.
Reykjavik,20.3.2018 P. Krost: Small is beautiful 3
„Being determines the consciousness“________________________________________________________________________________
● CRM 1995(www.crm-online.de)
● OceanBasis: 2001(www.oceanbasis.de)
● Kieler Meeresfarm 2014(www.kieler-meeresfarm.de)
● Environmental Impact Assessments
● Marine Ecology Studien
● ICZM
● Aquaculture (Algae, Blue Mussels)
● Products from sustainable marine resources
● Cosmetics („OceanWell“)
Reykjavik,20.3.2018 P. Krost: Small is beautiful 4
________________________________________________________________________________
Reykjavik,20.3.2018 P. Krost: Small is beautiful 5
European aquaculture industry over time________________________________________________________________________________
https://www.eea.europa.eu/data-and-maps/indicators/aquaculture-production-1/aquaculture-production-assessment-published-feb
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https://www.eea.europa.eu/data-and-maps/indicators/aquaculture-production-1/aquaculture-production-assessment-published-feb
Without Norway________________________________________________________________________________
Reykjavik,20.3.2018 P. Krost: Small is beautiful 8
In Europe, there is some interest to change that________________________________________________________________________________
● Numerous strategies on EU, national and regional level to boost aquaculture
Reykjavik,20.3.2018 P. Krost: Small is beautiful 9
But why? And who?________________________________________________________________________________
● Numerous strategies on EU, national and regional level to boost aquaculture
Reykjavik,20.3.2018 P. Krost: Small is beautiful 10
…. a huge potential is anticipated________________________________________________________________________________
Reykjavik,20.3.2018 P. Krost: Small is beautiful 11
…. a huge potential is anticipated________________________________________________________________________________
Reykjavik,20.3.2018 P. Krost: Small is beautiful 12
The top down view________________________________________________________________________________
Large markets
Large potential
Big industry
Employment
Taxes
Development
…etc.........
Reykjavik,20.3.2018 P. Krost: Small is beautiful 13
● Ignores the acting subjects! - the motivation of the aquaculture entrepreneurs!
● Fuels a number of research and development activities and pilot facilities, of which only few turn into sustainable and persistent operations
● Large potential for dissappointment – lack of public support ...
Wishful thinking!!________________________________________________________________________________
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● The motivation to run a commercial aquaculture operation is is the expectation of a commercial success (vulgo: profit)!!
● And this will not be accomplished by producing commodities for low budget markets in high salary countries!
– => Global protein demand and aquaculture in the western world are largely unconnected!
● .. but for local markets with high purchasing power.
But:________________________________________________________________________________
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High production costs (wages)
Limited Space
Strict and time consuming (environmental) regulations
Aquaculture
Constraints …..
Not an easy task in Europe!________________________________________________________________________________
Saturated classical markets
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High production costs (wages)
Limited Space
Consumer quality awareness(willingness to pay)
High purchasing powerAquaculture
….. and chancesConstraints …..
… the coin has another side________________________________________________________________________________
Demand for novel and unique products
Saturated classical markets
Strict and time consuming (environmental) regulations High prices through
technology / product refinery
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Classical approach: Economy of scale
Costs/item decrease with production volume
=> Increased profit and lower prices for consumers
=> Everybody is happy
In theory
Increase profit by scale(?)________________________________________________________________________________
Reykjavik,20.3.2018 P. Krost: Small is beautiful 19
Source: https://www.ssb.no/en/jord-skog-jakt-og-fiskeri/statistikker/fiskeoppdrett/aar-forelopige/2016-06-02Retrieved: 25.1.2018
0
20
40
60
80
100
Average prices for Norwegian salmon 1995 - 2018
Source: https://salmonprice.nasdaqomxtrader.com/public/report;jsessionid=64C9A752F6D71C730791CF9C9BF8E702?0. retrieved 20.2.2018
NO
KExample Norway
________________________________________________________________________________
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________________________________________________________________________________
Most markets are not like that!
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Many small enterprises...________________________________________________________________________________
https://de.statista.com/statistik/daten/studie/1929/umfrage/unternehmen-nach-beschaeftigtengroessenklassen/
97,8 %
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… employ a lot of people________________________________________________________________________________
41,4 %
https://de.statista.com/statistik/daten/studie/1929/umfrage/unternehmen-nach-beschaeftigtengroessenklassen/
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Year 19801990 2000 2009 2010 2011
Employment in marine Aquaculture 4500 4300 5100 5500 5800
1975 1980 1985 1990 1995 2000 2005 2010 20150
200
400
600
800
1000
1200
0
5
10
15
20
25
30
35
Norwegian Salmon Aquaculture
MarineAquaculture Produc-tion (1000 t)
Employment (in 1000)
Employees per 10,000 t production
Employment per unit produced drops with higher production ________________________________________________________________________________
Source: http://www.fao.org/fishery/facp/NOR/enRetrieved: 25.1.2018
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1999 2000 2001 2002 2003 2004 2005 2006 2007 20080
2000
4000
6000
8000
10000
12000
14000
Employees
Source: http://www.fao.org/fishery/facp/NOR/enRetrieved: 25.1.2018
Also in secundary industry________________________________________________________________________________
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Segments Segmentation strategy Comments
Zero Undifferentiated strategy Mass marketing: no segmentation
One Focus strategy Niche marketing: focus efforts on a small, tightly defined target market
Two or more Differentiated strategy Multiple niches: focus efforts on 2 or more, tightly defined targets
Thousands Hypersegmentation One-to-one marketing: customise the offer for each individual customer
From Wikipedia: Market Segmentation, retrieved 30.1.2018
Market segmentation________________________________________________________________________________
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Segments Segmentation strategy Comments
Zero Undifferentiated strategy Mass marketing: no segmentation
One Focus strategy Niche marketing: focus efforts on a small, tightly defined target market
Two or more Differentiated strategy Multiple niches: focus efforts on 2 or more, tightly defined targets
Thousands Hypersegmentation One-to-one marketing: customise the offer for each individual customer
From Wikipedia: Market Segmentation, retrieved 30.1.2018
Market segmentation in regional aquaculture________________________________________________________________________________
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From Wikipedia: Market Segmentation, retrieved 30.1.2018
Product differentiation________________________________________________________________________________
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Specialized, segmented production
Mass production
Product diversity hi loNumber of companies hi loEmployment many/unit few/unit producedSkilled workers yes no / fewInfrastructure (costs) not so required requiredDevelopment hi loEnvironmental impactimpact lo lo – hiRisks (diseases etc.) lo, balanced hiWater quality deterioration lo hiProfitability lo – hi hi
Small vs.big________________________________________________________________________________
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And the profitability?________________________________________________________________________________
Profit through added value and higher prices, not through high production volume
● Defined target markets
● Promotion and communication
● Innovations
● Divided costs by shared ressource use (logistics, advertizing, fairs, exhibitions etc.,
● Networking in professional associations for lobbying, political represbtation, networks
● Close cooperation with reserach places
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● Product Quality (Freshness etc.)
● From here! Local Production, Regional SpeciesLocal is the new Bio! Transparent production
● Direct MarketingExample: Blue Mussel: Wholesaler: 0.8 -2.0 € / 6.0 – 11.50 €
● High Refinery / Technology LevelCosmetics and Neutraceuticals from Algae
High prices need extensive communication (marketing)________________________________________________________________________________
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Fine de Claire VerteMarenne-Oleron
Belon (France)Belon River, Brittany
GauloiseBelon River, Brittany
GillardeauMarenne-Oleron
Source: www.oysterater.com
All of them: Pacific Oyster!!
From here. Local production. Regional species
(The classic: Wine! 100s of grape – species, 1000s of different wines________________________________________________________________________________
Et pour chaque lieu de production, une saveur différente: à vous de les découvrir !
Reykjavik,20.3.2018 P. Krost: Small is beautiful 32
Wholesaler Direct
Blue Mussels 0.80 – 2.00 € 6.50 – 11.50 €
Fisch vom Kutter 1.00 – 2.00 € 8.00 – 15.00 €
Direct marketing________________________________________________________________________________
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High refiners / technology level________________________________________________________________________________
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The BamS initiative________________________________________________________________________________
● BamS = Bio-Economy at marine Sites
● Idea: cascade utilization of biomassfrom aquatic sources
● Enhencement of regional economy
● Synergy (logistics, distribution,marketing, brand etc.)
Reykjavik,20.3.2018 P. Krost: Small is beautiful 35
CAU
EMB
FH KI
Trout Farm
Shrimp Farm
Cosmetics
GEOMAR
Fish Restaurant
Mussel Farm
GEOMAR
Marine science
Aquatic production
Processing,sales
GMA
FH HL
Fish Restaurant
Fish Restaurant
Kiel Fjord
Fish Restaurant
FH FL
Kelp Farm
Fish Restaurant
● Development● Consulting● Demonstration● Courses● Information● Exhibition● Sales● Storage● Presentation● Processing
Reykjavik,20.3.2018 P. Krost: Small is beautiful 36
● Small production will not solve global food (protein) scarcity
● But: neither will large production (Norwegian salmon for Africa?)
● Small production has an impact on employment, rather than on turnover
● Small production can be, but is not necessarily, ecologically better than large production (eg. CO2 footprint)
● Potential hazards in small production less dramatic (mortality, water stagnation, dead bottoms etc.)
● Products from small and local segmented production (can) have e better quality (freshness, choice ((you can always go to the supermarket..!))
● Increased self-determination of producer and independence from global prices
● Region benefits from added value, income and employment effects
● Costs per unit higher in production, logistic and communication
● Segmented production units require synergy and networking
Summary________________________________________________________________________________
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________________________________________________________________________________
Thank you for your attention!
Takk fyrir!