Yorktown Technologies free essay sample

Technologies, was founded by two gentlemen, Alan Blake and Richard Crockett, with the objective to patent the idea of producing GloFish ® genetically modified tropical zebra fish which would fluorescent all the time. Zebra danio fish are native to India. These fish are clear with stripes on them. The objective of these fluorescent fish is to identify water contamination. After further analysis, patenting this idea was not possible as these fishes where already been developed for research. As a result, Crockett and Blake proceeded in modifying their business strategy to license the packaging and reselling of fluorescent fishes to large industry buyers. Yorktown Technologies founders, met with Dr. Ivan Pruchansky who developed the fluorescent zebra fish and had expressed interest in working with the startup. Dr. Pruchansky eventually decided not to work with Yorktown Technologies for various reasons that triggered him, such as environmental community concerns, involving the university on the licensing of his discovery and jeopardizing his academic credibility. We will write a custom essay sample on Yorktown Technologies or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page After the unsuccessful negotiations with Dr. Pruchansky, Blake and Crockett partnered with National University of Singapore (NUS) as they had developed their own fluorescent fish and expressed interested in commercializing their fish. As a result, an agreement was signed which gave Yorktown Technologies rights to NUS line of fluorescent zebra fish and patent that covered all fluorescent ornament fish in exchange for a 16% royalty fee. This agreement would set Yorktown Technologies on a competitive advantage as competitors enter the market. Blake and Crockett implemented successful fundraising strategies which raised $5 million in preparation for the launch of GloFish ® genetically modified tropical zebra fish project. Yorktown Technologies secured two distribution agreements with the largest Florida freshwater ornamental fish producers and distributions in the country, 5-D Tropical and Segrest Farms. Despite the successful efforts in fundraising, Yorktown Technologies first year performance drove a loss of $120,000 compared to the $4 million company surplus projections. Although Yorktown Technologies sales have increased year over year, the main problem in this case is they haven’t reached their geographical targeted audience and facing channel distribution. Analysis and Evaluation As various issues have been addressed at Yorktown Technology, Blake and Crockett still need to evaluate the problems which are hindering the growth of the organization to drive long-term sustainable success. We will focus on five key areas to provide Blake and Crockett on what to expect, this includes: marketing environment, consumer market, channel infrastructure, competition and address any ethical concerns. All of this information will be used to provide a recommendation to Yorktown Technologies board of directors. Marketing Environment: Yorktown Technology faced a variety of environmental challenges, which triggered them to launch their product sooner than planned. There are various environmental agencies which are developing negative publicity of the impacts of genetic fluorescent zebra fish. Negative publicity prohibited Yorktown Technologies in marketing fish to Californian population which historically demonstrated adoption of innovative products. Yorktown has taken action to defend, educate and drive awareness of these fluorescent zebra fish. This effort has been implemented through media, such as television, magazines, newspaper and website. Regardless of the environmental concerns and Dr. Pruchansky’s effort, approval has been granted to market across the country, excluding California. Yorktown Technologies should provide additional report to California government to obtain approval. There is a significant level of market share Yorktown Technologies can obtain as the aquarium industry is worth over $1,000 million (Cato and Brown, 2003). The United States is the number one importer of ornamental fish despite European Union being the largest market for ornamental fish (Livengood and Chapman, 2012). Additionally, the United States produces and sells over 200 million ornamental fish and distribute to over 5,000 retail establishments (Kerin and Peterson, 2012). Moldvay (2012), published the United States 40% of pet owners, own a fresh water fish compared to cats and dogs (refer to table 1). The marketing environment and opportunities to succeed in the aquarium industry is significant just the proper marketing strategy needs to be implemented. Consumer Market: According to Yorktown Technologies, the negative â€Å"buzz† on genetically fluorescent zebra fish didn’t seem to impact initial sales. Blake communicated to USA Today, â€Å"Public demand for GloFish ® fluorescent fish has been extraordinary, even greater than we had anticipated† (USA Today, 2003). â€Å"Finicky† fish consumers accepted the product favorably. Product innovation was implemented after a retailer informed Yorktown Technologies that fish lovers like different, unique fish and that â€Å"variety drives purchases†. It isn’t too late to perform market research analysis on the targeted population to understand the unmet needs. After obtaining the retailer’s feedback and evaluating the flaws of the Red Zebra Danio (i. e. minimal brightness, loss of color), NUS developed a new generation of fluorescent GloFish ® that would address the flaws followed by launching different color fluorescent zebra fish (i. e. green and orange). The next phase should consist of line extension strategy by expanding the color variation to provide variety to consumers. In 2008, over $4 million was estimated to have been spent on Yorktown Technologies products and the United States consumer ornamental fish market is growing at a nine percent rate year over year. This requires Yorktown Technologies to identify the opportunity recognition to differentiate the supply of fluorescent zebra fishes. Concurrently, Yorktown Technologies should invest the time and effort to address the government’s request to enter the California market. This will be a significant win since California is the most populous state reported by the Census Bureau. Historical this population has proven to embrace innovated products. There is a significant consumer market to offer ornamental fish which would benefit Yorktown Technologies. Channel Infrastructure: Yorktown Technologies understands they need to identify the optimal distribution channel to reach their targeted population. There are five distribution options which Blake is evaluating to determine the optimal solution considering the firm’s resources. For instance, Yorktown Technology should strengthen the relationships with â€Å"mom and pop† (independent pet stores) pet shops through marketing not only their products but also these businesses where the GloFish ® products are sold. This will allow optimal display of the fish at the pet shops increasing the likelihood of visibility and increase demand. Although the Census Bureau indicates there is a decline in pet stores, sales are increasing at a substantial annual rate. According to Moldvay (2012), pets are considered part of the family, therefore owners will cut back on personal discretionary spending first before reducing spending on their pets. Another option is establish and strengthen relationships with major retail chains. Yorktown Technologies should present a new case to the three major retail chains demonstrating product line performance throughout the country, including California, and proposed optimal economies of scale that will benefit both parties. Overall, this will require to keep in mind the price sensitive and expert fish lovers. If this attempt fails, then Yorktown Technologies should reach out to medium size pet stores to introduce the product line which slowly will gain exposure and open opportunity to enter into the major retail chains market. According to the IBISWorld (2012) publication, PetSmart and PETCO own 63% of the pet store market share. PETCO recognizes the opportunity recognition by offering the product line at some of the stores now it is time to open the dialogue to roll out the product line across all stores. Blake is evaluating leveraging kiosks to increase awareness, education and sales. Finicky fish hobbyist would be more interested in purchasing the fish in person versus by mail or online. Blake understands that kiosk generate $10 billion annually which is a great appetite to steer positive organization growth. This is a model where other GloFish ® product lines can be cross-sell and proper educational information can be provided to the public. Additionally, Yorktown Technologies can ensure proper display of the fluorescent zebra fish is presented to capture audience attention. Developing a strategic pilot in metropolitan areas where kiosk can be used to initiate interest and sales. Eventually, if the pilot demonstrates to be successful then kiosk expansion discussions can be developed. Unfortunately, the cost to lease a kiosk is extremely costly for Yorktown Technology to invest currently. Another alternative is the internet which is a cost effective channel to sell the GloFish ® product line. The operational cost are minimal which shipping would need to be a variable Yorktown Technologies would need to address. Blake performed analysis on the shipping cost and the cost was greater than the fish value. Mintel (1991) notes that most of the weight of shipment is water and it is expensive to ship a box of water around the country. Per the US Census Bureau, retail e-commerce sales have increased year over year attributed to $60 million and is forecasted to continue to increase. Yorktown Technologies should develop partnerships with independent pet stores or major retail pet stores to request consumers to pick up their online orders at local stores. Not only would this benefit Yorktown Technologies, but the stores will generate extra foot traffic with the possibility of generating additional sales. If shipping is required, a relationship should be established with a package delivery company (i. e. USPS, UPS, FedEx, etc) to determine a flat rate and potentially offer free shipping to the consumers incorporating a satisfaction guarantee offer. This strategy can work if the website provides value, such as educational videos are provided, to sell the product to consumers. Unfortunately, consumers will not be able to select the â€Å"right† fish as variation exist amongst them where satisfaction concerns could not be met. Absolutely a channel to evaluate further as e-commerce growth continues to grow year over year. Finally, going international is another alternative Blake is considering. Although going international requires a significant level of investment, there are tariffs to consider, illegal breeding possibilities and would require to address foreign regulations. The international market is much larger but the US is the number one importer of ornamental fishes (Livengood and Chapman, 2012). Countries such as India and European Union identify a lucrative industry to export ornamental fishes as source for income generation (De and Ramachandran, 2011). Blake indicates there are a few countries with restrictions making it impossible to enter those countries. Yorktown Technologies priority should strengthen the market share and relationships in the United States prior to going global. Competition: Yorktown Technologies has monopolize the ornamental fish, GloFish ®, since they have patent the fluorescent ornamental fish from NUS making it difficult for competition to enter the market. Consequently, there is already and existing market (National University of Taiwan, NUT) with similar products (fluorescent green medaka fish) and lower prices already abroad (Kerin amp; Peterson, 2010). Competing with the medaka fish will be very challenging for Yorktown Technology as they currently don’t have a strong financial foundation to compete aggressively and invest in the international arena. As a result, this could cause the end of this organization. An option could be for Yorktown Technologies to determine if there is business benefit to develop a similar patent agreement with NUT to diversify the product line and legally introduce the fish in the United States. This would be a proactive approach for Yorktown Technologies before a competitor obtains the NUT agreement and competes with them in the United States. A more thorough explanation of the competitive position will be defined through a SWOT analysis. Yorktown Technologies strengths consist of being the first and only organization to patent a fluorescent ornamental fish. It has monopolize the market giving them full market share on fluorescent ornamental fish. Another strength is they have incorporated the trading up offering by leveraging NUS enhancement to ensure the GloFish ® is more colorful and avoid losing the color as the fish matures. Additionally, they have taken a proactive approach to introduce product variation by providing fish lovers’ two additional colors to select. Scientist support the genetically engineered fish since they don’t pose any harm to the environment. With strengths comes weakness, Yorktown Technologies is encountering lack of brand awareness by various environmental communities. They haven’t been able to build a relationship with these environments to address their concerns and educate them on the benefits of the fluorescent engineered fish. Another weakness is identifying a solid distribution channel to maximize their sales force. They are encountering poor display of their products with independent pet stores and unable to successfully distribute to all major pet retailers. Yorktown Technologies is encountering challenges with controlling shipping cost. From outside perspective, Yorktown Technologies has several opportunities that can help the firm reach its full potential. First, management should invest time and effort to provide the report California government has requested to reach ~40 million consumers. Strengthen relationships with retailers to obtain optimal display and offer their products across major retailers. Additionally, Yorktown technologies has the opportunity to develop partnerships with package delivery companies to minimize shipping cost and be able to offer products via their website or request consumers to pick up their order at a local pet store. Another opportunity can be to diversify their product line by developing a patent agreement with NUT which will leveraged their fluorescent green medaka fish. Providing educational material and attending seminars will be instrumental to ensure the companies brand isn’t impacted with the negative â€Å"buzz†. Threats is the final category of the SWOT analysis. The major threat the organization is facing is poor distribution strategy. If the strategy isn’t finalized it will continue to impact the organizations growth opportunity. Additionally, the Asian competition will be required to address as they are manufacturing large volumes of the genetically modified medaka. Another factor to be consider is the validation of altered medaka imports which could/is hinder Yorktown Technologies future growth opportunities. Ethical Concerns: Despite the controversy GloFish ® generated prior and after the launch, various scientist confirmed these genetically engineered zebra fish weren’t a threat. The FDA (2003) announced that these genetically engineered zebra danio fish don’t pose a threat to the environment from the unmodified fish. Dr. Jyotshna Kanungo (2009) observed they are extensively used for research since they are similar to humans in many ways. These fishes have been instrumental in research and have made significant discoveries recently. Additionally, these fish have similar pathways as humans which have vertebrates, liver, pancreas, etc (FDA, 2013). The cost of maintenance is minimal and their fast development are advantages in using this specimen in laboratories. The concerns addressed by the environmental organizations don’t display any concerns to humans or to their species. Ethical issues aren’t a factor for Yorktown Technologies. We live in an environment where products and food are mostly genetically engineered which don’t cause an issue to society. There is confirmation from many scientist and organizations which indicated there is no concern with these fishes therefore the ethical dilemma surfaced aren’t relevant. It is almost a decade since the launch of GloFish ® and no reports have been addressed reporting negative side effects to the environment and original species. Finally, science is used to provide opportunities, hope and success to people and businesses. Hence if there are any concerns in genetically modifying the zebra danio fish then are the issues with in-vitrio where hope is given to couples to become parents. This is definitely a sensitive matter but genetically engineered zebra danios absolutely don’t drive ethical concerns they drive opportunity. Yorktown Technologies recognized the opportunity in the aquarium industry and developed research to partake in this industry. Recommendation Based on the information provided in the analysis, it is highly recommended that Yorktown Technologies dedicates the time and resources to abide with the California government request to enter this geographic arena to expose ~40 million people with this innovative and sophisticated product. Additionally, Yorktown Technologies should build and strengthen the relationships with independent pet stores and major retailers (i. e PETCO) by promoting the pet stores in Yorktown Technologies marketing efforts (i. e. magazines, website, public relations) in exchange of selling the product and providing optimal visibility. Next, Yorktown Technologies should diversify their product line by introducing variations and potentially patenting NUTs fish. This will aid in adding additional complexities for competitors to enter the fluorescent fish industry. Blake is aware that in order to acquire market success, a strong distribution strategy needs to be address. Hence, the internet channel will be the most cost effective channel in comparison of the kiosk. Yorktown Technologies should establish strong relationships with package delivery companies to obtain a cost effective shipping fee. Additionally, consumers can be given the chose to pick up the fish at their local pet shops for their convenience. This would absolutely require partnerships to be built with local and major pet shops to establish a same day pick up program. Finally, Yorktown Technologies should develop education campaigns to address the concerns that have been addressed by various organizations and offer online promotions to increase adoption rates. There are opportunities for Yorktown Technologies to reach its targeted population as one out of eight American households owns a freshwater fish aquarium (Kerin and Peterson, 2010).