Attempting to make more sophisticated products

November 22, 2010 16:19

The Norwegian salmon industry mostly exports whole fish and fillets. New research indicates that companies can earn more by adding value to salmon products - and several companies have already begun doing so, reports with reference to Nofima. 

Norway is still to a large degree a raw material supplier of salmon, but both the authorities and industry want more salmon to be further processed in Norway. This would create more jobs, increase export earnings, provide more stable prices and could provide some further competitive advantage, not least in the freshness of the product when processed.

"The salmon industry has become more interested in adding value to products to increase earnings, but it is difficult to say how profitable this is," says Senior Scientist Geir Sogn-Grundvåg at Nofima.

Sogn-Grundvåg has, in collaboration with scientists at Nofima and the University of Stirling, Scotland, carried out studies of salmon companies in Norway, Scotland and Chile. Analysis along the entire value chains has included the UK and French retail and foodservice sectors.

The scientists have studied how the companies are trying to differentiate salmon products, or in other words give the product discrete characteristics in order to make it different and more sophisticated than the standard products of whole salmon, steaks and fillets. Much can be done to differentiate one salmon product from another, including varying the form, labelling and packaging. Other common methods emphasise more abstract characteristics such as healthiness, environmental considerations and the country or region of origin.

The research indicates that salmon companies can achieve competitive advantages by developing products that stand out from the crowd, but most of the strategies can be copied and, as such, provide only a temporary market advantage.

The scientists' studies at shops in France and the UK also identify imitation to be a far more widespread strategy than innovation and the development of truly novel products and product characteristics.  Firms often monitor what their competitors are doing and often copy their product concepts. Few product characteristics are truly innovative, unique and difficult to imitate.

"One example is how the producers have copied pre-packed smoked salmon which is sliced and visible through a plastic window," says Sogn-Grundvåg. "There is now an extremely large selection of this product type from many different producers, commonly with very limited differences between them."

"Several of the characteristics and methods that are used are common for the companies, which shows they are not alone in the choice of strategy.  This means that companies must work continuously to develop and maintain the advantages they have achieved," says Sogn-Grundvåg, adding: "Companies wanting to differentiate their products should therefore concentrate on strategies and product characteristics which they can produce but that are difficult to copy."

This research project was financed by the Research Council of Norway.  It provided an important foundation for further research which is now continuing on product differentiation on salmon and white fish in a new four-year project financed by the Fisheries and Aquaculture Industry Research Fund.

A series of popular science articles on the results of the project have been published in the journal Norsk fiskeoppdrett. To view all the articles, open the attached PDF document (Norwegian language only).

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