So what’s the price of tuna, Charlie? Packed in water or not?
Wild Bluefin Tuna will sell for almost $25 per pound in Tokyo’s Tsukiji market; “ranched” Spanish Bluefin Tuna will sell for $11 per pound in the same market; and White Albacore Tuna (canned in water) is available for $4 per pound at your local supermarket. This is quite a price range for tuna. Either the economic forces of the tuna market are unique or there is a serious pricing strategy disconnect.
This broad spectrum of prices reflects the many aspects of the tuna business. It also demonstrates the eff ects of market and economic influences of a business. Thus, this simple example also illustrates an important management lesson: Know your business precisely, and you will understand your market to determine “significant” price points and see the influence of a changing economic and regulatory landscape. This may seem like an obvious lesson, but sometimes the consequences are far reaching.
The first two prices cited above are not for the “canned” tuna business but for sushi restaurants. The most expensive wild bluefin tuna will be served at a very exclusive high-end Tokyo restaurant. Tokyo, Japan, is a city and country where the nuances of different bluefin tuna species are appreciated and attract individuals willing to pay for the experience. The two different prices reflect the fact that a market also exists for individuals with discriminating tastes but not an unlimited expense account. Thus, the “ranched” bluefin has a market—not the very upscale market that the producers imagined but a very good market nevertheless. And, of course, the price of this product precludes its use in a “canned” product, as the albacore tuna is marketed.
With its island nation heritage, Japan is a country that appreciates the different varieties of tuna. Thus, two avenues have developed to meet this demand: traditional tuna fishing to gather the wild species, and the “ranched” species provided by other countries attempting to provide a product and develop a new market.
However, both are “fresh markets” because Japan is a country that knows the “tuna” experience is best enjoyed fresh and not in any “canned” state. A willingness by the Japanese people to pay and pay well for this gustatory experience provides a very attractive market for tuna providers.
This is not the case for the U.S. market where, even though it is a country that has two coastlines, most individuals live in the hinterland. As a result, tuna is viewed as just another species of fi sh. Given this perception, price is a discriminating factor: too high and a purchase will not be made. In addition, the state of freshness is relative and therefore a canned product is very suitable. All of this is reflected in the price and the product. Americans are not very discriminating tuna consumers.

QUESTIONS

1. Are there industries or products other than tuna for which the U.S. firms have decided not to compete with Japanese firms because Japanese consumers constitute such a major part of the consumer market?

2. What other reasons may the U.S. firms have had for opting not to compete with Japanese firms for the tuna market? How might U.S. firms competitive decisions now be influenced by the radioactive contamination from Japan's crippled nuclear plant in 2011?

3. Name at least two other products where the relatively non-discriminating taste of American consumers causes manufacturers/producers to sell “lower-status” products to the U.S. market. Is the reverse also true; that is, that a more discriminating taste of American consumers results in higher-quality, higher-priced goods being sold to the U.S. market?