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HBRARY
*Michigon State}
J University

 

 

This is to certify that the

thesis entitled

THE MARKETING 0F EXCESS
MICHIGAN SALMON IN MICHIGAN

presented by
MARK S. SARGENT

has been accepted towards fulfillment
of the requirements for

Master degree in Sc1ence 1n

Fisheries &‘ Wildlife

 

 

 

Major professor
Harold H. Prince

/
Date was

0-7639 MSU is an Aflirmatiw Action/Equal Opportunity Institution

 

MSU

 

 

 

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THE MARKETING OF EXCESS

MICHIGAN SALMON IN MICHIGAN

By

Mark S. Sargent

A THESIS

Submitted to
Michigan State University
in partial fulfillment of the requirements
for the degree of

MASTER OF SCIENCE

Department of Fisheries and Wildlife

1985

ABSTRACT
THE MARKETING 0F EXCESS
MICHIGAN SALMON IN MICHIGAN
by

MARK S. SARGENT

The 1983—1993 excess Michigan salmon harvest contract
required Tempotech Industries, Inc. to perform a Michigan
market study for excess Michigan salmon. The main objective
was to obtain perceptions of those involved in the Michigan
fish marketing system. The study was based on 42 personal
interviews conducted with representatives of the following
market levels: specialty fish wholesalers, wholesale/
retailers, retailers; supermarkets, Tempotech Industries,
Inc., and the Michigan Department of Natural Resources.
Interview results indicated salmon carried by Michigan fish
firms were mainly west coast salmon and few carried excess
Michigan salmon. Fish firm managers perceived low quality
as the major marketing barrier to excess Michigan salmon,
and that high grade excess Michigan salmon should be sold as
fresh, medium grade as frozen, and low grade as processed.
High quality packaging, labeling, and promotion were
perceived as important to a sucessful marketing plan. Proper
attention to marketing barriers will be necessary to obtain
a sucessful Michigan market. Over time and with proper
marketing activities the Michigan market may be a feasible

alternative to the present situation.

ACKNOWLEDGEMENTS

I wish to thank the members of my committee for their
support and assistance. Dr. Harold H. Prince and Dr. Milton
H. Steinmueller provided needed support and guidance.
Special thanks and appreciation to Dr. Thomas R. Pierson,
whose criticism and determination for clarity greatly
improved the quality of this thesis. Special appreciation
is extended to Dr. Howard Tanner who served as my thesis
director. His door was always open and he freely spent time
discussing my work. His feedback and opinions were always
interesting and beneficial. His insights in regards to
work, research, and fishing have broadened my horizons and
given me a well rounded education that few others will
receive. Appreciation must also be offered to Tempotech
Industries, Inc. for funding this research and for their
help and support. I would also like to thank the following
graduate students for their support, advice, and friendship;
Earl Flegler, Brian Gray, Tom Kulowiec, Rick Rusz, Doug and
Jenny Sweet, and Mike Thomas. Finally, words can not
express my gratitude to my family. My grandparents, father,
and siblings were always there with support and help. Last
and the most important, I want to thank my Mother. She was
always there with mental, physical. and financial support.
Her support was instrumental in all that I have done and she
deserves a large share of the credit for my accomplishments
to date.

ii

TABLE OF CONTENTS

CHAPTER PAGE NUMBER

 

I. INTRODUCTION 0 O O O O O O C O O O O O O O O O I O O 1
Statement of Problem . . . . . . . . . . . . . . . 3

Organization of Thesis . . . . . . . . . . . . . . 8

II. OBJECTIVES, HYPOTHESES, AND METHOD . . . . . . . . . 9
Specific Objectives . . . . . . . . . . . . . . 9
Hypotheses . . . . . . . . . . . . . . . . . . . . 10
Research Method . . . . . . . . . . . . . . . . . 10
Limitations of Research Method . . . . . . . . . . 17

AnaIYSiS Of Data 0 O O O O O O O O O O O O O O O O 20

III. RESULTS: THE MICHIGAN FISH MARKETING SYSTEM . . . . 21
Interviews . . . . . . . . . . . . . . . . . . . . 21
The Michigan Fish Industry . . . . . . . . . . . . 24
Marketing Problems . . . . . . . . . . . . . . . . 41
The Northern Michigan Fish Industry . . . . . . . 45

Future Outlooks . . . . . . . . . . . . . . . . . 46

IV. RESULTS: THE MICHIGAN SALMON MARKET . . . . . r . . 47
The Michigan Salmon Market . . . . . . . . . . . . 47
Tempotech's Perspectives and Opinions . . . . . . S7

MDNR Perspectives and Opinions . . . . . . . . . . 67

iii

CHAPTER

V. DISCUSSION OF RESULTS . . . . . . . . .
The Michigan Fish Industry . . . . . .
The West Coast Salmon Market . . . . .

The Michigan Salmon Market in Michigan

VI. RECOMMENDATIONS . . . . . . . . . . . .
Recommendations to Tempotech . . . .
Recommendations to the MDNR . . . . .
Recommendations to the Michigan Fish

Marketing System . . . . . . . .

VII. SUMMARY AND CONCLUSION . . . . . . . . .
summary 0 0 C O O C C O . . C O O O .

Conclusion . . . . . . . . . . . . .

APPENDIX A: Introduction Letter . . . . . . .
APPENDIX B: Questionaire . . . . . . . . . .
APPENDIX C: Definitions . . . . . . . . . . .

LITERATURE CITED . . . . . . . . . . . . . .

iv

NUMBER

 

. . 73
. . 73
O O 82
O O 90
. 101
. 102
. 108
O 109
. llO
. 110
. 112
. 114
O 116
. 124
. 127

LIST OF TABLES

 

 

TABLE PAGE NUMBER
1 U.S. salmon landings from 1973 to 1983 . . . . . . 85
2 U.S. salmon consumption from 1973 to 1983 . . . . 87
3 1983 excess Michigan salmon harvest, by

species and grade . . . . . . . . . . . . . . . 91

FIGURE

LIST OF FIGURES

 

Location of Michigan cities which were used

in telephone directory listing . . . . . .
Location of Michigan fish wholesale interviews
Location of Michigan fish wholesale/retailers

interviews . . . . . . . . . . . . . . . .
Location of Michigan fish retail interviews .
Location of Michigan supermarket interviews .
Location of excess Michigan harvest sites

and processing plant . . . . . . . . . . .
Processing steps performed by Tempotech . . .
Primary marketing channels of the Michigan

fish marketing system . . . . . . . . . .

Percent of world salmon supply by major

PAGE NUMBER
0 I 13
. . 25
. . 27
O I 28
O O 29
O O 59
O O 61
O O 75
O O 84

country, 1980 . . . . . . . . . . . . . .

vi

CHAPTER I

INTRODUCTION

Coho salmon (Oncorhynchus kisutch) and chinook salmon

 

(Oncorhynchus tschawytscha) were introduced to the Great

 

Lakes by the Michigan Department of Natural Resources (MDNR)
in 1966 and 1968, respectively, in an effort to improve the
declining sport fishery and as reported by Ryder et a1.
(1981) to utilize the abundant forage base available in the
Great Lakes. These salmon have not only supplied a large
sport fishery to the public, but have also provided a
substantial economic advantage to public and private
organizations.

During the fall, mature salmon migrate up the Great
Lakes tributaries to spawn and die. Although there is some
natural reproduction of chinook salmon, which is estimated
to be from 600,000 to 700,000 smolts per year (Tanner 1985
pers. commun.). The majority of salmon returning to these
streams are the same salmon planted there as smolts or
fingerlings several years earlier by the MDNR. In the past,
the MDNR caught these spawning salmon at weirs located on
two streams to remove the eggs and milt for state
hatcheries. The carcasses and surplus eggs were then sold
to private enterprises for further processing and marketing.
During these earlier years the contracts between the MDNR

and private enterprises were for one year. Since private

firms had no guarantee of obtaining the contract at the next
bidding, they had little incentive to investigate long run

market strategies or make capital investments.

The 1983 Harvest Contract

The contractual time frame was changed in 1983 when a 10
year contract was signed between the MDNR and Tempotech
Industries, Inc. (Tempotech), a private fish marketing firm
located in Hart, Michigan. Tempotech had handled excess
Michigan salmon1 in the past and had the knowledge and
facilities to market these fish. The 1983 contract
specified the following requirements to be met by

Tempotech.

1) To operate state-owned weirs, under MDNR direction, at
designated locations, to harvest excess salmon, and to

purchase the harvested salmon carcasses and/or salmon eggs.

2) To construct, install and operate temporary devices or
methods, under MDNR direction, to harvest excess salmon at
designated locations and to purchase salmon carcasses and/or

eggs at those locations.

3) To propose, develop and implement a plan to process and
market salmon and salmon byproducts harvested from state
owned weirs and temporary harvest facilities in the State of
Michigan and elsewhere.

1: Defined in Appendix C.

University Involvement

After being awarded the contract, Tempotech contacted
Michigan State University and asked M.S.U. to perform the
Michigan marketing study under the above requirements. The
Fisheries and Wildlife Department at M.S.U agreed to
undertake this marketing study under the leadership of Dr.

Howard Tanner.

Statement of the Problem

 

Marketing Difficulties

Before going into more detail on the present marketing
study it is necessary to look at the difficulties in
marketing Michigan salmon. Both public relations and
economic problems exist. Opinions have been voiced that
these fish are common property and that they have been paid
for with funds from fishing licenses. Thus, some fishermen
are upset with the sale of what they regard as "their" fish
(Rankin 1984). Furthermore, fishermen misconcieve that
their fishing recreation is affected by the harvest and that
Tempotech is removing other game fish (Huggler 1983).
Communities near Great Lakes tributaries are also concerned,
since they fear the loss of tourist and recreation revenues
generated by the salmon migration into their area.

Marketing of Michigan salmon in Michigan also poses
difficulties. Some Michigan residents believe the fish may

contain substantial amounts of toxic chemicals making them

unfit for human consumption (Buelow 1984). In past years,
the chemical contents of salmon exceeded limits set by the
Federal Food and Drug Administration and the Michigan
Department of Agriculture for the sale of fish. Even though
the fish are currently below legal contaminant limits, the
public remains skeptical about the safety of the fish. The
problem is compounded by Michigan Department of Public
Health warnings on fishing regulations that state: no one
should eat salmon from certain lakes for more than one meal
per week and that children, women who are pregnant, nursing
or expect to bear children should not consume these fish at
all (Michigan fishing guide 1983).

The harvested excess Michigan salmon consist of four
grades. The top quality salmon have bright red meat and
silver skin and are referred to as "bright grade", with the
next lower grade referred to as "semi-bright". Low quality
fish have dark skin and pale meat and are labeled as "dark
grade". Those fish spending excessive amounts of time in
holding runs have very low quality because of extensive
bruising and are referred to as "hatchery grade". Up to 80%
of the harvest is composed of the lower grade salmon (semi—
bright, dark, and hatchery grades), and because of their
darker skin and pale meat they are considered unappetizing
by consumers. During the 1983 harvest, an estimated-
1,273,000 pounds of dark grade salmon were harvested

(unpublished MDNR notes). The problem with these fish is

how to utilize them effectively since they are unappealing
to consumers in their natural condition.

Another difficulty is the competition among Michigan
salmon and other fish, especially west coast salmon.
Introduction of Michigan salmon into the Michigan market
will directly compete with the west coast salmon industry.
To compete effectively, the quality of the Michigan salmon
should be similar to west coast products. However, pricing

may compensate for lower Michigan quality.

The Concept of Marketing

"Marketing" is not just the selling of a good or
service, but deals with research, planning, purchasing,
distribution, and the behavioral sciences (Cantor et a1.
1969). Thus, marketing has to do with all steps, processes,
and services which are used from the production of a good or
service until it is delivered to the ultimate consumer.
Vast economic and social changes in the last decade have
made better marketing imperative (Business Week 1983), and
within the marketing field the new priority is the

minimization of risk through indepth market research.

The Research Problem

In light of the vast array of subjects that could be
involved in this study and the economic and time
constraints, it was necessary to establish limitations and

focus efforts of the study. Since the study is a

requirement placed on Tempotech by the MDNR, personnel from
the MDNR were asked to develop a list of questions that they
would like answered. The following list contains the

pertinent questions as perceived by the MDNR.

1) What are the barriers to marketing Michigan salmon and

how can these barriers be "overcome"?

2) What is the overall feasibility of improving the
marketing situation for the firm possesing the harvest

contract?

3) What is the economic potential of marketing excess

Michigan salmon?

The following general objectives are areas of emphasis or
focus which were selected for the research because they lie
within the above MDNR areas of interest and are also accept-

able to Tempotech.

1) To determine the perspectives and attitudes of those
involved in the Michigan fish marketing system with respect

to the present fish marketing systems and its operations.

2) To determine the perspectives and attitudes of those
involved in the Michigan fish marketing system on marketing

of west coast and excess Michigan salmon.

Participants in the fish marketing system can provide

valuable information on present market conditions, as well

as the feasibility of marketing new products in the future.
Because of daily involvement in the market, they are aware
of trends and believe that they are knowledgeable about
their customers' taste and preferences. Also, since
marketing channel participants will not deal in fish which
they perceive to be undesirable to consumers, these
participants have a very direct influence on the market-
ability of the product.

A primary concern of the study was to survey
wholesalers, retailers, and supermarkets that sell fish and
seafood in Michigan. Due to budget and time restrictions
the restaurant industry will not be observed. However, it
could be a major marketing channel for Michigan salmon and
may require further research.

Transportation lines required to carry fish between
different levels of the marketing channel have indirect
affects on the supply or demand in the marketplace. The
transportation system is a link between the quantity
supplied by the fishermen and the quantity demanded by
consumers. However, the transportation system may affect
the product quality. Time and temperature during
transportation have a direct affect on the quality of the
product and its shelf life. To further understand these
effects it would be appropriate to document how the product

is being transported.

Organization of Thesis

 

The next chapter will discuss the objectives,
hypotheses, and methods used as a base for this study.
Chapters III and IV will review the study results obtained
concerning the Michigan fish marketing system, as well as
the activities and perceptions of Tempotech and the MDNR.
Chapter V will highlight some of the major results and some
of the pertinent literature. Chapter VI will give a list of
recommendations for Tempotech, the MDNR, and the Michigan
fish marketing system. The last chapter will summarize the
information covered within the text and give the concluding

remarks.

CHAPTER II

OBJECTIVES, HYPOTHESES, AND METHOD

The following chapter will present the specific objec-
tives and hypotheses of this study. There will also be a
discussion of the method used to collect the data and its

limitations.

Specific Objectives

 

The following is a list of objectives to be met by the

study.

1) To describe the marketing channels that Michigan salmon

follow from harvest sites to consumers.

2) To identify and describe barriers in the sale of Michigan
salmon within the state and to determine ways to help

overcome these barriers.

3) To determine the perceptions of those involved in the
Michigan fish marketing system, with respect to the best
form (smoked, canned, fresh, etc.) for marketing different

grades of Michigan salmon.

4) To determine the perceptions of wholesalers and
retailers, with respect to the similarities and differences

between west coast and Michigan salmon.

Hypotheses

 

At the outset of this study there were several

hypotheses proposed, regarding the study.

1) The labeling of salmon as "Michigan salmon", will have a

negative effect on the sale of Michigan salmon.

2) Lower grade fish will have to be processed in form and/or
taste to reduce the negative impacts of its identity and

origin.

3) Those involved in the Michigan fish marketing system
perceive that consumers view Michigan salmon as unsafe to

eat because of the contamination issue.

4) The Michigan fish marketing system perceives Michigan

salmon to be lower in quality than west coast salmon.

Research Methods

Sample Composition
The main concern was to sample wholesalers, wholesale/
retailers, retailers, and supermarkets involved in

Michigan's fish marketing system. Tempotech and the MDNR

were sampled because of their participation in the excess
Michigan salmon market. Because of financial and time
limitations other market levels (eg. institutions,
restaurants, etc.) were not sampled. The study was also

limited to firms located only in Michigan.

Sampling Procedures

Firms were selected non-randomly in an effort to obtain
information from the largest firms at each marketing level.
It was assumed that these firms handle the majority of the
fish and seafood products in Michigan and that they would
have well formed perceptions and opinions because of their
large involvement in the marketing system.

The best criterion to determine the largest firms would
be to look at the relative rankings of these firms within a
market level, through accounting and production figures.
However, this type of data was not readily available and a
feasible alternative method had to be found and is explained
below.

Wholesalers.- Wholesale firms consist of firms which
sell fish and seafood to other market levels. Several
listings of wholesalers were obtained, as listed below. The
individual lists were cross referenced against each other.
Firms found on several lists were recorded, and considered

as representatives of the largest firms.

1) A list of 40 Michigan wholesalers was obtained from

telephone books, for the following cities: Lansing, Grand

_ 11 _

Rapids, Battle Creek, Jackson, Detroit, Saginaw, Flint, Mt.
Pleasant, Gaylord, Ludington, Traverse Bay area, Sault St.
Marie, and Escanaba (Fig. 1). These cities were chosen
because of their size and their location throughout the

state.

2) A list of 147 Michigan fish marketing firms obtained from

the Department of Agriculture.

3) A list of the largest Michigan fish wholesalers as

perceived by the MDNR.

4) A list of the largest Michigan fish wholesalers as

perceived by Tempotech.

During the survey period, wholesalers were also asked who
they perceived as the largest wholesalers in the state.
This was used as a check to make sure the largest whole-
salers were sampled. If a firm was mentioned several times
by interveiwees it was added to the sample.
Wholesale/retailers.- Firms that were both wholesalers
and retailers were first noted while sampling wholesalers
and retailers. These wholesale/retail firms sold fish to
other market levels as well as directly to consumers. Since
they performed different activities than the wholesalers or
retailers they were later separated as a distinct category.

Given that these wholesale/retail firms were observed while

 

 

 

Fig. 1. Location of Michigan cities which were used in

telephone directory listing.

- 13 -

sampling the largest wholesalers and retailers, it was
assumed that the sample of wholesale/ retailers was composed
of the largest firms at that market level. This can be
supported by the fact that these firms usually list
themselves as wholesalers and/or retailers, as far as phone
directories or market level activities.

Retailers.- Retailers sold fish directly to consumers

 

and carried few other items than fish. The sample of
retailers was chosen by the same methods used to sample
wholesalers. Wholesalers and retailers were also asked for
their perception of the largest retailers for verification.

Supermarkets.- Supermarkets sold fish directly to

 

consumers and handled numerous other grocery items. Meijer
Thrifty Acres, Michigan division of The Kroger Co., and
Spartan Stores were chosen because of their size and
distribution throughout the state. The first interview for
each group was with the Michigan fish supervisor for each
firm. These interviews provided the names of the largest
three Michigan stores in each firm, which were sampled

later.

Survey Procedures

Personal interviews with representatives of each chosen
firm were used to collect the necessary information. Each
firm was sent an introductory letter approximately three to
four weeks before the intended interview. This letter

explained the study, stressed its importance, and asked for

1 I.

their cooperation (Appendix A). Approximately one week
after the mailing, phone contacts were used to follow—up the
introductory letter. This contact was used to verify the
reception of the letter, locate the person to act as the
firms representative, and to set-up an interview. All
interviews were made at the respondents' convenience and
were held at their place of business.

Each person interviewed was asked to answer a list of
questions pertaining to the activities performed by that
firm in the Michigan fish marketing system, as well as to
discuss their views of the Michigan fish and salmon markets
(Appendix B). The questions were open-ended in an effort to
assure that these topics were covered during the interview
and to prompt the host to reveal, in as much detail as
possible his opinions and perspectives on other topics
dealing with the marketing study.

I conducted all interviews and most were held in a
semi-formal format. Appropiate clothes were worn for each
interview, depending on market level and location. Business
”style clothes consisting of dress slacks, shirt, and tie,
were worn for most interviews in the southern portion of
lower Michigan. This seemed to be the accepted dress style
of the respondents. More informal clothing was worn for
interviews with northern lower Michigan and the upper
peninsula firms. A clipboard was used to write on for the
first two supermarket interviews and these interviews were

short and held standing in front of a display case. On the

next supermarket interview a briefcase was brought to the
interview. This interview and the following interviews were
substantially longer, covered more information, and were
held in an office or breakroom were there were fewer
interruptions. The grocers' seemed to be impressed when a
briefcase was used and were willing to spend more time and
supply more information.

Few notes were taken during the interview, so to allow
the interviewer to keep eye contact with the respondent and
show interest in the response. The recording of information
depended on notes composed of key words which were used for
memory recall following the interview. Immediately after
each interview, notes were reviewed and all recalled
information was recorded on to a tape recorder. At a later

time this data was transcribed.

Sample Size and Response Rate

A total of 51 introductory letters were mailed out and a
total of 42 interviews were conducted, resulting in a
response rate of 82 percent. Reasons for non-response were
the following; 3 firms refused the interview, 2 firms
accepted to do the interview but convenient times between
interviewer and interviewee could not be arranged, and 4
firms were not interviewed because phone contacts were not

made due to disconnected phones.

Limitations of Research Method

 

Sampling Limitations

Because of time and study scope not all market levels
were not observed. Market levels, such as restaurants and
institutions, may be important segments of the Michigan fish
marketing system, though, not as important as the market
levels sampled. McCoy and Hopkins (1979) reported that,
when time and money are constraints, brokers, wholesalers,
and market place sellers are logical sources of information.
Because of present well developed egg markets, the marketing
of eggs and egg byproducts were not investigated.

The sampling procedures relied heavily on listings from
several sources which may have biased the sampling for

several reasons.
1) The lists may not have contained all Michigan fish firms.

2) Lists formed from phone directories were based on a
limited number of cities and tended towards larger cities in

certain areas.

3) Listings may have contained a majority of firms with

large expenditures on promotion and advertising activities.

The choice of firms representative of the Michigan marketing
system was based on an arbitrary estimate of which firms
were the largest for each market level. Firms chosen in

such a manner may not actually be the largest firms in the

state, although, comments made during interview indicated
that the largest firms were covered within the sample. The
basic assumption of using the largest firms was that these
firms would perform well as knowledgeable representatives
for the market system and would have well formed
perceptions. This assumption may be limited by several
factors. First, respondents may have biased their response
in hope of creating a positive image with the interviewer.
Second, new incoming firms, and smaller firms may have just

as accurate perceptions as those larger firms.

Survey versus Personal Interviews - Decision Rationale

Mail surveys may have been less expensive than personal
interviews. Data obtained via mail surveys could have been
analyzed using statistical methods and may have been easier
to summarize and present in the form of tables and figures.
However, personal interview surveys were chosen for several
reasons. Problems with surveys for marketing studies, as
identified by McLaughlin (1983), are the substantial
uncertainty in forming pertinent questions and frequently
the unwillingness of respondents to fill out mail survey
forms. Furthermore, McCoy and Hopkins (1979) report that if
research is conducted by one individual, the interviews can
be aided by the use of interviewer guideline questionaires
with ample space for responses. Social scientists have also
shown that personal interviews guided by this type of

questionaire can yield highly valid, reliable, and

representative preferences, values, and beliefs (Brudge and

Hendee 1972).

Survey Limitations

Although, the personal interview approach was selected
as the most appropiate method to use, it was not without
limitations. One limitation was the lack of numerical data
and statistics which impede the analysis and summarization
of the data. Another limitation is the possibility that
some of the information was not gathered due to the
relatively small number of observations of those
interveiwed. The following limitations were reported by

McLaughlin (1983);
1) Too strong of a rapport can bias the response given.

2) Misleading conclusions based on a minority of

observations of a non-random sample
3) Unwillingness of respondents to reveal information

The unwillingness to reveal information was also reported by
McCoy and Hopkins (1979). This lack of response can be
caused by respondents concern for being quoted or having

their specific strategies reported (McLaughlin 1983).

Analysis of Data

 

Interviews were categorized into each specific market
level to enhance analysis. These interviews were then
aggregated to facilitate organization and summarization of
the responses. Focus was placed on similar responses made
by the majority of the respondents for each market level.
This provided summarized and aggregated information for each
market level. Research publications and trade publications
were used to support the results and to help form

recommendations.

_ 20 _

CHAPTER III

RESULTS: THE MICHIGAN FISH MARKETING SYSTEM

In this chapter information on the Michigan fish
marketing system will be reveiwed. The Michigan fish
industry is composed of firms; fishermen, suppliers, whole-
salers, retailers, and supermarkets; which are involved in
fish marketing activities in Michigan. Current marketing
practices, as well as the perspectives and opinions of those

active in the Michigan fish industry will be reviewed.

Interviews

 

Interviews were conducted with firms active in the
Michigan fish industry to get their perspectives and
opinions on the marketing of excess Michigan salmon in this
state. Because there was little information available about
the general activities of these firms, respondents were
asked to describe their activities. The majority of
interviews were conducted with the proprietor, although,
some were conducted with store managers and salesmen.
Because of the diversity of people interviewed, they all

will be referred to as "managers."

- 21 -

Interview Composition

Forty two interviews were conducted between June and
November, 1984. The interviews included: 10 specialty fish
and seafood wholesalers, 10 specialty fish and seafood
wholesale/retailers, 8 specialty fish and seafood retailers,
6 supermarkets from 2 supermarket chains (3 from Meijer
Thrifty Acres, 3 from the Michigan division of The Kroger
Co.), 3 independent supermarkets from Spartan Stores, as
well as the Michigan distribution centers for each super-
market group. Interviews were also conducted with Tempotech
Industries, Inc. and the Michigan Department of Natural

Resources.

Michigan Fish Marketing Participants, Defined.
1) Specialty fish and seafood wholesalers (wholesalers)-
sell fish and seafood products to other firms which sell

directly to the consumer.

2) Specialty fish and seafood wholesale/retailers (whole-
sale/retailers)- sell the majority of their fish and seafood
through wholesale activities, although, they also sell fish

through their own retail operation.

3) Specialty fish and seafood retailers (retailers)- Sell

fish and seafood directly to consumers through private

retail establishments.

- 22 _

4) Supermarkets- sell fish directly to consumers through a
supermarket operation. Interviews were conducted with each
stores meat and fish department manager. Throughout the

paper they will often be referred to as "grocers."

5) Michigan distribution centers- the main warehouse and
office for each supermarket group. The main fish and
seafood buyer for the state of Michigan for each supermarket
was interviewed. Their responses were aggregated with those

given by individual supermarkets.

6) Tempotech Industries, Inc. (Tempotech)— present holder of
the Michigan salmon contract and perform such activities as

harvesting, processing, and other marketing operations.

7) Michigan Department of Natural Resources (MDNR)— state
governmental body in charge of the state's natural
resources. Responsible for the salmon contract and

harvesting requirements.

Length of Interviews and Data Aggregation

Length of the interviews ranged from 15 minutes to 3
hours, the average was about 45 minutes. Length of
interviews depended on how much time respondents had.
available to spend with the interviewer.

All information reported in this section are

aggregations of respondents opinions and perspectives. Some

individual comments have been included when they are of
importance to the study. It is useful to understand that
the information presented was derived from the interviews
and thus represent perspectives and opinions, although some

are reported as if they are facts.

The Michigan Fish Industry

 

Fish Marketing Participants

Wholesalers.- The location of fish and seafood

 

wholesalers are in three areas, Detroit and surrounding
suburbs, Grand Rapids, and along the shore of northern Lake
Michigan (Fig. 2). Most wholesalers are active in wholesale
fish markets only, although, some do handle other products
such as red meats or deli items. These firms sell fish to
restaurants, supermarkets, retail fish stores, and
institutions or industry. These wholesalers draw upon a
nationwide and Canadian network of suppliers.
Wholesale/retailers.- All firms labeled as wholesale/
retailers sold a majority of their fish through wholesale
channels, but did operate some type of retail outlet. The
percentage of wholesale activities, estimated by firm
managers, ranged from 55-85 percent of their total sales.
Retail operations of these firms generally consist of some
type of full service counter and a display area for frozen

and/or fresh fish. Several also contained small food

_ 24 _

 

 

Fig. 2. Location of Michigan fish wholesale interviews.

- 25 _

service operations for the sale of cooked fish. Most
wholesale activities involved transactions with local
restaurants. The majority of these restaurants relied
heavily on the tourist trade, thus fish sales are seasonal
and peak during summer months. Wholesale/retailers were
located in larger cities, as well as along the Great Lakes
shoreline (Fig. 3). Wholesale/retailers receive most of
their fish from Michigan wholesalers, commercial fishermen,
tribal fishermenl, and from their own commercial fishing
operations.

Retailers.- Fish and seafood retailers were located in
larger cities, as well as along the Great Lakes shoreline
(Fig. 4). These firms purchase their fish from wholesalers
in Michigan and from nearby markets. They sell to customers
generally living near their store.

Supermarkets.- The supermarkets interviewed were located
in larger cities in southern lower Michigan (Fig. 5). These
stores receive their fish directly from wholesalers and sell

to shoppers of their store.

Suppliers

Wholesalers.- Michigan wholesalers draw upon a
nationwide network of suppliers, although, most transactions
are with Boston, New York, and Chicago markets. The
remaining supplies come from the Canadian Freshwater Fish

1: Defined in Appendix C.

- 26 _

 

 

 

Fig. 3. Location of Michigan fish wholesale/retail

interviews.

- 27 -

 

 

Fig. 4. Location of Michigan retail interviews.

- 28 -

 

 

Fig. 5. Location of Michigan supermarket interviews.

- 29 -

Market Corporation, as well as from west coast and other
east coast markets. These suppliers are able to provide a
wide variety and a relatively consistent supply of fish and
seafood products.

Wholesale/retailers.- Wholesale/retailers receive most

 

of their fish from Michigan wholesalers, commercial fisher-
men, tribal fishermen, and from their own commercial fishing
operations. Wholesalers are able to provide a wide variety
and consistent supply, but are perceived as charging higher
prices for certain species. Commercial fishermen can often
offer fresh quality products at lower prices but can not
offer consistent or stable supplies. Tribal fishermen offer
the same advantages and disadvantges as commercial fishermen

but also supply Michigan lake trout (Salvelinus namaycush),

 

which is illegal for Michigan commercial fishermen to
harvest. Wholesale/retailer fishing operations have several
advantages, such as fresh quality products and control over
their own supply, but again to some extent face inconsistent
and unstable supplies.

Retailers.- The majority of retailers purchase their

 

fish from wholesalers out of Detroit, Chicago, and northern
Michigan markets. Northern Michigan wholesalers supply

mostly white fish (Coregonus clupeaformis) and lake trout.

 

Several retailers did get some fish from commercial
fishermen.

Supermarkets.- Each group is serviced by a wholesaler

 

who works directly with that supermarket group. Each

_ 3o _

individual store receives its fish directly from whole-
salers. In the past some frozen fish came from distribution
centers but this has decreased because of space, time, and

cost limitations.

Volume Moved Through Marketing Channels.

A rough estimate of yearly tonnage for each wholesaler
ranged from 200,000 pounds per year to over 8,000,000 pounds
per year, with a mean of 4,000,000 pounds per year per firm.
These estimates are very rough for several reasons. First,
estimates of a firms volume relied on the manager's estimate
and his ability to recall past sales. Second, managers may
have been skeptical about releasing their volume for
competitive reasons. Third, managers often gave wide ranges
of estimates which were often based on short run volume
figures. Because of these problems in obtaining estimates
of volume, other market levels were not asked for their

volume.

Products Handled

Types of fish.- Most firms handle a wide variety of

 

ocean, lakel, and Great Lakes2 fish as well as other
seafood. Wholesale/retailers and retailers handle more lake
and Great Lakes fish than ocean fish when compared to
wholesalers and supermarkets.

A large portion of the lake and Great Lakes fish

1_2: Defined in Appendix C.

_ 31 _

handled in Michigan is not supplied from Michigan
commercial fishermen but is produced in Canadian waters.
The main reason for this is the convience of working with
the Canadian Freshwater Fish Market Corporation. This
corporation is composed of numerous Canadian fishermen and
receives marketing and financial help from the Canadian
government. The corporation offers its customers a variety
of species, stable and often lower prices, consistent
supply, and better quality for some fish species. They can
offer these advantages because they have governmental
support and are well organized. Managers also carried
Canadian fish because they felt that consumers perceive it
to be safer, higher quality, and better tasting. There are
firms that carry only Michigan fish, but they are a small
minority.

Product Form.- Fresh and frozen fish are carried by all

 

firms, although, wholesale/retailers and retailers handle a
majority of fresh fish with few frozen items. These firms
also carry more smoked fish than any other marketing group.
The amount of low value species compared to high value
species carried for all firms depends on the demographics of
the market they are selling in. All supermarkets inter-
viewed had some type of fresh fish display area, as well as
frozen fish display, and the majority of these stores had a
fresh fish service counter. Because of the low volume of
sales for high value species, supermarkets tend to carry

more low value fish.

_ 32 _

Large scale sales of fresh fish in supermarkets has.just
started in the last few years, but has received good recep-
tion from shoppers. Supermarkets are increasing their
display space and number of species. Some grocers perceived
restaurants as being very important to their sales because
frequently the first time consumers try fish or a new fish

species it is at a restaurant.

Processing

Wholesalers and Supermarkets.- Some operations performed

 

during processsing are; scaling, skinning, fileting, and
steaking. All wholesalers and supermarkets are involved in
some type of processing, although, the majority do very
little. The amount of processing that is needed often
depends on the species of fish, with some species being
processed by the supplier to save on transportation cost.
Both wholesalers and supermarkets avoid processing because
of high added costs to the product, since processing for
both market groups is performed by union employees who
receive relatively high rates of pay.

As a consequence most supermarkets want their fish to be
processed before delivery to their stores. Almost all their
fish is sold as fillets, although, a small amount is sold as
steaks, or headed and gutted (H&G). Some supermarkets do
buy bulk fish in the round if they feel they can sell the
product at a reduced price or as a sale item. In this case,

stores will do their own processing and packaging as needed.

_ 33 _

One supermarket group received its fish from its wholesaler
not only processed but also packaged, labeled, and priced.
The only thing the stores had to do was place the product in
the display case.

Wholesale/retailers and Retailers.- There is a

 

difference between the amount of processing performed by
northern and southern wholesale/retailers and retailers.
Northern firms do all their own processing because of the
larger amount of fish they get from commercial and tribal
fishermen. The southern firms get most of their fish from

wholesalers, and either buy preprocessed fish or sell it as

H&G.

Storage

Wholesalers store their fish in large walk-in
refrigerators and freezers. The fresh fish is stored on ice
in cardboard boxes, which are placed in refrigerators. Most
fish handled by wholesale/retailers are stored in a similar
manner, except that to be sold on retail markets. These
fish are placed in the display case on a bed of ice during
the day and stored on ice in the refrigerator during the
night. This same method of storage is used by most
supermarkets and retailers. Managers reported that ice not
only helped keep fish moist and cold but was also attractive
to consumers and helped reduce odors.

The majority of supermarkets displayed their fresh fish

in the same display case as red meats. The fresh fish is

-34..

often stacked in piles within the display, these piles
needing constant quality checks. Almost half of these
display cases were kept at 300 F with the remaining kept at

temperatures ranging from 28-340 F.

Consumers

Composition.- Present day fish buyers are of basicly

 

three groups. One group is young professionals with high
income and higher levels of formal education. Another group
is either oriental or has some oriental heritage. The third
group of consumers is composed of health and diet conscience
consumers who buy fish because it is good for them.

Buying Behavior.- Managers perceived that for most

 

consumers, fish are bought on impulse and is not a normal
part of their market basket. They feel that fish are
usually not ranked as high as red meats in terms of consumer
preference and is infrequently placed on consumers shopping
lists. They also felt, pound for pound fish are more
expensive than red meats and that consumers may perceive it
as a luxury item. Similarily, after a bad experience
consumers will not return to fish as readily as they would
with red meats.

Knowledge.— At all marketing levels managers thought

 

that consumers have a very low knowledge about fish.~
Consumers with either higher incomes or higher experience
levels from fishing or long term fish purchasing have a

higher knowledge about fish species, handling, and cooking.

_ 35 _

It is interesting to note that only three managers mentioned
that it was their role to educate consumers. A large
majority of managers who sell to restaurants felt that the
chefs also lack knowledge of fish species and proper
handling techniques.

Consumer Questions.- Most consumers questions concern

 

handling , preparation and cooking of the product. Origin
of the catch and time of catch are also asked frequently.
Managers thought that origins of the catch had a lot to do
with consumer perceptions of the product. Managers felt
that consumers perceive Lake Superior fish to be better than
other Great Lakes fish. Although, few questions are asked
about the taste of the product or about contaminants, there
are consumers who show great interest in these topics.
Several managers thought that consumers infrequently asked
about contaminants because they feel the product must be
safe to be on the market. However, some managers felt that
consumers are tired of hearing about contaminants and no

longer worried about this issue.

Promotion

Advertising.— Some wholesalers give buyers promotional

 

items to use in their advertising campaign, but most leave
promotional work and advertising up to retailers, super-
markets and restaurants.

Wholesale/retailers and retailers rely heavily on word

of mouth to promote their store. These firms place ads in

the telephone book yellow pages, and some place infrequent
advertisements in local newspapers.

Supermarkets advertise fish products through store ad
sheets. These sheets are placed in store weekly newspaper
ads and generally feature two fish items, usually at reduced
prices.

In-store Promotion.— Wholesale/retailers, retailers, and

 

supermarkets rely heavily on in-store promotion activities
to help increase fish sales. The following are typical of

methods used:

1) Special decorations to promote a fish and seafood

atomsphere.

2) Fish recipes to inform shoppers of different ways to

prepare fish.

3) Free samples which allow consumers to taste different

species.

4) Daily specials to persuade consumers to try different

species.

5) Special labeling such as "grain fed fish" or "Canadian"

to inform consumers of special traits of the product.

Distribution
Wholesalers.- Distribution from suppliers to wholesalers
is either by truck or aircraft, with airfreight used most

frequently. Most truck and aircraft fish carriers

_ 37 _

specialize in fish and seafood, and regulate temperature for
these specific products. Wholesalers rely on quick delivery
from producers and suppliers to maintain product quality.
Problems in getting supplies due to transportation
interruptions, such as mechanical breakdowns or delayed
flights, or changes in availability often cause shortages or
delays in product supplies.

Delivery from wholesalers to wholesale/retailers,
retailers, and supermarkets is by refrigerated truck. Fish
are packed on ice, in either waxed cardboard boxes or
plastic buckets. The majority of deliveries are made twice
a week. Again, buyers expect fast delivery to insure fresh
quality products.

Other Market Levels.- Fish purchased by wholesale/
retailers from commercial fishermen or northern Michigan
wholesalers are delivered by a private fish transportation
firm. This firm serves as the transportation mode only,
with the fish being sold directly to buyers. Fish are
placed in waxed cardboard boxes and covered with ice before
being placed in refrigerated trucks. Products, mainly white
fish and lake trout, are picked up at numerous fishing ports
in Michigan and are delivered to Michigan, Chicago, and New
York markets. Fish from tribal fishermen, small scale
commercial fishermen, and integrated fishing operations1 are
delivered to wholesale/retailers and wholesalers by boat or
truck.

1: Defined in Appendix C.

_ 3g _

Markets

Wholesalers.- Wholesalers tend to differentiate into

 

several different markets. These markets are segregated by
their location or market activity. Wholesalers tend to sell
in diffferent areas because of territorial holdings. The
other differential is the type of market purchasing the
product. The most common markets sold to are; restaurants,
chain supermarkets, fish retail stores, and insitutions or
industry. The first three markets purchase the majority of
fish, with the latter purchasing fish infrequently and a
relatively small portion.

Other Market Levels.— Wholesale/retailers sell wholesale

 

to local restaurants and retail to the general public.
Retailers and supermarkets sell to those consumers who live

near their store.

Sales Trends

Supermarket and retail sales decrease in summer months
for several reasons. First, during the summer months
consumers prefer to cook outdoors and do not perceive fish
as a barbeque item. Second, during summer, consumers change
their food preference to light and quick food products.
Lastly, during warm weather more consumers are active in
catching their own fish.

During spawning seasons of local fish species (ie.
rainbow smelt (Osmerus mordax) and salmon) there are

increased sales for these specific species. One factor for

this increase may be increased publicity by the news media
covering the run. Managers also get sales from sportsmen
who after trying to catch these species end up empty handed.
Lastly, with increased publicity on spawning and fishing,
consumers are more aware of available supplies, and may
perceive products in stores as fresher during this time

period.

Market Competition

Fish wholesalers interviewed believe there are about
10-12 large wholesalers in Michigan. Because of small
numbers of wholesalers and large numbers of buyers, these
respondents felt that the market is very competitive
(rivales), and that only a few cents a pound can make a
difference in obtaining a sale. Although, since they are
all members of the Michigan Fish Producers Association
(MFPA) and deal with the same employee union, wholesalers
also believe they are part of a closely knit group.

Some wholesale/retailers and retailers felt that
wholesalers had a tight hold on the market, and that few
alternatives are available to buyers if unsatisfied with
the service received. The main reasons for dissatisfaction
is delivery of low quality products and high prices. One
alternative is to send the product back, but firm managers
thought this was only a short term solution. The second
alternative is to change to a new wholesaler. Managers

perceived that this alternative is limited for two reasons.

_ 40 _

First, because there are so few wholesalers in the state,
one has relatively little choice as to a new supplier.
Secondly, managers thought that by repetitive changes they
could force themselves into a situation where, either
wholesalers would not service their firm or would charge

higher prices because of their unstable purchases.

Fish Marketing Concerns

Storage temperatures, shelflife, and product quality are
all major concerns of managers. The majority of managers
are also concerned with methods used for giving fish species
their market names, and the lack of regulations on naming
products. Because of inconsistent market names, buyers feel
it is difficult to perceive the species or quality of the
product they purchase. Also, for most species there are no
quality grading systems to inform buyers of the quality.
These situations do influence some sellers and producers to

substitute lower quality for higher quality products.

Marketing Problems

 

The following sections will review two sets of problems
facing the industry. The first set of problems are general
problems faced when marketing fish. The second set consists

of problems faced with the marketing of Michigan fish.

_ 41 -

Fish Marketing Problems

A large problem facing the fish industry is decreasing
supplies and increasing costs of fish because of reduction
in availability and restrictive government regulations.
Another major problem is the lack of good promotion and
public relations work. Some managers wanted the industry to
place more emphasis on educating publics as well as
educating managers involved in the fish industry.
Inconsistent supplies of fish because of regulations,
transportation problems, or inconsistent catch also has a
large effect on the industry.

Those firms selling to restaurants are also faced with
difficulties of delivering a portion controlled product,
which is begining to be requested by buyers. This increases
the amount of handling, waste, and price. Because of
portion control, sellers are also having problems selling
fish which are smaller than those requested by buyers.

The main problems faced by the supermarkets are low
product mark-ups and returns on fresh fish. Quality control
problems are also faced with the placement of fish in the
same display case as red meats, because of the diffferent

temperatures needed for the two products.

Problems in Marketing Michigan Fish
Different market participants gave a wide range of
responses when asked about problems faced when handling

Michigan fish. The largest complaint by wholesalers is the

_ 42 _

large amount of paper work required by the MDNR when
handling Michigan fish.

Wholesale/retailers.- Wholesale/retailers deal with a
large portion of Michigan fish sold in Michigan. Because of
their large involvement with Michigan fish they responded

with the most problems, and perceived four basic problems;

1) The contaminate issue
2) The conflict between tribal and sports fishermen
3) Promotion and marketing

4) The MDNR

They thought that effects of the contamination issue, on
shoppers purchases, were greatly magnified by the news
media. They perceive that the media is publishing biased
articles which they (the fish industry) have little power to
challenge. Most thought that effects of the publicity were
short term and that markets typically return to "normal"
several weeks after a story breaks. Several respondents said
that the contaminant issue was actually a political
situation, since contaminant levels are used to regulate the
commercial fishery but not the sports fishery.

The tribal-sportsmen conflict caused by tribal treaty
rights have caused much controversy over allocations of
Michigan's fish supply. Not only has this issue effected
supplies of Michigan fish available but has also increased

conflicts between commercial and sports use of fishery

_ 43 _

resources which managers perceive as effecting consumer
purchases.

Most wholesale/retailers thought the Michigan fish
industry needed better consistency of supply, promotion, and
marketing efforts. They feel this would help create a more
consistent and stable supply and help control varying
prices.

Managers are also concerned with the supply and demand
for Michigan fish and other fish species. They do not want
to improve or establish a market for a species if the supply
can not meet future demands. Managers are also concerned
with the supply and demand of a product because of their
effect on prices and sale levels.

Respondents also thought the MDNR lacked support and
interest in the Michigan commercial fishery. The wholesale/
retailers would like to see fewer restrictions on fishing
areas and are interested in limiting catches if they could
get a longer season. The majority of respondents felt that
the MDNR needs better public relations as well as a better
explanation of their future plans.

Retailers.- Retailers were also concerned with problems
facing the Michigan fish industry such as media effects with
contaminants and sportsmen versus commercial fishery
conflicts. Several managers mentioned the MDNR's poor

public relations as a subsantial problem in the industry.

-44-

The Northern Michigan Fish Industry

 

Because of special concerns and activities of those
involved in the industry in the northern part of Michigan's
Lower Peninsula and the Upper Peninsula, it is important to
take a special look at this group.

Sale Channels.- These firms rely on Michigan whitefish

 

and lake trout for a large part of their sales. Most local
sales are connected with the tourist trade either directly
or indirectly. A large portion of fish caught by northern
fishermen are sold to wholesalers and wholesale/ retailers
which in turn sell most of their product to markets in
Chicago, Detroit, and New York.

MarketinggPosition.- The nature of the market is such

 

that when fish are available, fishermen will increase their
fishing effort which typically creates a saturated market.
These fishermen feel that they have little choice of who to
sell to because of the small number of buyers. These buyers
all typically offer similar prices which move inversely with
supply.

Producers Position.- Because of the small number of
buyers and undifferentiated products they offer, producers
have very little marketing power. This loss of marketing
power is a main concern of suppliers and producers.
Although, most producers and suppliers in northern Michigan
are members of the MFPA, a form of cooperative to increase

marketing power, this organization does not appear to be a

_ 45 _

factor in terms of stronger marketing. Presently the MFPA
has mainly functioned as lobbyist for the organization and
has been most functional during times of crisis. One
reason for the small marketing role played by the MFPA is
that its members, producers and wholesalers, are very
individualistic and do not function well as a group. This
lack of cooperation interferes with group plans to control
supply and thus influence prices.

Those firms operating in the northern parts of the
state seem to be displeased with the activities of MDNR. A
majority of them feel that the MDNR can not be trusted and
are trying to eliminate their industry through rules and

regulations.

Future Outlook

 

Respondents from the entire industry look forward to
increasing sales in the future. Wholesalers and super-
markets seem to be the most optimistic, both groups plan on
increasing their product lines in the future. Most managers
thought that future fish markets will be good and that fresh

fish service counters will be the new way of selling fish.

_ 46 _

CHAPTER IV

RESULTS: THE MICHIGAN SALMON MARKET

This chapter looks at respondents marketing activities,
perceptions, and opinions on salmon with emphasis on
Michigan salmon. The last half of the chapter will reveiw

responses by Tempotech and the MDNR.

The Michigan Salmon Market

 

Present Handling of West Coast Salmon.

Most wholesale/retailers and retailers and over half of
the supermarkets carried salmon, most of which were west
coast salmon. Supermarkets mainly carried low value species
and did not carry salmon because of its high price. Most
wholesalers carried bright-silver grade west coast salmon,
mainly from Alaska.

All market levels thought that west coast salmon sold
well and reported good demand for the product. Wholesalers
reported that salmon sales are a small percentage of their
total sales, estimated as being less than 2% of the total
sales. This estimate faces the same restrictions as the
estimates of volume made earlier.

During winter months west coast salmon is not readily
available and wholesalers carry Norwegian salmon because of

its consistent supply. This Atlantic salmon (Salmo salar)

 

-47-

is expensive and most is sold to "white tablecloth"
restaurants.

Fresh west coast salmon is flown to wholesalers
approximately twice a week as long as the supply is
available. Supermarkets tend to buy preprocessed salmon,
but occasionally buy some H&G. Supermarkets sell smaller
size fish as H&G, reporting that consumers usually buy
smaller size because total costs are less. Large H&G salmon
obtained by supermarkets are cut into steaks, while medium
size fish are cut into fillets. Retailers handle west coast

salmon in a similar manner, although, retailers carry more

H&G fish.

Past and Present Sales of Michigan Salmon.

£g§£.- Several firms carried Michigan salmon during the
early 1970's. This salmon was sold as fresh salmon steaks
and managers perceived average sales. These sales were
before discovery of contaminant problems and managers
perceived good future markets. When contaminants were found
in these fish, products were taken off markets for safety
reasons.

Present.- At present, two retail firms are selling
Michigan salmon supplied by Tempotech. Firm managers report
that sales of these fish have been good. However, they are
unsure of sale levels in the future. These salmon are being
sold at low prices (e.g. 60 cents per pound) and this is

likely the reason shoppers have been buying the product.

_ 4g _

Managers could not say if shoppers have been satisfied with
their purchases or if products would continue to sell.
Several retail stores also carried Michigan salmon which
have been caught by tribal fishermen in the Great Lakes.
Managers feel that these fish are of good quality, and sells
for relatively high prices (e.g. 2.99 dollars per pound).
Managers perceived good sales when these salmon are
available, and that customers are highly satisfied with

their purchases.

Michigan Salmon Samples.

Fish industry managers were asked how Michigan salmon
should be handled if sold in Michigan markets. Managers
were also asked to look at Michigan salmon samples which
consisted of frozen H&G salmon of the following grades;
bright, semi-bright, dark, and hatchery; and frozen salmon
smoked fillets, frozen lox, salmon smokestick, and salmon
jerky. Smoked salmon fillets had been dyed to give them a
bright red color and were sealed in air tight packages.
Salmon smokesticks and jerky were both processed in Los
Angeles, California from Michigan salmon. The smokestick
was in an air tight package and the jerky was in a sealed
package with a decorative label. Managers were asked to
look at the products to get their opinion as well as
perspectives on how to utilize different grades and their

market potential.

-49-

Managers showed very little interest in looking at
frozen samples. Either they were not interested in the
products or did not want to take the time. Those who did
look at the samples had very little to say about the
products, especially lower grades. Managers did show
interest in the salmon smokestick and jerky. They also
readily gave their opinion on Michigan salmon even if they

did not see the samples.

Michigan Salmon Market Form.

Fresh/Frozen.- Managers thought that high grade

 

Michigan salmon could be sold as a fresh product, with the
majority processed into steaks and fillets, and a small
amount sold in the round or H&G. Those fish which were not
good enough to sell as fresh, but still had good quality
could be placed on frozen markets. Frozen Michigan salmon
should be processed by suppliers into steaks and fillets.
Managers had very little to say about lower quality fish.
Comments such as "It should be used as catfood" or "used as
fertilizer" were often made about this quality level. One
individual did think that low quality Michigan salmon could
be used in canned salmon, salmon patties, or as salmon
nuggets similar to chicken nuggets.

Cured Products.- The majority of fish managers thought

 

that Michigan salmon would do well on the market as a smoked
product. Those who looked at smoked fillets and lox thought

they were highly marketable products. Several responded

- 50 -

that these products would hide the identity of lower quality
fish and still be marketable. Wholesalers and grocers
perceived good demand and consumer acceptance for smoked
salmon.

The jerky and smokestick both met positive comments from
all respondents. They were impressed with these products,
their packaging, and those who tried them were impressed
with their taste. Managers thought both products would sell
well, but noted that markets would be bars, taverns, and one
stop convenience stores with little volume sold through

conventional fish markets.

Needs to Handle Michigan Salmon.

State Involvement.- Managers were asked to report what

 

they perceived as their needs to handle Michigan salmon.
The major need of managers is to have the state become
active in the Michigan fish industry placing emphasis on
Michigan salmon. The following are activities they would

like the state to perform.

1) Research publications and news releases on the quality of

the Great Lakes and on Michigan fish.

2) Data to sporting publics on planting and harvest to help

decrease sportsmen pressure.

3) Improve regulations and enforcement of illegal fish sales

by sportsmen.

- 51 -

4) Accurate quotas on the harvest of Michigan fish to

guarantee future supplies.

5) Educate the public about commercial fishing, Michigan
fish; handling, preparation, and cooking of fish; present

and future management plans.

6) Decrease the use of toxic level checks at wholesale

levels.

7) Establish a marketing group to help promote and market

Michigan fish.

Supply.- To handle Michigan salmon, managers said they
need a semi-consistent supply, and insurance from producers
that they will receive a quality product. This is especialy
important for the sale of fresh salmon when it is available.
Fresh products will also need good distribution channels so
it can be in stores 2-3 days after harvest. Several whole-
salers mentioned that they wanted exclusive rights to sales
in Michigan, if they became involved with Michigan salmon.
Some managers said they would need a high quality product at
a reasonable price before they would handle it, but they
also said if price were too low consumers would judge the

product as low in quality.

Product Name
Interviewees were also asked if they thought naming the

product Michigan salmon or Great Lakes salmon would make a

- 52 -

difference in marketability. The majority of managers said
that the product should be named Great Lakes salmon for the
following reasons. They thought that the name Great Lakes
had less connotation to Michigan contaminant problems.
Secondly, if the product is sold in other Great Lake states,
the name Great Lakes would receive better consumer
acceptance. Lastly, since the product is coming from
several of the Great Lakes, it would be more appropriate to

call it Great Lakes salmon.

Labeling and a Seal of Approval

Managers were asked what they thought some type of
special labeling or seal of approval would do for the
product. The majority perceived labeling as helpful to
consumers, since it would give consumers a way to identify
products. All managers felt that a seal of approval would
be beneficial, especially if backed by some governmental

agency, since this would increase consumer acceptance.

Packaging

Several managers made comments that Michigan salmon
should be sold in some type of sealed package. If the
product is to be sold in a package, managers said it would
have to be packaged in an appealing fashion with promotion
items such as recipes, handling instructions, and a creative

description of the product.

-53-

Barriers to Marketing Michigan Salmon in Michigan.
The main barriers to marketing Michigan salmon in

Michigan, given by Michigan fish firm managers were;

1) Low quality of Michigan salmon.
2) Poor promotion and public relations of Michigan salmon.
3) Poor perceptions of the harvest contract.

4) The contaminant issue.

Quality.- The majority of managers thought that Michigan
salmon are lower in quality when compared to west coast
salmon. They perceive Michigan salmon to have less color
and taste than west coast species. This perception was
reflected by the fact that excess Michigan salmon are caught
at weirs and are already spent. Quality of lake caught
Michigan salmon was referred to as being very good, but
still not as good as west coast salmon. Some managers did
think that Michigan salmon has above average quality when
compared to other fish species.

Promotion and Public Relations.- Poor promotion and

 

public relations of the commercial use of Michigan salmon
was perceived as one of the marketing barriers. Some
managers did not know that it was legal to sell Michigan
salmon and available on the market. The poor public
relations in the past over allocation of the resource and
conflicts at weirs have caused many problems. Managers are
concerned that commercial allocation of salmon have caused

conflicts between sport and commercial uses of the product.

_ 54 -

Several managers said they would be afraid to handle
Michigan salmon because they thought they may face boycotts
or vandalism by local sportsmen.

Harvest Contract.- Some wholesalers and wholesale/

 

retailers question the bidding contract process. They feel
that transactions may be unethical or questionable and
several accusations were made about the bidding. Some
managers feel they should have been sent notification of the
bidding. They are not sure if they would have bid or met
the MDNR's bidding requirements, but feel they should have
had opportunity to try. They also felt that if the bidding
was done correctly, there would have been more than one firm
placing a bid. Lastly, several managers thought that the
upper echelon of the MDNR was influenced by Tempotech either
by financial or political means, although, this is only a
perception.

Conflicts.- Conflicts at the weirs caused by upset
sportsmen and accusations of harvesting recreational species
has created poor publicity for the harvest. Outraged
sportsmen who felt that they were being cheated of their
fish, which they supposedly paid for, verbally and
physically opposed the harvest. There are also groups who
have appealed to the MDNR and the media with accusations
that Tempotech is harvesting recreational species (ie. brown

trout (Salmo trutta) and steelhead (Salmo gairdneri) which

 

 

are to be released and allowed to continue up stream.

- 55 -

Contaminant Issue.- Another barrier may be the

 

contaminants found in Michigan salmon. Few managers
perceived this as a large problem, but greatly magnified by
the way the media handled the issue. Managers were under
the perception that the media's desire for sensationalism
had often blown issues out of proportion, although, it was
their perception that consumers would overlook this issue
after some time has passed since the last publication.
Other Barriers.- Other barriers mentioned by managers
were; competition between Michigan salmon and west coast
salmon, competition with other fish species in a similar
price range, poor consumer acceptance, and non-consistent
supply. Managers did not perceive these as large barriers,
but when added to other barriers they could greatly affect

the marketability of Michigan salmon.

Great Lakes Fishery

The majority of managers interviewed thought that
Michigan salmon should be harvested in the Great lakes
rather than at the weirs. They feel this would yield better
quality, longer and more consistent supply, and would be

beneficial to the commercial fishermen's economic status.

Future Michigan Salmon Market.
When asked about the possibilities of carrying Michigan
salmon, managers gave a wide range of responses. Several

managers said they would be interested in carrying Michigan

- 56 -

salmon and feel these salmon would do well in Michigan if a
large supply is available at reasonable prices. However,
managers were not sure if Michigan salmon would be
marketable even at lower prices.

Several managers thought Michigan salmon would do well
in world wide markets as a low cost protein source for less
developed countries. Several also felt that Michigan salmon
may be marketable in nation wide U.S markets if the supply

of west coast salmon decreased.

Tempotech's Perspectives and Opinions.

 

To be able to get an accurate representation of the
perceptions and opinions of marketing Michigan salmon, it is
necessary to get the view point of the firm currently
marketing the product. The current holder of the MDNR
harvest contract is Tempotech Industries, Inc., and is in
charge of harvesting, processing, and marketing Michigan
salmon. This firm was interviewed to examine their current
handling of the product, and to get their opinions on the
marketing of Michigan salmon. This section will review
activities performed by Tempotech, as well as their

perspectives and opinions on Michigan markets.

- 57 -

Harvest

The Process.— During 1983 weirs were placed in five

 

streams (Fig. 6) to obstruct salmon migration movements so
they could be assembled for harvest. Fish are moved through
several raceways, and are assembled into holding ponds where
they are held until harvest.

When ready for harvest, fish are moved into another
raceway where a mechanical fish crowder is used to
concentrate them. Once concentrated, fish are removed by a
mechanical basket and dumped on to a sorting table. While
on this table MDNR biologists take biological data and fish
are sorted by species. Non-harvested fish are released back
into the stream and are allowed to continue up-stream.

Handling and Cost.- Fish are then placed in large wooden

 

totes and are covered with ice. When the totes are full
they are moved into the trailer of a waiting semi-truck,
until the trailer is full. These trucks then move the fish
to the processing plant in Hart, Michigan (Fig. 6).

The cost of operating the harvest site, as well as all
up-keep costs are covered by Tempotech. These costs were
formly paid by the MDNR. Similarly, MDNR personnel formely
operated the harvest sites, which is now performed by
Tempotech. These are some of the benefits that the MDNR has

obtained with this new contract.

- 5g -

 

0 Harvest site

‘ Processing plant

 

 

Fig. 6. Location of excess Michigan salmon harvest sites

and prcessing plant, 1983.

- 59 -

Processing

Upon delivery at the processing plant, fish are put on
the processing line as soon as possible. Fish are handled
in various manners depending on the way they are sold,
either H&G, fillets, steaks, or left in the round. The
following is a description of the steps at the processing
plant to produce frozen chinook fillets and rounds.

Totes full of fish and ice are dumped into a holding
area at the head of the line. The fish are spread on to a
sorting table as soon as possible. The fish are then sorted
into females and males, with each sex moved to a different
line. Males go through 8 steps before they are placed in

freezers (Fig. 7).

Processing of Male Salmon

 

1) Slabbed- Fillets are cut from the body.

2) Headed - The head is cut from the carcass.

3) Skinned- The skin is removed from the fillet.

4) Cleaned- The fillet is scrapped clean and the pinbones
are removed.

5) Washed - The fillet is rinsed in water.

6) Bagged - The fillet is placed in an indiviual plastic
bag.

7) Shelved- The bagged fillet is placed on a metal shelving
unit.

8) Freeze - The shelving unit is moved to the short term

freezer.

-60-

 

 

Golding)

Sorting

 

E99
Processing

 

 

 

 

Males Females
CSIabbed Body CID

 

 

a

 

 

J i
C Headed) €99 remog
' 1

 

 

 

 

 

(Cleaned) Gidney Cut

1 i
Washed (Washed)

l J
CBEOECD (Bagfed)
C ShelverD (Shelveg

\Greezer D/

Fig. 7. Processing steps performed by Tempotech.

 

 

 

 

 

 

-61-

 

An explanation of movement of the product from the short
term freezer will be given after going through the
processing of females. It is interesting to note that both
heads and skins will be stored and later sold. The heads
are sold to southern U.S markets where they are used as crab
bait. The skins are sold to European markets were they are

processed to be used as a type of leather.

Processing of Female Salmon.- Females are moved into

 

their own processing line were they go through 9 steps

before reaching the freezer.

1) Body Cut- A cut is made so to have access to the eggs.
2) Eggs -The eggs are removed to be processed later.
3) Gilled - The gills are removed from the fish.

4) Gutted - The viscera is removed from the fish.

5) Kidney Cut- The kidney sack is cut open.

6) Cleaned - The exterior and body cavity are cleaned.

7) Washed - The fish is rinsed in water.

8) Shelved - The fish is placed on a metal shelving unit.
9) Freeze-The shelving unit is moved to the short term

freezer.

Egg Processing.- Upon arrival to the egg processing

 

room, eggs are sorted either as low quality for fishing
bait, or high quality for human consumption. Bait eggs are

placed in five gallon buckets and stored until they are

- 62 -

sold. Eggs for human consumption are either processed into
ikura, (salmon roe which has been seperated from the sack
during processing) or sujiko (salmon roe processed in the
sack). Both are then placed in agitators were they are
preserved and dyed. Eggs are allowed to dry to a specific
degree and then packaged. Since most of these eggs will go
to Japanese markets, Japanese technicians are at the
processing plant to observe and perform some of the

processing activities (e.g. sorting and packaging).

Storage

After sufficient freezing time, fish are removed from
the short term freezer, graded, and placed in boxes. Fish
are graded on skin and flesh color into 4 grades, bright,
semi-bright, dark, and hatchery. Some fish may be given an
ice glaze before being boxed. Approximately 100 pounds of
fish are placed in each cardboard box which is bound with
metal binding tape, labeled, and then moved to a long term

freezer for storage.

Present Markets.

The majority of these fish are exported out of
Michigan. Most are sold to a California broker, although,
some will go to other national markets. However, some
frozen and fresh salmon are being sold to retailers in
Michigan. These retailers are handling a small amount of

the total catch and their market results were covered

- 63 -

earlier. Bait eggs are sold to a bait manufacturer in
Wisconsin. Ikura and sujiko are sold directly to Japanese

markets.

Product Form

Fresh/Frozen.- The advantages and disadvantages of

 

different ways to process the product were discussed.
Tempotech is selling some fresh and frozen salmon directly
to retailers in Michigan, although, they would rather be
going through wholesalers. They have tried going through
wholesalers but have not obtained agreeable terms on prices.
The big problem in selling fresh and frozen salmon is the
low quality of the majority of the harvest.

Cured.- Salmon jerky and smokestick are perceived by
Tempotech as good ways to process Michigan salmon since
lower quality fish may be used, and the identity of the
product may no longer be an issue. The problem here is the
difficulty of profitably marketing the products. Jerky and
other similar products are handled by several large
distributors who purchase their own rack space and perform
rack jobber activities. For Michigan salmon products to go
on the market, they will have to go through one of these
distributors.

The entrance into the smoked salmon market also has
several difficulties. Smoked salmon is best cured from
salmon with high fat content which creates a problem since

weir caught salmon are very lean. Secondly, smoked salmon

- 64 -

markets consist of numerous small scale smokers which
creates a very competitive market.

Canned.— Because of large inventories of canned west
coast salmon, the canned salmon market is the least likely
way to market Michigan salmon. These large inventories have
been caused by several good harvest years and decreased
demand for canned salmon because of the botulism scare faced

several years ago.

Seal of Approval

Tempotech thought that government backed seal of
approvals would be very beneficial to the marketing of
Michigan salmon in Michigan. However, they also felt the

state would not take the risk of performing this function.

Perspectives

Interviews were conducted with Tempotech to see what
marketing problems they feel they face and to see if there
are differences between Tempotech's perspectives and
perspectives of other market levels in the Michigan fish
industry.

Quality.- Tempotech views low quality, contaminants, and
market saturation as the main marketing issues. Because of
the low quality of weir caught salmon, compared to west
coast salmon, Tempotech feels that they receive poor
consumer acceptance of the product in its natural form.

Tempotech perceives that they will have to change the

- 65 -

products form, thus minimizing the negative impacts of its
identity and origin. At this time Tempotech is looking into
several processes which can hide the identity of the
product, such as salmon jerky and smokestick, as well as
fish nuggets and fish patties.

Contaminants.- Contaminants not only affect consumers

 

perceptions of salmon, but will also affect the way
Tempotech handles the product. If these fish are above
government contaminant levels they cannot be sold for human
consumption, pet food or fertilizer. If the fish are above
contaminant levels, by contract, Tempotech still has to
harvest the fish as well as transport them to a disposal
site. Not only are they prohibited from selling the
product, but they must also incur the cost of disposal.

Market Saturation.- Tempotech perceives that presently

 

there is a saturation of salmon on the Michigan market.
Norwegian, Alaskan, and Canadian salmon, on the market,

leaves little room for the introduction of Michigan salmon.

Great Lakes Fishery

Tempotech was asked what effects moving the harvest from
the weirs to the Great Lakes would have on their firm. They
felt that this change would have little effect on their
operation. If this were to happen, Tempotech would perform

as assembler, processor, and distributor of the product.

-66...

MDNR Perspectives and Opinions

 

The MDNR fisheries division staff was interviewed
because of their direct relationship with the product. The
MDNR works with Tempotech in regards to harvest operations
and restrictions, purchasing price of the resource, as well
as having an interest in marketing procedures. They were
also responsible for requiring Tempotech to conduct a
Michigan marketing study. Another reason for interviewing
them was the interest shown by Michigan fish marketing
participants in state participation in the fish industry.
The interview was also used to check for discrepancies of
perceptions between Tempotech, the fish industry, and the
MDNR.

The Marketing Study.- The MDNR placed emphasis on a
Michigan marketing study for several reasons. First, a
Michigan marketing study was part of the traditional salmon
plan as far back as 1968, most major segments of this plan
have been carried out except the marketing segment. The
first firm to purchase the contract was a strong supporter
of the possibilities of Michigan salmon, and impressed upon
the MDNR the importance of a Michigan marketing study.
Secondly, the MDNR believes Michigan should derive benefits
from marketing salmon in several ways. Positive economic
impact should occur if the amount of fish exported is
decreased and more is channeled through Michigan's fish

industry. Similarily, increasing demand in Michigan may

- 67 -

allow the MDNR to gain more economic benefits from the sale
of the resource. Lastly, the MDNR has great pride in
Michigan salmon because of the programs major success, and
would like people to observe and purchase Michigan salmon in

Michigan markets.

Harvest Problems

One of the major problems the MDNR has had to face with
their salmon program has been public criticism of the
harvest. The public perceives that these fish are worth
more than the present weir selling price, and have been
complaining to the MDNR about low prices. Also some publics
have confused the salmon harvest with the snagging issue and
have forwarded accusations that the salmon harvest is a step

to support the MDNR's opposition to salmon snagging.

Product Form

The MDNR thought that Michigan salmon should be sold in
the form that most closely related it with the natural form
of the fish. They would prefer that a high proportion be
sold as fillets, steaks, or H&G and less highly processed
items such as jerky or fish patties. It is their opinion
that relatively high quality salmon not be processed and
that lower quality products still be used for human

consumption.

- 68 -

Market Barriers

The number one marketing barrier perceived by the MDNR
was the contaminant problem. They feel on an international
scale that the second barrier would be the perception of
poor product quality, although, they thought that the
contaminant barrier was much more significant than the
quality barrier. They feel that a part of the poor quality
barrier is caused by public confusion and not the actual

quality.

Marketing Role

The MDNR was asked what role they felt they should play
in the marketing of Michigan salmon. They felt that in a
perfect world it would be nice to assist in the marketing,
but in view of the reality of the MDNR's present position,
they will have very little involvement in any of the
marketing procedures. They feel it is their role to manage
the biological system, and that the industry must perform
their own marketing operations. As an alternative, the
Michigan Department of Commerce or Department of Agriculture

may be influenced to perform these activities.

State involvement
The MDNR was also asked how they perceived their role
towards the list of activities, given by Michigan fish

marketing participants, that the state should perform.

- 69 -

Public Information.- Present research results and news

 

releases on quality of the Great Lakes and on Michigan fish
are being presented to the public by the news media.
However, the MDNR perceives these stories as being generally
sensational and negative. The MDNR has several problems
when trying to inform the public of the safety of the Great
Lakes and Michigan fish. At present it is hard to tell what
are the long term effects of eating fish from the Great
Lakes, so how confident can the MDNR be in informing the
public of its safety. Also, because of differing
philosophies between the MDNR and the Michigan Health
Department, endorsement of fish safety by the MDNR may not
be allowed by the Health Department or may cause conflicts
between the two agencies.

Sportsmen Publics.- Both data to sporting publics on

 

plantings and harvest to help reduce sportsmen criticism,
and improved regulations and enforcement against illegal
fish sales by sportsmen, are areas that the MDNR feels are
deficiencies of their department. Better public relations
and news releases for the salmon management plan are already
scheduled for next year, and should be beneficial. The
enforcement of illegal fish sales is deficient for several
reasons. First, because of financial limitations and lack
of man power, efforts to control this problem have been
restricted. Second, the MDNR prefers to concentrate its
efforts to apprehending illegal fish buyers instead of

sellers, although, little progress has been achieved. They

- 7o -

perceive this method as more efficient than concentrating on
numerous sellers.

Harvest Quotas.- Respondents wanted the state to set
accurate quotas on the harvest of Michigan fish to guarantee
future supplies. The MDNR feels that at this time the
Michigan commercial fishery is one of the most regulated in
the nation and questions the need for more regulations.
Present regulations are designed to insure the future of the
fishery resource.

Educating the Public.— Several difficulties face the
MDNR when asked to educate the public. The first is how to
educate the public. What methods can be used and can
efforts realy affect the publics knowledge? Second, is it
the MDNR's role to educate the public on marketing aspects
of the resource? Is it their role to educate the public
about fish quality, handling, cooking and preparation?
Lastly, performing activities such as educating the public
can be expensive. Currently, the National Sea Grant program
is performing work on this topic.

Toxic Checks.- Most wholesalers wanted a decrease in the
use of toxic checks at wholesale levels. These checks are
not performed by the MDNR but by the Food and Drug
Administration (FDA). They check at wholesale levels
because of the small number of wholesalers which reduces the
expense, time, and work load necessary to check the fish.
Michigan salmon are also checked at wholesale levels even

though the fish have been checked at the producers and they

have been given permission to sell. This may cause a
marketing barrier because of the risk incurred by whole—
salers when carrying the product. However, the FDA only
covers inter-state shipments, and Michigan fish sold in
Michigan are exempt from their regulations. Although, the
Michigan Department of Agriculture does check Michigan fish

for toxics.

Great Lakes Fishery

The alternative of opening a Great Lakes commercial
salmon fishery was an alternative that the MDNR felt they
would not accept because there would be too much political
opposition against it. Also, the MDNR feels that by
allocating salmon in the Great Lakes to a sports fishery and
harvesting salmon at the weirs as a commercial fishery they

are promoting efficient and good resource management.

-72-

CHAPTER V

DISCUSSION OF RESULTS

This chapter will review and discuss some of the primary
results covered in the last chapter. Information from trade
and research publications will be used to compare and
contrast the Michigan fish marketing system and Michigan
salmon marketing with other markets and products. These
publications will also be used as a source of pertinent
information which may be beneficial to the present marketing

system.

The Michigan Fish Industry

 

Fish Marketing Participants

Wholesalers.- The location of wholesalers in Michigan

 

were in three areas; Detroit, Grand Rapids, and along the
shores of the Great Lakes. Other researchers have also
acknowledged Detroit and Grand Rapids as major fish markets
(Development Planning and Research Associate, Inc. 1982).
The Great Lakes shore markets are smaller, less concentrated
and probably less known as major Michigan markets. Those
markets in southern lower Michigan have probably located
there because of large populations in those areas. Markets

along the Great Lakes shores have most likely located there

- 73 -

because they are close to local commercial fishermen, thus a
local supplier, and because of the high influx of tourist
during summer months. Suppliers to Michigan wholesalers are
distributed nation wide, although most transactions are with
Boston, New York, and Chicago markets (Fig. 8). These
distant markets also serve as destination points for
Michigan-caught fish (Harris 1982).

Michigan fish wholesalers tend to differentiate into
several markets; restaurants, retail, and supermarkets. One
reason for this is because markets have different demand
characteristics based on location, economic levels,
preferences, and traditional consumption levels (Development
Planning and Research Associate, Inc. 1982). The market
demand for a species is influenced by the local culture,
religion, and traditions (Shang 1981).

Wholesale managers in the Michigan fish marketing system
felt that the Michigan fish industry is very competitive1
between wholesalers. Bell (1968) states that the primary
market for fish is one of the most competitive in the U.S..
In spite of wholesalers belief that they have a coordinated2
and tightly knit3 organization, observations of this
research indicate that the Michigan fish industry is
very fragmenteda, lacking group effort in marketing
coordination, promotion activities, and quality control.

Wholesalglretailers.- Michigan wholesale/retailers

receive fish from wholesalers, commercial fishermen, tribal

1"4: Defined in Appendix C.

- 74 -

 

 

 

‘ Tribal 7 lntergrated ‘

 

 

 

 

 

 

  
     
 

 

 

  

Commercial . .
. t' h men fishing
fishermen Is er operation
FISH PRODUCERS
I National a; - Lower Northern
International Michigan Michigan

suppliers wholesaler wholesalers

Wholesale!

retailers

 

 

 

 

 

 

 

1L———> Atlrupermarkets
VI Restauantslk ”J
k—’»{ Reta! j— _J

#

Fig. 8. Primary marketing channels of the Michigan

tish marketing system.

 

 

 

 

 

 

 

 

 

fishermen, and from their own operations. Wholesale/
retailers sold a majority of their fish through wholesale
channels, but did operate a retail outlet. Harris (1978)
reports that Michigan fish suppliers are not only involved
in marketing, but in some cases also operate retail markets.

Supermarkets.- All supermarkets interviewed carried both
fresh and frozen fish and the majority had a fresh fish
service counter. The sale of fresh fish in Michigan
supermarkets has just started recently, but has faced good
sales. There seems to be a trend for grocers to establish
fresh fish service counters. This trend was indicated by
numerous new service counters, and reported plans for new
fish service counters for stores which did not have service
counters at this time. Similarily, Pierson (1983) reports
that supermarkets are adding fresh fish service counters to
their operations. In general, fresh fish departments are
receiving increased space, capital, labor, promotion, and
management attention. These trends may be caused by the
growing number of consumers who buy fresh fish and seafood
in supermarkets. Consumers are purchasing the majority of
their fresh fish and seafood at supermarkets, and over half
of all consumers rate fish and seafood selections in
supermarkets to be good or excellent (GMA Research
Corporation 1982a). Currently, there has been increaSing
consumer purchases of fresh products in general.

Restaurants.- Some grocers felt that restaurants are

 

important to their sales because they are often the first

place consumers try fish. Although, restaurants prefer
fresh fish, they also use frozen fish because it is
convenient, less perishable, and less costly (Zehner 1972).
Inherently, stable prices are crucial when a restauranteur
is considering carrying fish, or a new species since they
dislike frequently changing menu prices. Restaurants
represent a large potential market for fish because people
prefer to eat fish away from home (Ginley 1978, Finley
1981).

Fish Varieties

Most of Michigan's fish industry firms handle a wide
variety of fresh and frozen ocean, lake, and Great Lakes
fish, as well as other seafoods. Development Planning and
Research Associate, Inc. (1982) states that a new concept in
marketing is to centralize a wide variety of fish and
seafood within one department. Michigan fish wholesale/
retailers and retailers carried mostly fresh fish and few
frozen items. Since fresh fish is significantly higher in
economic value than frozen (Processed Prepared Foods 1980)
and perceived by fish marketing managers as more desirable
(Ginley 1978), Michigan wholesale/retailers and retailers
seem to prefer carrying the fresh form. Alternatively,
frozen fish is carried because of its convenience (Jensen

1982) and improved quality control (Wagner 1972).

-77..

Processing

The amount of processing performed by a firm depends on
the type of fish. Michigan firms tend to do very little
processing, preferring to let suppliers perform this
function. This is similar to the produce market where
wholesalers and retailers expect suppliers to take care of
processing operations (McLaughlin and Pierson 1983).

Grocers and retailers in the Michigan fish industry sell
the majority of their fish as fillets and a small amount as
steaks. GMA Research Corporation (19823) found that when
the consumer is given a choice they most frequently choose

fillets and steaks over whole fish.

Handling

Storage temperatures, shelflife, and product quality
are all major concerns of Michigan fish market managers.
Providing consistent quality is reported as a major key to
merchandising fish (Pierson 1983). Storage temperatures for
fresh fish reported by grocers ranged from 30-340 F, on the
low side of the recommended temperature of 32-380 F (Food
Manufactor 1967).

Michigan managers perceived lack of standards in
grading, naming of products, and labeling as one of the
larger problems in the fish industry. Until the entire fish
and seafood system upgrades its standards many consumers

will avoid fish and seafood (Pierson 1983). This lack of

- 73 -

standards decrease the amount of market coordination between

market levels and can cause confusion to shoppers.

Consumers
Composition,- Present day fish shoppers, as reported by

the Michigan fish industry, are characterized as being one
of three different groups; young professionals, persons of
oriental heritage, and health and diet conscience consumers.
Young professionals may be able to afford more fish and may
be more aware of the nutritional and health values of fish.
Orientals are traditional fish consumers, and fish
consumption is part of their culture. Several researchers
have acknowledged increased demand for fish and seafood by
health and diet conscience consumers (Schaffer 1980, Ginley
1981, Pierson 1983). These consumers perceive fish as being
nutrional, low in calories, and almost lacking in
cholesterol (Ginley 1981, GMA Research Corporation 1982a).

Buying Behavior.- Michigan fish market managers thought
that for most consumers, fish is bought on an impulse and is
not a normal part of the consumer's market basket. U.S.
consumers annually eat approximately 12.9 pounds per capita
of commercial fish and shellfish (U.S. Dept. of Commerce
1984) compared to about 82 pounds of fresh beef
(Development Planning and Research Associate, Inc. 1982).
Unfortunately, Michigan managers report that pound for pound
fish is more expensive than red meats. Similarly, Martin

(1977) reports that beef and poultry are often cheaper per

- 79 - l

ounce than fish. However, fish prices vary with quality,
size, and supply, (van der Mealen 1962) and thus
generalizations are risky.

Knowledge.- At all marketing levels managers thought

 

that consumers and chefs have a low level of knowledge about
fish characteristics, handling, and preparation. Consumers
lack familiarity and competence in fish to a greater degree
than with other foods (Ginley 1978, Pierson 1983). Zehner
(1972) states that consumer education is a vital part of the
selling effort and (Pierson 1983) reports that this effort
must be continued. Though traditional eating habits die
hard, shoppers presented with fish cooked in an appetizing
way have added it to their menu (Craig 1981). Continued and
increased education and promotion work should help maximize

this acceptance.

Promotion

Most promotion done in the Michigan fish industry is by
word of mouth, although grocers and retailers try to
increase sales through in-store promotion activities.
Several research projects on promoting seafood and fish have
been conducted by the GMA Research Corporation (1982a).
They found that consumers would purchase more seafood if
more recipes were made available. Over 40 percent of
consumers either always, or frequently, use recipes in
preparing seafood and agree that there should be more

recipes on ways to fix seafood. Cookbooks, magazines,

- go -

newspapers and word of mouth were the most cited sources of
recipes. In Zehner's (1972) report to the Michigan Trout
Producers Cooperative, she states that to market Michigan
trout, producers must go out and extensively promote the
product. According to retailers interviewed by Development
Planning and Research Associate, Inc. (1982) advertising has
a significant effect on purchases, and consumers are very
receptive to salmon promotions. Television and newspaper
reports about fish and seafood are well received by
consumers, while radio plays an important part as a

reinforcer (GMA Research Corporation 1983a).

Distribution

Distribution from suppliers to Michigan wholesalers is
most frequently by temperature regulated aircraft, while
distribution from wholesalers to other market levels is by
temperature regulated truck. All market levels rely on
quick delivery to maintain product quality. Grocers and
retailers are looking for distributors who can get fish to
them on time (Pierson 1983), and this probably holds true
for wholesalers and wholesale/retailers. The primary
concern in distribution is reflected by managers demand that
fresh products arrive in their stores two to three days

after harvest.

- 81 -

Market Position

Some wholesale/retailers and retailers feel that they
have inadequate bargaining power with wholesalers and that
wholesalers have a tight grasp on the market. It is
interesting to note that Bell (1968) reports that individual
fishermen have little market power, especiallly since they
can do little to differentiate their product from their
competitors. So it seems that both wholesale/retailers and
suppliers lack market power. It may be possible that the
fish industry is approaching strategies similar to those
McLaughlin and Pierson (1983) reported for the fresh fruit
and vegetable market. They state that " wholesalers and
retailers are increasingly moving costs and risk to growers

and shippers."

The West Coast Salmon Market

 

The Influence of the West Coast Salmon Industry

To understand more about fish marketing systems in
Michigan and Michigan salmon markets it is useful to look at
the west coast salmon industry. Not only are west coast
salmon a substitute to Michigan salmon, but west coast
products and marketing practices also influence the
marketing of salmon in Michigan. Competition with regional
products in domestic markets is an important factor

affecting the demand for a species, as well as, market

- 82 -

demand for a species can be approximated by regional

comparisons (Shang 1981).

Production

Alaska and Northwest salmon production accounts for
approximately 50 percent of the world supply of salmon and
almost the entire domestic supply (Fig. 9) (Natural Resource
Consultants 1983). Alaskan production alone, accounts for
about 84 percent of the U.S. production of fresh, frozen,
and cured salmon over a six year period (Development
Planning and Research Associate, Inc. 1982). Salmon
landings were the second most important in quantity and
value for the 1983 commercial U.S. fishery (U.S. Dept. of
Commerce 1984). A total of 639,293,000 pounds of pacific
salmon were landed in 1983 (Table 1), of which 0.6 percent
went into fillets and steaks, and 27.4 percent into canned
salmon production, and 78 percent as whole or eviscerated
fish. Forty six percent of the pacific salmon landings were
sold on export markets as fresh, frozen or canned. Although
no major changes are expected in the status of northwest
salmon resources, before the end of the decade abundance of
pacific salmon will drop to cyclical lows, with decreasing
run sizes and catches (Natural Resource Consultants 1983).
However, other researchers may not agree with these
predictions, Development Planning and Research Associate,
Inc. (1982) expected that high Alaskan salmon production

will continue into the future.

- g3 -

ALASKA 46%

OTHER U.S.A. 4%

 

      
 

oTHER NATIONS 4%
CANADA 8%

U.S.S.R. 17%

JAPAN 21%

Fig. 9. Percent of world salmon supply by major country, 1980
(Natural Resource Consultants 1983).

-84-

 

 

 

Table 1. U.S. salmon landings, 1973-1983 (U.S. Dept. of
Commerce 1973-1983).

YEAR (TthEHEdWFEEHHs) (TEEHEiEElDZIIEES)
1973 213,009 125,113

1974 196,820 121,312

1975 201,591 116,298

1976 309,242 196,496

1977 335,642 221,863

1978 404.489 254.537

1979 536,116 412,776

1980 613,811 352,277

1981 648,440 438,247

1982 607,420 391,999

1983 639.293 350,826

 

- g5 -

Supply of West Coast Salmon Available to Michigan

The west coast salmon industry faced two major problems
in 1983, large carryovers of inventories, and declining
values of foreign currencies which negatively impacts export
sales (Pacific Fishing 1984). This large supply of product
and disincentive for international trade will increase
supplies of northwest salmon available to Michigan
wholesalers. This is reflected by Tempotech's response of
market saturation as a major market barrier. However, the
northwest salmon industry is having difficulties marketing
their product profitability and this could continue into the

future (Natural Resource Consultants 1983).

Michigan's Demand for West Coast Salmon

All Michigan market levels thought that west coast
salmon sold well and report good demand for the product.
Pacific Fishing (1984) reports that consumer awarenesss and
consumption of salmon is growing. However, this increase in
fish consumption may be caused by the growth in population,
with only small increases, in per capita consumption (Table
2) (Natural Resource Consultants 1983). GMA Research
Corporation (1983a) states that awareness of salmon has
actually decreased in 1983, when compared to 1982. The
largest market in sales for U.S. fresh and frozen salmon is
Japan. However, the U.S. is the second largest market and

U.S. frozen salmon sales have been rising rapidly in recent

- 35 -

Table 2. 'UJL salmon consumption, 1973-1983 (UJL Dept.<xf
Commerce 1973-1983).

 

 

 

Per Capita
U.S. Consumption* Population (7527722tiig/
YEAR (Thousand Pounds) (Million Persons) year?
1973 134,807 209.6 0.64
1974 170,795 211.6 0.81
1975 134,838 213.8 0.63
1976 249,954 215.9 1.16
1977 239,788 218.1 1.10
1978 239,897 220.5 1.09
1979 336,462 223.0 1.51
1980 412,278 225.6 1.83
1981 364,889 227.7 1.60
1982 292,787 229.9 1.27
1983 331,357 232.0 1.43

 

'*U.S. consumption = U.S. landings + Imports - Exports - Storage.

- g7 -

years (Development Planning and Research Associate, Inc.

1982).

West Coast Salmon Prices

Exvessel.- The exvessel price1 per pound, in 1983, for
all pacific salmon species was 55 cents, and prices for
chinook and coho were the lowest they have been in the last
six years (U.S. Dept. of Commerce 1984). Some of the most
common factors determining exvessel prices are; quality,
size, season, gear type, location, competition, and product
form; although, Alaskan prices are most influenced by market
perceptions of fish quality (Development Planning and
Research Associate, Inc. 1982).

Wholesale.- Domestic wholesale prices of salmon in real

 

dollars has trended downward in recent years. Wholesale
prices are affected by supply, quality, and the demand for
fish (Development Planning and Research Associate, Inc.
1982). The wholesale price per pound for fresh west coast
salmon ranged from 2.84 dollars for chinook to 1.60 for chum
salmon.

Retail.- Retail fish prices in 1983 were at their peak
during August and September and lowest during March and
April (U.S. Dept. of Commerce 1984). A large portion of the
total salmon marketing cost is the high transportation'cost
of distributing the product (Development Planning and
Research Associate, Inc. 1982).

1: Defined in Appendix C.

- 88 -

West Coast Salmon Market Form

Domestic Market.- Coho and chinook pacific salmon are

 

processed almost exclusively in fresh and frozen forms, and
have been predominate species in fresh markets, with
eventual market form depending on inherent quality, size,
and method of harvest (Development Planning and Research
Associate, Inc. 1982, Natural Resource Consultants 1983).
Chinook salmon are very high in fat content and have firm,
succulent flesh. Chinook are marketed as slices, steaks,
fillets, and smoked sides. Larger fish are generally used
for smoking. Coho also have firm flesh but have a more
delicate flavor. These fish are highly desirable for both
table use and smoking because of their size, color, and
relatively high fat content. Most coho are sold as frozen
whole fish, steaks, or as fillets. These frozen fish are
popular with domestic retail stores and restaurants.

Michigan Markets.- The majority of Michigan firms that

 

carried salmon, carried bright-silver grade west coast
salmon, most of which is from Alaska. Michigan firms use
the smaller size west coast salmon as H&G, since they
perceive consumers as preferring smaller size fish.
However, Development Planning and Research Associate, Inc.
(1982) reports that larger size salmon are considered a
positive attribute by buyers. Large salmon in the Michigan
market are cut into steaks, while medium size fish are cut

into fillets.

- 89 -

The Michigan Salmon Market in Michigan

 

Salmon Production

During 1983 approximately 1,975,886 pounds of excess
Michigan salmon were harvested, of which roughly 60 percent
were coho and 40 percent chinook (unpublished MDNR notes).
Of the total catch about 24 percent were silver grade salmon

2

and the rest were dark grade salmon , stripped salmon3, and

mortalitiesé; 64, 7, and 5 percent, respectively (Table 3).
Although, this harvest of nearly two million pounds seems
large, it is quite small when compared to the west coast
salmon harvest of over 600 million pounds. Dramatically,

the Michigan harvest equals roughly 0.3 percent of the west

coast harvest.

Salmon Supply

At present, only a few Michigan firms are carrying
excess Michigan salmon, and accounts for a small portion of
the harvest. One of the main problems in supplying Michigan
firms has been the lack of agreement between Tempotech and
buyers on selling prices. There are also several Michigan
firms carrying salmon which had been caught in the Great
Lakes by tribal fishermen but these purchases have been
small and supplies inconsistent.

14': Defined in Appendix C.

- 90 -

Table 3. 1983 excess Michigan salmon harvest by species and
grade (Unpublished MDNR Notes).

 

 

Percent of Total

 

 

 

 

Species/Grade Number Pounds Catch Weight
Chinook
Silver 8,399 43,133 2.2
Dark 40,230 578,007 29.3
Stripped 7,480 90,974 4.6
Mortalities _5Ll55 74,129 _3;§
TOTAL 61,264 786,243 39.8
Coho
Silver 69,097 437,368 22.1
Dark 102,295 695,019 35.2
Stripped 6,961 37,869 1.9
Mortalities 2,799 19,386 _L;9
TOTAL 181,152 1,189,692 60.2
TOTAL 242,416 1,975,935 100.0

 

- 91 -

Salmon Demand

Several Michigan fish firm managers said they would be
interested in carrying excess Michigan salmon and thought
they would want fresh and frozen, brights and semi-brights.
They perceive good demand for the product if a large supply

is available at the right price.

Salmon Prices

The price of excess Michigan salmon is mainly affected
by the price Tempotech will have to pay the MDNR to purchase
these fish. The price is also affected by harvest, process-
ing, transportation, and storage costs. During 1984 excess
Michigan salmon were sold by two Michigan retail fish
stores. One store was selling Michigan salmon as frozen
salmon steaks in five pound boxes for 2.99 dollars per box
(60 cents/1b.). The other store was selling whole fish,
averaging two to four pounds per fish, for 1.25 dollars per
fish (31 to 62 cents/1b.). One Michigan retail fish store
was selling salmon caught in the Great Lakes, by tribal
fishermen, as fillets for 2.99 dollars per pound. These
prices are relatively low compared to the Michigan retail
price of west coast salmon of about 5.70 dollars per pound

for fresh salmon steaks.

Salmon Processing

Utilization.— Michigan fish firm managers had little to

 

say about Michigan salmon products, especially the lower

- 92 -

grades. This disinterest could be caused by several
factors. First, respondents may not care how salmon are
handled as long as they arrive at markets in the proper
condition. Second, managers may have been restricted by
time and may not have wanted to extend the survey by
discussing the use of Michigan salmon. Third, respondents
may lack adequate knowledge on utilizing low quality fish.

Quality and Form.- Managers perceived Michigan salmon as

 

being lower in quality than west coast salmon, especially in
color and taste. However, managers did think higher grade
Michigan salmon could be sold as a fresh product. The
majority of managers thought that a large percentage of the
product should be processed into steaks and fillets and a
small amount could be sold in the round or H&G. Those fish
with inferior quality characteristics could be placed on
frozen markets.

Canned.- Tempotech reported that, because of large
harvests of west coast salmon and large inventories of west
coast canned salmon, the canned salmon market is an
unacceptable alternative for marketing Michigan salmon.
High inventories of canned west coast salmon were also
reported by the Development Planning and Research Associate,
Inc. (1982). There has also been a shift in the U.S. away
from canned salmon (Natural Resource Consultants 1983),
despite a lower price image by consumers compared to fresh
and frozen salmon. Consumers also perceive canned salmon as

less nutritious than fresh (GMA Research Corporation 19823).

- 93 -

It is interesting to note that the GMA Research Corporation
(1982b) found that two percent of consumers interviewed
thought that their purchased canned salmon (Alaskan) was
from the Great Lakes and over 50 percent of those
interviewed did not know or care where canned salmon came
from. This awareness of the Great Lakes as a salmon fishery
may be a reason for calling the product Great Lakes salmon.

GMA Research Corporation (1982b) reports that consumers
have little awareness of the origin of pacific salmon. Only
18 percent of consumers interviewed by GMA Research
Corporation (19833) reported that fresh and frozen salmon
comes from Alaska. Although, consumers are interested in
the pros and cons of the selected species, they are not
concerned with the origin of the species (GMA Research
Corporation 1982).

Smoked Products.- The majority of managers thought that

 

Michigan salmon would fare well on the market as a smoked
product (e.g. smoked fillets, lox, etc.). Alternatively,
Tempotech reported that Michigan salmon would not produce
high quality smoked products and that smoked fish markets
are highly competitive. In general, fish with low fat
content, poor color, or with a tendency to bruise are
unsuitable for smoking (Development Planning and Research
Associate, Inc. 1982). Because of extensive energy required
during spawning and the high tendency for bruising from
holding prior to harvest, Michigan salmon would most likely

provide a low quality smoked product.

-94-

Jerky and Smokestick.- Salmon jerky and smokestick met

 

good acceptance from respondents, and those who tried the
product were also impressed with its taste. These products
would serve as convenience items which are an important part
of consumers fish purchases (Martin 1977, Pierson 1983).
Tempotech feels this would be the most appropriate way to
sell Michigan salmon, although, the problem lies in the
difficulty in getting shelfspace on the jerky market.
Difficulties faced by small food manufacturers in obtaining
shelf space were also reported by Walzer et. al (1976), as
well as considerable amounts of risk involved in salmon
processing due to the necessary fixed cost of operations
(Development Planning and Research Associate, Inc. 1982).
Although, problems may be faced in obtaining shelf space
within supermarkets, possibilities exist of Tempotech
directly servicing small grocery stores and convenience
stores with processed Michigan salmon. This may be the best
alternative for handling low grade salmon, although, the
MDNR would prefer that only a small percentage of Michigan

salmon be allocated to highly processed forms.

Labeling and a Seal of Approval

Both Michigan fish marketing managers and Tempotech
thought some type of label and seal of approval would help
market Michigan salmon. Both groups thought that the seal
of approval would be most beneficial if backed by the

government. The GMA Research Corporation (1984a,b)

- 95 -

conducted a quality seal shelf test with Alaskan salmon
products using the "Alaska Premium" seal. These seals
influenced shoppers positively; with shoppers willing to pay
more, associated products with higher quality and/or
increased safety, and were more likely to choose that
product. They also report that the seal would have

greater impact had it been more prominent and if greater

exposure through advertising had been accomplished.

Packaging

If the product is to be sold in a package, Michigan fish
firm managers perceived that it would have to be done in an
appealing fashion with promotion items such as recipes,
handling instructions, and a creative description of the
product on the package . Packaging will increase consumer
acceptance and help maintain higher product quality.
Pierson (1983) reports that vacuum packaged fresh fish can
remain seven days in the package and five more days in the
display case, although, it is important that packages be
odorproof and leakproof. Cornell University research on the
storage of fish, found that blanched fish in 1900 F water
for two seconds prior to storage almost doubles product
shelflife (Industry Week 1981). They have also worked on a
controlled atmosphere storage system for fresh salmon which
can extend the fresh products quality at least four weeks
(Processed Prepared Foods 1980). Consumer reactions to

salmon in individual polyethylene pouches has been excellent

- 96 _

(Wagner 1972), and other test markets reveal large potential
markets for high quality prepackaged fresh fish (Food

Manufactor 1967).

Product Introduction

The introduction of a new product into the market is not
easy. The average grocery chain is offered 100 new products
a week and the success of these products depend on the
products concept and its physical characteristics (Cantor
et. al 1969). With the introduction of a new product we
must be careful to avoid the following reasons for market
failure given by Angelus (1970);
1) Insignificant consumer difference
2) Poor product positioning
3) No point of difference
4) Bad timing
5) Poor product performance
6) Wrong market for the company
Thus, when looking into markets as potential areas for the
introduction of Michigan salmon, it will be important to

observe the market to obtain a measure of the potential

risk.

Conflicts and Needs

Conflicts.- Poor promotion and public relations of

 

commercial Michigan salmon is one of the barriers facing the
marketing of these fish. Conflicts at the weirs caused by
upset sportsmen, and accusations of harvesting recreational

species has resulted in poor publicity of the harvest.

- 97 -

Similarly, Oregon's commercial and recreational fishermen
are both trying to convince management agencies that their
group should have a larger share of harvestable supplies
(Smith 1978).

Ngg1§.- One of the major needs of managers was to have
the MDNR become active in the Michigan fish industry. Other
states in the U.S. have marketing groups which combine state
and private aid to help market a fishery product. The
Alaska Seafood Marketing Insititute (ASMI) is a good example
of a joint state and industry body, supported financially by
the state, which provides promotional efforts, quality
assurance, and publications (Development Planning and
Research Associate, Inc. 1982). However, the MNDR feels
that the Michigan Fish industry should perform their own
marketing activities and that the MDNR should not be
involved. Fish Industry needs from the MDNR, as listed by
managers, will probably not be met because either the MDNR
did not think they were responsible for that market role or
were limited because of money, time, or labor. Although the
MFPA is an organized fish industry group, they have not
taken the lead in marketing Michigan fish. Perhaps in the
future a group can be formed, composed of representatives
from the MDNR, the MFPA, the Michigan Commerce Department,
etc., to put a concerned effort into the marketing of

Michigan's fishery resources.

- 98 _

The Contaminant Issue

Michigan fish marketing managers responded that few
consumers asked about contaminants in fish. It was the
managers perception that consumers were no longer worried
about contaminants and that consumers believe that products
on the market are safe. In contrast, the MDNR perceives
contaminant problems as the number one marketing barrier and
low quality as a secondary barrier. Tempotech also
perceived contaminants and low quality as major barriers,
with contaminants not only affecting consumers perceptions
but also affecting the way Tempotech handles the product.
In comparison, very few managers perceived contaminant
levels as a large problem, but felt that it had been

magnified by the news media.

Great Lakes Fishery

The majority of managers interviewed thought that
Michigan salmon should be harvested in the Great Lakes.
Salmon caught in open waters are also preferred by the
Alaskan industry (Development Planning and Research
Associate, Inc. 1982). Managers referred to lake caught
Michigan salmon as being very good, but not as good as west
coast salmon. The location of catch is also important from
an intrinsic quality standpoint (Development Planning and
Research Associate, Inc. 1982). Because of higher -
perceptions of salmon caught on the Great Lakes, managers

felt that Michigan salmon and its products should be called

-99...

Great Lakes salmon. In their management report Tody and
Tanner (1966) recommended that surplus stock of Michigan
salmon be commercially harvested but do not mention if it
should be an open water fishery. Tempotech felt that the
change from a weir fishery to a Great Lakes fishery would
have little effect on their firm, while, the MDNR would not
accept the Great Lakes fishery alternative. Since, the MDNR
is in charge of the harvest regulations and oppose the idea
of a Great Lakes fishery, this alternative will not be
feasible. Although, the MDNR should keep in mind that it
would be easier for the harvester to market Michigan salmon

if caught in the Great Lakes.

— 100 -

CHAPTER VI

Recommendations

This chapter will present three separate sets of major
recommendations. The first set consists of recommendations
to Tempotech, which should help increase Tempotech's
efficiency and reduce the risk of market failure for
Michigan salmon products. Recommendations will also be made
for the MDNR which should be beneficial to Tempotech and
help reduce conflicts involving the harvest. Lastly,
recommendations will be made for the Michigan fish marketing
system. These recommendations center around improvements
for market performance. They do not place emphasis on
Michigan salmon, however, in the long run they may be
beneficial to the marketing of Michigan salmon. Results of
the interviews with Michigan fish marketing participants are
the primary basis for each recommendation. However,
formulation of specified recommendations and suggestion of
practical implementation required integration of interviews
with the MDNR and Tempotech, as well as personal

observations and marketing literature.

- 101 —

Recommendations to Tempotech

 

Product Quality

Attempts should be made to improve product quality,
thus increasing consumer acceptance and marketability.
However, the feasibility of these changes, to increase
quality, can be highly affected by their costs. Alternative

methods of implementing increased quality are listed below.

1) Locate harvest sites as close to the Great Lakes as
possible. This should increase the percentage of silver

grade fish in the catch.

2) Decrease harvest site live fish holding time as much as
possible so fish can be harvested sooner. This should
increase the quality of the fish since they will be slightly
less mature, experience reduced bruising, and sustain fewer

preprocessing mortalities.

3) Reduce time period between harvest and processing. This
may be accomplished by more frequent trips between the
harvest and processsing sites, quicker loading and
unloading, and less delay time. Development Planning and
Research Associates, Inc. (1982) state that salmon must be
processed as soon as possible because of the fragile nature

of the meat and its rapid deterioration.

4) Trailers should have refrigerator units and these should

be kept at the proper temperature.

- 102 -

5) Decrease handling and processing time as much as
possible, with less holding time before processing so fish

may maintain higher quality.

Processing

1) Bright grade salmon should be processed into fresh
fillets and steaks. Finley (1981) recommends that
processors should concentrate on fresh fish. Additionally,
Processed Prepared Foods (1980) states that storing fish in
the fresh form can result in potential savings in the cost

of freezing operations.

2) Semi-brights should be processed into frozen steaks,
fillets, and H&G with large, medium, and small fish,

respectively; used for each product form.

3) Low grade salmon should be used in highly processed
forms. Cured products such as jerky should meet favorable

market conditions.

Packaging
1) High quality packaging and handling will be important in

marketing the product.

2) Packaging should be attractive and appropiate labeling

would be beneficial.

3) Frozen and cured products should be sold in a sealed

package and it may be feasible to sell fresh fish in a

- 103 -

similar manner. However, more information on packaging of

fresh fish should be found before it is attempted.

4) Contacts with leading universities should be made and
maintained to provide Tempotech insights into processes that
can increase shelf life and quality. Cornell University may
be a good place to gather such types of information.
Michigan State University departments of Food Science and
Packaging may also be able to provide Tempotech with help in

this area.

Labeling and Seals
1) Clean attractive labeling should be used whenever
possible and can be used in several ways.

a) Placed on packaged products

b) Given to firms to be used in fresh fish display cases

2) Labels should include the following
3) Handling instructions
b) Cooking instructions
c) Recipes

d) Attractive description of the product

3) Some type of seal, such as a seal of approval from a
governmental agency or consumers group, would be helpful.
Some possibilities for seals would be;

a) Fresh Great Lakes Salmon

b) Great Lakes Best

c) Michigan's Finest

- 104 -

Distribution
1) Products should be moved to buyers as soon as possible,
particularly fresh fish. Transportation systems should be

temperature regulated and the product should be kept on ice.

2) Fresh and frozen products should be distributed through
existing wholesalers and wholesale/retailers. Shang (1981)
states that the existing fish marketing system should be

given primary consideration.

3) If the above is not feasible, Tempotech should look into
the possibilty of performing these wholesale activities.
Forward vertical integration should be used when there is an
inability to effectively market products through existing

outlets (Yuen et a1. 1978).

4) If possible, jerky and smokestick products, should be
distributed through those large distribution firms presently
handling products similar to these. If this is not
possible, Tempotech should look into the feasibility of
directly distributing these products to grocery stores and

one stop convenience stores.

Promotion
1) T.V. and newspaper should be the most effective way to
promote the product. Radio spots should be used at

intervals as reinforcement to the above methods.

- 105 -

2) Target consumer segments should include young profes-
sionals, orientals, and health and diet conscious consumers.
0f the three, young professionals may be the least important
since their higher incomes will allow them to easily

substitute west coast salmon for Michigan salmon.

3) GMA Research Corporation (1983b) recommends that optimum
impact, given a specific budget, can be achieved by covering

more markets with limited advertising expenditures.

4) In-store promotion items, such as posters and recipes,
should be readily available to firms purchasing the product.
These promotion items should target consumers senses of
taste and smell. Promotion items using "mouth watering"
words convince consumers that fish is good and to purchase

it (Ginley 1978).

5) News releases on the commercial use of Michigan salmon,
harvest activities, salmon contaminant levels, and recipes

should be made as often as possible.

Price

1) During the early years of product introduction, prices
should be as low as possible to influence consumer
acceptance, and decrease competition from illegal sales.
Once the product has been initially accepted by Michigan
consumers, increases in price may be feasible. Jensen
(1982) states that success with fish products will insure

repeat business.

- 106 -

2) Increase the volume of fish harvested, with more harvest
sites or improved techniques. This may decrease the average
fixed cost per fish and provide a larger supply to Michigan

fish firms.

Product Indentification
Products should be referred to as "Great Lakes Salmon"
when sold in the Michigan and U.S. markets, to encourage

greater consumer acceptance.

Product Introduction
1) It will be important to have a planned program that
pre—determines the risk involved and moves to reduce these

(Cantor 1969).

2) Best market penetration could be achieved during the fall
and winter months, when availability of fresh salmon is a

problem (Wagner 1972).

3) Product introduction through special group meetings may
help increase consumer acceptance of the product.
a) Introduce the product through special functions and
banquets, such as Michigan State University Autumn
Fest.
b) Invite Michigan specialty fish firms to the
processing plant for an open house, to introduce them

to the product and provide information on Tempotech's

-107—

processing and harvest activities. A similar approach

could be used with newspaper food section editors.

Future Research

1) Consumer market studies should be performed during the
time of product introduction. Information on consumer
demographics, product awareness, product acceptance and
perceptions, could help predict market feasibility and

reduce risks.

2) Studies should be performed to look into markets such as
restaurants and institutions. These markets could supply

feasible outlets for the product.

Recommendations to the MDNR

 

1) Supply as much information as possible to the public
about the rationale for the harvest and the activities

performed during the harvest.

2) Try to increase the public's knowledge on fish quality

and contaminant levels of Great Lakes fish.

3) Increase enforcement of illegal salmon sales, especially

those made by sportsmen.

- 108 -

4) In the future, make sure that the contract bidding is
well publicized and that the transaction is transparent to

the public.

Recommendations to the Michigan Fish Marketing System

1) Those involved in this system should try to improve their
market organization so they can coordinate market
activities. Professional experts, specializing in market
cooperatives and organization should be called on to provide

a coordinated, efficient, market system.

2) Standards for grades, names, and quality should be set

up and enforced within this industry.

- 109 —

CHAPTER VII

SUMMARY AND CONCLUSION

SUMMARY

A total of 42 interviews were conducted with the
following market levels; specialty fish wholesalers,
wholesale/retailers, and retailers; supermarkets, Tempotech
Industries, Inc., and the MDNR. These interveiws were
formatted as open discussions and observed present marketing
activities and perceptions on marketing excess Michigan
salmon in Michigan.

Michigan fish markets are located in southern Michigan's
larger cities and along the shores of the Great Lakes.

There are few large wholesalers in this state and they seem
to have a highly competitive and differentiated markets.
All market levels carried wide varieties of fish in both
fresh and frozen forms. These firms prefer to sell fish
which has been processed by the producer or supplier into
fillets or steaks. Major concerns of firm managers were
storage temperatures, product shelflife, quality, and lack
of standards in the industry.

Fish firm managers perceived that their consumers were
composed of young professionals, orientals, and health and
diet conscience consumers. Managers were also under the

perception that consumers bought fish infrequently when

- 110 -

compared to other meats, and that consumers had low
knowledge on species, taste, and preparations of fish.

The majority of fish promotion activities performed by
the industry is by word of mouth, although, retailers and
supermarkets also rely on in-store promotion activities.
Increased promotional activities may help strengthen fish
sales in Michigan.

Salmon carried by Michigan fish firms were mainly west
coast salmon. Large supplies of this product are available
and managers perceive good consumer demand. These fish are
sold in fresh and frozen forms and are usually processed as
fillets and steaks.

The excess Michigan salmon harvest is very small (0.3 Z)
when compared to the west coast harvest and the Michigan
harvest consist of a relatively small percentage of high
quality fish. At present, few Michigan firms are carrying
these excess salmon, though, increased demand may result if
a large supply is available. The sale price for these fish
was approximately 89 percent lower than what is being
received for west coast salmon.

The main barrier to marketing Michigan salmon, as
perceived by firm managers, is the lower quality and taste
when compared to west coast salmon. A distant second
barrier to marketing the product was the highly publicized
contaminant issue surrounding the product.

Managers perceive that high grade excess Michigan salmon

should be sold as fresh, and medium grade salmon as frozen,

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with both products processed as fillets and steaks. Low
grade Michigan salmon should be used in a highly processed
form such as jerky or salmon smokestick.

Respondents perceived that attractive and descriptive
labeling and packaging should be used to help market these
fish. Some type of product seal would be beneficial and if
possible the seal should be backed by a governmental or
consumer agency. Better public relations and promotion of
the commercial use of these salmon should be incorporated
into both Tempotech's and the MDNR's future plans, so to
increase consumer acceptance of the product and its
commercial use.

Specific recommendations were made to Tempotech, the
MDNR, and the Michigan fish marketing system. Recommen-
dations to Tempotech and the MDNR were centered around the
marketing of excess Michigan salmon in Michigan. Several
recommendations were also made specific to the Michigan fish
marketing system which may be beneficial to their market

activities.

CONCLUSION

 

Although low quality of excess Michigan salmon and the
contaminant issue surrounding this product are the two main

marketing barriers, other minor barriers were also perceived

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by the Michigan fish industry. None of these barriers
appear to be so large that independently they would cause
the failure of marketing excess salmon, but together they
may form a large solid market barrier. These independent
barriers could be perceived as building bricks of various
shapes and depths, some larger and thicker than others,
which form a solid wall separating market sucess from
failure. The pertinent question is how many of these bricks
must be reduced or removed to have access to a successful
market. Those bricks representing low quality and the
contaminant issue may be so massive that they may never be
removed. Yet over time, well planned marketing activities
may decrease their size and depth and additionally remove

some of the smaller bricks, leading to a successful market.

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APPENDIX A

Introduction letter sent to
Michigan Fish Market Participants.

-114-

Bruce Marshall May 20, 1984
Marshall Seafood, Inc.

4243 Green, S.E.

Detroit, Michigan 49508

Dear Mr. Marshall:

During the summer of 1984 I will be interviewing fish
marketing firms in Michigan. This initial contact is to
inform you that you have been chosen to be part of a
selected group of approximately forty five, which will serve
as representatives from your industry.

This survey is part of my research for a masters degree
under the department of Fisheries and Wildlife at Michigan
State University. The study was generated by contract
requirements placed by the Michigan Department of Natural
Resources on Tempotech Industries, Inc.. Tempotech
purchased the rights to harvest excess Michigan salmon from
the state of Michigan. The contract calls for the
development and implementation of a marketing plan for
Michigan salmon and byproducts within the state. The
purpose of the interview is to learn your perspectives and
opinions on this topic. All interviews will be strictly
confidential and anonymous. Hopefully this study can be
beneficial to both our research unit and your firm.

Each person interviewed will be asked to answer a list of
questions pertaining to Michigan salmon and its Michigan
market. The questions will be open-ended and are to assure
that specific tapics are covered during the interview and to
incourage the host to discuss in as much detail his/her
opinions and perspectives on other topics which deal with
the marketing study.

The interviews will take between 30-50 minutes. We would
like to set-up an appointment at the most convenient time
possible between June 1 and September 30. However, for
efficiency, those merchants in the same local area will
preferably be interviewed in the same time period. I would
like to meet with you on 6/06/84 if this will be possible.
I will be contacting you by phone within a week following
this letter to discuss this appointment. I'm looking
forward to meeting with you and discussing your opinions and
perspectives. Thank you for your time and help, if you have
any further questions please feel free to call me at (517)
353-7981. '
Sincerely yours,

Mark S. Sargent
Research Assistant
Fisheries and Wildlife Dept.

—115-

APPENDIX B

Interview Questionaire

Fish Marketing Questionaire

 

Date

Time

Name of Firm

 

 

 

Name of Respondent

 

Respondents Title

 

Location of Firm

 

1) Are you involved in:
wholesale activities

retail activities

2) What types of fish do you carry?

3) Aproximately, how much fish do you carry?

-117-

4) Where does most of your fish come from?

5) How do you receive your fish?

6) Would you describe your processing activities?

7) Would you describe your storage system to me?

8) Would you describe your methods of displaying fish?

-118—

9) What type of consumer are you selling to ?

10) What type of questions do your consumers ask?

11) What type of promotion activities do you perform?

12) How do you distribute your products?

13) Who do you distribute your products to?

-119-

14) What would you say are the major problems in the

Michigan fish marketing system?

15) What are your major marketing concerns?

16) Describe to me any other important factors effecting the

marketing of fish in Michigan.

17) At this time do you sell salmon?

-120—

18) If so what kinds of salmon?

19) Where is this product from?

20) In what forms do you sell salmon?

21) Could you give me all your reasons for not selling

Michigan salmon?

-121—

22) Assuming Michigan salmon were available for a reasonable

price, what would be your reason for not selling it?

23) If a Michigan firm tried to develop a Michigan market
for Michigan salmon, what would be the major problems

encountered?

24) What would you need to carry Michigan salmon?

25) What activities are needed to gain a suceesful market?

-122-

26) Respondents are asked to look at samples of Michigan

salmon.

27) What is your perception of these products?

—123-

APPENDIX C

Definitions and Terminology

-124-

DEFINITIONS OF TERMINOLOGY

Competitive- striving against each other for increased

sales and market share.

Coordinated- organized group working towards common

goals.

Dark Grade Salmon- MDNR grade, placed on weir caught
salmon for price differentiation. These fish are

the lowest grade produced at the weirs.

Excess Michigan Salmon- the portion of salmon returning
to streams which exceed management objectives for
recreational opportunities and stream ecology, as
well as those carcasses remaining after egg removal

for hatchery use.

Exvessel Price- the price received by the harvester of

the fish.

Exvessel Value- the value of fish at the harvester

marketing level.

Fragmented- disorganized group working against each

other or not working towards common goals.

Integrated Fishing Operation- firms which have inte—
grated their fishing operation with a retail and/or

wholesale operation.

-125-

Great Lakes Fish- fish caught on the Great Lakes (eg.

whitefish (WW. salmon

(Oncorhynchus spp.).

Lake Fish- fish caught on inland lakes (eg. bass

(Micropterus spp.), bluegill (Lepomis macrochirus).

Mortalities- MDNR grade, placed on weir caught salmon
for price differentiation. These fish have died

during holding and have low quality and value.

Silver Grade Salmon— MDNR grade, placed on weir caught
salmon for price differentiation. These fish are

the highest grade produced at the weirs.

Stripped Salmon— MDNR grade, placed on weir caught
salmon for price differentiation. These fish have
had their eggs removed by MDNR personal and have a

low value.

Tightly knit- organized group which works well

together.

Tribal Fishermen— those fishermen who have been given
special fishing rights because of their native

american heritage.

—126-

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-127-

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