Never out of

Sight!

In the UK we truly are a nation of pet lovers. 10.4m of us (48% of households) share our homes with some 15.2m cats and dogs, a number that has increased by 4.8% between 2006 and 2008 alone. The primary driver for owning a pet is companionship, and 81% of owners claim to treat their pets as part of the family. However with our busy lifestyles we regularly spends days and nights away from our companions, particularly cats who like to assert their independence by roaming through the neighbourhood and beyond. It is, therefore, a cause of great anxiety when a cherished pet goes missing.

PetTrak is a new tracking and location finding device product based on GPS (global positioning system) and GPRS (mobile phone technology). Attached to the pet’s collar, PetTrak is aimed at the cat and dog market.

Mintel are able to quantify the size and trends spent on non-food pet items, many of which are discretionary such as toys and grooming equipment. Overall the pet accessory market has an annual value of

£269m and this is forecast to increase by 15% over the next five years reaching £295m per annum by 2013. Within this the market for basic pet collars and leads has an annual value of £44m. the key insight is that Pet Track will add incremental value to this mature and establish category through it’s added value proposition.

In addition to pet accessories owners spend £215m per annum on pet healthcare and £1.6bn is spent annually on pet food. Mintel point to a trend of cat and dog owners becoming increasingly anthropomorphic, meaning they treat their pets like little humans. Mintel highlights that the trends in human food consumption are being witnessed in the pet food market, for example organic and provenance-assured foods are becoming prevalent.

The key insight this gives into the nature of the relationship between owner and pet is that the mutual bond is very strong and there are many owners prepared to spend above and beyond the basic costs of pet ownership in the same way parents invest in their children.

Mintel research also gives detailed information which enables us to understand the demographic and attitudinal profiles of pet owners. The profile of cat and dog owners is quite different.

In broad terms cat owners are young females, working full time and of higher socio-economic groups. Their internet usage is higher than average and their TV usage is lower. They are generally in one or two person households.

By contrast, dog owners show an even male-female profile, however they are owned by lower socio economic groups. They are heavy TV watchers, light internet users and more likely to be in family life-stage and therefore larger households.

Females are more likely to view pets as part of the family and are more likely to agree with the statement that pets are good company. Females place greater value on the companionship and emotional bond of pet ownership and more likely to claim to treat their pets like children. The maternal instinct is a constant and enduring part of the pet ownership experience for females.

Men are more likely to claim that their pets can look after themselves!

Up until now there have been basic devices available which attempt to track lost animals using RFID technology (for example Loc8tor with line of sight and limited distance) or expensive systems utilising GPS like RoamEQ and Snooper.

PetTrak was launched in 2010 by a start up company called eMotive Data Ltd, to address what they saw as a market gap for a mid-purchase priced but high service product. eMotive Data’s research showed zero customer awareness of competing brands however details of each competitor are mapped out below.

The PetTrak proposition was one of marketing leading technology and added value services. None of the current brands were seen as effective in terms of marketing; offering stand alone services and limited interaction with the customers once the device had been sold. There was no evidence of an ongoing relationship between brand owners and customers.

Launching in the Spring of 2010, the objective is to move toward a purchase price of £40-50 with a monthly fee of between £5 and £10 depending upon the level of services subscription (see trajectory). Target sales in the first year are 15,000 units making a revenue forecast of £1.5m, rising to nearly 100,000 units in third year with revenue of over £11m.

eMotive Data expect to obtain a high gross profit allowing substantial advertising and promotional activity £137k in year one, rising to £533k in year 3; a total spend over three years of £1m

2012

2011

2013

Personal Selling

Initially targeting grocery multiples due to the scale that can be reached through a single buying contract. Over years two and three regional sales forces will be developed to target independent retail outlets and vets. Bespoke branded point of sale material and merchandising unit will be given to stores.

Public Relations

Secure key brand ambassadors in the public eye. Appealing to women aged 25-35 are celebrities like Fern Cotton and Holly Willoughby who publically support pets’ charities. Marc Abraham celebrity vet from the Paul O’Grady show. Cheryl Cole represents a growing trend of visible celebrity pet ownership.

For makes the emphasis will be placed on opinion leaders in technology and those who bring out the fun side of pet ownership. Jeremy Clarkson and Jason Bradbury of the gadget show and Jonathon Ross as a male celebrity pet owner.

Direct Marketing

Mainly on line their targeting via facebook (46,120 people) and a similar number on thepet.net.

Sales Promotion

Limited promotional activities based around incentivising customers to recommend friends as the single most cost effective method of attracting new subscribers.

Advertising

Advertising will be based mostly around advertorials in key publication to drive awareness and knowledge of the concept and brand. In year two, a major campaign is proposed on the side panel of a major petfood brand, such as Whiskers, will be rolled out Outdoor advertising media will be developed in year three.

How it Works

Combining GPS and GPRS technology the device relays the cat or dogs position (accurate to a few meters) back to a secured server every two minutes. This allows 24/7 real time tracking and near total UK coverage without the problems of “line of sight” or limited radius associated with some products.

The pet can be located by accessing any PC or mobile phone connected to the internet. Additional valued added service include

Automated proximity alertsReplay of pets movements for the dayAutomated daily emails giving a breakdown of the pets activityOn-line activity league tablesAn igoogle application for easy constant updateiPhone/iPodtouch applications for quick updates

Distributors

The majority of sales for pet accessories go through pet shops and grocery multiple. The pet shops trade channel is relatively fragmented, with a small number of multiple chains (like Petsathome, Petplanet etc) and a larger number of independent stores. Grocery multiple sales for non-food items are heavily concentrated amongst the major players (Tesco, Asda, Argos, Wilkinson etc)

Components

GPS/GPRS chips: these are readily available but undergo rapid changes in technological advancement. Companies like SiRF being seen at the leading edge of development of patented devices, but older technology

integrate chipsets suitable for this application are imported directly from generic suppliers (mainly in China). Pre-fabricated Modules (see above) could available as an alternative, but more expensive, source. All of these companies are used to supplying large volumes directly to major manufactures or via electrical wholesalers to smaller customers.

Microcontroller chips and rechargeable batteries are generally commodity products (with the exception of very high specification batteries) available via wholesalers.

SIMS cards from mobile operator (charging monthly fee for data charges)

Collars are sourced directly from standard pet collar manufacturers

The entire unit is sealed in an injection moulded plastic casing sourced locally. (limited colour variants are available)

Similarly, packaging is locally source

All the products are identical in terms of the

main technology, however, the collar, the casing and the packaging will vary by size of the animal.

Questions

1/ Perform a Five Forces Analysis on the case

2/ If you were a director of Petrak, what insight does this analysis give you into the priorities and problems for your first year of operation?