show circuit case
TRANSCRIPT
First in Show Pet Foods, Inc.
Show Circuit
MKTG 494 M/W Shield Jeremy Dunbar Roxanne Gahol Elizabeth Aroyan Anna Nguyen Jenn Mak
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Table of Contents Target Market........................................................................................................................................3 Competitive Analysis..............................................................................................................................................3 Porter's 5 Forces.......................................................................................................................................................3 Show Circuit SWOT.................................................................................................................................................8 Market Definition.....................................................................................................................................................9 Segmentation............................................................................................................................................................10 Strategy ............................................................................................................................................................. .........13 VALS .................................................................................................................................................................... .........14 Market Potential....................................................................................................................................................14 Market Share...........................................................................................................................................................15
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Target Market
Market/Competitive Analysis
Dog food industry profile
Dog foods fall into three categories: dry, canned, and treats
Dog foods are marketed either as complete foods or as supplementary foods
Sales of dog food will total about $10 billion in 2009 at MSRP
Supermarkets/grocery stores dispense 36% of all dog food sold in U.S., which
represents $3.6 billion in sales at MSRP
Other 64% is sold at mass merchandisers (Wal-‐Mart), pet super stores (Petco
and Petsmart), farm/feed stores, veterinarians, Internet retailers, and
independent pet stores
Organic dog food sales grew 64% last year
Porter’s Five Forces
Threat of intense segment rivalry: HIGH
50 dog food manufacturers and 350 dog food brands in U.S.
Five companies accounted for about 75% of U.S. dog food sales in
2008
Well-‐known brands will have more shelf facings because of larger
slotting fee budgets; the ratio of shelf facings typically indicates the
amount market share and awareness ratio
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Nestlé Purina Pet Care, MasterFoods USA, and Del Monte Foods
brands are most prominent in supermarket/grocery store and mass
merchandiser channels
Hill’s Pet Nutrition is prominent in pet superstores and veterinarian
offices
Private label dog food accounted for about 9% of total supermarket
dog food sales
Total spending for advertising in dog food industry is about 2% of
sales
Nestlé Purina PetCare is the leading U.S. dog food advertiser
Major brands are spending $7 million to $8 million annually for
ongoing nationwide media promotion
$34 million was spent on television and print ads to introduce Beneful
(premium dry dog food); Alpo Lite was launched with a $10 million
advertising effort. Show Circuit has $700,000 at most
There are some products similar to Show Circuit being sold in the
freezer section of selected supermarkets in a few cities (Frosty Paws,
Bil Jac, etc.)
Threat of new entrants: LOW to MEDIUM
Product development is required; attaining the firm-‐specific
knowledge of frozen dog food increases entry barriers
Product category and location is unfamiliar for pet owners to
associate with dog food; this raises advertising costs
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15% of new products introduced to supermarkets each year are
aimed at the freezer case; 80% fail
Frozen food brokers are unfamiliar with dog food, which reduces the
ease of gaining distribution and shelf/freezer space
However, the sales of higher-‐priced/quality dog food is growing, and
the potential profit margins are attractive
Threat of substitute products: MEDIUM to HIGH
Canned and dry dog foods are cheaper and more widely distributed
Reduced leisure time causes Americans to prefer ready-‐made food
Owners can prepare their own complete dog meals with ‘people food’
Threat of buyer’s growing bargaining power: MEDIUM to HIGH
Channel members
• Frozen food brokers will be hesitant to promote a dog food
because it is outside of their expertise and promises a lesser
profit margin
• Retailers have limited shelf/freezer space and do not have to
take on a product if they do not think it will create foot traffic
Consumers
• During economic recession consumers will be more price
sensitive and avoid premium products
• However, pets need to eat to survive, and if the owner wants
complete frozen dog food (not treats), there are no other
brands within Boston to switch to from Show Circuit
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Threat of suppliers’ growing bargaining power: LOW
The meat products can be provided by any supplier as long as they are
federally inspected to fulfill the product claim
The remaining fortified cereal may be more limited because Show
Circuit requires high quality, but it is still a widely available
commodity
The freezing process or plastic packaging required is not highly
specialized and can be performed by any supplier or the manufacturer
itself if vertically integrated
Major dog food brands
Beneful (Nestlé )
Strengths
• Well-‐known brand that claims quality, nutrition, and flavor
• Contains real chicken to offer protein and increase muscle
strength
• Includes vegetables, vitamins, nutrients, and minerals
Weaknesses
• Contains some low-‐quality ingredients such as corn and
chicken by-‐product meal
• Bad publicity because of protein claims supported by only
chicken by-‐product meal
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Kibbles ‘N Bits
Strengths
• Well-‐known, established brand
• Lower price in relation to competitors
• Healthful ingredient claims, such as protein and vitamins
Weaknesses
• Only a few varieties within brand lines
• Lower quality in relation to competitors
• Some unhealthy ingredients, such as corn, soybean meal, corn
syrup, and wheat
Pedigree
Strengths
• Well-‐known, established national brand
• Dry, wet, and dog treats with claims of healthiness
• Focuses on four core benefits: skin and coat, oral care,
digestion, and immunity
Weaknesses
• Low quality ingredients, such as corn and chicken by-‐products
• Unspecified meat and bone meal from waste meat
Iams
Strengths
• Established, well-‐known brand with wide distribution
• High quality products with vitamins and minerals
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• No additives or preservatives
• Variety of brand lines and products within lines
Weaknesses
• Poor brand perception regarding healthiness
• Low quality ingredients, such as corn and corn by-‐products
SWOT analysis
Strengths
Claim that product improves dogs’ coats holds validity
Used and recommended by professional show-‐dog owners for years
Federally-‐inspected and high-‐quality meat ingredients
History of blue-‐ribbon winning dogs, who used Show Circuit
Weaknesses
New products need costly introductions to the retail market
Costliest prepared dog food
Needs refrigeration (perishable)
Requires thawing time
Large packaging will discourage owners to purchase large volumes
because of the required freezer space
Opportunities
Growth in premium and superpremium dog foods
Higher-‐priced dog foods fueled growth in dog food sales
Increasing emphasis on all-‐natural, no additives/preservatives, and
vitamin-‐and-‐mineral-‐enriched claims
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Will be only dog food located right next to ‘people food’ so there may be
an advantage of gaining market share as a first-‐mover
Threats
Well-‐known dog food brands with bigger promotional and slotting fee
budgets
Economic recession discourages purchase of premium products
Frozen food brokers need to be persuaded that greater product turnover
will compensate for potentially lower margin
Being the only dog food located right next to ‘people food’ also means that
consumers will need to be directed to the new location inside retailers
away from the dog food aisle
Define Market
Demographics/behavior
Fewer than half of U.S. dogs are regularly fed prepared dog food
U.S. owned-‐dog population is 65 million
Owners desire companionship and protection
Owners personify pets with human qualities and view them as members of
the family (75% of owners consider themselves Mom and Dad to the dog)
95% of owners pet and hug their dog every day
Owners spend more than $20 billion annually for vet fees, dog medication,
dog toys, clothing, accessories, and furniture
Greater Boston area has 1.2% of U.S. population and 1.2% of the dog
population, assuming direct correlation
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Expenditures for pet products in the Boston market approximate the
national average
Owners in general are price sensitive but willing to pay premium prices for
organic dog foods
Owners are concerned about the health and welfare of their animal
companion
Segmentation
Criteria
Demographics
Income
• $25,000+; Show Circuit is the costliest dog food to prepare
• 63% of households with incomes greater than $25,000 invest
in pet food, supplies, and care
Ages
• 21-‐54
Gender
• Male and Female
Marital status
• Single: owners want companionship, protection
• Married: act as moms and dads of pets
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Family life cycle
• 2-‐4 kids: (79% of parents with school-‐age children buy pet
food and supplies compared to 71% of parents with younger or
older children)
• No kids: (72% of roommate households buy pet food and
supplies, 73% of young, childless couples)
Housing: houses and apartments/roommate households
Behavior
Decision-‐roles
• Decider: parents/singles
• Buyer: women are more likely to do the grocery shopping
• User: dogs may not enjoy the flavor and refuse to eat it up to
the point they begin starving
Usage: heavy users are less likely to shop on price
User status: first-‐time users because product is just being introduced
to the retail dog food market
Loyalty: we need shifting loyals to switch to Show Circuit but remain
loyal
Product features
The frozen aspect will mostly attract those who are familiar with
eating and storing frozen foods
The product improves dogs’ coats; this will attract show dog owners
or those that value their dog’s physical beauty
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Healthy, organic, and other premium quality features will attract
those concerned with dog’s health trends and are willing to pay to do
more than the bare minimum for their pet
Geographic
Show Circuit will launch in its headquarters, Boston, as a test market
and will hopefully gain concentrated market share
If successful, First in Show Pet Foods, Inc. may take Show Circuit into
Texas to compete against Bil Jac
Frozen food brokers
Although dogs are the end users, and owners are the purchasers, a portion of the
campaign will need to be designated to the frozen food broker segment to convince
them to help distribute the product through retailers. These brokers are
characterized by the following:
Profile
Market client products to a range of frozen food retailers and
wholesalers to get the maximum volume of sales possible
Offer either basic service or advanced options such as inventory
control and promotional efforts
Motivation
Work on a commission basis; you only have to pay them for the sales
they make
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Access to segment
Most are very well advertised on the Internet through their own
websites
Geographic
Most standard frozen food brokers only work in a small geographic
area, such as a specific town or county. Brokers within the Boston
area will be targeted
Strategy
Differentiation
Although there will be a concentration in the (frozen) dog food
market, various segments of dog owners exist with varying wants and
needs
Product specialization
First in Show Pet Foods, Inc. does provide multiple dog food product
lines; however, this particular campaign is only focused on the frozen
Show Circuit product, which will be marketed to multiple segments
within the retail dog food market not limited to the following:
• Show dog owners/kennel market
• General household dog owners
• Frozen food brokers
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VALS
Innovators
Purchases reflect cultivated tastes for relatively upscale, niche-‐
oriented products and services
Most receptive to new ideas and technologies
Believers
Conservative, conventional, and traditional people with concrete
beliefs
They follow established routines, organized in large part around
home, family, community, and social or religious organizations to
which they belong
Achievers
Successful, goal-‐oriented people who focus on career and family
Favor premium products that demonstrate success to peers
Because of their busy lives, they are often interested in a variety of
time-‐saving devices
Market Potential
There is growth in premium and superpremium dog foods and an increasing
emphasis on all-‐natural, no additives/preservatives, and vitamin-‐and-‐mineral-‐
enriched claims
Boston, Massachusetts has an estimated population of 1.2% of the U.S. population,
which was 305 million in 2009; therefore, Show Circuit can reach 3,660,000 owners
since dog and human populations are highly correlated. Fewer than half of the dogs
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in the United States are regularly fed prepared dog food, so we can assume that half
of Boston’s dogs, or 1,878,000 dogs eat prepared food and are potential customers.
Market Share
Major Dog Food Categories and Brands in Supermarkets
Category Share of
Total Dog Food
Dog Food Brand and Category Share
Category Category Brands Category Share
Dry 65% National brands, such as 68%
Beneful (Nestlé);
Kibbles ‘N Bits (Del Monte);
Dog Chow (Nestlé);
Pedigree Mealtime (Masterfoods);
Iams (Iams)
Private Label (Store) brands 7
Other (Regional/Local) brands 25
100%
Canned 15% National brands, such as 88%
Alpo (Nestlé);
Cesar Select (Masterfoods);
Mighty Dog (Nestlé);
Iams (Iams)
Private Label (Store) brands 8
Other (Regional/Local) brands 4
100%
Treats 20% National brands, such as 73%
Milk Bone (Del Monte);
Beggin’ Strips (Nestlé);
Busy Bones (Nestlé)
Private Label (Store) brands 12
Other (Regional/Local) brands 15
100%