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executives looked forward to thei r meeting with representatives of Marketing Momentum Unlimited, a marketing and advertising consulting firm. The purpose of the meeting was to review the introd uctory program for First in Show’s entry into the retail branded dog food market in the Boston, Massachusetts, metropolitan market area. First in Show Pet Foods, Inc. executives viewed the retail dog food market as a growth opportunity for Show Circuit, its primary brand, following discussions wi th food brokers. These brokers had become aware that a product similar to Show Circ uit was being sold in the freezer section of selected supermarkets in a few cities i n the southwestern United States. ■ THE COMPANY AND THE PRODUCT First in Show Pet Foods, Inc. is a major producer of dog food for show-dog kenne ls in the United States. The company has prospered as a supplier of a unique dog food for show dogs called Show Circuit. Show Circuit was originally formulated by a mink rancher as a means of improving the coats of his minks. After several years of research, he perfected the formula for a specially prepared food and began feedi ng his preparation to his stock on a regular basis. After a short period of time, he no ticed that their coats showed a marked improvement. Shortly thereafter, a nearby kenne l owner noticed the improvement and asked to use some of the food to feed his dogs . The dogs’ coats improved dramatically, and a business was born. Show Circuit contains federally inspected beef by-products, beef, liver, and chicken. Fresh meat constitutes 85 percent of the product’s volume, and the highes tquality fortified cereal accounts for the remaining 15 percent. The ingredients, with no additives or preservatives, are packaged frozen to prevent spoilage of the fr esh uncooked meat. ■ PACKAGING AND DISTRIBUTION MODIFICATIONS First in Show executives recognized that modifications in the packaging of Show Circuit would be necessary to make the transition from the kennel market to the retail d og food market. After some discussion, it was decided that Show Circuit would be package d in a 15-ounce plastic tub, with 12 tubs per case. The cost of production, freight, an d packaging of the meal was $7.87 per case, which represented total variable costs. This case was prepared by Professor Roger A. Kerin, of the Edwin L. Cox School o f Business, Southern Methodist University, as a basis for class discussion and is not designed to ill ustrate effective or ineffective handling of an administrative situation. Certain names have been disguised. Copy right © 2009 by Roger A. Kerin. No part of this case may be reproduced without written permission of the copyright holder. 118
Yet. 119 The discussions with food brokers indicated that distribution through supermarke ts would be best for Show Circuit because of the need for refrigeration. Show Circuit’s history of blue-ribbon winners is another plus. What position would Show Circuit seek in the market? Should the program be targeted toward all dog food buyers or toward specific segments? 3. Show Circuit is essentially a new product and is unknown to the general public. to market Show Circuit successfully. The fact that Show Circuit will be the only dog f ood located right next to “people food”in the frozen food section of the supermarket is an advantage that must be capitalized upon. Was the market itself adequately defined and segmented? 2. One question that was never asked but that plagued First in Show executives was “Will this program establish a foothold in the market for Show Circuit?”This dir ect question implied several subissues: 1.000 to $700. ■ THE MEETING Company executives listened attentively to the presentation made by representati ves from Marketing Momentum Unlimited. in spite of this history. The Situation Our goal is to introduce and promote effectively the sale of Show Circuit dog fo od in the Boston market area in 2009. Show Circuit is a completely balanced frozen dog food. although it would certainly stretch their promotional budget. During the course of the meeting.FIRST IN SHOW PET FOODS. Supermarkets typically receive a gross margin of 22 percent of their selling price for dog foods. which company executives consi dered reasonable. What should be the recommended selling list price to the consumer for Show Circuit? 5. which had yet to be determined. ■ PROPOSAL OF MARKETING MOMENTUM UNLIMITED The following is an excerpted version of the proposal presented to First in Show executives. Could First in Show Pet Foods. The questions were primarily designed to clarify certain aspects of t he program. Show Circuit is among the costliest dog foods to prepare and will be available through supermarkets. achieve a 15 percent return on sales in i ts introductory year? First in Show executives realized that they had to answer these questions and others before they accepted the proposal. what the packaging . The cost of the proposed plan could be $500. First in Show executives raised a number of questions. in essence. Inc. Could the food brokers get distribution in supermarkets given the sales program? 4.000. exclusive of slotting fees. INC.we must accomplish two objectives: • Make the public aware of the brand name of Show Circuit. So. Food broke rs would represent Show Circuit to supermarkets and would receive for their service s a 7 percent commission based on the suggested price to retailers. Excerpts from their presentation follow. It is of the finest quali ty and has been used and recommended by professional show-dog owners for years.
These higher-quality-higherpri ced dog foods have fueled the growth in dog food sales along with the increase in dog ownership.S. The Environment Sales of dog food will total about $10 billion in 2009 at manufacturers’ prices. exp . The U. For example.” Not surprisingly. veterin arians (6%). and needs. The top claims for new dog food product introductions for the per iod 2006–2007 compared with 2007–2008. S till.looks like. and vitamin-and-mineral-enriched claims made for new product introductions.2 All-natural 107 138 29. research shows that “A person who owns a dog actually identifies with the pet. MARKET SEGMENTATION. feelings. A fourth trend is the growing emphasis on all-natural.6 billion in sales at manufa cturers’ prices. clothing.2 percent of the dog population since dog and human populations are highly correlated). no additiv es or no preservatives. These percentages also apply to the greater Boston market. illustrates this trend: 120 CHAPTER 4 OPPORTUNITY ANALYSIS. pet superstores such as Petco and Petsmart (20%). population (and 1. The other 64 percent is sold by mass merchandisers such as Wal-Mart (25% ). which means the dog food industry has yet to tap its full potential. the dog food ind ustry has benefited from increasing dog ownership. fewer than half of the dogs in the United States are regularly fed prepared dog food. A third trend is the growth in premium and superpremium dog foods. shown below. it comes as no surprise that dog owners spend more than $20 billion annually for veterinarian f ees. spurred on by the owners’ desire for companionship or need for protect ion. and the fact that Show Circuit is a high-quality dog food. owned-dog population of 65 million. 75 percent of dog owners consider themselves “Mom and Dad” to their animal companion s and 95 percent pet and hug their dog every day. Four trends indicate that this optimism is well founded. the Boston market is ideal for launching a new dog food. accessories. Also. assigning human charact eristics to the dog such as language. medication for dogs. Finally.7 Vitamin-/mineral-enriched 94 144 53.S. • Direct dog owners to shop for dog food in the frozen food section of supermarkets. which represents $3.0 The choice of supermarket distribution focuses on the single largest retail chan nel for dog food. Therefore. Supermarkets (and grocery stores) dispense 36 percent of all dog food sold in the United States. and furniture. First.We estimate tha t the greater Boston area has 1. thoughts. and Internet retailers and independent pet stores (6%).2 percent of the U.and dog toys. farm/feed stores (7%). A second important trend is that pet owners continue to invest their animal companions with human q ualities and view them as members of the family. is growing steadily and is expected to continue growing. AND MARKET TARGETING Claim Frequency in Percent Claim 2006–2007 2007–2008 Change No additives/No preservatives 95 146 53.
dog foods fall into thr ee categories:dry. Pedigree Mealtime (Masterfoods).S. Private label dog food accounted fo r about 9 percent of total supermarket dog food sales. Until Show Circuit’s program breaks. such as 88% Alpo (Nestlé). Iams (owned by Procter & Gamble. Kibbles ’N Bits (Del Monte). Inc. The Problems and Opportunities Introducing a New Dog Food in a New Form This is an opportunity to educate the consumer. such as 73% Milk Bone (Del Monte). Hill’s Pet Nutrition is prominent in pet superstores and veterinarian offices. The Competition There are about 50 dog food manufacturers and 350 dog food brands in the United States. Cesar Select (Masterfoods). . MasterFoods USA. Dog Chow (Nestlé).). Competitor advertising spending and forms of advertising used will be major considerations in planning Show Circuit’s introductory marketing strategy. MasterFoods USA (owned by Mars. INC. and Del Monte Foods brands are most prominent in the supermarke t/ grocery store and mass merchandiser channels. Beggin’ Strips (Nestlé).). Iams (Iams) Private Label (Store) brands 8 Other (Regional/Local) brands 4 100% Treats 20% National brands. Busy Bone (Nestlé) Private Label (Store) brands 12 Other (Regional/Local) brands 15 100% 122 CHAPTER 4 OPPORTUNITY ANALYSIS. canned. and treats. dog food advertiser. 121 E X H I B I T 1 Major Dog Food Categories and Brands in Supermarkets Category Share of Dog Food Brand and Category Share Category Total Dog Food Category Brands Category Share Dry 65% National brands.— accounted for about 75 percent of U. Inc. such as 68% Beneful (Nestlé). Exhibit 1 shows each category’s supermarket sh are of dog food and brand shares in each category based on our research. Iams (Iams) Private Label (Store) brands 7 Other (Regional/Local) brands 25 100% Canned 15% National brands. Total spending for advertising in the dog food industry is about 2 percent of sales. Inc. MARKET SEGMENTATION. dog food sales in 2008. However. Hill’s Pet Nutrition (owned by Colgate-Palmoliv e Company). five companies—Nestlé Purina PetCare (owned by Nestlé SA).enditures for pet products in the Boston market approximate the national average. Nestlé Purina PetCa re.S. N estlé Purina PetCare is the leading U. AND MARKET TARGETING Canned dog foods average about 75 percent moisture and 25 percent solid material s. Mighty Dog (Nestlé). and Del Monte Foods. FIRST IN SHOW PET FOODS.
6 oz. Microwave instructions are a possib ility. they are also conc erned about the health and welfare of their animal companion. which sells for $4. usually well rounded. consumers are willing to pay premium prices for organic dog foods.5 oz.79/5. Show Circuit’s quality suggests a premium price. Cesar Select $ . All these product forms are typically marketed in the same area of the store. This product is often pl aced near ice cream.49/10 oz. They are chewy. are not recommen ded as a complete food. Alpo Prime Cuts $1. Pieces. suggestions for quick thawing. For example. The opportunity to capitalize on the growing popularity of organic dog foods. Pup-Peroni $3.5 oz.29 for a fivepound package.69/5.7 ounce can for $2. Beggin’ Strips $5. 3. a frozen dog food sold in selected supermarkets in Texas. Creative Strategies Positioning Show Circuit will be positioned as the finest dog food available at any price and the only thing you will want to feed a dog that is truly a member of t he family.89/3. Mealtime $ 8. Iams $11. Lack of Appeal of Frozen Dog Food We can quickly turn this problem into an asset in our advertising (“the first dog food made to appeal only to dogs”).59/8 lbs. while tasty. They report that Bil Jac.25/22 oz. This view is supported by the food brokers who first recognized the opportunity for Show Circuit. Dog treats have a wide variety of ingredients and. Fortunately. The opportunity to be first to tap the vast market potential of a complete frozen dog food in Boston supermarkets. Therefore. Target Market We believe Show Circuit advertising should be targeted at singles . Dry dog foods are usually produced as flakes. Overcoming Objections to Frozen Dog Food An objection must be anticipated regarding the requirement for thawing time and freezer space. 2.They are marketed either as complete foods or as supplementary foods. Milk Bone $3. some of the pioneering work has been done already. or large chunks con taining about 15 percent moisture and 85 percent solids. Organic dog food sales grew 64 percent last year.19 for 14 fluid ounces. Mighty Dog $ . The opportunity to lay the groundwork for Show Circuit’s national market roll-out. and more economical than canned foods. Furthermore. Pricing We have considerable latitude in pricing as shown in Exhibit 2.69/24 oz. Summary of Opportunities We see Show Circuit seizing upon three opportunities: 1. A few Boston-area supermarkets carry a frozen dog treat called Frosty Paws. we should state on the container the thawing time.99/8 lbs. while dog owners in general are price sensitive. small pellets.49/8 lbs. Newman’s Own Organics dog food is sold in a 12. h ow long the food will keep in the refrigerator. E X H I B I T 2 Representative Dog Food Brands. While still a small share of the total dog food market. The consumer must now be taught to shop for dog food in another part of the store—the frozen-food section. and Package Sizes in Boston-Area Superma rkets by Product Form Dry Foods Canned Foods Dog Treats Dog Chow $ 8. carried a retail price of $5. plus a gentle reminder to pull that container out of the freezer in the morning.49.
Special-interest ads will appear i n the society. Because of the prove n qualities of television. Prime objectives are to regis ter the brand name and the package design in the viewer’s memory. However. compared with 71 per cent of parents with younger or older children. Television will provide access to a mass audience. Also. and the immediate follow-up will be ready. over 63 percent of households with incomes greater than $25 . an d 73 percent of young. The dog sleeps on t he bed and has free run of the house or apartment. and care according to research by the American Vet erinary Medical Association. the introductory ads will be r eady. childless couples. Now your dog can eat what show champions have been eating for years All these will be touched on as the campaign progresses. Creative Directions Initially. Only 30 percent of older singles and 41 percent of retired couples spend money on pet s. and roommate households regard their dogs as part of the family. and the copy will emphasize Show Circuit’s quality. Income also plays a role in pet spending. The reason is that single adults and married couples. 000. with and without children. supplies. sports. in the most persuasive form po ssible. proven crucial to a successful introduct ion in the pet food market. Sales Packet The sales packet given to brokers should include. the radio spots will be ready. more retentive audience with facts to justify all claims. This unusual media placeme nt is warranted by the product’s unique qualities. The guilt concept (shouldn’t your dog eat as well as you do?) 4. They will also supply a coupon. a variety of concepts can easily be applied. the television spot will be ready. 72 percent of roommate households.000 spend money to keep a pet. O nly 48 percent of households with annual incomes of less than $12.and marrieds between the ages of 21 and 54 with a household income greater than $25. television. an imaginative and all-important emotional approach wil l be taken. The world’s finest dog food 3. each with adequate justification: 1. and dining-out sections. The luxurious fur coat 2. . placement in these sections wil l pull a relatively low promotional budget out of the mass of food-section adverti sing. When the product goes national. Industry research indicates that 79 percent of parents with school-age children buy pet food and supplies. Newspapers will supply a smaller. Geographical Directions The entire campaign has been designed to accommodate product introduction outside the Boston market area.000 invest in pet food.We see little initial opportunity in targeting older househo lds. Concepts Because Show Circuit is such a unique product. the campaign will focus attention on product identification and an introductory coupon offer. The container and coupon will be prominently displayed.
each ad will show the container. Information about Show Circuit 6. Some 15 percent of new products introduced to superma rkets each year are aimed at the freezer case. Th e print campaign will open with an attention-getting ad with a brief product histo ry. Print media will be utilized to positi on the product against its competition by comparing it to canned and dry categories. Media Plan Because dog food is heavily advertised. The copy block dealing with Show Circuit will turn the problem of Show Circuit’s being frozen into a product advantage. Because of the organizational modes of supermarket buying departments. Two major problems have to be overcome. Information about the container 7. 123 3.000 fo r slotting fees paid to supermarkets to buy freezer space. Both the container and the ads will show a variety of breeds from show dogs to mongrels. Reprint of ads and TV storyboard 11. The most pressing problem is seen as the difficulty of finding the food in the supermarket. Eighty percent of these products fail. Instead. Sample shelf strip The packet should be designed to persuade the supermarket frozen-food buyer to provide freezer space to Show Circuit. the artwork reprodu ced on the container will be used. The other major problem involves the us ual higher margin for frozen foods. Order information 10. Profits available in the dog food category 2. INC. Promotional schedule 9. User endorsements 8. First in Show must follow suit to compet e.the following categories of information: 1. Suggested manufacturer’s list price to consumers and quantity discount schedule 5. The task will not be easy.we will no t be dealing with the regular pet food buyer. it will be necessary to per suade the frozen-food buyer to stock Show Circuit. It will be necessary to persuade the buyer that greater product turnover will compensate for a potentially lower margin for Show Circuit . The myth/fact format in newspapers will be utilized to take advantage of the current publicity dealing with the nutritional value of all-meat dog food and th e continued trend toward more natural foods (see Exhibit 3). No single breed of dog will be associated with the product. Market potential 4. At th e top of each of the ads designed to position the competition. Chain store acceptance of dog food FIRST IN SHOW PET FOODS. In order to give the campaign continuity. . Creative Strategy by Media Creative strategies will differ by media. Television will carry the brunt of the attack. so the TV spot will empha size location. It is highly likely First in Show Pet Foods will need to budget about $50.
and newspaper advertising will be placed on Thursday of the following week. c ontaining fact sheets. it contains all the vitamins relieved your dog needs. Newspaper insertion will be coordinated with TV flights. gives the food broker an impressive story to tell to the supermarket buyer. as puppy pops out of Remember. Fixed space will be purchased within the first half-hour of the progr am. FIRST IN SHOW PET FOODS. MARKET SEGMENTATION. is the main purpose of collateral advertising. and testimonial letters. The remainder of the budget will reach daytime and nighttime audiences. This is recognized as the critical stage of the campaign. Remember. boy hides dog. full-page ads will be p laced in Dog Fancy magazine for distribution throughout most of the Boston market area . A somewhat frowzy. AND MARKET TARGETING Collateral Advertising Accomplishment of objective 2. The sales packet. it doesn’t come in a can.General Media Strategy Advertising objectives are as follows: 1. 125 E X H I B I T 3 Show Circuit Print Advertisement semigreedy woman is shown enjoying a steak dinner—in contrast to an unappetizing cylinder of canned dog food. A second TV spot will emphasize location of the food in the supermarket. Create awareness of new brand 2. Newspaper/Magazine The primary purpose of newspaper advertising is distribution of coupons into the market. Manager walks by. the TV storyboard. shelf strips. The second phase of coupon distribution will be effected through 30-inch ads in the same newspapers. INC. Obtain distribution through supermarket outlets 3. Motivate trial through emotional impact of television 124 CHAPTER 4 OPPORTUNITY ANALYSIS. This will be accomplished by half-page ads in major Boston newspapers. Close-up of boy. getting distribution in supermarkets. The spot ends on a close-up of the product. Two basic approaches can be used for 30-second TV spots. Television The bulk of the budget will be placed in TV production and time. AND MARKET TARGETING Video Audio Supermarket—long establishing shot of Announcer:There are many things to small boy with bulge under jacket remember about new Show Circuit. middleaged. Each fli ght will begin on a Monday. Motivate trial through coupon redemption 4. for without sufficient distribution. . looks Remember. As a secondary means of distribution. Show Circuit is a perfectly balanced diet of meat and enriched cereal. The first approach capitalizes on the love of pet owners for their dogs. MARKET SEGMENTATION. A final coupon distribution will be made through a 30-inch ad m idway through the campaign. top of jacket champion dogs have eaten it for years. A sizable portion of the time budget will be spent on The Late Show with David Letterman. A description of the video and audio characteristics of this spot is as follows: 126 CHAPTER 4 OPPORTUNITY ANALYSIS. A sketc hed storyboard for this spot is shown in Exhibit 4. Close-up of sign indicating pet foods Remember. consumer advertising will be delayed. although it’s new to you.
750 9.was launched with a $10 million advertising eff ort. a premium dry dog food.500 Collateral (sales pack) 9. . We believe that this expenditure is reasonable.000 $529.000 $700.000 Televisiona $359. with fewer calories than regular Alpo. A line extension.000 Newspapers/Magazineb 100.250 5.750 Miscellaneous 5. E X H I B I T 4 Show Circuit Television Spot Storyboard FIRST IN SHOW PET FOODS.250 Agency fees 25.Dolly shot of boy looking at competitive brands Close-up of boy and dog (sync) Boy: I don’t see it anywhere.000 (Exhibit 5). a higher initial expense is necessary. For a new product.000 slotting fee as bein g the only incremental costs associated with the launch in the Boston market. compartment remember you find Show Circuit in People turn to stare the frozen (bark) food section. about $34 million was spent on television and print advertising to introduce the hugely successful Beneful. Alpo Lite. b The difference in newspaper/magazine cost is due to a larger number of inserti ons in Dog Fancy magazine.000 or $700.500 130.500 25.500 Total $500. For instanc e. where Tilt down and zoom in on product you shop for other members of your family. 127 Program Budget The budget for the program described can be either $500. Boy walks out of store past frozen-food Announcer:But most important. E X H I B I T 5 Alternative Advertising and Trade Promotion Expenditure Levels for Show Circuit Budget Levels Item $500. since most major established brands are spending $7 million to $8 million annually for ongoing nationwide med ia promotion. Sparky.000 a The difference in television cost is due to the production of a second commerc ial and larger television schedule.We see this expense and the $30.000 $700. INC.
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