First in Show Pet Foods, Inc.

Case Analysis
Submitted To: Dr. Thomas B. Clift Prepared By: Tong Li Student Number: 200906154
Date: 2011/10/12
Introduction
First in Show Pet Foods is a major producer of dog food for show-dog kennels in the
U.S. Show Circuit, major product of the company, would dramatically improve the
dog`s coat. It is a completely balanced frozen dog food, which is of the finest
quality and has been used and recommended by professional show-dog owners for
years. First in Show now faces the decision of whether to make the transition from
the kennel market to the retail dog foods market in the Boston area.

Case Problems, Issues

The major problem for First in Show Pet Foods is whether to make the transition
from the kennel market to the retail dog food market. Several issues need to be
resolved regarding this problem. First, whether the market itself is completely
defined and segmented. Second, what positioning strategy should the company use to
target the retail dog foods market and what distribution channel should be
capitalized? Third, the selling price is undetermined and whether the company could
achieve 15% profit in its introductory year.

Objectives
The objective of this report is to solve the problem identified above by defining
the issues; in addition, to provide a recommendation for the First in Show dog
foods, Inc.
Analysis
Market situation Exhibit 1: Market Matrix Market Matrix Dry (Boston Area)
Supermarket & $28.08M grocery stores Mass merchandisers Total 23.4% $49.92M 41.6%
$78 M 65% $6.48M 5.4% $11.52M 9.6% $18M 15% $8.64M 7.2% $15.36M 12.8% $24M 20%
$43.2M 36% $76.8M 64% $120M Canned Treats Total

As shown in the table above, the dog foods are distributed through two major
channels, supermarket and mass merchandiser, in Boston area; each account for 36%
and 64% of the total market share separately. Because the introductory program
target the supermarket as its distribution channel due to the need for
refrigeration, the efforts of this report will be focused on the supermarket &
grocery stores channel. Under the channel, the market is divided into three major
categories. Dry dog foods account for 23.4% of the total market share. In this
category, five major competitors hold 68% of the market. The second category,
canned dog foods, account for 5.4% of the total market share with four major
competitor; they capitalize on 88% of the market. For the treats category, there
are three major competitors. They control 73% of the market,
which account for 7.2% of the total market.

There are five major competitors in the market through the major three forms of dog
foods in 2008. They are Nestle, Iams, Hill`s Pet Nutrition, MasterFoods USA, and
Del Monte Foods, Inc. They account for 75 percent of U.S. dog food sales in 2008.
As we look through each category, it`s obvious to find that Nestle has two brand
names in each of the category. Thus, Nestle is our major competitor in compare with
other national brands.

SWOT analysis Strengths    Premium high quality dog food. Specialized frozen dog
food. Weaknesses   New product name in the market. Expensive price. Difficulties
of product distribution and placement due to the frozen requirement.

Exclusively been sold to show-dog  kennels.

The product has the benefit of improving dog`s coat.

Being the first organic food that will be marketed in Boston areas.

Opportunities  The growing population

Threats of  Competitor of 50 dog food

dog-ownership.

manufactures and 350 dog food



The growing popularity of organic dog food. 

brands in U.S. 5 major companies accounted for 75% market share. Nestle is the
leading U.S. dog food advertiser. Distributions acceptance to provide freezer space
in their store.

The estimation of Boston area is 1.2 percent of the U.S. population and  the
average expenses of dog food.

There is no complete frozen dog food  being introduced in Boston areas.

Marketing Mix 1. Product Show Circuit is a unique dog food which is originally for
show dogs. It is formulated to improve dog`s coat. Show Circuit is packaged in a
15-ounce plastic tube with 12 tubes per case.

2. Price Exhibit 2: Competitor`s Price Price per oz 0.066 0.07 0.09 0.057 Retail
price 8.49 8.99 11.59 1.25 Form Dry Dry Dry Canned Packaging 8 lbs 8 lbs 8 lbs 22
oz Brand Dog Chow Mealtime Iams Alpo Cuts Prime
0.125 0.254 0.154 0.549 0.677

0.69 0.89 3.69 5.49 3.70

Canned Canned Treats Treats Treats

5.5 oz 3.5 oz 24 oz 10 oz 5.6 oz

Mighty Dog Cesar Select Mike Bone Beggin`s Strips Pup-Peroni

Exhibit 3: Trade Margin Marketing channel Unit cost of goods Unit selling price
sold Manufacturer Distributor Retailer 7.87 9.26 9.96 9.26 9.96 12.77 15% 7% 22%
Gross margin

In order to achieve 15% gross margin, the selling price of Show Circuit to consumer
is determined to be $12.77 per case. In term of unit price, it is $0.851 per oz.
Thus, it is reasonable to position Show Circuit at the super premium dog food when
compare with competitors.

3. Promotion The promotion objectives for company are:    Create awareness of

the new brand Obtain distribution through supermarket outlets Motivate trial
through coupon redemption


Motivate trial through emotional impact of television

4. Placement Because the Show Circuit is priced at $0.851, which is higher than
other brand, the exclusive target market will be the super premium dog foods
market. Thus, the ideal distribution channel for the Show Circuit is the
supermarket which dispenses 36% of all dog food sold in the U.S. and complies with
the idea of the brand, which is to treat your dog as a family member.

Alternatives
Based on the analysis, there are three alternatives for the First in Show Pet
Foods. 1. Introduce the program with a budget of $500,000. 2. Introduce the program
with a budget of $700,000. 3. Do not run the program ant stick with kennels and
show dog markets.

Analysis of Alternatives
1. Introduce the program with a budget of $500,000. Exhibit 4: Break-even analysis
of the introductory grogram Program budget Slotting fee Total expense Unit variable
cost 500,000 30,000 530,000 7.87 700,000 30,000 730,000 7.87
Unit revenue Gross margin Break even quantity Selling price to consumer Break even
sales volume

9.26 1.39 381,295 12.77 4,859,137

9.26 1.39 525180 12.77 6,706,649

If the company take the introductory program with a budget of $500,000, First in
Show has to sell 381,295 cases of Show Circuit to achieve the break-even. At the
15% of gross margin per unit, the break-even sales volume for the company is
$4,859,137. That is to say, the company has to grab the 11.2% of the total market
through the supermarket channel in Boston area. Pros    Capitalize the retail
dog food market which has a huge growth potential. It is easier to achieve break-
even than the $700,000 program. Build brand awareness in retail market.

Cons   The company may not attract enough awareness with lower budget. Risk of
failure.

2. Introduce the program with a budget of $700,000. If the company runs the program
at the budget of $700,000, the company has to achieve the sales volume of
$6,706,649, which represents 15.5% of the market share
in Boston area, to reach bread-even. Pros   Grab the huge potential market as a
growth opportunity. Create more public awareness in the market than $500,000
program.

Cons    Incur Higher Risk of failure. Company has to perform better to achieve
break-even. It is harder to go back if the program fails.

3. Do not run the program ant stick with kennels and show dog markets. Pros    
Continued success as a well known brand. Continue with high profits and low
production and distribution costs. No cost associate with product introduction. No
risk of failure.

Cons   Opportunity cost of losing a new market. Growth opportunity is limited in

existing market.

Recommendation
Based on my comparison among the alternatives, I recommend First in Show Pet Foods
to run the introductory program with a budget of $500,000. There are several
reasons associate with my recommendation. Firstly, opportunity for growth is great
in the retail dog foods market. If the company runs the program, it will have the
opportunity to be the first to tap the vast market. Secondly, in terms of
competition, Show Circuit is completely a new brand that differs from the
competitors in the existing market which could be used as a competitive advantage
against its competitor. Also, the guilt concept that applied to the Show Circuit
customer would attract more potential customer who treat dog as a family member and
stand outside of the existing market. Thirdly, the budget of $500,000 will make it
easier for First in Show Pet Foods to achieve break-even in its introductory year
and lower the risk to the company.

In order to succeed in the introductory program, the First in Show Pet Foods should
make a clear definition for its market segment which is the high end dog raisers
who would spend more on their dogs than those who buy Dry, Canned, and Treats. In
addition, Show Circuit should be positioned as super-premium dog food in frozen
state and only target toward the high-end segment because of the inherent high
quality of the brand.