First

in Show Pet Foods, Inc.

Show Circuit

MKTG 494 M/W Shield

Jeremy Dunbar Roxanne Gahol Elizabeth Aroyan Anna Nguyen Jenn Mak

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

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 Porters 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

Nestl Purina Pet Care, MasterFoods USA, and Del Monte Foods brands are most prominent in supermarket/grocery store and mass merchandiser channels

Hills 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

Nestl 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

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 buyers 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

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 (Nestl ) 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

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 Iams Strengths Established, well-known brand with wide distribution High quality products with vitamins and minerals 7 Low quality ingredients, such as corn and chicken by-products Unspecified meat and bone meal from waste meat

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

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

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 10

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 dogs physical beauty

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Healthy, organic, and other premium quality features will attract those concerned with dogs 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 Bostons dogs, or 1,878,000 dogs eat prepared food and are potential customers.

Market Share
Major Dog Food Categories and Brands in Supermarkets Category Dry Category Share of Total Dog Food 65% Dog Food Brand and Category Share Category Brands National brands, such as Beneful (Nestl); Kibbles N Bits (Del Monte); Dog Chow (Nestl); Pedigree Mealtime (Masterfoods); Iams (Iams) Private Label (Store) brands Other (Regional/Local) brands Canned Treats 20% 15% National brands, such as Alpo (Nestl); Cesar Select (Masterfoods); Mighty Dog (Nestl); Iams (Iams) Private Label (Store) brands Other (Regional/Local) brands National brands, such as Milk Bone (Del Monte); Beggin Strips (Nestl); Busy Bones (Nestl) Private Label (Store) brands Other (Regional/Local) brands 12 15 100% 8 4 100% 73% 7 25 100% 88% Category Share 68%

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