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Is dog food an attractive category? In answering this question, please consider category size and growth rates, competitive intensity, competitive shares, advertising spending, and trends.

Is dog food an attractive category? In answering this question, please consider category size and growth rates, competitive intensity, competitive shares, advertising spending, and trends.

Introduction

Historically, for more than 10000 years, dogs have been the most popular pets in the world. During 2004, “there were 72 million dogs in the United States” and “lived in 37.2 percent of US households” (Calkins, 2010, p. 1). Additionally, in the same year, “there were about 43 million dog-owning households in the United States”, with most households had just one dog and 37.8 percent had two or more (Calkins, 2010, p. 2). A dog do not represent the purchase of an item for the home, on the contrary, it is a member of the family. According to the breed and physical characteristics, through the time, more than a pet, they have become a member of the family. Thanks to the love that the owners feel towards dogs, it generates a link where you give them an excellent quality of life; therefore, food is an attractive category.

According to Calkins, in 2004 “Dog food was a major industry in the United States, with total retail sales of $8.2 billion” (Calkins, 2010, p. 4) and “Globally the dog food category had retail sales of more than $23 billion” (Calkins, 2010, p. 5). The industry is composed of several well-known companies such as Nestle, Mars, and Procter & Gamble, who invest in innovation focused on the nutrition and health of pets, as well as market their products, making this a very competitive industry. In regards to advertisement, the case states that “Industry advertising surpassed $190 million in 2004”, amount invested in advertising and promotion such as print, commercial advertising on television, web-ads and commercials on radio, as well as other campaigns and events where they were sponsors.

Having analyzed the previous factors, we conclude that, considering category size and growth rates, competitive intensity, competitive shares, advertising spending, and trends, dog food is an attractive category. In the specific case of Pedigree prepared by the Mars Company, it is one of the most recognized brands in the market with a market share of 14.5%, which is the largest on the market. All companies seeking the same purpose to bring their advertising campaigns based on make happy both the dog and the owner, offering a product with beneficial attributes for the dog. In the specific case of pedigree, a change of go-to-market strategy focused on "the love of dogs" was created, in which the charge of creating the Marketing Plan is Julie Smith. To publicize this new strategy bells, advertising should reach the hearts of dog owners.

The dog food category can be segmented in several ways. Please identify at least three ways the dog food category can be segmented and the implications for brand marketing.

The food category may break down in the various segmentation methods pertaining to owners, dogs, and and food as follows:

  • Relationship between owner and dog
  • Dog owners demographic information
  • Type or size of dog

Under the first category segmentation it is based on the relationship between owner and dog, in other words, the connection between dogs and owner. Simultaneously, there are 4 sub-categories: dog as a child, as a grandchild dogs, dog as a friend, and dog as a dog. In the first two categories we found an owner who includes the dog, as part of their family they invest in all kinds of needs that arise in the dog, as well as generate needs to be happy with their new family member. Therefore, they invest a lot of money on their dog providing the best quality food and medicines. This is the most targeted category by dog food companies. In the third category, dog as a friend, the owner sees the dog as a company that offers friendship, best explained by an owner, as “Dogs are wonderful-loyal, fun, and loving They Provide great companionship and many hilarious moments, like when our dog Rocky got his head stuck in a box of cereal.” (Calkins, 2010, p. 4) This type invest only what is necessary to the dog. The fourth category, dog as a dog, are the minority group who do not create a strong link between the dog and the owner and do not spend much money on their dog.

On the other hand, the second category is based on the demographic information for dog owners: income, age, education, marital status, or housing situation. All these factors influence buying food for your dog. We can statistically analyze various scenarios. The majority of households, who have a dog, are those who have children, representing 77% more likely to own a dog as a pet compared to families without children. Parents like to create a link with the children and the dog, which creates responsibility. Also, the dog is a protective and friendly figure that they can also play with. Another example to analyze is whether or not owner owns a home. People who own their own homes have dogs according to the property in terms of size and breed. While for renters it is harder to have a dog. In many places do not rent if you have a dog or if you do, it can incur extra fees, increasing the cost of the dog maintenance. The last example is very interesting, is related to the level of education. According to the case " dog ownership decreased as education level increased: 41.6 percent of households with high school or less education owned dogs, compared to 32.2 percent of households with advanced degrees" (Calkins, 2010, p. 2). This indicates that people with higher levels of education dedicate more time to their careers, including jobs, and therefore they cannot have a dog. This type of owner buys a certain amount of food. Thus, companies must develop different size food packaging.

Lastly, the third category is based on the type or size of the dog. The canine population is very diverse, we find dogs from the teacup to Great Danes; as friendly as Labradors but as serious as the Pitbull; age of the dog: puppy, adult, or senior; pure or mixed breed. Depending on the breed type there is given conditions that the owners needs to take into consideration such as the different genetically health problems and special care they need. Food is a very important part for the health of pets; the owner should seek a specific food according to their characteristics. For this reason, companies innovate products for small dogs or large breed, puppies, adults, or seniors, for short hair or long hair, if you suffer from kidney or heart, etc.

A. Who are the influencers on brand purchasing and how has this changed?

There are many types of influencers on brand purchasing. The company that produces dog food through advertisement, as we have already mentioned, on television, radio, and Internet, directly influences some owners. Other owners are influenced indirectly through family, friends, social networks, veterinarian, and breeders. Earlier, the range of products was small, limited to dry and wet food. Now, new products such as snacks, treats, and frozen food were introduced. Also, other influencers were the veterinary and the breeder; they recommend a specific brand and type of food either at the time of the purchase of the dog or on a visit to check its health. Consequently, companies approach and maintain good relationships with dog breeders and veterinarians because they can get easy profits as they recommend their products. Moreover, the word of mouth from family or friends, based on experience, help owners to make a decision. Nowadays, the Internet has changed the way incorporating online research where owners can look food products in the market influenced them. There are blogs that talk about pros and cons of a specific food or brand, created by dog ​​owners " Magazines and online communities provided the latest industry news and allowed dog owners to communicate with one another and share stories." (Calkins, 2010, p. 5)

Are there high or low levels of brand loyalty and why?

Brand loyalty is very variable; depending on how loyal is the dog owner. In the case of the industry of dog food, the case says that " Most dog owners were loyal to a particular brand; there was limited switching in the category." (Calkins, 2010, p. 6). Consequently, the industry has high levels of brand loyalty. This loyalty is based on the experience that the owner has with the mark. The owners avoid giving food change that the transition from one to another can bring health implications as stomach upset, indigestion and gastrointestinal issues that could make the dog suffer. To prevent your family member or best friend suffer, or extra veterinarian expenses, the owners avoid to change their dogs diet.

What is the implication of this for Pedigree?

The implication of this for Pedigree is positive due to the high brand loyalty. It makes owners prefer pedigree rather than other brands, as well as, marketing savings and flexibility due to customer retention rather than getting new clients, also customers who re-buy or re-patronize Pedigree products. Usually loyal customers are forgiving and put behind bad experiences. In the case of Pedigree’s message "made with meat" and "recommended by breeders" buyers, who think that a balanced diet, less meat and more vegetables, provide a better health to dogs, did not positively perceive it.

In reviewing the Pedigree financial statements, how has the company been managing this brand?

In reviewing the Pedigree’s financial statements we can base on the information of the following table, from which we get an idea of ​​it’s spending: Figure 2. Pedigree U.S. Financial Highlights (Calkins, 2010, p. 14) In the table above, we see the operating profit and sales-related expenses. Throughout the last three years: 2002, 2003 and 2004, the cost of goods has decreased, due to the reduction in the cost of ingredients used to produce food. Consumers always relate the low price with low quality, particularly generating a negative impact on the health of the dogs, as well as, creating a bad image to the brand. Fortunately, companies in this industry are regulated by the same agency that regulates human food products, called US FDA (US Food and Drug Administration), that make rules, policies, and parameters in the production and distribution of dog food. Moreover, the advertising and promotions budget was reduced, giving competitive advantage to other companies. The result can be seen in increased revenues for 16.5 million, which represents 2.059%. Similarly, the profit increased slightly by 0.3 million, representing 0.5%.

What is the current positioning of Pedigree?

The current positioning of Pedigree is located in the mainstream tier, low price up in tier; differing from the latter by having a bit more quality at a low price of $ 20.99 per package of 40 lb. If we analyze sales percentage per tier, we can see that Pedigree is located in the group makes more sales, competing with brands such as Purina Dog Chow, Alpo and Kibbles' n Bits. Its products are distinguished by the convenience of its price and quality standard. These products are usually found in chain stores and supermarkets, making your purchase well located. In the following table we can see the four different tiers and their sales percentage:

What, if any, are there issues with this positioning?

As we mentioned earlier, an issue with positioning was because of the Pedigree's message "made with meet" and "recommended by breeders", previously mentioned, which does not achieve the purpose of attracting customers, given that dogs like meat they would love Pedigree. On the contrary, it was perceived negatively because the dog owner is looking for the dog’s good health, and a diet based on meat is not a balanced diet. Therefore, emotionally, it was not well perceived.

A. What options does Pedigree see moving forward?

The first approach of the company emphasizes on the brand’s go-to-market strategy. The company has to shift its focus from product concept to marketing concept. For this, the company has to focus particularly on the relationship between the dog owners and their pets. They have to emphasize on the “the love of dogs.”

Another approach is that the brand should invest in a price discount program designed to reduce prices and invest in the stores and retailers so that the company can get better shelf space, which they are losing, to other competitors.

Constant innovation and developing a line of healthier products that would match the Beneful formulations.

B. What are the pros and cons of each?

They will get better understanding of the owners’ attitudes towards their pets, and will have a clear idea about what an owner can to do get the best products or services for their pets.

The proclamation that Pedigree believes in dogs will help in building the brand loyalty among the consumers.

The proclamation that Pedigree believes in dogs will help in building the brand loyalty among the consumers.

For engaging this approach the company has to invest heavily on advertising and promotional tools, and this will lead to heavy expenditures.

Conclusion

Price discounts are important promotional tools and helps in attracting consumers.

Price discounts will help to attract consumers from different income groups, who earlier were not willing to buy the product due to its prices.

Though price discounts is short-term promotional tool, but in helps to find and keep customers in the long run.

Sometimes the customers perceive that the companies giving discounts or low rate, the products are not of good quality.

Investment is huge. The pros of research and development for developing quality products:

The company will be able to develop products that match the quality of the products from its competitors or it may be even better

Constant research will help to identify the needs of the consumers better and thus addressing them accordingly

Huge capital investment required

Long-term process

C. What do you recommend and why?

  • Change the focus of the marketing strategy
  • Continue with the same prices
  • Invest on advertisement
  • Implement marketing tactics

First of all, in relation to the marketing strategy of pedigree, the best decision is to change it to "the love of dogs." That is, the mark must be positioned with this new slogan, generating a positive reaction on customers, assuring them that they will receive a quality product, and good nutrition to your dog at a reasonable price. Second, it is important to consider the decision to go down to low price tier; the more you lower prices the more the dog owner will think it is of lesser quality. This image is negative to the owners who want their dog to have excellent health. Their perception will be a product of low nutritional content, harmful for their dog.

Third, in order to promote the new marketing strategy "the love of dogs" should be achieved based on an advertising campaign reaching out to the hearts of the owners; stressing how important it is their dog for Pedigree and that they always want the best for your pet. This will create customer loyalty, revenue increase, market shares increase, and profit increase. Fourth, in terms of reduction of price, Pedigree being a brand whose price is low, it will not generate a large increase in purchases if the price is decreased.

Developing other marketing tactics like coupons to make a purchase; a database through a page where loyal customer are registered and can see tips to take care of their dog; run promotions such as including a bag of 10 or 20 pounds for the purchase of a package of 40 lb., send coupons and promotional information via email to their customers. These technics will generate customer loyalty to Pedigree Brand, since there are not only showing interest their pet but on them.

References List

  • Calkins, T. &. (2010). Pedigree Growth Strategy. (N. University, Ed.) Kellogg School of Management,.
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