ZENITH PET FOODS

E.GOWTHAM(9UTA11)
S.PARVADAVARDINI(9UTA19)
J.SANGEETHA(9UTA29)
M.UDAYA KUMAR(9UTA37)
R.M. DHANANJAYAN(9UTA45)
ABOUT THE CASE
 Zenith pet foods is a major distributor of dog foods for show

dog kennel in US
 Its purpose was to review zenith entry in to household dog

food market in Boston, Massachusetts.

 It sought the help of the marketing and advertising

consulting firm “Marketing Momentum Unlimited” for the

above purpose.
NATURE OF INDUSTRY
 Total dog food sales was $7.0 billion per year

 US dog owners population 65 million.

 Dog owners spend $20 billion annually as veterinarian fees

medication for dogs and dog toys, clothing, accessories and

furniture.
 There are 50 dog food manufacturers and 350 dog food

brands sold in the US, which captures 83% of dog food sales.
According to the
2009-2010 APPA National Pet Owners Survey, basic
annual expenses for dog owners in dollars include:

Surgical Vet Visits $532

Food $229
Kennel Boarding $273
Routine Vet $225
Groomer/Grooming Aids $66
Vitamins $61
Food Treats $64
Toys $40
NATURE OF INDUSTRY
 Dog food manufacturers spend about 2% of their sales for advertising.

 Annual advertising spending for established brands is $7 to $8 million for

nationwide media promotion.
 Main competitors are:

 NESTLE PURINA PET CARE

 IAM (P&G)

 HILLS PET NUTRITION(COLGATE PALMOLIVE)

 MASTER FOODS USA (MARS INC.)

 DEL MONTE FOODS

 PRIVATE LABELS (10% OF SUPER MARKET DOG FOOD SALES )

ECONOMIC TRENDS:
Growth in unique pet foods

Growth in pet services such as grooming, boarding, pet photography,

dog walking and pet sitting.

Growing interest in pet health care.

Continued steady increase in pet insurance, with at least two new

players arriving in the market.

More pet friendly environments.

Increased competition from large buyers.

ECONOMIC TRENDS
Large companies interact with small businesses behind the
scene on monetary investments and market alliances.
Industry consolidation with large buyers buying
promising, small players.
Increased online sophistication from new pet related
businesses in e-commerce, design and usability.
More meaningful pet related blogs.
Pet adoptions continue to grow.
 Boston area has 1.2% of US population (since dog
and human population are highly correlated).
SUPER MARKET SALES
SEGMENTATION
The household dog food industry consists of four
categories of food. These categories and the percent of total
dog food sales of each are shown below:

Super market and grocery stores dispense 36% of all

dog foods sold in United States which represents $2.5
billion in sales at manufacturers price.
ZENITH PET FOODS
 Zenith pet foods is a major distributor of dog foods for show dog kennel in

US.

 Show circuit was originally formulated by mink rancher for improving the

coats of his minks.

 Kennel owners noticed that the dog’s coats were improved dramatically, and

business was born.

 Zenith executives recognized packaging of show circuit would definitely

make a transition from Kennel market to household dog food market.

 ZENITH PET FOODS
 Packaged in 15 ounce plastic tub with 12 tubs per case

 Cost of production, freight, packaging of meal was $6.37 per

case(total variable cost)

 Super market would receive a gross margin of 22% of their selling

price for dog food.

GOALS:
 To introduce & promote effectively the show circuit dog food in Boston

area.
 Make public aware of the brand name through packaging
 CASE ISSUE

 Frozen foods

 Advertising & Packaging strategy

 Premium price
FROZEN FOODS
 Show circuit has two varieties Wet food and Semi moist dog food. Both the food

varieties should be frozen. Additional cost of $30000 for super markets is included in
the budget for freezer space.

 Even though Wet foods market is untapped by other competitors, there is a threat in

future that the fraction of market potential will tremendously go down.

 There is always a tendency that the dog owners will not look in to the frozen section.
ADVERTISING STRATEGY

 The communication budgeting approach used by

zenith pet foods is competitive parity.

 The other competitors of zenith are well established, so

it is in appropriate to use this kind of approach.

 The introductory advertising strategy is very low

which will not entertain more customers.

 PREMIUM PRICE
 Price charged by zenith pet foods is quite high when

compared to their competitors

 Organic dog food sales grow by 64% last year from which

only 0.9% are willing to pay premium price

 Premium price is targeted to upper class people.

 Niche market

TARGET MARKET:

INCOME MARITAL STATUS AGE

>$25000 SINGLE AND MARRIED 21-54
AMERICAN VETERINARY
MEDICAL ASSOCIATION
SURVEY
MARKET POTENTIAL IN VARIOUS
SEGMENTATION
75% OF PARENTS WITH SCHOOL GOING CHILDREN

71% OF PARENTS WITH OLDER CHILDREN

72% OF ROOMMATES HOUSEHOLDS

73% OF YOUNG CHILDLESS COUPLES

63% OF HOUSEHOLD WITH INCOME > $25000

30% OF OLDER SINGLES

41% OF RETIRED COUPLES

 POSITIONING
 It has a direct implication on pricing

 Three companies capture 90% of the wet food market

 Two companies capture 85% of semi moist food market

 Here positioning becomes an issue because we assume the same percentage also

applies for the Boston market, therefore the opportunity of show circuit is reduced.

 Zenith has to maintain a high standard and high quality and premium price to

establish a unique place in the market.

 MARKET POTENTIAL:
DOG SALES DATA % OF EST DOG SUPER SUPER
FOOD DOGS FOOD MARKET MARKET
CATEGOR SALES % DOG
Y FOOD

DRY 63% = 1.2% $52.92 M 36% $19,051,20

$4.410 B 0
WET 17% = 1.2% $14.28 M 36% $5,140,000
$1.190 B
SEMI MOIST 2% = $0.140 1.2% $1.68 M 36% $604,800
B
DOG 18% = 1.2% $15.12 M 36% $5,443,200
TREATS $1.260 B
TOTALS $7.0 BILLION 1.2% $84.0 M 36% $30,240,00
0
MARKET SEGMENTATION
 Extreme dog lovers.

 Dog owners concerned more with nutrition than convenience

and storage.
 Dog owners who are unsatisfied with other dog foods.

 As 75% of dog owners consider themselves as “mom and dad”

to their animal companions and who think dog as a member of

the family.
 BREAK EVEN ANALYSIS -
WET FOODS

Kal kan Pedigree = Alpo =

$.69/13.2 oz $.50/13.2 oz
1 ounce= $ 0.052
15 ounce = $ 0.78 1 ounce= $
0.038
15 ounce = $
0.80

Zenith Pet foods = $6.37 /12 tubs Bill Jac = $ 2.29 for 2
pounds
1 tub(15 ounce) = $ 0.53
 ACTION PLAN
 Zenith pet foods- wet foods cost of production, freight and packaging of

the meal $6.37 per case which represents total variable cost.
 Therefore one tub costs $0.53, we suggest zenith to recommend to sell a

tub for $0.80.

 Compare to the wet dog foods the moist dog food category is likely to

be unprofitable for show circuit.

 A lot depends on the quality of introductory promotion program and the

amount spend.
SHOW CIRCUIT
CONTRIBUTION:
PREMIUM PRICED PREMIUM PRICED
Wet Dog Food Semi- Moist Dog Food
CASE TUB CASE TUB
Price to Consumer $ 9.60 $ 0.80 $ 10.80 $ 0.90

Price to Retailers $0.624 $8.424 $0.702

(22% Gross $7.488
Margin)
Broker ($0.524) ($ 0.044) ($ 0.590) ($ 0.049)
Commission
(7% Commission)
Zenith Unit $ 6.964 $ 0.58 $ 7.834 $ 0.653
Revenue
Production + ($ 6.37) ($0.531) ($ 6.37) ($0.531)
Freight +
Packaging cost
Contribution $0.594 $0.049 $1.464 $0.122
 RECOMMENDATIONS
 Create awareness of a new brand by motivating trials

through coupon redemption and emotional impact on TV.

 Market coverage should extend to other mass merchandisers,

pet super stores, farm/feed stores, veterinarian and internet

retailers.
RECOMMENDATIONS

MEDIA SCHEDULING AND PLACEMENT:

The program planned seems to miss a sizeable

portion of target markets with day time TV scheduling.
So the advertisements impact should be measured from
time to time.
RECOMMENDATIONS
 Trade program: a major issue here is whether the proposed

program will gain distribution.

 The problem is - The broker must deal with frozen food buyers

and not pet food buyers, therefore education is necessary.

RECOMMENDATIONS
Coupon program: the consultants estimated that 1 in

10 coupons distributed would be redeemed with each

coupon valued at $0.10. On an average coupon
redemption will cost $0.01 per tub (or) $0.12 per case,
therefore the new contribution per case will be $0.12
less. This will increase the break even volume.
 RECOMMENDATIONS
 Advertising spending level: Neither product pioneers a “new category” frozen dog food

therefore it would seem that show circuit is under spending at $400,000 level for the
introduction which further places the market entry in danger.

 The $600,000 spending level seems more appropriate. However, the analysis of the

marketing programs economics indicates this amount is likely to be unprofitable.

RECOMMENDATIONS
 They should provide dry foods and dog treats to compete

with the other competitors

 The packaging quantity should be reduced and sold at

various quantity levels.

 The best media to advertise about the product should be

found and the advertisement should have more emotional

impact on customers.
 Trial packs should be introduced as introductory offers
SWOT ANALYSIS
STRENGTH
It is a highly nutritious and quality ingredient dog food

There is great potential to grow in this field.

Most pet owners want what is good for their pets, and

this includes pet food that is healthy for their dog.

Environmental trends.

Niche marketing.
WEAKNESS
Dog owners shopping for dog food in the supermarket

are not prone to look in the frozen section (awareness).

Competition in market.

Pricing
OPPORTUNITIES
The household dog food industry is growing and will

continue to grow
Potential to be the first to tap into frozen dog food product

in this region with possible expansion to other regions.

Opportunity to invest in organic dog food which has grown

64%
OPPORTUNITIES
Distributing in grocery stores is ideal since it is the largest channel

for dog food .

The campaign will focus on national television reaching a broad

audience while still focusing on local media such as newspapers.

The campaign will focus on the product being a premium-priced,

high-quality product highlighting the benefit of the luxurious coat

your pet will have.
THREATS
Introducing a new dog food in a new form.

Category of dog food.

Lack of appeal of frozen dog food.