First in Show Pet Food Case Analysis
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First in Show Pet Foods, Inc is in the process of launching a new dog food product to supermarkets called Show Circuit. Show Circuit is currently the number one dog food for show dog kennels. First in Show Pet Foods is trying to get the product as mainstream as possible. They want people to recognize the product immediately by seeing its logo and they want to make sure that consumers are aware that the pet food is sold in the freezer section of their grocery store. First in Show is considering how to launch their product to the average dog owner in the greater Boston area at their local grocery store.
Top claims for new dog food product introductions for the period of 2006-2007 and 2007-2008 show an increase in dog food with no additives/no preservatives, more vitamins/minerals, and all natural dog food. This increase shows that the high quality dog food, like Show Circuit, will grow in popularity among dog owners. First in Show chose supermarkets to dispense their food was because it is the single largest retail channel for dog food. Supermarkets dispense 36 percent of all dog food sold in the United States. The greater Boston area was a good market choice because it has 1.2 percent of the U.S. dog and human population. Also, the Boston area spends the same amount on pet products as the national average. Show Circuit will be the only dog food in the Boston area supermarkets that need to be refrigerated.
Alternative 1 – The first alternative is to spend $500,000 on an ad campaign. This alternative will also add in the $50,000 for slotting fees for the supermarkets. This gives us a total fixed costs of $550,000. This alternative will use the higher $50,000 slotting fee as opposed to the $30,000 slotting fee because we are assuming that the additional $20,000 will help convince the supermarkets to give our product premier space in their freezer section. We are also assuming that this premier space will help costumers find our product easier. We have also assumed a profit margin on 40%. This profit margin seems reasonable within the dog food market based on the competitors prices. Another assumption made is a market share of 5%. This is a moderate to low estimate because it is a new product and there is no other like so it would be hard to have large impact on the market.
Advantages/Benefits – This choice is the cheapest option that utilizes advertising. This plan has a break even of only 84,485 units. It will advertise on both the television and in print ads which will help the public become familiar with the product and the placement of the product. The visuals in both types of advertisements will make the logo instantly recognizable to the consumers. The net profit for this alternative is rather high at $427,855.
Disadvantages/Costs – One disadvantage of this choice would be the cost. It would cost First in Show a total of $550,000 in fixed costs. The high total fixed costs pushes the break even dollar amount to over 1.2 million.
Alternative 2 – The second alternative is to spend $700,000 on the ad campaign. This alternative also uses the $50,000 slotting fees as suggested in alternative 1. It also assumes a profit margin of 40% and market share of 5%.
Advantages/Benefits – The advantages of this choice is the second television commercial and the larger number of insertions in the Dog Fancy magazine. The second television commercial will focus on showing the customers that the dog food is placed in the freezer section next to the human food. This will let interested consumers easily find the product and not have to search the entire store for it. The additional insertions in the magazine will target the dog loving population more effectively. One can assume if they subscribe to Dog Fancy magazine that they take really good care of their pet and treat them like family. If they treat their dog like family they are more apt to spend their money on higher end dog food like Show Circuit.
Disadvantages/Costs – The main disadvantage of this alternative is the high total fixed costs. With such high fixed costs the number of units sold to break even is 115,207 units. Also the break even dollar amount is over 1.6 million and a net profit of only $227,855.
Alternative 3 – This alternative is the most drastic. It only pays the slotting fees for the supermarkets and spends no money on advertising. The slotting fee of $50,000 will be used in this alternative as well for the same reasons as stated in alternative 1. The profit margin of 40% and market share of 5% will also be assumed.
Advantages/Benefits – The low total fixed cost is this options primary advantage. With such low costs the break even unit sales is only 7,680 units. Also, the break even dollar amount is really low. This alternatives net profit is $927,855.
Disadvantages/Costs – The disadvantages to this alternative are the fact that the consumers will be unaware of the product. They will not know it’s high quality advantages to their pets, nor will they know where to find it in the grocery store. Another disadvantage is that the customer will not receive any coupons for the product. As the case states, because dog food is so heavily advertised, they must advertise to compete.
Best Alternative Choice
Alternative 1, the $500,000 marketing plan seems to be the best choice. This alternative is the best because the break even units and dollars as well as the market share are all achievable. The television and print ads will get the consumer familiar with the product and its logo which will increase sales. Alternative 2 was not chosen because of its lower net profit. Although the second television spot and additional insertions were seen as a positive, the cost was not worth it. Alternative 3 was not chosen because the consumers will not be aware of the product or where to buy it in the grocery store.
Preliminary Marketing Plan
The preliminary marketing plan is to run the television ad and print ads as stated in the case. The printed ads will also include a coupon that will make the product more attractive to consumers who feel the retail price of $14.38 is expensive. The product will be placed in a very visible section of the grocery store’s freezer section. The extra $20,000 slotting will help secure prime shelf position.
The target market will be singles and married couples between the ages of 21 and 54 with a household income of greater that $25,000. This demographic is more likely to see their pet as a member of the family. This fact will help Show Circuit because the television ad will appeal to this demographic. Industry research shows that over 70% of this population buy pet food and supplies.