Example Of Case Study On Pedigree Growth Strategy
Is dog food an attractive category?
Dogs have always been a favorite pet for a significant number of households across the globe and from what it seems, their number will keep rising (Calkins & Deming, 2010 p.1). Apart from that, people not only want to have o a dog as a pet, but also tend to keep more than one, especially those that consider their dog(s) part of the family. To more than 90 percent of dog owners, their dog is taken care of like another family member or a companion, which means they are willing to spend a considerable amount of money to make sure their dog is healthy and happy (Calkins & Deming, 2010 p. 3-4). That said; when people are emotionally involved and attached with something, be it another human being, an idea, their pet, etc., it is evidenced they will do anything. Indicatively, when U.S. pet owners were surveyed as to how far they would go for their pet’s health, the majority of them answered they would spend up to $5,000 just to keep their pets alive, while a 30 percent said they were willing to spend as much as needed (NBC News, 2007). Dog food alone costs around $100 per year, excluding treats that are given as a reward for good behavior or in special occasions (Calkins & Deming, 2010 p.6). At such turbulent times and considering the economic difficulties the entire world is facing, such a mindset is admirable and reveals much about how much pet owners love and care for their pets (and how much they are willing to sacrifice to have a healthy dog at home). What becomes clear by interpreting statistics is that only a mere one percent of dog owners consider their dog their property, and not connect emotionally with it, unlike the overwhelming majority that cares deeply for their pet. Of course, there is the portion of people that breed dogs for money. However, even to them, having a healthy and well taken care of puppy is essential to their business (Calkins & Deming, 2010 p. 4-5).
The trend in the last 15 years reveals that dogs are not treated like before and are no longer fed by table scraps. Instead, dog food has evolved into a major industry, in the US and abroad, and given that dogs love to eat, dog owners feel particularly content when providing their pet a balanced meal with nutrition quality, checked by the US Food and Drug Administration and the Association of American Feed Controls that ensured their pet’s health and did not cause any unpleasant intestinal issues (Calkins & Deming, 2010 p. 5-6). Consequently, dog food is definitely an attractive category; a category that will bring increased revenue to those making the calls.
How well is Pedigree been doing?
With Pedigree spending more in advertising, breeder promotion programs, and marketing than any other brand (more than $180 million combined in 2004 alone), it makes sense it was the leading share holder in the pet food industry in the world, in 2004, with 14.5 percent market share in the US (Calkins & Deming, 2010 p.9). Their operating profits reached $60 million, while their revenues exceeded $780 million in 2004. However, competition has significantly affected them, with the appearance of IAMS Dog Food that promoted natural products and sold their products at higher prices than Pedigree. On the other hand, brands that were selling more cost-effective pet food ($0.41 average retail price for dog food versus $0.55 from Pedigree), were also causing a major blow at Pedigree’s revenues (Calkins & Deming, 2010 p.13). However, Mars Petcare Inc, the owner of Pedigree, seems to have found a way to remain on top of the 30 global petfood companies with the largest annual sales in US dollars, with $16,650 million, in 2012 revenues, with North American being their principle consumer (Petfood Industry, 2014 p.21, 26). The humanization of companion animals, such as dogs and cats, has led pet owners to look for products that help in their pet’s weight management and nutrition. Especially after the economic recovery from the financial crisis, fancy dog food trend has picked up significantly (Coleman-Lochner, 2013). Pet owners look for products that ensure their pet’s dental care, as well as pet foods that contain fibers, whole grains, and proteins, among other ingredients that prevent allergies and promote the pet’s overall health (Petfood Industry, 2014 p.35). This is why Pedigree’s Dog Food with chicken, rice, and vegetables dry dog food is on the top of the five best selling dog food in the US (Dog-Nutrition-Advice, n.d). In 2013, Pedigree’s market share was estimated at around nine percent, as per their dog dry food sales, clearly showing that Pedigree remains a leader in dog food products, but is threatened by competition more than before, given that the number one brand (by far) in dry dog food is a private company (17 percent market share), while Purina Dog Chow is only a breath away (Statista, 2015).
What marketing strategy do you recommend going forward?
During the last years, people have shown a tendency towards healthy eating and natural foods. As already mentioned, pet owners consider their pets as family members and companions, or a merchant that they would do anything to increase their value (pet breeders). As such, they are want to buy their pet(s) organic petfood and natural pet products. The US retail sales of organic petfood, between years 2003 and 2009 have increased from $14 million to $84 million without showing any signs of regression whatsoever (Taylor, 2010). The equivalent sales of natural pet products in the US between 2005 and 2014 increased from $894,000 to more than three million US dollars (Taylor, 2010). In 2005, there were only two US marketers of petfood that had invested in natural petfood (Hill’s Pet Nutrition and Del Monte). It was much later when Mars entered this field offering products in the pet specialty. Therefore, a marketing campaign, mainly using the social media, promoting organic or natural products will probably be effective and help raise the brand’s awareness and revenues. That said; Pedigree’s projects, such as the Pedigree Shelter Renovation Project and the Pedigree Feeding Program (Pedigree.com) that provide shelter dogs with food should continue and multiply, as people appreciate brands with a generous character and nature. Such moves gain the respect and appeal of both pet owners, pet societies, and overall communities. A brand that cares about animals that much is perceived to be trustworthy.
Calkins, Tim, Deming, Ann (2010). Pedigree Growth Strategy (A). Kellogg School of Management. KEL497-PDF-ENG.
Coleman-Lochner, Lauren (2013). Fido Goes Organic as Private Equity Eyes Pricey Pet Food. Bloomberg. Retrieved Jan. 21, 2014 from: http://www.bloomberg.com/news/2013-04-17/fido-goes-organic-as-private-equity-eyes-pricey-pet-food.html
Dog-Nutrition-Advice (n.d.). Best Selling Dog Foods. Retrieved Jan. 21, 2015 from: http://www.dog-nutrition-advice.com/best-selling-dog-foods.html#section1
NBC News (2007). Readers Willing to Pay up to Keep Pets Healthy. NBC NEWS.com. Retrieved Jan. 21, 2015 from: http://www.nbcnews.com/id/17600186/ns/health-pet_health/t/readers-willing-pay-keep-pets-healthy/#.VL-fci4iUUK
Pedigree (n.d.). Pedigree Feeding Project. Retrieved Jan. 21, 2015 from: http://www.pedigree.com/03Adoption/feeding-project/Default.aspx
Petfood Industry (2014). Top 30 Petfood Companies Highlight New Global Leaders. Retrieved Jan. 21, 2015 from: http://www.petfoodindustry-digital.com/201401/Default/11/1#&pageSet=11&contentItem=0
Statista (2015). Dry dog food: market share of leading brands in the U.S. 2013. Retrieved Jan. 21, 2015 from: http://www.statista.com/statistics/188670/top-dry-dog-food-brands-in-the-united-states/
Taylor, Jessica (2010). Market update: natural and organic petfood. Petfood Industry. Retrieved Jan. 21, 2015 from: http://www.petfoodindustry.com/Market_update__natural_and_organic_petfood.html