Tyler Pet Foods
Tyler Pet Food Inc. is a major distributor of dog food for show-dog kennels in the United States. After some researches and discussions, Tyler Pet Foods (TPF) decided to enter into the household dog food market in the Boston, Massachusetts metropolitan area. TPF hired a consulting firm to help it promote and distribute its product. The programs included situational and competitive analysis, the problems and opportunities of the company, and creative strategies to promote its product.
The sales of dog food will total almost $5.6 billion this year, with $3.1 billion in sales coming from supermarket chains. The Boston area has 1.5% of the U.S. population, and 1.5% of the dog population. The dog food industry has been growing rapidly because of owners desire for companionship or need for protection. Dog owners are generally price sensitive, yet they spend more than $10 billion annually for veterinary fees and medications for dogs. Supermarkets make approximately 55% of all dog food sales. Typically, all pet foods are located in one area of the store, separate from human foods. The following graph shows the detailed market potential of Show Circuit dog food.
Category Share of Dog Food Total Sales of Dog Food Boston Market Potential Supermarket % Show Circuit Market Potential
Canned 23.7% $5.6 billion 1.5% 55% $10,949,400
Dry 58.6% $5.6 billion 1.5% 55% $27,073,200
Semimoist 2.2% $5.6 billion 1.5% 55% $1,016,400
Treats 15.5% $5.6 billion 1.5% 55% $7,161,000
There are about 50 dog food manufacturers and 350 dog food brands in the United States. Ralston Purina, Kal-Kan, Heinz, Nestlé USA, and Nabisco, together capture 83% of all supermarket sales. Traditionally, dog food comes in four forms: canned, dry, semimoist, and snack-type. Either the introduction of Show Circuit would add a new segment for frozen dog food or TPF would segment it between the dry and moist segments already established. The prices of these forms of food can range between $.55 for a 5.5 oz. can up to $9.99 for a 13.5 lb. bag. Because dog food is heavily advertised, TPF must follow suit to remain competitive in the industry.
IV. PROBLEMS TO BE ADDRESSED
After meeting with representatives from Marketing Ventures Unlimited, these questions were left to be answered:
1. Was the market itself adequately defined?
2. What position would Show Circuit seek in the market? Should the program be targeted toward all dog food buyers or toward specific segments?
3. Could the food brokers get distribution in supermarkets given the sales program?
4. What should be TPF's recommended selling list price to the consumer for Show Circuit?
5. Could TPF at least break even in the introductory year and achieve a 15 percent return on sales in subsequent years?
V. PROBLEMS ADDRESSED
On the question about the market itself being adequately defined, I believe that it was narrowed down adequately to the single and married couples between the ages of 21 and 50 years of age with an income greater than $25,000. This represents a focused target market but it is questionable whether the market is large enough to be profitable.
On the question about the market positioning, Show Circuit will be marketed as a high-quality food that has for years, been exclusively sold to owners of show dogs. The product is also differentiable from other forms of pet food, since it is a frozen pet food, and one of the first organic dog foods. Consumers would find this dog food in the frozen food section of a supermarket along side the food that you would serve to other family members.
The problem of the food brokers getting distribution in supermarkets represents the greatest challenge for TPF. However, the pioneering work has already been done by a frozen dog treat called Frosty Paws. Frosty Paws has already gained freezer space next to ice cream in Boston area supermarkets. It is difficult to convince supermarkets to give up a proven product's space, for an unproven, untested product. It may be necessary to offer higher profit margins to the frozen food buyers, to encourage them to free up space to sell Show Circuit.
The following graph demonstrates the selling price and the contribution margins.
CANNED CASE CANNEDTUB SEMIMOIST CASE SEMIMOIST TUB
Price to Consumer $18 $1.50 $11.16 $0.93