The Problem. Food brokers in the Boston area have approached Breeder’s Own Pet Food with the opportunity to begin selling Breeder’s Mix dog food in supermarkets. They have enlisted the services of a marketing agency to assist them in evaluating the potential of the endeavor. After receiving the marketing agency’s proposal, Breeder’s Own is faced with the following problem:
- Should Breeder’s Own Pet Food accept or reject the Marketing Momentum Unlimited proposal as written?
Recommendation. Breeder’s Own Pet Food should accept the Marketing Momentum Unlimited proposal and proceed with selling Breeder’s Mix dog food in supermarkets. The following decision factors are relevant to this recommendation.
Market Opportunity. Breeder’s Own has an opportunity to take a leadership positioning in a swiftly developing new market. Currently the dog food market is divided into the dry food, canned food, and treats categories. The frozen food category is a small market with only a one percent share of the current market. However, this market is growing quickly and has experienced 133% growth over the previous two years. In a small market with a limited number of players, Breeder’s Mix has an opportunity to take a leadership position as a premium brand. Additionally, another market focused on healthy dog food – organic food – grew 64% over the last year. Although Breeder’s Mix is not an organic dog food, the growth of this market is a sign that dog owners are interested in healthier options for their pets.
Product Positioning. As Table 1 indicates, Breeder’s Mix compares favorably to both dry and canned dog foods. As such, Breeder’s Mix should be positioned as an equivalent to premium dry dog foods and a healthy alternative to canned foods. For the sake of pricing consideration, Newman’s Own, an organic dog food, has been included in Table 2 among the list of dry dog foods. Table 2 indicates that the prices of dry and canned foods are fairly comparable at the low- to mid-range. The high-end, premium canned dog food is far more expensive than comparable brands in the dry food category. Breeder’s Mix should be priced at $0.20 per ounce. This prices it slightly above premium dry foods like Iams and equivalent to healthier dry options such as Newman’s Own. Additionally, this pricing places it in the top tier of canned foods, but not as high as brand’s such as Cesar Select. Based on the favorable product attributes displayed in Table, this should effectively position Breeder’s Mix as both a premium alternative to dry food and an affordably priced alternative to canned foods. In both cases, Breeder’s Mix is the superior option in terms of canine health.
Profit Potential. The total estimated dog food market in Boston as indicated in Table 3 is $168 Million. Of this, more than $60 Million is sold in supermarkets. Marketing Momentum Unlimited has presented Breeder’s Own with two advertising options to tap into this large market. The options cost $500,000 and $700,000 with the second option including all of the advertising of the first plus additional television commercials and magazine inserts. The break even analyses in Table 4 show that, using a retail price of $0.20 per ounce, either option is viable as long as Breeder’s Mix can capture between 1.64% and 2.26% of the Boston area market share for dry and canned dog food sold in supermarkets. The market potential for treats was purposefully excluded, as Breeder’s Mix is not positioned to compete with treats. The break-even market share equates to approximately $800,000 to $1.1 Million in sales. Compare those sales figures to the industry average advertising spend totaling two percent of sales and $25 Million to $35 Million in sales would normally be expected. Compared to the industry average sales dollar per advertising dollar spent, the break even analyses for Breeder’s Mix is very attainable.
Media Plan Effectiveness. Marketing Momentum Unlimited has created a media plan designed to convince buyers that Breeder’s Mix is the best food for dog owner’s that consider their dog to be a member of the family. By focusing on the quality of the product and not the price, Marketing Momentum Unlimited is conveying the position that Breeder’s Mix is a premium dog food, rather than a low-cost alternative. Additionally, the media plan is aggressive and targets both late night and daytime TV watchers. The insert in Dog Fancy magazine is also targeted at quality conscious buyers. Based on the industry standard of two percent of sales devoted to advertising, both the $500,000 and $700,000 budget are high for the Boston market. That being said, this is a product launch, and it is important that Breeder’s Own campaign intensely for initial market share. Finally, the media plan draws attention to the one factor that will be most difficult for Breeder’s Mix to overcome; it’s location in the frozen food aisle rather than with other dog foods.
I would have included the tables mentioned above, but converting them was a big PITA.