Zenith Pet Food Inc – Market Attractiveness and Potential
Zenith Pet Food, Inc. produces Show-Circuit, a high-quality dog food made only from the best ingredients, proven to keep top performing show dogs in the best of health and a luxurious coat (Kerin & Peterson, 2007). Priding itself on freshness and quality, Show-Circuit will be available frozen to maintain freshness. Evident in the blend of 85% fresh meat and 15% premium cereal, quality is very important to Zenith. Presently, the established market base of kennel owners has come to appreciate and recognize the benefits of Show-Circuit and its unique formula.
Zenith executives are considering negotiations with Marketing Momentum Unlimited (MMU) to expand Show-Circuit into the household dog food market-base in the Boston, Massachusetts, metropolitan area. MMU has proposed retail supermarkets in this area as an opportunity for market segmentation. Executives realize that a situational analysis is necessary to determine adequate market segmentation, price, targeted market base, and if expansion will result in profits.
Situation Analysis
Market Attractiveness and Potential
Dog food is a highly attractive market, as the volume constantly increased in the past years (Euromonitor International, 2009). Experts forecast the sales for high quality pet food to grow (Bennett, 2006), and the analysis supports the decision for targeting the market segment of “singles and marrieds between the ages of 21 and 54 with a household income greater than $25,000” (Kerin & Peterson, 2007, p. 85). Data from EIU Data Services (2009) shows a growth of 6% in the past 10 years for the US population aged between 20 and 54 years. Furthermore, EIU Data Services (2009) expects the number of households earning more than $25,000 to increase in the next five years (see chart 1).
The dog food market has a high growth potential driven by two major trends. First, the number of dog owners increases. Dog owners perceive the dog as family member and are willing to spend more money on high quality dog food. Second, dog owners consume convenience food, reducing the amount of table scraps (Kerin & Peterson, 2007). Euromonitor International (2009) supports these trends by forecasting a sales increase of 15% from 2009 to 2014.
Competition
The dog food market is highly competitive. Five long-established companies such as Procter & Gamble, Mars and Nestlé own 75% of the market (Kerin & Peterson, 2007). Utilizing trends in human foods such as nutraceuticals and convenience factors, the competitors long history of producing known brands such as Dog Chow and Pedigree will produce competition in this market (MarketLine, 2009). The household dog food market is a valuable target for Zenith as it shows steady growth rates in the past and promising market forecasts for the next years. However, Zenith will need an efficient marketing