Frozen Cat Food
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Frozen Cat Food
Situation Analysis
Background
Tyler Pet Foods currently sells a frozen dog food product in a few stores in the southwestern U.S. This dog food is considerably better quality than the major companies offerings. Because it was created as a food for dog breeders, it is made to very high standards. The food is made from uncooked meat and is frozen to preserve freshness. The product is successful in its current market because of the demanding nature of its customers despite being more costly than mass market pet food. The product is known to give dogs a smoother, glossy coat. In the dog food market, this product is very unique.
Environment
The dog food market is enormous – a $5.6 Billion dollar market. However, this is a mass market, and the receptiveness of this market to a very different type of dog food is not at all clear. It appears that most people buy their dog food rather oblivious to its real quality or who actually manufacturers, or even what it actually is. Therefore, most dog food is simple, low quality food made by faceless conglomerates. Positioning within this market will require some careful consideration of the market dynamics.
Competition
The competition is a set of massive corporations with well established distribution mechanisms. These companies have a global reach and are well entrenched. Their economies of scale allow them to have low operating costs as well as
low unit costs for their products. Their products are heavily advertised. Grocery stores trust them to maintain reliable demand through their large scale advertising budgets. Advertising budgets, particularly
for product launches, run into the millions of dollars.
Stage of Life Cycle
Show Circuit Frozen Dog Dinner is a new product, at least to the consumer market. It is new on several fronts. Tyler pet foods as a manufacturer is unknown to the consumer market, especially in the northeast. The product is new in that it is made from fresh meat product and premium grain products and is uncooked. And finally, a frozen pet food is completely new to the consumer market.
Skills of the firm
Tyler Pet Foods is very experienced in the professional dog breeder market. It also has developed an obviously successful product with regard to the sales to the professional market in that the breeders trust it to keep their dogs healthy.
Financial Resources
The management of Tyler Pet Foods has approved $300,000 to $500,000 to launch Show Circuit in the Boston Area. No other information has been given except that this will stretch the resources of the firm. It is reasonable to assume that the success or failure of this product launch will have such serious implications for the company that it will make or break Tyler Pet Foods. Of course success for the product will launch Tyler to another level as a consumer pet food supplier (with its associated competitive risks) but failure could well kill the company financially. It is critical to use this marketing budget very carefully.
Distribution Structure
Currently, Tyler Pet Foods is selling to kennels via selected pet stores. Their sales channel has been established without advertising and is based on a generally professional market of breeders and, it would seem, perhaps some mass market people who have figured out what the product is and its quality. There are no sales to supermarkets as of yet.
Problems and Opportunities
Environment
The markets huge size is both a blessing and a curse. Of course the very large market represents a large opportunity in terms of pure scale, and it would appear that there is no immediate competition, but the market size presents all kinds of new challenges that TPF has not had to deal with. Scaling production to a mass market while maintaining high quality presents new challenges to TPF. Customers in the mass market are sensitive to different things that TPF has little to no experience with: mass consumer packaging, which would have to be very different in style to be appealing and public relations, which have to be more nimble to deal with emergencies. (For example, when Intel went from a specialist to a publicly visible firm they had to learn very fast just how much it was important to react appropriately to negative consumer sentiment when it was revealed that they had a defective product with their first Pentium class microprocessor).
Competition
The competition for the mass market is much more aggressive than anything that TPF is likely to have had to deal with so far. Moreover, they are likely to respond much more quickly to a new entrant than TPF may be anticipating. Just as Coca-Cola responded quickly to the success of specialist water and juice entrants by introducing a very successful line of Minute Maid juices and Dasani water, and used their powerful and established distribution network, the incumbent dog food producers may be able to mimic the Tyler Pet Food product, produce it more cheaply, and market it more effectively. Most ominous for TPF is that the incumbents will be able to spend large sums researching exactly what aspects of Tyler Pet Foods are popular with consumers and focus on providing a product with those aspects highlighted. Minute Maid juice, for example, is perceived as being good quality when in fact its really ordinary and even low quality and Dasani water is hardly imported from France, so it has a better profit margin, and is well marketed and distributed, so sales are strong.
Stage of Life Cycle
The newness of TPFs product Show Circuit Frozen Dog Dinner is a strategic advantage over the competition. TPF will have certain first mover advantage if, indeed, there is a mass market for it. Moreover, the product has the advantage of being well field tested through years of real-life experience with professional breeders. On the other hand, it is possible that the needs of the mass market are so different that the experience that TPF has could even be a liability, leading management down the wrong course of action. It is not clear that TPF has any understanding of what aspects of the product are popular with the consumer market, even though they are already likely selling it to some consumers