SALES & DISTRIBUTION INTERNAL EVALUATION 4

MARKETING & DISTRIBUTION STRATEGIES FOR ENTERING THE DOG FOOD MARKET

Submitted To: Prof. C.V.A. Prasada Rao

Submitted By: Avinash Jain 08BSHYD0166 Chandranath Banerjee 08BSHYD0197

INTRODUCTION Changing lifestyles in the form of the rise in nuclear families and double income households have encouraged the growth of pet ownership in urban areas. A gradual shift towards prepared pet food has been observed. Pet owners are more willing to spend on pet food and pet care products than ever before. MARKET TRENDS The trend has spawned an entire industry, with a growing emphasis on pet care. The increasing number of pet shops and advertisements for pet food brands, combined with the greater concerns about pet health and welfare, are driving the shift towards prepared pet food. The number of advertising campaigns directly targeting pet owners is rising and most advertisements strive to communicate the benefits of prepared pet food and its nutritional value over homemade alternatives. The support of vets for these campaigns has led Most of the growth in retailers private label sales is likely to come from the economy segment, as rising employment boosts disposable income and reduces poverty, adding millions of new consumers to the bottom of the market. Branded pet food products can address these issues by aggressively pushing into developing markets in terms of both distribution and marketing. But the potential for growth in these markets over the medium and long term is huge. MARKET ANALYSIS Marketing and Distribution Marketing function is sacrosanct in case of FMCG companies. Major features of the marketing function include the following: 1. High Initial Launch Cost - New product require a large front-ended investment in product development, market research, test marketing and launch. Creating awareness and develop franchise for a new brand requires enormous initial expenditure on launch advertisements, free samples and product promotions. Launch costs are as high as 50- 100% of revenue in the first

year. For established brands, advertisement expenditure varies from 5 - 12% depending on the categories. 2. Limited Mass Media Options - The challenge associated with the launch and/or brand building initiatives is that few no mass media options. TV reaches 67% of urban consumers and 35% of rural consumers. Alternatives like wall paintings, theatres, video vehicles, special packaging and consumer promotions become an expensive but required activity associated with a successful FMCG. 3. Huge Distribution Network - Super markets virtually do not exist in India. This makes logistics particularly for new players extremely difficult. It also makes new product launches difficult since retailers are reluctant to allocate resources and time to slow moving products. Critical factors for success are the ability to build, develop, and maintain a robust distribution network The affluent section of the urban population the 350 million strong middleclass is the major target segment for pet food products in India. Indian pet owners have traditionally fed their pets with homemade food, and the slowly increasing practice of feeding branded pet foods is a relatively new trend. The size of the Indian pet foods market estimated by industry sources at approximately 6,000 tones and growing annually at 10-15 percent very small compared to the vast international pet foods market. Although this figure can be increased by selling ever more expensive premium and superpremium products to existing consumers, there is far greater potential for sales growth (in both volume and value terms) in luring pet owners who continue to feed their pets household scraps into the economy segment. However, a sustained marketing effort will also be required to drive demand for economy products and food manufacturers could use their niche markets to facilitate the distribution of their products in developing markets, making it more difficult for indigenous manufacturers to develop their own premium offerings.

But one strategy that indigenous firms in developing markets can use to gain an advantage over foreign rivals at the very top end of the premium segment is to market their products in terms of their freshness. SWOT ANALYSIS

STRENGTHS y y y Buying Dog food has become very easy through Internet and telephonic orders The market for Dog Care in India is growing at an average annual rate of 9.3%.1 A report from The American Pet Products Manufacturers Association (APPMA) indicates that in 2002 Americans spent more than $29.5 billion on food, supplies, veterinary and other services for their pets.2 y Increasing disposable income of people all around the globe including India which makes it possible for them to go for leisurely activities like maintaining a pet dog.

WEAKNESS y Lack of brand loyalty among customers. Customers immediately switch brand if their dogs do not eat a particular brand of food y y Improper distribution leads to unavailability of dog food at many localities Healthy Dog food with natural ingredients would come at a premium price for consumers so it might be difficult to gain instant market share.

1 2

http://www.clickindia.com/pets-and-pet-products/food-for-animals/ http://html.rincondelvago.com/marketing-strategy-on-dog-food-in-eeuu_marketing-estrategico-para-comida-deperros.html

OPPPORTUNITIES y Almost 70% of pet dogs worldwide dying out of heart attack due to overweight caused by improper diet. Thus an opportunity for healthy dog foods. y Another opportunity is to offer differentiated products i.e. dog food with ingredients suited for a particular breed of dogs. This way we can customize dog food for different breeds. y A lucrative opportunity is to rope in Dog Breeders and Vet Clinics. They would invariably stick to a brand if they find it nutritious and convenient. THREATS y Competition from established brands like Pedigree, IAMS, Purina, Alpo, Puppy Chow and Premium Dog Food y High promotional costs to grab the attention of consumers

MARKETING STRATEGIES 1. PRODUCT STRATEGIES

Offer food tailor made for puppies, adult dogs, obese dogs, work dogs etc. thereby rejecting the notion that all dogs can eat the same food

Also, offering different foods for different breeds of dogs

2. PRICING STRATEGIES

A small premium as compared to the existing brands has to be charged for the high quality ingredients used. But this should not be too high as compared to the competitors.

Puppy Large Breed Puppy Adult Maint Small Breed Adult Maint Medium Breed Adult Maint Large Breed Premium & Large Premium Lamb & Rice Light & Large Breed Light Senior

3kg 3kg 3kg

Rs. 340 Rs. 340 Rs. 310

7.5kg 7.5kg 7.5kg

Rs. 820 Rs. 820 Rs. 790

3kg

Rs. 310

7.5kg

Rs. 790

3kg

Rs. 310

7.5kg

Rs. 790

3kg 3kg 2.5kg 3kg

Rs. 340 Rs. 340 Rs. 340 Rs. 340

7.5kg 7.5kg 6kg 7.5kg

Rs. 840 Rs. 840 Rs. 770 Rs. 840

3. PROMOTION STRATEGIES

Below the line (BTL) activities like T-shirts with our brand printed on them for our sales and distribution team

Promotional posters in State buses, railway compartments, metro-rails, grocery stores etc. This would give visibility to the product at low cost.

Initial discounts for consumers like coupons which will allow consumers to avail 10%, 20%, 30% discounts for their 2nd, 3rd, and 4th purchases respectively. This will help in repeat purchase and improve brand loyalty.

4. PLACE

y y

Sales will be through super-markets, malls and grocery stores in urban areas In sub-urbs, small towns and rural areas, small kirana stores will be roped in for the selling of the product.

Also, veterinary clinics can be roped in. The product can be introduced to vet doctors as a superior and healthy alternative to existing products and can be sold at vet clinics also.

As the product becomes popular among customers, the company can introduce services like online and telephonic orders and home-delivery.

PROMOTIONAL STRATEGIES IN DETAIL Press Release The first step in communicating with the public would be to send out a press release explaining our new product and when distribution will begin. Press releases and media kits would be sent to food retailers, editors of Food & Science, as well as the editors for magazines we plan to advertise in. Finally, there would be a contact name and number for more information. Magazines One form of media we would use would be through magazine advertisements. The advertisements would be placed in magazines that are directed towards the same demographics of our target audience. Magazines have longer shelf life and are, therefore, a consistent reminder of our product and its benefits each time the magazine is read through. These magazines include pet care magazines, magazines targeting house wives such as Femina, Cosmopolitan as well as in business magazines. Television Another form of media we would use would be through television and our website. Although it is the most expensive form, it is also most effective. Television commercials are the fastest and easiest way to reach our target audience. Advertisements will run during programs that are

watched by those with the same demographics as our target. Our website will feature information about of our product, partick spots for broadcast and cable networks will appear throughout the country on various stations to reach our target. Outdoor Advertisement We will display advertisements on billboards along high traffic roads and highways, which will increase our likelihood of reaching a large percentage of our audience. Reaching people while they are in their vehicles will increase the possibility of immediate purchase. Consumer Promotions We will run promotions at major food retailers throughout the country. Promoting at major food retailers will allow us to get feedback from the consumer. Coupons will be offered on our website and at sampling stations inside food retailers. Initial discounts for consumers like coupons which will allow consumers to avail 10%, 20%, 30% discounts for their 2nd, 3rd, and 4th purchases respectively. This will help in repeat purchase and improve brand loyalty. Public Relations For our Public Relations efforts, we will sponsor a fundraiser for Pet-Care Foundation. We chose foundation as the target customers reach such places for funding of medical procedures or for education of pet care. Also, such places create unique, meaningful opportunities for delivering aid to animals and people in need. Hence such activities would entail awareness among target customers. POSITIONING The product is going to position itself as one of the first to create a healthy and nutritious packaged food for dogs which would complement its original line of products. We would broaden our target market by reaching to an entirely new audience. PACKAGING The packaging for the Fat Free nutritious dog biscuit will be red and blue to promote a fresher image to our already successful brand of BITE. We chose the color red because it triggers the

thought of a health lifestyle. We also plan to include a zip lock seal on the package to lock in the freshness for a longer period of time. CHANNEL AND DISTRIBUTION Indian retailing, though enjoys many unique features, is still done in a primitive way. Barring a few exceptions, Indian retailers, particularly FMCG retailers, are not in a position to implement world class practices of supply chain management. The concepts of Quick Response or Efficient Consumer Response are unheard of in Indian retailing. The two bases of modern retailing management, the Electronic Data Interface and a mutually respectable partnership among retailers and suppliers (the manufacturers) are missing to a great extent in Indian context. Also, Indian marketing channel members are performing some unnecessary tasks, which make the channel structure heavy and inefficient. Though these inefficiencies are observed in all retailing irrespective of industry, the symptoms are more evident in Indian FMCG retailing. Inefficiency in retailing leads to lower profitability of the retailers and lower service outputs for the consumers. Ways and means to strengthen the position of the retailing and FMCG industry, doing away with the causes for the inefficiencies, therefore, are to be taken up in an urgent manner. Such measures may include establishment of retailers co-operatives, merger and buyout, use of technology to the greatest possible extent, setting up of non store retailing centers and increase in franchisee network. Indian retailing and FMCG industry is characterized by certain attributes. y The network of retailers reaches every nook and corner of the country. So any product produced anywhere in the country can be easily accessed by the buyers from any location. Thus the spatial convenience of Indian retailers is varying high. y Secondly, in India the retailing industry is an unorganized lot consisting of, in most of the cases, small entrepreneurs. And the virtual omnipresence of the Indian retailer can be attributed to these small entrepreneurs only. The second attribute gives rise to the following characteristics y Power of the retailers, as such is very less, and in many cases it is negligible. This weakness has been exploited by the manufacturers and the stronger partners of the

marketing channel. The retailers, in general, abide by the terms and conditions set by the manufacturers and other "big brothers" of the channel. y The manufacturers cannot directly reach all retailers in a particular geographical area. Therefore, the manufacturers cannot maintain the desired relationship with the retailers, which in turn, make management of the channel complicated. This also makes the possibility of a direct feedback loop from the retailers almost remote. y Therefore, the member operating between the manufacturers and retailers become more powerful as they can block the channel of communication between the two. So the dependence of retailers on other channel members increases to a high extent. Thus the participation of retailers in the flows of marketing mix becomes lower than desired. y The financial strength of the Indian retailers, in general, is very low and hence the investment capabilities. This makes the retailers more dependent on the other channel members. Logistics and Supply Chain Management y y Creating Value-Adding Networks Logistics and Supply Chain Management include the idea of a service-driven logistics system based upon identified service priorities and a customer base segmented according to service requirements. There are many ways in which logistics can impact on overall return on investment and finally has an impact on shareholders. y In todays competitive environment, we have to cut the cost from where ever it can be reduced. So logistics and supply chain should be designed such that warehouse charges is minimum. If storage charges are reduced, then automatically our profits are increased. If storage charges are low then we do not have to clear the stock rapidly we can wait for update in technology. Supply Chain Supply chain or network will be according to the location of our target market, retailers and customers. We can look for various cheaper networks like railways. The main store can be centralized from where the supply to the retailers can be easily provided. Supply

chain will be according to the fact that it does not affect the cost too much. The time lag should not been too much means the supply should be immediate.

DISTRIBUTION CHANNEL Detailed Overview The distribution network is one of the key strengths that help it to supply most products to almost any place in the country. This includes, maintaining favorable trade relations, providing innovati ve incentives to retailers and organizing demand generation activities .Each business portfolio ha s customized network to meet its objectives. The most obvious function of providing the logistics support is to get the companys product to the end customer. The general trade comprises groce ry stores, chemists, wholesale, kiosks and general stores. The company should provide tailor made services to each of its channel partners. It should develop customer management and supply chain capabilities for partnering self service stores

Channel Design We can have two types of channel selling i. Regular (traditional) retail channel, ii. Direct Selling Channel We can have a well entrenched distribution model which comprises of C&FAs Redistribution Stockists, wholesalers and retailers,focusing on Product availability, Brand comm unication, and higher levels of brand experience

1. Channel Structure Typically, the goods produced in each of the factories are sent to a depot with the help of a carryi ng and forwarding agent (C&FA). The company has its depot in every state of the country. The C&FA is a third party and gets servicing fee for stock and delivery of the products. In each town, there is at least a redistribution stockist (RS) who takes goods from the C&FA and sells them to retail outlets.

Manufacturer B2B

C&F (carrying& forwarding) B2B

Modern Trade

Distributors B2B Retailer

Institutes (consumers)

B2C

B2B

Dog Owners

Dog Breeders

Vet - Clinics

2. Diamond Model of Distribution Model At the top end of the diamond, there are the self service retail stores which constitute 10% of the total FMCG market. The middle, fatter part of the diamond represents the profit center based sal es team. In the bottom of the pyramid is the rural marketing and distribution which accounts for 20% of the business. As a result of the new distribution plan the company has planned to reduce t he number of RS in small towns. 3. Field Sales Force Well set up a distribution network that ensures availability of all their products, in all outlets, at all times. This includes, maintaining favourable trade relations, providing innovative incentives to the retailers and organizing demand generation activities among a host of other things.

The important activities that field sales force will do are: (i) Target chasing and (ii) Reporting on a daily basis.

The general trade comprises grocery stores, chemists, wholesaler, kiosks and general stores. Vari ous activities that can be undertaken to develop a robust distribution channel are : (i) Setting up of full scale sales organisation comprising key account management and activ ation to impact, fully engage and service modern retailers as they emerge. (ii) (iii) (iv) Servicing Channel partners and customers with continuous daily replenishment. Leveraging scale and building expertise to service Modern Trade and Rural Markets. Delayering of sales force to improve response times and service levels.

Various other practices that can be implemented in order to improve the efficiency of the distribution channel are as follows: y Implementation of supply chain system that connects stockists across the country, and als o includes a back end system connecting suppliers,all company sites and stretching right up to stockiest. y IT tools can deployed for connectivity across the extended supply chains. Backend proces ses have been combined into a common Shared Service infrastructure. y Initiating the concept of Super Value Stores (SVS) in urban areas to partner traditional s tores to provide a range of services ranging from managing their inventory to setting up POS (point of sale) banners. y Undertaking several initiatives for traditional channels in order to improve their capabilities at the front end by developing skills for stockists' sales force.

REFERENCES
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http://www.clickindia.com/pets-and-pet-products/food-for-animals http://html.rincondelvago.com/marketing-strategy-on-dog-food-in-eeuu_marketingestrategico-para-comida-de-perros.html http://web.ebscohost.com http://tutor2u.net/business/marketing http://dogfoodcomparison.blogmyz.com