Sdm Project (Dog Food)

8/3/2019 Sdm Project (Dog Food)

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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


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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


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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 super-

premium 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 oftheir products in developing markets, making it more difficult for indigenous manufacturers to

develop their own premium offerings.


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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 Buying Dog food has become very easy through Internet and telephonic ordersy The market for Dog Care in India is growing at an average annual rate of 9.3%.1y 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 makesit 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 theirdogs do not eat a particular brand of food

y Improper distribution leads to unavailability of dog food at many localitiesy Healthy Dog food with natural ingredients would come at a premium price for consumers

so it might be difficult to gain instant market share.

1http://www.clickindia.com/pets-and-pet-products/food-for-animals/

2http://html.rincondelvago.com/marketing-strategy-on-dog-food-in-eeuu_marketing-estrategico-para-comida-de-

perros.html


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OPPPORTUNITIES

y Almost 70% of pet dogs worldwide dying out of heart attack due to overweight caused byimproper diet. Thus an opportunity for healthy dog foods.

y Another opportunity is to offer differentiated products i.e. dog food with ingredientssuited 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 wouldinvariably stick to a brand if they find it nutritious and convenient.

THREATS

y Competition from established brands like Pedigree, IAMS, Purina, Alpo, Puppy Chowand Premium Dog Food

y High promotional costs to grab the attention of consumers

MARKETING STRATEGIES

1. PRODUCT STRATEGIES

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

y Also, offering different foods for different breeds of dogs

2. PRICING STRATEGIES

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

competitors.


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Puppy 3kg Rs. 340 7.5kg Rs. 820

Large Breed Puppy 3kg Rs. 340 7.5kg Rs. 820

Adult Maint Small

Breed3kg Rs. 310 7.5kg Rs. 790

Adult Maint Medium


Adult Maint Large


Premium & Large

Premium3kg Rs. 340 7.5kg Rs. 840

Lamb & Rice 3kg Rs. 340 7.5kg Rs. 840

Light & Large Breed

Light2.5kg Rs. 340 6kg Rs. 770

Senior 3kg Rs. 340 7.5kg Rs. 840

3. PROMOTION STRATEGIES

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

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

y Initial discounts for consumers like coupons which will allow consumers toavail 10%, 20%, 30% discounts for their 2

nd, 3

rd, and 4

thpurchases

respectively. This will help in repeat purchase and improve brand loyalty.


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4. PLACE

y Sales will be through super-markets, malls and grocery stores in urban areasy In sub-urbs, small towns and rural areas, small kirana stores will be roped in for

the selling of the product.

y Also, veterinary clinics can be roped in. The product can be introduced to vetdoctors as a superior and healthy alternative to existing products and can be sold

at vet clinics also.

y As the product becomes popular among customers, the company can introduceservices 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


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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 Freenutritious dog biscuit will be red and blue to promote a fresher

image to our already successfulbrand of BITE. We chose the color red because it triggers the


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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 buy-

out, 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 productproduced 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 thecases, 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. Thisweakness has been exploited by the manufacturers and the stronger partners of the


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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 morepowerful 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 theinvestment capabilities. This makes the retailers more dependent on the other channel

members.

Logistics and Supply Chain Management

y Creating Value-Adding Networksy 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 bereduced. 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


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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 StructureTypically, 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.


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Manufacturer

B2B

C&F (carrying& forwarding)

B2B

Modern Trade Distributors Institutes

B2B (consumers)

Retailer

B2C B2B

Dog Owners Dog Breeders Vet - Clinics

2. Diamond Model of Distribution ModelAt 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 profitcenter 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 ForceWell 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.


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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 fullscale sales organisation comprising key account management and activation to impact, fully engage and service modern retailers as they emerge.

(ii) Servicing Channel partners and customers with continuous daily replenishment.(iii) Leveraging scale and building expertise to service Modern Trade and Rural Markets.(iv) 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 also includes a backend 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 processes have been combined into a common Shared Service infrastructure.

y Initiating the concept ofSuper Value Stores (SVS) in urban areas to partner traditional stores 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 theircapabilities at the front

end by developing skills for stockists' sales force.


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REFERENCES

y http://www.clickindia.com/pets-and-pet-products/food-for-animalsy http://html.rincondelvago.com/marketing-strategy-on-dog-food-in-eeuu_marketing-

estrategico-para-comida-de-perros.html

y http://web.ebscohost.comy http://tutor2u.net/business/marketingy http://dogfoodcomparison.blogmyz.com

.

Sdm Project (Dog Food)

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