Tyler Pet Foods, Inc Essay, Research Paper
Tyler Pet Foods, Inc.
I. SUMMARY
Tyler Pet Food Inc. is a major distributor of dog food for show-dog kennels in the United States.
After some researches and discussions, Tyler Pet Foods(TPF) decided to enter into the household
dog food market in the Boston, Massachusetts, metropolitan area. TPF hired a consulting firm to
help it promote and distribute its product. The programs included situational and competitive
analysis, the problems and opportunities of the company, and creative strategies to promote its
product.
II. INDUSTRY
The sales of dog food will total almost 3.835 billion this year, with 2.5 billion in sales coming
from supermarket chains. The Boston area has 1.5% of the U.S. population, and 1.5% of the dog
population. The dog food industry has been growing rapidly because of owners desire for
companionship or need for protection. Dog owners are generally price sensitive, yet they spend
more than 120 million annually for veterinary fees and medications for dogs. Approximately
65% of all dog food sales are made in supermarkets, which provide 25% gross profit margin to
the retailer. Typically, all pet foods are located in one area of the store, separate from human
foods.
III. COMPETITION
There are about 1,000 dog food manufacturers in the United States. Ralston Purina, Carnation,
Mars, Heinz, Quaker Oats, and Grand Met USA, together capture 83% of all supermarket sales.
Traditionally, dog food comes in five forms: Canned, Dry, Soft-Dry, Moist, and Treats. The
prices of these forms of food can range between, $.60 per can, up to $7.19 per 12 lb. Bag.
Because dog food is heavily advertised, competitors must follow suit to remain competitive in
the industry.
IV. PROBLEMS TO BE ADDRESSED
After meeting with representatives from Marketing Ventures Unlimited, these questions were left
to be answered:
1. Was the market itself adequately defined?
2. What position would Show Circuit seek in the market? Should the program be targeted toward
all dog food buyers or toward specific segments?
3. Could the food brokers get distribution in supermarkets given the sales program?
4. What should be TPF’s recommended selling list price to the consumer for Show Circuit?
5. Could TPF at least break even in the introductory year and achieve a 15 percent return on sales
in subsequent years?
V. PROBLEMS ADDRESSED
On the question about the market itself being adequately defined, we believe that it was
narrowed down adequately to the single and young married couples between the ages of 21 and
30, and people 50 years of age and older. This represents a focused target market but it is
questionable whether the market is large enough to be profitable.
On the question about the market positioning, Show Circuit will be marketed as a high-quality
food that has for years, been exclusively sold to owners of show dogs. The product is also
differentiable from other forms of pet food, since it is a frozen pet food, and one of the first
organic dog foods. This dog food would be found along side the food that you would serve to
other family members, in the frozen food section of a supermarket.
The problem of the food brokers getting distribution in supermarkets, represents the greatest
challenge for TPF. However, the pioneering work has already been done by a frozen dog treat
called Frosty Paws. Frosty Paws has already gained freezer space next to ice cream, in Boston
area supermarkets. It is difficult to convince supermarkets to give up a proven product’s space,
for an unproven, untested product. It may be necessary to offer higher profit margins to the
frozen food buyers, to encourage them to free up space to sell Show Circuit.
The recommended selling list price to consumers should be approximately $9.95 per case(12
tubs). This includes the $6.37 manufacturing cost, $1.59 which is a 25% markup for TPF, and
$1.99 which is a 25% markup for the supermarket. This price is only slightly higher than the
other types of dog foods, but is justified by the premium quality of the product. Canned dog food
is approximately $.043 per oz., Dry dog food is approximately $.042 per oz., Moist dog food is
approximately $.06 per oz., while Show Circuit would be approximately $.055 per oz..
In order for TPF to break even in the introductory year, they would have to sell 188,679 units to
cover a $300,000 promotional budget, and 314,465 units to cover a $500,000 promotional
budget. This would represent a 5% and a 8.3% market share, respectively, of the Boston area dog
food market.
Promotional Budget$300,000$500,000
Divided by Markup$1.59$1.59
Units to Break Even188,679314,465
Times $9.95 Price$9.95$9.95
Dollar sales Show Circuit$1,877,356$3,128,927
Boston Total Sales(2.5b*1.5%)$37,500,000$37,500,000
Market Share5%8.3%
To attain this level of market share, would be great, but we don’t think that it is likely in the first
year. We do not feel that TPF will break even in the first year, and it may be a year or two before
TPF achieves a 15% return on sales.
VI. CONCLUSION
Although, a $500,000 promotional budget would definitely increase consumer awareness, we
believe that it would be too risky to expect a 8.3% market share in the Boston area for Show
Circuits first year. A $300,000 promotional budget is a safer bet, and although 5% is still a high
amount of market share for the industry, it is lower and more attainable than the 8.3%.
http://ua-referat.com