First in Show Pet Foods, Inc. is a major producer of dog food for show-dog kennels in the U.S, and is now a supplier of a high quality dog food for show dogs called Show Circuit. The situation facing First in Show Pet Foods currently is one of expansion. First in Show wants to break into the world of retail branded pet food. The company has to choose the best suitable Advertisement and Trade Strategy. INDUSTRY AND MARKET ANALYSIS:
The dog foods are distributed through two major channels, supermarket and mass merchandiser, in Boston area (See Exhibit A); each account for 36% and 64% of the total market share separately. The introductory program targets the supermarket as its distribution channel due to the need for refrigeration. Under the channel, the market is divided into three major categories. Dry dog foods account for 23.4% of the total market share. In this category, five major competitors hold 68% of the market. The second category, canned dog foods, account for 5.4% of the total market share with four major competitor; they capitalize on 88% of the market. For the treats category, there are three major competitors. They control 73% of the market, which account for 7.2% of the total market. There are five major competitors in the market through the major three forms of dog foods in 2008. They are Nestle, Iams, Hill`s Pet Nutrition, MasterFoods USA, and DelMonte Foods, Inc. They account for 75 percent of U.S. dog food sales in 2008.
Based on the analysis, there are two alternatives for the First in Show Pet Foods- Introduce the program with a budget of $500,000, or introduce the program with a budget of $700,000. Alternative 1: If the company takes the introductory program with a budget of $500,000, First in Show has to sell 381,295 cases of Show Circuit to achieve the break-even. At the 15% of gross margin per unit, the break-even sales volume for the company is $4,859,137. That is to say,...