Omega Paw Case
February 10, 2011
Omega Paw is a corporation, which the owner/inventor, Michael Ebert, sells the “Self Cleaning Litter Box.” Michael aspires to reach goals of future sales of $1.7 million by December 1996, $3 million by December 1997, and $5.7 million by December 1998. With the cat population continuously rising as well as his product being the first to be introduced in the United States, these goals are not farfetched.
The criteria that were taken into consideration are the number of grocery stores, the product in the consumer’s mind, the costs required, break even analysis in units and dollars, the cat population, and the capacity that Omega’s manufacture can produce.
The alternatives that Michael was presented with was to do nothing and continue as is, to increase advertising or visit other mediums of advertising to increase penetration into pet stores, a mail order/TV campaign, mass distribution in K-Mart and Wal-Mart, and finally move the product into grocery stores.
The decision to be made is to introduce Omega Paw’s self cleaning litter box into grocery stores. With all criteria taken into consideration, this alternative is the most viable and deemed most profitable after close financial analysis. The break even is sufficient for each of the three years of goals, the consumers in this market take almost all of the market at 95%, when they shop for litter boxes and the amount of exposure in the grocery store is to ensure that Omega Paw Inc. will produce the sales that they aspire for.
Michael Ebert must decide which alternative to take in order to boost sales over the following three years. Analysis:
Omega Paw Inc. has been in the business of selling the “Self Cleaning Litter Box” since August 1995. The product line is a self cleaning litter box used for cats in order to ease the unpleasantness of cleaning a litter box by hand. Omega Paw’s product is consisted of a moulded plastic box with rounded edges that allow the cat to enter and leave through a large opening at the side. The boxes come in two sizes, the larger size meant for larger or many cats. To clean the litter box, the cat owner would first roll the box onto its back, letting the litter to pass through a filter screen and collecting any clumped litter separately in a long, narrow tray. The owner would then roll the box back to the normal position, allowing the clean litter to flow back through the filter to the litter tray. At this point, the tray that is holding the clumped litter could then be removed by the handle and dumped out. The marketing aspect of the corporation is done via magazine, TV commercials and trade shows and also through their manufacturer representatives. Industry/Market Profile
In the mid 1990’s, there was 66 million cats in North America, consisting of 60 million in the United States and 6 million in Canada. In 1996, 33% of the ten million households in Canada had an average of two cats. The cat population has risen by seven percent between 1994 and 1996 and is said to continue growing at an annual rate of four percent over the next few years. The reason for the growth is the recent trend towards apartment and condominium living. Other factors that pertain to the growth rate is the ever increasing mobility of the workforce, the rising average age of the Canadian population and the ease of care and maintenance with cats compared to other pets. (See Exhibit 1 – Market Size and Growth Rate) Consumer Analysis
The spending habits of the typical cat owner are approximately $520 annually which account for 44% spent on food, 23% on vet visits, 13% on supplies such as litter, litter boxes, and bowls, 20% on flea and tick supplies, grooming and toys and also just over 50% of owners bought presents which 88% accounted for were during the December holidays. Omega Paw Inc. divided their...