MBA-FPX5012__Assessment1-1

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1 Marketing Plan Assessment 1 David Estaphnous

2 Executive Summary MSH is one of five companies competing in the pet food market. MSH has been in the market for 20 years offering and specializing in pet food. The company uses its farming business to source its raw materials and offer pet food at a very affordable price. The company currently produces dry food, wet food, and animal treats catering to dog and cat owners. The business plans to introduce a high-end line of health-conscious pet food to differentiate itself from the competition and grow its clientele beyond its present geographic area. In order to accomplish this, MSH will modify its business plan and advertising strategy and use a range of marketing techniques, such as celebrity endorsements and social media promotion. The company currently has an 8% market share and the Vice president of marketing is in charge of introducing the product. The marketing campaigns will focus on millennials to ensure proper exposure and they will collaborate with veterinarians to introduce the free product into the market before launching. Business Context MSH Brands is a privately owned pet food manufacturing business that has been in business for over 20 years in California. The company initially started a farming business and grew it into an organization specializing in pet food. Using locally grown produce and organic meat products sourced from local farms, the company has been successfully beating year-over-year goals. The company offers quality pet food at an affordable price. It also primarily caters to dogs and cats and produces dry and wet pet foods. The number of pets, particularly dogs and cats, in the US increased during the COVID-19 pandemic due to consumers being cooped up at home, driving revenue growth for premium pet food production. Due to the humanization of pets and the

3 increasing availability of information on pet nutrition, consumer preference has shifted toward premium pet food. Large corporations with globalized operations strove to most effectively meet this expanding demand, which led to a boom in international trade. However, as import growth outpaced export growth, smaller domestic producers faced increased competition. Over the last five years, the industry's revenue has increased at a compound annual growth rate of 2.8%. In 2022 the pet food market was valued at $109 billion worldwide. The market is projected to expand at a 5.1% compound annual growth rate (CAGR) from 2023 to 2028, while it is expected to reach $145.3 billion(Wood, 2023). The growing trend of humanizing pets and the growing desire for pet ownership are expected to fuel the pet food market's continued growth. The number of Americans who own pets has increased dramatically over the previous thirty years. 66% of American households, or 86.9 million homes, had pets as of 2023. Statistics on pet ownership indicate an increase from 56% in 1988. Pets provide invaluable companionship and emotional support to their owners. 76% of cat owners and 85% of dog owners view their animals as family members. To maintain their competitiveness, major players in the market are anticipated to keep launching novel and inventive goods. This business plan aims to introduce a high-end line of natural/organic premium pet food, differentiate itself from other companies, grow its clientele beyond its present geographic area, reach new clients, and increase market share. To accomplish this, MSH will modify its business plan and advertising strategy and use various marketing techniques, such as digital marketing that includes SEO, paid ads, social media advertising, and celebrity endorsements. The company is currently capturing 13% of the market share. The company projects an expanded product to increase market share by 10% to enhance the market share.

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4 Situation Analysis MSH has developed an excellent reputation in California by having products pets eat and love. The company’s motto is to preserve its products' affordability, consistency, and quality. The company has a simple product collection that consists of feline and canine. Due to the high demand for canine food, MSH has allocated 62% of its production to canines, while 38% is for feline. This has allowed MSH to have various products catered to different types of consumers. Table 1 lists all products the company excels in offering. Table 1 Product Description Canine Feline Total Dry Food -plain 12% 11% 23% Dry Food -Vegetable (Nutrition) 15% 10% 25% Wet Food -Meat 23% 14% 37% Animal Treats 5% 3% 8% Overall Total 62% 38% 100% Nestle Purina, Hill's Pet Nutrition Inc., and Mars Petcare Inc. are the leading three players in the pet food industry. These corporations hold the largest market share because of their extensive distribution network and excellent brand recognition. According to Krueger, Purina is presently leading the industry in all categories of pet care worldwide, holding a 29% market share and dominating the markets for dry dog food, dry cat food, and wet cat food products. Purina – 29%,

5 Mars – 17%, J.M. Smucker – 8%, Hill’s – 7%, Blue Buffalo – 6%, MSH – 8%, and Others– 25%(Wall, 2023). Table 2: Current Market Share MSH needs to ensure a competitive advantage strategy; thus, a SWOT analysis will help determine how the marketing strategy will benefit the company. Strengths ● Name recognition as the company has been in the industry for over 20 years. ● The company sells its products nationally across the US. ● The company has solid distribution centers that favor the expansion of the company. ● Low production costs due to company ties with farming.

6 ● Outstanding leadership that favors quality over profits. Weaknesses ● Few products to select from. ● Low nutritional value with non-nutritional options. ● Local focus on the US market. Opportunities ● Geographic expansion internationally to decrease business risks and increase revenue ● Increase pet ownership in the US and Worldwide. Pet food consumption is expected to rise due to changing lifestyles and decreasing birth rates. Pets are now considered more of a member ● New Product launches to keep up with demand and enhance competitive advantages. Threats ● Shortage of skilled labor in manufacturing. Manufacturing has been one of the most affected industries by labor shortages. As of June, there were over 600,000 steady manufacturing jobs open in manufacturing companies across the country due to the high level of industrial demand(Stevick, 2023) ● Stringent Regulations as the FDA has regulations to prevent adulteration and misbranding of pet food. The SWOT analysis has identified the company's strengths, weaknesses, opportunities, and threats. The SWOT analysis has revealed where the company could develop an edge to capture more market share, acquire new clients, and increase revenue in different markets. The company

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7 must evaluate risks before starting the endeavor of new marketing. Additionally, NPV(net present value), IRR(initial rate of return), and PI(profitability index) have to be determined to qualify the project. Marketing Strategy To formulate a marketing strategy, the company must identify the target market. 66% of U.S. households (86.9 million homes) own a pet. Dogs are the most popular pets in the U.S. (65.1 million U.S. homes own a dog), followed by cats (46.5 million households) and freshwater fish (11.1 million households). Millennials make up the most significant share of current pet owners (33%), followed by Gen X (25%) and baby boomers (24%). Households with annual incomes of $100,000 and over are most likely to own pets. Additionally, Homeowners are more likely to own pets than renters. Five of the top 10 states with the most devoted dog owners are in the Pacific and West, including Colorado, Alaska, Nevada, Washington, and Oregon. In 2022 Americans spent $136.8 billion on their dogs, up 10.68% from 2021 ($123.6 billion). The average annual cost of dog ownership is $730. 42% of dog owners and 43% of cat owners obtained their pets from a store, whereas 38% of dogs and 40% received their pets from an animal shelter or rescue(Megna,2023). Target market allows the company to cater to its customers. Differentiation is the foundation for marketers who want to create a powerful brand and avoid the price pitfall. The ability of a business to execute in one or more ways that rivals cannot or will not match gives it a competitive edge. Companies should develop a lasting competitive advantage, according to Michael Porter. The competitive advantage must be long-lasting so the company can endure economic hardships(Kelly, 2005). The company could use a channel differentiation strategy to stand out. It can also more effectively and efficiently design its distribution channels’ coverage, expertise, and performance to make buying the

8 product more accessible, enjoyable, and rewarding. Back in 1946, pet food was cheap, not too nutritious, and available exclusively in supermarkets and the occasional feed store. Dayton, Ohio–based Iams gained success marketing quality pet food through regional veterinarians, breeders, and pet stores. Doing so can enhance the position of the pet food(Kotler, 2022). MSH could use this differentiation strategy to compel Veterinarians to recommend the product so that pet owners would be more convinced. They would also be able to save money as a result. Marketing Tactics The promotional strategy MSH should adopt is establishing a penetrative approach to the market to gain as much market share as possible. Since MSH has an excellent reputation for providing traditional pet food, the new products will be offered to be premium, natural, and organic to address customer needs. To capture market share, the company must have apparent opponents and objectives. The objectives for the new product are to capture more market share, i.e., increase market share by at least 5%, increase sales by 15%, and increase customer base by at least 15%. The options are flank and guerilla strategies since the objectives and opponents are clear. The flank strategy is to identify shifts causing gaps to develop so the company can fill the gap. Since the flank strategy will focus on gaps, the company must take advantage of geographical locations where opponents are underperforming(Kotler, 2022). The next strategy is to initiate guerilla attacks, which are small, sporadic conventional and unconventional attacks, such as targeted price reductions, vigorous marketing campaigns, and sporadic lawsuits. Developing these strategies will require digital marketing campaigns across social media platforms like Instagram, TikTok, YouTube, Facebook, and Google. These campaigns will focus on paid ads along with organic growth. These social media websites are viral among millennials, and the campaigns will increase the brand's exposure to its target audience. Product placement

9 will ensure the product is available to the consumer. Channels such as Whole Foods, Trader Joe's, and other health-conscious channels will raise awareness about the brand. Establishing a presence in these stores will enhance the brand’s image. Finally, celebrity endorsements are a highly effective method of reaching many customers by leveraging the celebrity’s audience and followers. The Pricing strategy must be planned with caution due to the economic situation the country is in. The inflation rates are very high; assets like stocks and real estate are also high. According to the Federal Reserve system, the interest rates are at 22 years high of 5.25-5.5%. Pricing the product is mainly dependent on the customer’s psychology and perception. Consumers may have an upper price threshold above which prices are excessive and the product seems unworthy of the money, as well as a lower price threshold below which prices indicate poor or undesirable quality. Thus, most of the time, consumers employ reference price criteria when they are buying products. Thus, the best way to price the premium product is to get competitors' prices of similar products to make a competitively priced product that the consumer will favor over the competition. Additionally, the company must demonstrate the value and quality of the products to the consumers on the packaging and the marketing campaign. Organic, premium pet food is more nutritious than other pet food. Eating better and maintaining a good diet is critical to the pet’s health. The pet must also like the product so that when the owner receives a free product, they will return and buy it. The objectives of setting the price are to survive the competition, ensure maximum profit, and capture as much market share as possible. Effectiveness Controls

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10 The control metrics for this project are first to increase the company’s revenue by 20%. The increase in revenue is due in part to increasing the customer base marketing to different clients and managing active marketing campaigns on social media websites. Thus, the second control will be customer expansion to reach at least 25-30% of millennials, as these customers are the main target audience the company is seeking to expose the brand to. Third, the company should aim to increase market share by 4% the following year after the release of the new product. The fourth control is to expand the manufacturing territory to different geographies where competition is underperforming. Fifth control, net profits are at 10% of the gross margins of the newly introduced products. Summary MSH is competing in a very competitive market that is about to expand. The company is planning to revolutionize pet food to incorporate a healthy premium product that will increase market share and capitalize on the constant demand for pet food. Upon SWOT analysis, the company realizes that its major brand strength lies in its strong distribution, leadership, and brand name. Thus, the company will leverage its strength to introduce the product into the market. The company will conduct a stellar marketing strategy which is channel distribution as a form of differentiation to set itself apart from the competition. Additionally, the company will supplement the strategy with different tactics to drive the campaign to success. These tactics are flank and guerrilla strategies to gain market share and compete effectively. Additionally, using a great pricing strategy to monitor how the product competes in the market.

11 References Kelly, F. J., & Silverstein, B. (2005). The breakaway brand: How great brands stand out . McGraw-Hill. Kotler, P. (2022). Marketing management . Pearson. Megna, M. (2023, November 6). Pet ownership statistics 2023 . Forbes. https://www.forbes.com/advisor/pet-insurance/pet-ownership-statistics/#:~:text=to%20pet %20ownership%3A-,As%20of%202023%2C%2066%25%20of%20U.S.%20households% 20(86.9%20million,acquired%20pets%20during%20the%20pandemic. Porter, Michael E. (1980). Competitive Strategy: Techniques for Analyzing Industries and Competitors. Stevick, K. (2023, August 28). Council post: Worker shortage: Overcoming workforce challenges in manufacturing . Forbes. https://www.forbes.com/sites/forbesbusinesscouncil/2023/08/25/worker-shortage-overcomi ng-workforce-challenges-in-manufacturing/?sh=6599783b250b#:~:text=The%20labor%20 shortage%20in%20the,filled%20in%20manufacturing%20businesses%20nationwide. Wall, T. (2023, March 1). 5 pet foods brands lead us market share, Purina Tops . Petfood Industry. https://www.petfoodindustry.com/pet-food-market/article/15469584/5-pet-foods-brands-le ad-us-market-share-purina-tops

12 Wood, L. (2023, June 23). Pet Food Industry Outlook 2023-2028: Intense competition among the industry’s top dogs leading to new and innovative products . PR Newswire: press release distribution, targeting, monitoring and marketing. https://www.prnewswire.com/news-releases/pet-food-industry-outlook-2023-2028-intense- competition-among-the-industrys-top-dogs-leading-to-new-and-innovative-products-30186 0905.html

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