Marketing Situation Analysis Report 061414 PDF

Marketing Situation

Analysis ReportZach Hupy

Background

History

• The PetSafe Brand was started in 1991

• Originally started selling radio fences to contain dogs, attempting to

compete with Invisible Fence Brand (at the time a different company)

• In 1991, Invisible Fence sold the transmitter portion of their system for

$450. The unit contained $13 worth of electrical components

• PetSafe wanted to offer a similar product for a better value than Invisible

Fence. In doing so, they eventually beat Invisible Fence in sales and bought

them

History Continued

• Financial goal for PetSafe was to sell 100 radio fences in

the first month. Actually sold 3,000 in the first month

• Sold $1,000,000 worth of radio fences in the first 6 months

• Founder Randy Boyd is still the CEO today

• Currently, Radio Systems Corporation (parent) is worth

upwards of $360M

• Radio Systems Mission Statement: “To be the most trusted

brand in the pet industry”

Radio System’s Distinct Brands

Industry Data2009 2010 2011 2012 2013

Sales $ 14.09 B $ 14.67 B $ 15.29 B $ 15.87 B $ 16.28 B

Profits $ 2.76 B $ 2.55 B $ 2.84 B $ 2.97 B $ 2.96 B

0

2

4

6

8

10

12

14

16

18

2009 2010 2011 2012 2013

Pet Industry Profit and Sales (in billions)

Sales Profits

Brand Data2012 2013

Sales $ 277.4 M $ 301.6 M

Profits $ 129.0 M $ 162.9 M

0

50

100

150

200

250

300

350

2012 2013

PetSafe Profit and Sales (in millions)

Sales Profits

Macro-environmental Factors

• ECMA (Electronic Collar Manufacturer’s Association) is a

world-standard in regulations on electrical outputs for collars

• ECMA restrictions on electrical power outputs for static

correction collars have been put in place to limit the stimulation

for the pet

• PetSafe has dedicated themselves to make sure that all their

products meet these ECMA standards, as well as adjusting their

products for international environments

• All PetSafe’s products also meet FCC regulations for radio

signals in the US as well as a number of regulations in each

country where they are used

Market Share

68.2%

21.4%

2.6%

7.8%

PERCENT MARKET SHARE (TRAINING COLLARS)

PetSafe Dogtra Tritronics Other

Product

Product Life Cycle• The Pet Industry is in the mature age of its life cycle (According to IBIS Report for

March 2014)

• According to APPA, the tipping point of the industry happened in 2005-2006 when pets began to be rewarded and punished in human terms.

• This tipping point sparked a boom that has created a significant increase in new pet products and innovations leading up to 2014

• However, the forecast indicates that the number of new products released will decline from 2014 until 2019

2004 2006 2008 2010 2012 2014 2016 2018 2020

Pet Product Life Cycle

Types of Products

• Currently, PetSafe has a wide variety of products, indicating a differentiated target marketing strategy

• PetSafe currently produces remote dog training collars, radio control fences, pet-proofing aids, kennels, water fountains, feeders, pet doors, litter boxes, dog collars and harnesses, toys, treats, as well as several other types of products

Product Strategy

• PetSafe’s marketing strategy uses superior innovation which positions them to offer greater value to the consumer in several product categories

• Because of PetSafe’s dedication to new innovation (including over 40 patents) and customer service, PetSafe has remained a leader in electronic pet production for nearly 20 years

• Although PetSafe changed their slogan several years ago from “Happy Pets, Happy Owners” to “Protect. Teach. Love.” , both slogans provide the same message to consumers, who in turn have become loyal customers

Price

Price Range, Objective, and Strategy

• PetSafe is a higher-end product company that typically maintains a constant price level for each of its segments

• PetSafe then employs product line filling to fully offer products to all prospective buyers in the specific target market

• The price range of PetSafe’s products is between $3 and $600

• Training Collars range from $40-$200; Radio Fences range from $160-$600; Dog Doors range from $13-$250

• PetSafe’s Price Objective: Offer a higher quality product, and the product reliability and consistency will justify the higher price

• PetSafe’s Price Strategy: Although PetSafe prices are higher than some competitors, those who experience the brand will become loyal customers due to the product quality

Price Competition and Marketplace Environment

PetSafe PetSmart PetCo

Little Dog Elite Trainer $179.95 $164.99 $159.95

Stay + Play Wireless Fence $339.95 $300.99 $341.10

Electronic Passport Door $229.95 $199.99 N/A

DrinkWell Multi-Tier Fountain $59.99 $69.99 $42.99

• All the prices listed in the table above were online prices. Therefore, the online

market is extremely competitive with discounted pricing and changes in inventory

• The marketplace environment is also extremely competitive. On top of the well

known producers, there are also store-specific brands that attempt to duplicate the

products of the industry-leader, PetSafe

Place

Locations and Channel Structure Diagram• PetSafe does not have retail or wholesale outlets. They do however have 7 offices world wide

and sell to more than 10,000 stores

• PetSafe employs multiple marketing channels. They use both P-C and P-R-C channel structure and it is typically the retailer who is the channel captain

• This indicates that the channel structure uses an administered VMS

• PetSafe (and Radio Systems) use a third party distribution strategy to get their products from the manufacturing line to the customer. They are typically warehoused in the US prior to being shipped to customers.

• U.S. and World Headquarters: Knoxville, TN

Raw Materials: Plastic, Circuit

Boards, Electronics

Product Development

Product Manufacturing and Assembly

Marketing

Pet Product Stores:

PetSmartPetCo

Online and Catalog Sales:

PetSafe.net

Customer Feedback

Promotion

Positioning Statement, Promotion Objective,

and Target Market

• Positioning Statement: To pet owners who want a quality product for their loved one, PetSafe is a product company that gives simple and effective solutions to their pets’ specific needs

• Positioning Objective: PetSafe’s objective is to use multiple mediums of communication to capture several differentiated target markets to provide the maximum amount of value to each segment

• The primary target market for the pet product industry are males and females between the ages of 25 and 45 and are typically financially stable

Promotion Strategy and Tools Used

• Strategy focuses on customer satisfaction and customer service, fitting in

line with PetSafe’s Mission Statement, “To be the most trusted brand in the

pet industry”

• PetSafe promotes their brand by hosting an annual contest “Bark for Your

Park” in which cities in the US compete for a $100,000 grand prize to build a

dog park in their area

Positioning Map (Training Collars)

Low Quality

Low Price High Price

High Quality

Dogtra

Dog Widgets

PetSafe

Esky

AGPtek

What would you do differently?

Things I would adjust• Product

• Product definition at times has been murky. A better defined product would make for a

smoother new product development process. This can be achieved through a customer-based

marketing strategy. By performing studies PRIOR to product creation and getting

consumer feedback, marketers can better inform engineers of the product requirements

• Product returns being close to 5% company-wide is simply too high. Consider hiring an

additional quality control employee to work along the assembly line full-time. Also consider

creating quality requirements for the manufacturers to make product. If the manufacturers

do not meet PetSafe’s standards, they do not make PetSafe products

• Place

• PetSafe products are currently sold in many retailers, both in stores and online. However, all

of their manufacturers are in China, with a Chinese-lead design team. I think the CDC

needs a full time American-trained overseer to ensure products stay on schedule for delivery

Things I would adjust

• Price

• Having worked at Radio Systems, I feel qualified to say they work from a cost-based

pricing mentality. Switching to a more value-based pricing mentality would be better

for the company in the long run to create a loyal customer base

• Promotion

• Historically, PetSafe has not done much advertising. They are beginning to include

advertising in their marketing mix, but they still need to make a more concentrated

effort to advertise in high-touchpoint media. Possible media include television,

promotional events at pet stores, and even discounting on their online marketplace