marketing strategies - case study: uk pet market
Strategies for growth in the UK pet market
The UK pet food market is a substantial market in its own right – worth almost £1.5 billion. However, the market is mature offering little prospect of exciting growth. As a result, pet food manufacturers looking for sales growth are trying to enter related markets by extending their brands into pet services.
Among them is Masterfoods UK, which is stepping up its presence in the lucrative pet insurance market. It is also launching Pedigree Denta, an oral pet care range comprising dental sticks and chews, backed by a £3million marketing campaign.
The UK pet food market was worth £1.49bn in 2001, a rise of 4.2 per cent on 2000 (source: Leatherhead Food Research Association. While the value of sales has increased, sales volumes are fairly static at nearly 1.2 million tonnes.
The difference in growth rates is explained by two main factors:
• An increase in premium product sales
• A switch in demand from heavier "wet" food to lighter "dry"
products, which are less messy.
Market shares
In the UK, two companies dominate the pet food market:
• Mars' Masterfoods (45 per cent market share) has
a brand portfolio that includes Whiskas, Pedigree, Kitekat, Cesar and Sheba
• Nestlé Purina Pet care (32 per cent market share), Nestlé's
brands include Felix, Friskies and Bakers Complete.
Whiskas canned is the number one brand, with sales of £87.5m.
It is followed by Pedigree canned (£82.1m) and Nestlé's Felix
canned (£82.0m).
Market developments
Developments in the UK pet food market are being largely influenced by increasing segmentation.
Products are segmented by reference to:
• Life cycle
• Added convenience
• Lower maintenance
• Health claims
Industry observers put these trends down to the "humanisation" of pets by their owners.
lams shakes up the market
At the forefront of the healthy eating trend is Procter & Gamble's (P&G) "super premium" dry food, Iams. Initially sold through specialist retailers and vets, it was introduced in mainstream supermarkets in April 2001, backed by a £28m marketing campaign. iams provides an excellent example of how a change in distribution channel can significantly improve sales.
Iams has shaken up the market quite significantly. Since then, dry food has taken off massively as the launch jogged other suppliers into spending money on advertising.
Mirroring the trend towards healthy pet food products, the market for pet healthcare and accessories is also growing. Mintel estimate that this market grew by 6.3 per cent between 1999 and 2001.
A look at the US market gives an idea of how far the UK pet care market could go. The US market is showing strong growth in pet clothing, bedding and travel accessories.
Could UK pet food brands be successful in extending into the pet care and pet accessory segments?
Some marketers in the industry believe that translating core brand values of trust and expertise from pet food into pet care is a relatively short step. However, those pet food brands which have core values associated with the pleasure or joy of pet ownership may find it difficult to transfer brand equity into some areas of pet care
Other observers predict that the next big move for pet care brands could be into branded veterinary care, grooming parlours and boarding kennels.
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