Ralston Purina is the overall market leader in pet
food sales. They have 28.3% of the dog food market and approximately
24% of the cat food market (Grocery Marketing, Sept. 1990). When
deciding on a distribution channel for pet foods, Purina has utilized
a variety of approaches. Originally when the company first introduced
Dog Chow Checkers (it's first pet food, which was introduced in
the early 1930's), distribution was exclusively through Purina
feed dealers. However, with the urbanization of America and the
increasing number of consumer products available, it seemed natural
that the company should look to broaden its distribution base.
So, in the 1950's Purina began distributing its pet foods through
grocery stores (through which it had already been marketing its'
Chex Cereals), and by 1957 had achieved nationwide distribution
of the product, which was now called Purina Dog Chow. Sales and
profitability mushroomed.
Consumers have recently become more knowledgeable
and demanding, and Purina has again revamped its distribution
strategy. They have introduced "Premium" or "Professional"
brands, known as Pro Plan which can only be obtained through specialized
outlets. They have limited distribution of these products to
people positioned as experts, that the consumer can go to for
advice and the product - veterinarians, breeder/kennels, feed
stores and pet "supermarkets." They have continued
to market Dog Chow, Cat Chow and related products through grocery
stores, but as the attached article from "Grocery Marketing"
relates, grocery store owners and managers are missing out on
a growing market. This market has targeted the pet enthusiast
who wants the best for their pet - perhaps the "Yuppies"
that have a dog or cat rather than kids - with nothing being too
good for their four-legged friend.
Draft a memo to Pat McGinnis, President and Chief
Operating Officer of Ralston Purina Grocery Products, that addresses
the following questions:
(40 pts.) 1. Evaluate the pros and cons of each distribution strategy:
a.) Grocery stores.
b.) Specialty outlets such as feed stores, veterinarians,
breeders/kennels.
Consider such aspects as specialization, product
knowledge, price, ability to handle promotions, number of customer
contacts. Explain why the different channels might lend themselves
to a different target customer.
(10 pts.) 2. Should the specialty outlets be given exclusive
distribution rights for a particular area or market? Why or
why not?
(20 pts.) 3. What recommendations could Ralston Purina
give to grocery stores that want to capture part of this market
for premium pet foods? How can they position themselves as experts?
Do they want to?
(20 pts.) 4. What recommendations could Ralston Purina
give to a feed dealer that sees this as a profit opportunity?
(10 pts.) 5. Does the company run the risk of alienating grocery stores, which continue to market the largest volume and dollar value of their products? What can they attempt to do to quell this dissension? (This probably ties in with question #3 above). Is the risk worth the potential benefit?