Omega Paw Case Study Solution
With direct and Indirect competition along with the production constraints, Bert Is motivated to break through these barriers ND prolong the growth phase of this product with Increased sales and profits. Problem Statement: After a successful first year of business in selling “Self-cleaning Litter Box”, Omega Paw is forced to strategically plan on how it will grow its business that has the potential to expand and achieve its objectives.
With various direct and indirect competitive forces in action, the company has to plan and implement creative marketing and distribution techniques to Increase efficiency and productivity, thereby increasing sales. Objectives, background and environment assessment: With an increasing cat population in North America, Omega Paw aims to achieve sales of $1.
7 million by the end of 1 996 fiscal year. The company looks forward to nearly double Its sales over the next two years reaching at $3 million by 1997 and SO_7 million by 1998.
The company initially started out with shipping the litter boxes directly to the customers. Due to production delays and faults, Omega suffered a dent to its reputation and decided to add a distributor channel to overcome the issue. As the company introduced their product in the United States, it utilized the kills and industry contacts of manufacturer representatives in order to reach out to the distributors.
The company looks forward to meet its target sales level but the current distribution strategy Limits the exposure of the product only to the pet stores.
To reach the budget sales and profitability, various alternatives have been considered with regards to the distribution of the product at places other than and including pet stores. Before determining which method of marketing or distribution will be the most suitable and profitable one for the company, it is important to underline the strengths, weaknesses, opportunities and threats that the company currently faces and to ascertain which alternative would align most with the company’s Interest.
The company has maintained high standards of Its product quality.
This is evident from the fact that the company took a rather risky step in its initial product phase by sending out delay letters to its customers but did not compromise on quality to save the company’s reputation. Additionally, the quality of the product is also warranted from the fact that 7 out of the 8 distributors picked up the product Immediately. The easy use of the product and a litter box with its top covered serves to attract customers who are sensitive to odors and scooping feces. Moreover, strength In production capacity Ana Atlanta resources would allow ten company to meet its targets.
The company has set up very high sales targets considering the fact that it is has been in the business for only two years.
Production delays and inaccurate demand forecasts can potentially impede the operational and distribution functions, thus adding to overhead costs. In terms of the product itself, customers may find a litter-filled litter box heavy and difficult to roll. As the population of cats is estimated to grow at 4% in the coming years, the company has ample opportunities to continue to market its product to new and existing customers.
Due to the increase in the ownership of cats as pets, the company also has the opportunity to extend its growth period for the foreseeable future and generate profits. The complimentary product used with the product poses a significant threat to the acceptability of the company’s product. A sub-standard litter not effectively rolling in the litter box could potentially bring negative reviews to our product.
In terms of the business, a booming cat population could attract more companies to introduce enhanced version of this product in this industry where there are no barriers to entry.
Market and competitive analysis: There are estimated to be 66 million cats in North America. This estimate has risen by 7 percent between 1994 and 1996 and is estimated to grown at an annual rate of 4% over next few years. There has been an uptrend in multiple cat households which is primarily due to the ease of care and maintenance for cats relative to other pets. Omega Paw has segmented its market into three divisions.
% of the cat owners are new or first time owners while 80% of the owners are experienced. The rest of the 15% are segmented in the “gray zone” where owners keep their pets outdoors and therefore only spend on food.
Omega Paw should focus its marketing in the first two segments as those owners are likely to research and browse information about the best available products for their feline friends. The 80% segment could be divided more in to smaller segments with pet owners who prefer to use basic traditional equipment versus owners who are willing to try new products to see if it matches heir needs. Omega Paw faces direct competition from three companies.
It has a competitive advantage over Evergreen Self Scoop Litter Box in term of its pricing. However, Evergreen has a bigger advertising campaign and distribution network.
While Quick Sand is competitively priced, the whole process of cleaning the litter is strenuous and therefore it would allow Omega Paw to attract the customers of Quick Sand towards its product. The similarity of Lift and Sift product to that of Quick Sand provides Omega Paw with a similar competitive advantage except that Lift and Sift as a very limited advertising exposure as compared to Quick Sand. Overall, Omega Paw is well positioned with a closed box self-cleaning litter product. With proper marketing approach and distribution, it has the opportunity to grab a larger market share and profits.