Sales & Marketing -- (Pet) Food for Thought

Dec. 21, 2004
Adding new distribution channels doesn't have to be a dog fight.

While mass market distribution might not be the ultimate goal of all consumer-products manufacturers, it is for many. But that move can be fraught with risks. Can we meet increased volume demands? Are we ready for the higher-stakes marketing challenge? Will there be any damage to our brand image? Can our sales organization make the shift to the new distribution channel? Will we find the new customers we're looking for? And perhaps most importantly, can we do all this without losing our existing customer base? Iams Co., a Dayton-based pet-supplies manufacturer acquired by Procter & Gamble Co., Cincinnati, in 1999, confronted all of these questions recently when it expanded distribution of its Iams dog- and cat-food brands. For years these premium brands had been distributed exclusively through pet stores, pet-supply stores, and veterinary clinics. In March 2000 Iams expanded distribution in a rollout, described as the largest in P&G history, to 25,000 new retail outlets including grocery stores, clubs, and mass retailers. The company had enjoyed decades of steady growth through specialty distribution, expanding plant capacity in the mid-1990s. But by the late '90s, many small, independent pet stores were closing their doors, and competition among premium pet-food brands was increasing. At the same time, surveys found existing Iams customers asking for "shopping convenience," and market research showed that 70% of U.S. pet-food buyers never shop in the pet specialty channel. The move to expanded distribution seemed obvious. "Obvious, but not easy," says Bryan Brown, director of communication and one of the Iams executives who helped craft the expansion plan known internally as Project Millennium. In addition to the large-scale manufacturing and logistics effort involved, expanded distribution risked leaving existing channel partners feeling unsupported. A good communications strategy was critical. Sales/marketing had a dual challenge: first, to gear up with new-distribution customers like Target Stores and Costco. Equally challenging, Iams salespeople had to reassure the existing customer base that the company wasn't abandoning them. In part, this involved salespeople repeating some of the same things they were telling the mass-market retailers, according to Brown. "We preached to them the benefit of increased awareness and advertising, including sales promotions that would benefit them as much as the mass-market retail outlets we were adding." To its specialty retailers, the company also delivered a communications-program effort aimed at preserving the brand equity that Iams had built up over the years. "We anticipated competitive activity questioning whether the expansion would have an impact on Iams quality and the premium positioning of the brand," says Brown. "So we got aggressive and sent more than 30,000 letters from our president to specialty pet retailers, veterinarians, and breeders explaining the decision and underscoring that neither the P&G acquisition nor the expansion plan would compromise quality in any way whatsoever." Brown thinks that communication plan was a big factor in preserving Iams' existing business during the expansion. "This was an emotional issue for many of our retailers -- one that could be perceived as a negative blow to their business -- and some of them made very emotional decisions," says Brown. In some cases this included removing Iams products from their shelves altogether. Overall, however, the effort seems to have paid off. Iams' sales have grown from $800 million at the time of the P&G acquisition in third quarter 1999 to more than $1 billion at the end of fourth quarter 2000, and its share of the overall pet-food market through all channels jumped from 8% to 12% during the same period. But "the good-news story from the specialty pet channel is that many of the marketing plans we had put in place have been well received," Brown says, preserving Iams' position as the leading pet-food manufacturer in the pet specialty-store channel, where it has a 26% share. William Keenan Jr. is editorial director for Alexander Communications Group, New York, editor of Sales Rep's Advisor newsletter, and the former editor of Selling magazine.

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