Creating fans for 21st Century pet care products

Business Insight A need to reinvent the category

1. Dogfood Market Slowly growing at 2% 2. Share of Dry becoming over dominant

2000

4000

6000

8000

1998 2000 2002 2010

Mio€

6882 Mio€ 5351 Mio€

Dry 82%

Wet 54% Dry 46%

0 0.04 0.08 0.12 0.16

Wet Dry

€ / K

cal

3. Dry Contribution / Kcal half of Wet

MFE Contribution Expected to decline

From 100 Mio€ to just 60 Mio€

40 60 80

100 120

1998 2000 2002 2010 M

io€

62 Mio€

108 Mio€

Brands and products trammelled…

…by convention

People are more sophisticated than the pet brand choices available to them

Market Insight:

there is an unmet need for connection (except in publishing)

Where is the pet care brand that is allied with this desire for psychological, emotional and behavioural engagement with animals?

Q. Where do you start to create a new market space?

A. With consumers:

• Gap in the market exists for a health-conscious, design-conscious information-rich brand that is well-engineered that would appeal directly to early adopters and market-influencers

A. With consumers:

• Gap in the market exists for a health-conscious, design-conscious information-rich brand that is well-engineered that would appeal directly to early adopters and market-influencers

With that insight we asked the question -

what if…

What if a range of pet products were designed around the true nature of pets… ?

What if a dog food were designed around the true nature of dogs… ?

…a range of pet products •  connected to consumers in a new way

•  resonated with the values and beliefs of the consumers

•  was designed to be:

1). better for pets 2). better for people 3). better for Mars

What if…?

Sixth Sense, A new proposition Meet Consumer needs, pioneer & capture new market

Health & Convenience

Enjo

ymen

t &

Varie

ty

Wet

Dry

SixthSense

1. Breaking Health vs Taste consumer tension

Time to eat

Dry Wet SixthSense

1~2 Minutes 7~10 Minutes

2. Exploring a complete new proposition

3. A new Brand to connect with consumer

4. A brand execution 100% aligned with the essence and the positioning

•  New packaging breaking with convention •  New communication strategy •  New route to market

© SMLXL

© SMLXL

© SMLXL

1. Better for dogs…

Up to now:

Food ingredients have been designed to meet the needs of basic dog nutrition

and the efficiencies of mass production

The food experience has been sorely neglected

At best, they have been given astronaut food; at worst they have been given TV dinners

Up to now:

As a consequence, dogs are eating at speeds which is unhealthy for them

Under this regime, dog obesity has increased and life expectancy has decreased - significantly

Up to now:

Animals are not machines

- they need more than fuel

…including their instincts, behaviour and psychology?

…a dog food were designed around the true nature of dogs…

What if…?

•  Extremely enjoyable, longer-lasting to eat •  Better digestion through longer time to eat

• Greatly decreased risk of obesity

•  Increased life expectancy •  Chewing for pleasure and for improved dental care

•  Better oral hygiene benefits than dry food

Being authentic to the nature of animals Sixth Sense provides holistically healthy and authentic food

The benefits:

believes:

Better nurture through deep thinking about nature

A commitment to start without any preconceptions,

except the belief that good pet products begin with thinking hard and afresh about the true nature of animals

believes:

With a determination to nurture them through thinking holistically

about their instincts, behaviour, emotions as well as the nutritional needs of their bodies

believes:

2. Better for people…

•  Pets have been central to peoples lives

•  Pet brands have been peripheral choices that say little about the owner’s overall lifestyle or about their beliefs

•  Dog food has been a compromise between convenience and efficacy

•  Dry foods seen OK as for nutritional health and convenience, but not for enjoyment and variety

•  Wet foods seen OK for immediate enjoyment and variety, but not for health and convenience

•  Dog food manufacturers have responded to growing concerns about quality of life and health with claims about quality of ingredients

But…

Up to now :

People understand that food has a significant role beyond nutrition

And people are looking for brands that reflect their values and beliefs

There is an opportunity for Sixth Sense to fulfil this role:

consumers have a new higher order expectation of products

products designed to solve a problem and deliver ‘performance’ and fit with other high-performing brands that redefine the category

Brand Model

Proposition Pioneering pet products that have been developed by thinking afresh, in-depth, and holistically about the nature of animals. A promise to deliver better performing, always evolving, pet care products

Positioning •  Category breaker •  Premium brand •  Thought leader

•  Take a position not a positioning Stylish, witty and more insightful than the others (and it therefore implies this about the users of it too)

Ideology Products designed by thinking about their end-users. Don’t follow conventions if they’re wrong. Follow your instincts. Listen to your dog! Commercial success results from putting pets first

Origins State-of-the-art insight into animal instincts and behaviour. Developed by experts (not mere enthusiasts) who are passionate about animal well-being. A company big enough to invest in in-depth R&D and with the technological resources to use it.

Personality Intelligent, witty and engaging, independent, optimistic, straightforward, authentic, passionate mavericks

Essence

Pioneering products for pets that respect their true nature.

3. Better for Mars…

1.  Sixth Sense an aspirational Brand that trades-up consumers 2.  A well balanced portfolio aligned with the trading-up potential for Pedigree, once the market

is mature

Business Insight An additional string for a clear premium portfolio

Appropriate for my dog

Appealing to me

Dog as friend Dog as a dog

Pedigree

Cesar Royal Canin

Frolic Chappi

Sixth Sense

Dog as child

Sixth Sense, A new proposition Meet Consumer needs, pioneer & capture new market

Health & Convenience

Enjo

ymen

t &

Varie

ty

Wet

Dry

SixthSense

1. Breaking Health vs Taste consumer tension

Time to eat

Dry Wet SixthSense

1~2 Minutes 7~10 Minutes

2. Exploring a complete new proposition

3. A new Brand to connect with consumer

4. A brand execution 100% aligned with the essence and the positioning

•  New packaging breaking with convention •  New communication strategy •  New route to market

Sixth Sense, a new business model Regain Leadership and boost profit

UK France Germany Estimate Europe ‘10

- Dog populations (millions)

- Dog between 10 and 25 Kg

- Target segment*

8

33%

11%

6.5

39%

17%

4.2

36%

22%

Demand / Year 2300T 1600T 1800T

NSV / Year 14 Mio€ 18 Mio€ 27 Mio€

Profit / Year 4.4 Mio€ 2.6 Mio€ 3.2 Mio€ * (health conscious seeking pet wellbeing)

36% 33%

24%21%

21%

18%

13%

11%

60017%

250

SixthSense (Y1) SixthSense (Y5)

PrimeCosts

ConversionCosts

A&P+ F&S

G&A

NSV 3600 €/t 3600 €/tContribution / Kcal

SixthSense 0.290€

Wet 0.141€

Dry 0.080€

Profit

Trade Margin

SixthSense 2350€/T

Wet 700€/T

Dry 500€/T

•  RSP = 30%- 50% premium over RC

•  TM = 50% Trade Margin

•  A&P = 5% of NSV (alternative communication strategy)

•  Franchise & Sale Cost = 10% of NSV (own distribution)

•  G&A = 11% of NSV (lean management)

59 Mio€

11 Mio€

Sixth Sense Potential to premiumize Pedigree

Step 1 Step 2 Step 3

Early Adopter Majority

Late Majority

PEDIGREE EXECUTION

SIXTH SENSE LAUNCH SIXTH SENSE NPD

PEDIGREE NPD

SIXTH SENSE NPD

6th Sense NSV 6th Sense Profit Pedigree NSV Pedigree Profit

By 2010 By 2015 By 2020

59 Mio€ 11 Mio€

N/A N/A

75 Mio€ 15 Mio€

52 Mio€ 7 Mio€

90 Mio€ 21 Mio€

103 Mio€ 15 Mio€

193 Mio€

*Pedigree Consumer feeding 2-3

products / week as part of their feeding

pattern

Why a New Brand to start and not just…. a Pedigree line extension.

The Rationale Pedigree Launch Implications

• Existing Brands lack credibility to challenge consumer perceptions & behaviours

• Reduces the opportunity to a simple line extension from 120Mio€ to 35Mio€?

Ambition: Reinventing the Category

•  Target: consumers seeking a higher order brand that reflects their values and beliefs.

•  This is not the traditional Pedigree target.

• Confuse current Pedigree consumer •  Limit the potential to reach a new

target segment

Objective: Target consumer segment identified by the market research

• Difficult to establish the product as main meal under Pedigree.

• Given that past innovation within Pedigree has been in S&T, the product format is seen by Pedigree consumers as a treat.

•  Limits credibility as a main-meal due to S&T portfolio

• Cannibalise S&T with a product that could be used as a healthy, occupational treat

Critical Success Factor: Build main-meal product

• Deliver full consumer expectation for the product • Use the marketing mix to support product positioning

(premium, new,…)

•  Lack of freedom to execute vs target groups & category needs

• Risk losing credibility of current Pedigree offerings.

Execution: Total Mix alignment (product, brand, distribution, comm.)

• Sixth Sense is not a food brand, it is a range of products and services springing from specific beliefs.

•  It has permission to create behaviourally-driven food and non-food products for any pet

• Pedigree only has permission for line extension with this particular product.

Scope and Permission: Any pet, any type of product

And what about MealBone ?

MEALBONE SIXTH SENSE

Care for your dog beyond complete nutrition with also Dental care and Chewing satisfaction.

Pioneering pet products that have been developed by thinking afresh, in-depth, and holistically about the nature of animals.

Proposition

Competes against Super-premium Redefine the Pet care Category Category breaker - Premium brand - Thought leader

Positioning

US: Health oriented market dominated by Dry

Europe: Balanced Market split between Dry (Health) vs Wet (Enjoyment)

Context

Dry product strong on Health and claiming some oral care benefit

Holistic feeding behaviour of the dog for longer & happier life through slow eating. First of a series of radically innovative pet care products.

Product expectation

Snack New way to feed your dog that will replace current main meal. European Consumer Perception

Product Usage

Eating Experience

<2 minutes 2-5 minutes

5-10 minutes

>10 minutes Average - 10.7 mins Average - 4.0 mins

MealBone is

• NOT considered as a Meal

• NOT a slow eating experience

Medium (26-55 lbs.)

Static Sample of Total Respondents (161) %

Treat (Net) 45 As an everyday snack or treat 31 Only on special occasions as a snack or treat 14

Meal Accompaniment (Net) 30 As a meal instead of other dry dog food brands 25 As a meal instead of canned/ wet dog food 4

Meal Replacement (Net) 25 As a meal in addition to other dry dog food brands 22 As a meal in addition to canned/ wet dog food 3

Sixth Sense MealBone

6.5

5.3 6.8

0 5 10

All format (n=259 obs)

Gel (n=89 obs) Fec (n=85 obs)

After Meal Feeding Opinions

Different Consumer Perceptions

1% 12%

36%

51%

27%

50%

19%

4%

The route to success is a new category, not a new product ….making news…creating advocates

Sixth Sense is not a new Dog Food It’s pioneering products for pets that respect their true nature

Appendix

Marketing & media strategy

Food on the Run Category Local Sandwich Shop ‘Fast Food’ Homemade Sandwich

Pret à Manger

•  Pret à Manger took the principal of fast food and delivered a healthy eating option that you could trust

•  Built around the care and preparation of their products

•  Fresh food made fresh everyday

•  High commitment to service and to their staff

•  And did it with no advertising

•  Customer advocacy - a brand driven by belief

Case example: Creating a new category within a category

Pet Food category Science/Health Gourmet Mid-price Mass-market

Sixth Sense Instinctively

better products for dogs

A product range that encourages for both owner and pet:

•  Nutrition

•  Physical well-being

•  Mental well-being

•  Emotional well-being

•  A longer and more fulfilling life

Case example: Creating a new category within a category

Media recommendations & plan

Successful brands get into the mind slowly

•  A blurb in a magazine

•  A mention in a newspaper

•  A comment from a friend

•  A display in a retail store

After a slow build-up, people become convinced that they have known about the brand forever

Belief:

•  Commitment to care for our pets

•  Love of good food

•  Concern over environment

•  Healthy scepticism towards conventional advertising claims

Media connections:

Create a rapport with customers based on trust and shared values via long term partnerships with keytrusted media

A holistic combination of careful distribution, marketing, new media, packaging to deliver a a sense of clear differentiation from all other petcare brands

Communications, like the brand, are designed with its consumers’ tastes and behaviours in mind

Communication strategy:

Distribution channels and partnerships will aid consumer perceptions of the brand proposition Recommendation to limit initial distribution to: Quality (pet) food stores and vets (where premium dry food is already sold), health food retailers, independent food stores / delicatessens, specialist B+B’s and Waitrose for first 12 months

Audience Analysis

5 million households in UK have a dog*

Core Audience

1.1m Primary shoppers

in household

24% (UK Households)

21% (UK Households)

* Pet Food Manufacturers Association ** TGI 2004

Health or food

Conscious households**

Own a dog

*TGI

1.1m households

Social grade ABC1 78% (index 111) Social grade AB 28% (index 121)

Married 53% (index 100) No children in household 75% (index 120)

Separated / Divorced / Widowed 34% (index 142) Age 45+ 70% (index 142)

Live in London 12% (index 60) Live in South 11% (index 121)

Live in Wales / West 12% (index 144) Live in N.West 14% (index 113)

Live in South West 6% (index 185) Live in Midlands 18% (index 117)

Core audience: Up-market professional couples in their 50’s living outside of London (probably Midlands or South West)

Demographics

The Simpsons (typical household profile)

Jonathan & Sarah Simpson and Max (2 year old Dalmatian cross) They’re in their late 40’s & married for 22 years Jonathan runs small architectural practice Sarah works part-time in local school Have a 19 year old son at university Live outside Bath Prefer to shop at Waitrose and independent retailers Read Guardian & Observer Read books Opposed Iraq War, voted Lib Dem May 5th Are careful about what they eat and often buy organic food Concerned about the environment and keen ‘recyclers’ Health conscious but do not participate in sport Enjoy walking, particularly when accompanied by Max

*TGI

•  76% buy free range products when available (index 202)

•  69% believe their diet to be very healthy (index 176)

•  66% agree with statement “all fast food is junk” (index 166)

•  43% state that all advertising annoys them (index 131)

•  60% feel bombarded by advertising (index 125)

•  90% appreciate good food (index 112)

•  10% consider themselves TV addicts (index 80)

•  11% Like watching TV ads as much as the programmes

Key attitude statements

*TGI, NRS

Media consumption overview

Relatively light media consumers •  Older age group, AB profile (lower TV viewing)

•  Watch ave TV : documentaries, news, drama & BBC

•  Avid daytime radio listeners (not commercial stations)

•  Light newspaper reading (mainly at weekends/ broadsheets & mids)

•  Read women’s magazines (older women’s)

•  Read newspaper supplements

•  Rarely go to the cinema

•  Keen internet users (specifically email, info gathering, & shopping)

Key media channels: newspaper supp’s, women’s magazines & internet

– brands that redefined their categories

Brand Inspirations

Dyson

•  Rethinking household appliances

•  Born out of frustration with conventional vacuum cleaners

•  And from a willingness to rethink the design to suit function rather than market conventions

•  Dysons eliminate tedium of working with Hoover bags, and delivers a number of further benefits and opportunities:

•  ‘No loss of suction’

•  Allergen filtering

•  Dyson hasn’t rested on its laurels

•  The new ‘ball’ design improves manoeuvrability and, according to their research, makes men more willing to do the housework

Jamie Oliver

•  A passionate rebel

•  Recognised expertise as a chef

•  Maverick

•  Trusted integrity: good cause, campaigning attitude, personal belief, know how

•  Unexpected integrated benefits (against culture of gruel/fuel for kids): It turns out that improving the food for children is not just a nutritional issue, it’s a health, education and behavioural issue.