Royal Canin, created in 1967 by Jean Cathary, a French veterinarian, is now a major European player in the segment concerning nutrition for dogs and cats. Its headquarters are currently located in Aimargues, France. The company currently employs nearly 3200 employees around the world. Royal Canin has seven production plants in France, South Africa, United States, Brazil, Argentina and Russia, and its products are sold in 90 countries.
The company specializes in dry foods for dogs and cats. The various products are compiled as food charts according to various criteria (including the weight of the animal). The brand even lists a nutritional chart on the packaging of its products, and is in a continual search for innovation to improve product quality.
In 2002, the group was bought by Mars, which provided much needed impetus to its development and growth. Thus in 2006, its turnover exceeded one billion euros.
At the macro-economic level: In France, the rate of ownership of pets is very high, indeed, a French couple owns at least one dog or cat.This rate is rising with pets becoming an increasingly important part of French households.
Animals are often considered as a member of the family, and not merely as pets, in most households in the developed countries. According to sociologists, pets represent an alternative to the lack of affection and the growing individualism in society.
Despite the current unfavorable conditions owing to the credit crunch, the pet food market is doing quite well. Indeed, although the trade volume of pet food has declined by 1.7%, it increased in value by 2.6%. This is mainly due to the relative rise in demand for dry food which increases the production cost more than wet food. In total, this market is estimated at over $2 billion per year. Also worth noting is the fact that dog food rakes in more cash (€504 million) compared to cat food (€300 million).
Technology is relatively important in this area and the companies involved invest substantially in the R&D department.The innovations are essential as companies have to churn out new products adapted to the various peculiarities and health aspects of the animals.
Dangerous dogs are increasingly monitored by law and may perhaps be no longer popular among homeowners.
We notice a new trend in the pet food market- organic products - which could eventually capture a sizeable chunk of the market.
At the micro-economic level: For such a study to be possible, we had to address the French pet segment which consists of 18 million dogs and cats. However, all these animals do not consume products made by the pet food industry since half of the pet owners fed their animal's home-made food. This greatly reduces the number of households affected by the changing dynamics of the market.
This market is unique because the consumer is not the buyer. It is constantly changing due to increasing diversification of products to meet the demands of disparate needs and requirements as dictated by the physical characteristics of the animals. There are now a multitude of products to suit the age, weight, height, race, etc., of the animal. Latest additions in the pet food market include snacks and sweets that animals can nibble on at any time.
Tags: Royal Canin, pet food industry, diversification of products, R&D department, Technology, ownership of pets, households, Jean Cathary
[...] In 2002, the acquisition of Royal Canin by Mars allowed it to increase its financial resources enabling it to increase even more its presence in the pet food market Propose recommendations for Royal Canin regarding its marketing mix to continue to grow in the pet food market At the product level The current trend for food in general is organic.Why not make organic products for our animal friends.? More and more consumers are focusing on this criterion, many notifications appear on products, such as the logo demonstrating organic farming). [...]
[...] Pressure from substitute products: In this market, substitute products are the products of human consumption and this substitution is not a real competition because the client does not usually turn to food called''human''to replace dry or wet food for her pet Internal analysis of Royal Canin At the commercial level (Market) - Price: Royal Canin offers high-end products so the prices of their products are relatively high. - Products: In 1997, Canin Royal launched three categories of products adapted to the weight of dog: Mini if the animal weighs from 1 to 10kg Medium if the animal weighs between 10 and 25 kg Maximum if the animal weighs over 25 kg Since then, segmentation of products has increasingly been thrust into limelight. [...]
[...] For communication, brands that are positioned mid-range mostly resort to TV advertisements while the premium brands also rely on non-media communication (e.g., event) Determine the competitive position of Royal Canin using the Porter model The intra-sectoral fight It appears that five major groups compete in the pet food market: First, Masterfoods, which owns the brand Royal Canin, was the market leader in 2006 with market share in value ( by volume).Its turnover for 2006 was 677 billion euros.This group also owns many brands well known to the public as Pedigree, Cesar, Canigou for dogs and Whiskas, Kitekat for cats. [...]
[...] Indeed, Royal Canin withdrew its products from the shelves of supermarkets in favor of specialty retailers (breeders, veterinarians, etc). Thus, it allows consumers to get advice and explanations from professionals. In addition, in 1997, the group continued its strategy of innovation in marketing novel products that are appropriate to the weight of the dog and thus found itself operation in a virtual monopolistic market. This allows the brand to increase profits that are then reinvested in research and development. Moreover, since its inception, Royal Canin continues to expand abroad with particular production sites abroad in order to lower its production costs. [...]
[...] Indeed of pet owners still feed their animals with the remains, but attitudes are changing and people no longer hesitate to splurge on the health of their animals, and finally, the efforts of R & D of large groups (such as Royal Canin by example) still allow for further segmentation of products and therefore a better appreciation for the consumers. Competition in this oligopolistic market is wide open among the major groups, however, entry into this market seems very difficult (multiple barriers to entry). [...]
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