Jim and Janice Dougherty first conceived the idea for a pet superstore in 1986; however, the first two stores did not open up until 1987. The stores opened in Arizona and were called PetFood warehouse. Shortly after opening, the names changed in 1989 to the official and current name, PetSmart. The company started out by opening each store individually but then began to buy out smaller chains to better adapt to the quickly growing market.

In the following decade PetSmart expanded its business by offering a variety of services. It began to offer full-service pet salons, mobile pet clinics, an equine department, pet adoption centers, and the list continues to grow. Not only did PetSmart expand its company in the competitive market but it also began charitable foundations and in 1994 formed PetSmart charities. Many of its efforts went into preventing pet overpopulation and euthanasia. These efforts allowed PetSmart to open its 1000th store in 2007.

The current trend in the pet superstore industry is focused on pet health. PetSmart is promoting nutrition for animals by using natural products. Even through the economic downturn people are treating their pets like family and are becoming increasingly conscious of the health of their pets. They are currently moving away from the “mart” mentality to the “smart” mentality when it comes to caring for your pet, which is why they have steered away from PetsMart. and changed their name to PetSmart. Instead, PetSmart wants to be viewed as a pet specialty store who trains its employees to specialize in an array of pet products. This knowledge is portrayed not only by its employees expertise but also from the services the it

Introduction Through this research, we have found that PetSmart should hone in on the “pet parent” as a core demographic. “Pet parents” view their pets as part of the family and see this animal as a huge priority in their lives. This demographic is extremely important because of the growth we have seen from it in the last decade. Today, people are increasing more likely to agree that they are a “pet parent.” Efforts to target this market segment should be a retailer’s main focus.

We also examined PetSmart’s competitors in this research. Petco is their main competitor, along with major supermarket chains like Target and Walmart. Each of these stores offer something a bit different than PetSmart, but PetSmart has a heads up on these other stores because of their expertise. This competitor analysis in down in the Situational Analysis, which provides great insight into the pet superstore industry.

After the Situational Analysis’ secondary research had been conducted, we moved onto a more direct research, primary. We completed this research by conducting a survey and focus group. Our survey was conducted online using QwikSurvey to the “pet parent” demographic. We did have a few people begin the survey who were not “pet parents,” however, we used a question to screen our participants. We got 122 participants to take our survey by emailing the link out to family and friends who could be categorized as someone who views their pet as their top priority. This survey gave us lots of insight into the beliefs and attitudes of our target market. We were able to see how they thought and viewed certain pet ideas and products, which allowed us to grasp our demographics' buying habits. We observed this by asking questions that observed monthly spending and shopping frequency. This survey gave us a lot of insight. For example, men and women are not very different in terms of cause related marketing and women tend to value quality over price.

After the survey was conducted and we had enough participants, we began analyzing the data. This qualitative data gave us more to go on than the quantitative data that we had in the Situational Analysis. We downloaded our results onto SPSS which provides more in-depth insight from charts and tables. We also conducted a focus group that gave us more insight to our survey results. We created a Moderator Guide and objectives to help keep us on track during our focus group. The qualitative data was very important to our research as it helped us make recommendations to our client, PetSmart and to also understand the consumer further.

All in all, after conducting both qualitative and quantitative research, we gained valuable insight into the “pet parent” demographic. These recommendations include pet adoption, chartity awareness, quality, clever advertisements, and incentives. We are now more accuratly able to target this market segment because of our research efforts.

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Industry Overview Brief History

Although historians are not positive as to when humans first started keeping animals as pets, they do know that dogs were one of the primary animals to be domesticated. In ancient Egypt, dogs and cats were animals of great importance. Taking the life of a greyhound held the same consequences as taking the life of a man. The Egyptians considered cats to be demigods or “half-gods” and began domesticating wildcats from Africa. Because of their high status, they were prized and had higher importance than a human. If a house was burning down, the cat would have been saved first. The Romans domesticated animals as well. Unlike the Egyptians, cats and horses were both used as working animals. They instead regarded birds and dogs as pets.

Towards the Middle Ages, pets were a luxury only to be had by the upper classes. Because of the infamous witch-hunts, many owners and their cats were put to death on accusations of witchcraft. This jumpstarted the popularity in dogs as pets.

The first pet food to be created was bird food. During the 1800s many people owned birds for their singing abilities. Shortly after this, the first dog food was invented in 1860. World War II brought about the idea of canned dog food and in the 1920s people began to keep reptiles as pets. The first cat litter was created in 1947, making it much more practical to keep a cat as an indoor pet.

With all of the advances in technology and information, people began to create different types of pet treats and products. It was only a matter of time for companies like PetSmart and PetCo to enter the scene.

1965 Walter Evans opened veterinary supplies business called United Pharmaceutical Company, or UPCO

1980 Petco opens first store outside of California

1986 PetSmart founded by Jean and Jim Daugherty as Pacific Coast Distributing, Inc.

1994 Pet Smart Charities was founded—Petco went public as the largest pet specialty retail chain in the industry

1999 PetCo Foundation was established for charitable giving to animal-related causes

2001 Launch of Petco.com

Timeline

Advertising During the past five years the amount spent on the advertising

industry has generally increased, with the exception of a slight decline in 2009. According to Ad$pender, the main media outlets are network, cable and television. In the 2004, over $242 million was spent in the industry. There has been an pretty steady increase in sales from 2004 all the to the last year of data available, which is 2010. In 2010, over $678 million was spent on advertisements. By breaking down the expenditures by quarters, one will see that the most money was spent in the third quarter (July 1-September 30). This trend in advertisement is most likely a result of pet owners being more active during the warmer months.

Stages in the Product Life Cycle The pet superstore industry is in the growth stage of the product life cycle (14).

Source: Ad$pender 2010

Competitors PetSmart’s primary competitor is Petco. Between the two

companies they are the leaders in retail for the pet industry. In 2008 they had a combined sales of almost $8 billion (15).

Petco alone had sales over $2.7 billion in 2008. They have been able to increase rate of sales at a healthy pace since 2000.

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Size of Industry Sales The pet superstore industry has seen a steady increase over

the past five years. Even through the United States’ economic crisis, the pet industry has consistently increased revenue, keeping its recession-resistant claim. According to Packaged Facts, the sales of pet products and services rose by 5 percent in 2009, adding two and a half billion dollars to the industry. The industry seems to be growing, especially with the help of the “pet parent.” Those who view their pet as part of the family are less likely to agree to cut back on their shopping habits for their pets. In 2009 Packaged Facts polled pet owners and 19 percent strongly disagreed that they would spend less on pet products because of the economy.

Source: Packaged Facts

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They have similar values and concepts as PetSmart (15). The rest of the market is made up of companies targeted towards discount prices such as Wal-Mart, Pet Supplies Plus, or smaller private companies (15).

Growth Potential/Forecasts According to Packaged Facts, the pet superstore industry

outlook is very promising. Right now the leading share in the market is veterinary services. In 2009, sales in this category increased by 10 percent and had a projection of a 6 percent sales rate increase in 2010 and 2011 (15). With the advancement in medical supplies and procedures for pets, along with an increase in the importance of the “pet-parent” relationship, the veterinary market will consist of 41 percent of sales by 2014 (14).

Economy of Industry Despite the recent economic downturn, many people are

continuing to be emotionally attached to their pets and are becoming more conscious of their pet’s health. The fact that pet ownership is increasing reinstates the positive outlook on the pet superstore industry. It is helping put the industry in a recovery phase. According to American Pet Products Association President Robert Vetere, “people become more attached to their pets in times of uncertainty and stress, so we continue to reward them for their unconditional love and companionship. Couple this with the trend of humanizing products and services for our pets and the result is an overall increase in spending so we can strengthen that human animal bond” (14).

Pet products and service rose by 5 percent in 2009, adding two and a half billion to the market during the recession. Retail sales in the pet superstore industry have been projected to increase by 2.5 percent throughout 2010. Housing and employment are also supposed to improve. The economy is slowly but surely recovering (14).

4

Seasonality According to media expenditures, the pet supermarket

industry spends the most advertising money during the third and fourth quarters. The industry spends more money during the warm months of the year and around the winter holiday season (Ad$pender). In 2010 the pet supermarket industry spent 22,918.8 million in the third quarter, which far exceeds 16,399.8 million that was spent in the first quarter. It is safe to assume that the reason behind the increase in the third quarter is that pet owners want to spend more time outdoors with their pets when the weather is nice, and people also are inclined to be more active during the warmer seasons. This results in the need for more supplies (i.e. toys, treats for training, leashes, etc.). The conclusion for higher spending in the fourth quarter could be attributed to the ever-growing idea of “pet parents,” the idea that your pet member is part of your family. The fourth quarter of the year contains many of the winter holidays, and during these holidays spending on advertising and consumer spending on purchasing increases. If people consider their pets’ part of their family they are not only going to increase purchases for their family but for their pets as well. The average spending in the third quarter from 2006- 2010 is at least 20,006.6 million above every other quarter. The ad industry has taken this into account when devising strategies for targeting time periods where there is an increase in consumerism.

Legal & Regulatory Issues There are very strict regulations within the pet industry.

Organizations like the Food and Drug Administration (FDA), American Pet Products Association (APPA), the US Environmental Protection Agency (EPA), and the Pet Industry Distribution Association (PIDA) work to help enforce these laws at local, state, and federal levels. These regulations apply to anyone in or looking to become a part of the pet industry. Laws have been put in place to monitor and regulate the labeling, sale, and production of all pet products as well as shipping, handling, and sale of animals. In 1951 the Pet Animals Act required a license to own a pet shop.

The FDA works hand in hand with the department of agriculture for each state on a general scale to regulate the manufacturing and distribution of pet food and more specifically every single ingredient used has to meet certain standards

depending on the state. In 2007 the Food and Drug Amendments Authorization Act required the FDA to spread new laws for pet food by 2009 and under the Bioterrorism Act, all food must be registered with the FDA. Most states have very particular procedures for registering all pet products sold. Products that fall with in the category of pesticides must register through the EPA. Like registration for pet food, there is also a registration fee concerning pesticides. Some products may be excluded from the pesticide list, if and only if, all ingredients are exempt. An issue that the pet industry is facing more every day is the ownership of exotic animals. One of the most recent laws imposed by the government was the captive wildlife and safety act in 2003. This law addresses the concerns regarding the private ownership of big cats in the United States. This law was imposed after a 10 year old boy was attacked and mutilated by his aunt’s 400 pound tiger. The law makes it illegal to move certain types of live big cats across the U.S. borders unless you qualify as exempt.

There are many strict regulations about the sale, transportation and ownership of animals in the United States. Due to the Pet Animals Act of 1951, a license is required in order to open and run a pet shop. Registration forms must be filled out and transportation must take place within a certain and quick timeframe to best benefit the animal. The Animal Welfare Act (AWA) sets a minimum of standards for the handling of commercial animals. The purpose for shipping or transporting the animal must be clearly defined and approved. Currently in Glendale, California the City Council has been trying to ban the sale of dogs and cats within the city limits. Organizations like PIJAC (Pet Industry Joint Advisory Council) are fighting against bans like this because the results of such a ban will not create a positive situation for the pets.

Societal & Cultural Considerations The most popular cultural trend in the pet industry right now is that of the “pet parent.” The human-animal correlation is what Packaged

Facts calls an “untapped goldmine” (14). Pets as Family:

In 2009, 75 percent of cat owners highly agreed that they would consider their cat as a family member, 77 percent of dog owners highly agreed, and 73 percent of all pet owners highly agreed that their pets are a part of the family (15).

This trend is great for the pet industry because the U.S. Pet Ownership & Demographics Sourcebook’s data suggests that those who consider their pet as family tend to spend more money on their pet than those who don’t (15). Traveling and Pets:

As people follow the trend of being a “pet parent,” they also become more inclined to follow other trends, like traveling with their pets. This has opened up an entirely new aspect to the pet industry with airlines and hotels providing pet oriented alternatives. Under the Safe Air Travel for Animals Act, placed effective in June 2005, requires airlines to report all incidents involving animals to the Department of Transportation’s Aviation Consumer Protection Division (ACPD). This has brought about a new form of emphasis on pet travel and has inspired services like Delta’s Pet First (14).

When pet owners cannot bring their pets with them, there are options like PetSmart’s PetHotels, a service that allows the owner to leave their pet in a safe and reliable environment while they are absent. (19) Green Movement:

The pet industry is no exception to the fast-growing trend of going green. This green movement is beneficial for the animals and for companies’ business aspect. The green products draw customer appeal and change like the one that Cardinal Labs in Azusa, CA have made by switching to run their plant solely on solar power, which in turn helps save money (14). 5

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Targeted Audience For PetSmart, the target audience is directed toward younger generations who are delaying starting a family and, instead, getting a pet.

This target audience, referred to as the “pet parent,” considers his or her pet as more than just an animal. They also target adult females with higher income who can afford to take care of their pet. The company targets its consumers through a variety of services aimed to attract new pet parents. The grooming, pet training, PetsHotels and Doggie Day Camp are their largest sectors. These programs provide the company with a better understanding of their customers, which can help change their behavior and build long-term loyalty.

PetSmart has incorporated sustainable initiatives into its marketing. “Going green” is the most popular marketing for most industries at the moment, and Packaged Facts predicts that within the next decade most companies will become more sustainable. This will not only appeal to current customers but also help to reign in more customers (14).

Mobile Grooming and Veterinary Care: Right now there is only a small following but this type of grooming is the hottest trend in the pet

supermarket industry right now. Petco has recently paired up with Aussie Pet Mobile, who was named #1 in the pet category of Entrepreneur's magazine Franchise 500 list (14). Packaged Facts predicts that mobile veterinary care, like ambulances, will hit a high growth rate within the next few years (14).

Client Profile Company History

Jim and Janice Dougherty formed the idea for a “PetFood Warehouse” in 1986. By the next year, PetFood Warehouse was opened in Phoenix, Arizona. The company changed its name to PetSmart in 1989 based on the slogan, “We’re a MART for PETs that’s SMART about PETs.” During the same year, the company began its first full-service, in-store salon for dogs and TV commercials (19). Over the next three years the company expanded to obtain a larger customer base. PetSmart proudly presented its first private pet food labels in 1992. Because the labels are exclusive to the company, it brought higher margins than other foods (19). Ironically, in 1993 the company bought Unipet Distributors. Not only was this the first company PetSmart bought, but it was also the company where the pet product warehouse idea initially started. A year later PetSmart formed PetSmart Charities, Inc. This nonprofit organization is dedicated to ending euthanasia of animals and helping homeless pets find homes (19). Between 1995 and 1996 PetSmart hit the billion dollar mark, bought three more companies and went international by opening stores in Canada. Coming into the new millennium PetSmart bought PetsHotel Plus, a pet boarding hotel that had huge potential for customer appeal and finally opened two stores within two years (19). In 2006 the company unveiled Smart Nutrition Selector online and in stores. This program suggests list of foods that will best suit the pet’s needs. Finally, the company hit their 1,000th store mile marker in 2007, only two decades after the first one opened (19). Now, PetSmart is proud to stick by its original vision, “To provide Total Lifetime Care to every pet, every parent, every time” (19). PetSmart currently operates more than 1,197 stores in the United States, Canada and Puerto Rico. It provides a wide variety of products and services making it the largest specialty pet retailer in the pet supply industry (19). Between the PetSmart salons, PetsHotels, Doggie Day Camps, PetSmart Charities and The Pet Hospital, PetSmart provides ample amount of convenient service for pet-parents today.

Sales Data Despite the U.S. recession, the pet supply industry has remained recession-resistant. Sales of pet products and services actually rose 5percent in 2009 (14). As shown by the graph, “PetSmart – Annual Sales Growth,” PetSmart had total revenues of $5.7 billion in 2010 which was an increase from the previous year’s total sales of $5.3 billion (20).

It is predicted that the pet supply industry will continue to have a higher demand because of the emotional bond between pet owners and pets. Many view their pet as a member of the family which proves an advantage for pet markets (14). Source: 20, RetailSails Annual Sales Data

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7

Advertising Expenditures Over the past five years, PetSmart has used various

advertising methods to promote its products and services. The economy has had some effect on advertising budgets throughout the years.

Referring to the graph (Advertising Expenditures), there was a steady rise in expenditures from 2006 to 2008. However, the recession did cause PetSmart to cut back on its advertising budget in 2009, only to increase the budget in 2010 for the highest amount spent in the past five years (3). With the exception of 2009, PetSmart has consecutively increased spending on advertising from 2006 to 2010, capping at over six million dollars on advertising in 2010. The categories that have drawn the most money are Cable TV, Syndication and Network TV (3).

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Media Mix ��� PetSmart’s advertising expenditures range from 11 different

media outlets. From Cable TV to Outdoor advertising the company has a wide breadth of promotional efforts. PetSmart's media mix involves various media outlets. Television, syndication and radio are amongst the largest categories that are used throughout the campaign (3). The chart demonstrates PetSmart media mix in 2010. The expenditures that were least used were Sunday Magazine at 0 percent, Outdoor at 18 percent and Spot TV at 36 percent. These media outlets were seen as least useful in the marketing mix and were therefore less used.

The expenditures that draw the most money are Cable TV at 42.19 percent, Syndication at 24.52 percent and Network TV at 15.39 percent. PetSmart has consecutively increased spending on advertising from 2006 to 2010. It spent over six million dollars on advertising in the year 2010 alone (3).

Creative Strategy PetSmart strategy highlights the services that the company

offers as well as implementing seasonality ads. During the fall, PetSmart sends out a series of ads about Black Friday, the day after Thanksgiving where Christmas shoppers find great deals on gifts for the holidays.

Another example is the promotion of Easter, which can be seen to the left. Using the seasonality strategy gives customers an excuse to go into the store and provide them with ideas.

PetSmart plays up its in-depth service features because they believe consumers will see it as a benefit to themselves and their pets. Every company’s main purpose, when implementing advertising strategies, is to get the consumer interested in their store or brand. Obviously, PetSmart has completed this task by being the largest pet superstore retailer of servicers of and solutions.

Source: Ad$pender

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Newspaper Network Radio Nat Spot Radio

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PetSmart Spending Total (2006-2010)

Figure 5

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Positioning “PetSmart moved away from the “mart” mentality and focused on providing “Smart” solutions and

information” (19). PetSmart wants its customers to see the company as more than just a store’ instead, it wants customers to see the employees as individuals who care about their pet as much as the owners. This is shown by the extensive employee training, superior customer service and the outstanding services provided within each store and the quality of products sold.

PetSmart bases its position on customers finding superior products and exclusive services for an affordable price in one convenient location. By creating its own private pet food and the Nutrition Selector program, . PetSmart’s position is based on customers finding superior products and exclusive services for an affordable price in one convenient location. The company has taken steps toward its position by creating its own private pet food labels and a program, Smart Nutrition Selector, which guides pet owners to get the best quality and services for their specific pet (19).

It has also implemented a customer loyalty program called PetPerks. This program will allow PetSmart to customize its marketing and communicate more effectively with its customers (19). With convenient prices, several locations, products and services, PetSmart makes it easy to satisfy consumers’ needs. Specifically, the company’s vision is “to provide Total Lifetime Care to every pet, every parent, every time” and its slogan is “Happiness in store” (19). These sum up PetSmart’s positioning on how it wants its customers to view the company. It seeks to provide the best service and products possible to keep the customers and pets happy.

Cause Related Marketing PetSmart founded PetSmart Charities, Inc. in 1994. This is an “independent, nonprofit organization that creates and supports programs

that save the lives of homeless pets, raise awareness of companion animal welfare issues and promote healthy relationships between people and pets” (19). By providing more than $134 million in grants and programs that benefit animal welfare organizations, PetSmart Charities has assisted saving the lives of more than 4.5 million pets (19). Its vision is simple: “A lifelong, loving home for every pet.” This shows how PetSmart is more than just a company trying to make money, but a company that truly cares for animals. It influences current pet owners to help out those in need and helps acquire new customers who also have a love for pets (19).

The mission of PetSmart Charities is “to improve the quality of life for all pets by creating and supporting programs that save the lives of homeless pets and promote healthy relationships between people and pets.” PetSmart carries out this mission statement through various ways:

• Funds programs that save lives of homeless pets • Collaborates with animal-welfare agencies across the U.S. and Canada • Provides emergency relief for animals in critical need • Raises awareness by promoting healthy and happy relationships between people and pets • Implements customer and associate fundraising programs (19).

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More than ever before, cause-related marketing is an essential strategy in today’s industry. Marketers have been using cause-related marketing as a way for customers to sanction spending extra money. In return, when a company is associated with a cause, it gives customers one more reason to shop at that particular store (14).

Competitor Profiles Primary Competitors

Petco is considered to be one of PetSmart’s primary competitors in the pet industry. The two pet supply companies accounted for more than half of total industry revenue in 2011 (20). PETCO is a privately owned company that has more than 1,000 stores nationwide and is the only pet store to provide service in all 50 states, including the District of Columbia (17). PetSmart and PETCO both offer quality pet and veterinary supplies that are sold directly to animal professionals and to the public at discount prices. In 2010, both pet store chains accumulated combined sales of approximately $8.7 billion.

Brief History Petco was originally founded in 1965 by Walter Evans and five associates as a mail-order veterinary

supplies business. Initially, the business was called United Pharmaceutical Company (UPCO), and opened its first store in La Mesa, California in 1976. At the time, the primary customers consisted of ranches, kennels, catteries, and grooming shops (17). In 1979, UPCO changed its name to Petco in order to promote a better connection between its product supplies and household pets. The first official Petco store opened in Tigard, Oregon in 1980 (17).

Petco’s business increased in 1988 after it bought two pet supply chains WellPoint and the Pet Department. This tripled Petco’s stores from 40 to 130, expanding the stores to states outside of California. Petco’s growth continued, and by 1994, it went public as the largest pet specialty retail chain in the industry with 218 stores in 13 states and sales of more than $189 million (17). The success of Petco brought the company the opportunity to develop pet services directly to its customers, and opened its grooming business in 1985. In 1999 Petco established the Petco Foundation to manage and promote charities related to animal causes. Since its establishment, the independent nonprofit organization has raised over $7 million for more than 7,000 animal welfare partners throughout the nation (17).

Due to the market depression and undervalued shares in 2000, Petco changed to private ownership. In 2002, Petco launched pet supply services through its website. Petco has more than 1,000 stores in all 50 states with more than 22,00 associations across the country (17).

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Sales Data In 2006 Petco went back to becoming a privately

owned company. Because of this, the company’s financials are no longer available to the public. This limits the ability to analyze a year-by-year dissection of the company’s financial performance (20).

Despite this, a projection has been made by IBISWorld of Petco’s positive growth within the five years to 2011. It has been estimated that Petco’s revenue will total $2.9 billion in 2011, indicating a 5.9 percent annual growth over the five-year period (20).

Media Mix Between the years of 2006-2010, Petco’s marketing and

promotional efforts have been invested in all forms of traditional media outlets except Sunday Magazines outlet (3). Most of the spending was invested in radio and television. The most spending was Network Radio (29.69 percent) and Cable Television (21.85 percent).

Television is one of Petco’s primary mediums because the target audience is considered heavy viewers of prime time television (26).

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Advertising Expenditures Petco has been efficient in its efforts to use all of the

various types of traditional media outlets for its marketing and promotional advertising. It can be seen from the total spending chart that most of the spending was in the year 2006, with Petco spending a total amount of $24,200,000 on advertising. Advertising spending has gone down since 2006, with only $9,492,600 spent on advertising. However, the economic depression of 2008 can be assumed to have been a major factor in the spending cuts. ***I don’t have a source for this sentence, it’s just an assumption since we are in a sort-of economic depression. Feel free to take it out if you need to*** Spending went up for Petco in 2010 with a total amount of $13,534,300 in advertisement costs. Throughout the years of 2006 to 2010, most of Petco’s spending has gone towards network, cable, syndication and spot television advertisements (67%), as well as network and national spot radio (15%). These mediums are used for Petco’s advertising strategy because the target audience is considered heavy viewers of prime time television and radio listeners (26). Newspaper is the next medium used by Petco in their advertising spending with 11 percent.

Source: Annual Report and IBIS World

Source: Ad$pender 2010

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Petco Media Mix 2006-2010 Network TV Cable TV Syndication Spot TV Magazines Sunday Magazines National Newspapers Newspapers National Spot Radio Network Radio Outdoor

Figure 7

Positioning Petco emphasizes the importance of nutrition and healthy

living for pets. This positioning gives Petco the opportunity to focus on pet specialty exclusive brands and strengthen their brand as a health and natural market player (14). The company considers itself to be the pet nutrition headquarters due to its wide selection of high-quality premium and natural pet food (17).

The positioning of Petco is also strengthened by its nationwide pet nutrition education campaign, which aims to educate consumers about pet nutrition from the help of internal and external nutrition experts (17).

Creative Strategy In 2011, Pertco announced Draftfcb Orange County as its

Agency of Record for brand and product advertising. The agency is responsible for the brand’s creative strategy and development of in-store, digital and design work for specific campaigns (10).

The agency’s first campaign for PETCO consisted of a consumer awareness campaign with digital, newspaper insert, in-store and TV components. The consumer awareness campaign promoted Petco nutrition found in its stores (18). This particular campaign capitalizes on Petco’s 100% satisfaction guaranteed policy (20).

Part of the creative strategy is sending out e-mails sent to members of its customer loyalty program Petco Pals. The e-mails encourage consumers to visit the company’s website and learn of its events, sales and other information being promoted (18). As part of Petco’s consumer awareness campaign, the agency used spending on digital outlets that exceeded the year before, including Petco’s first TV campaign since 2007 (18). The emphasis on digital is part of the creative strategy in communicating the message of the campaign out to the public quickly.

Audience Segments Petco’s targets audiences and groups such as breeders and

veterinarians through various media channels and promotional activities that focus on its national campaign. The recommended primary consumer for PETCO is white, married adults between the ages of 25-34 with at least a four year college degree and an income of $40,000 or above (26).

Petco’s used these qualifications to target consumers who plan on having a family in the future and who also want to include a household pet as a part of that future family (26).

Many of The Petco Foundation’s sponsored events are targeted towards these audience types. The Petco Foundation donates about $15 million a year to help animal-welfare organizations. This is part of Petco’s cause-related marketing efforts. The Foundation also provides nationally known experts to increase adoptions at a fraction of the price. Local shelters hold adoption events at Petco stores and invite customers to think of adopting (17).

Another local fund supported by The Petco Foundation is the “We Are Family Too” fund. The Foundation provides funds to humane groups who develop programs that help families keep their pets during the current economic hardship (17).

The “We Are Family Too” fund is consistent with Petco’s strategy to target a family audience and emphasize the importance of creating a relationship between owners and their pets. 12

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New Developments

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In 2009, Petco opened its first Unleashed by Petco store in San Diego, California. Unleashed by Petco was created as a smaller-scale, community oriented store, focused primarily on helping customers’ pets become healthier (14). The boutique styled pet store provides customers with natural, organic and higher-end products and first-rate pet service. Currently there are 38 Unleashed by Petco stores in the country (17).

Store features in Unleashed by Petco differ from Petco stores in order to exude a “neighborhood store” atmosphere and promote community bonding among customers. One of the features includes a Treat Bar where customers’ pets are allowed to meet and socialize together. Customers are encouraged to bring photos of their pets that are displayed on a portion of the store’s wall as well. Each store also includes weight scales pet owners can use to actively monitor their pet’s health (23). Services provided at Unleashed by Petco consist of private and group dog training, DNA breed testing and vaccination clinics. All associates of Unleashed by Petco are nutrition certified (23).

Unleashed by Petco also plans to host pet adoption events regularly as part of The Petco Foundation’s cause-related marketing efforts (23).

Secondary Competitors

Walmart is considered to be PetSmart’s secondary competitor. Walmart, PetSmart and PETCO are among the most popular retailers who target pet supply consumers. Walmart is the world’s largest retailer chain with $405 billion in sales for the end of the fiscal year of January 31, 2010. In 2009 alone, the company estimated revenue of $1.4 billion in sales of pet supplies (26). This revenue estimate conveys how aggressive Walmart has become in the pet market.

Since its first aspirations to enter the pet supply market in 2005, Walmart has increased the category as high priority. In 2009 Walmart used the television media outlet to broadcast a series of brand-focused television spots focused on the pet supplies provided in its stores. The company has also debuted a fair amount of pet oriented products and services. These include a

line of dog treats from dog bakery franchise Three Dog Bakery, environmentally friendly pet products and flea and tick medication formally available in veterinary offices (20). Walmart’s strategy is to provide mass quantities at the best value price. Target consumers are assumed to have a lower household income, however this does not exclude consumers of a higher income level (20).

14

Consumer Analysis The Pet Parent

Despite the state of the economy in the U.S., “pet parents” have been relatively unaffected (11). The pet superstore industry has shown an increase of 5 percent in sales in the past year (Packaged Facts). There are currently about 75 million dogs and about 85 million cats owned in the United States (6). The majority of these owners see their pets as a part of the family. When polled, ninety-one percent of pet owners agreed with the statement “I consider my pet(s) to be part of the family” (14). This view is one quality that distinguishes a pet owner from a “pet parent.” Pet parents are individuals who place high importance on the care of their pets, their relationships with them, and the emotional ties that justifies those pets as a significant part of the individual’s family. These owners have a desire to present their pets with the highest standard of life, and have the financial means to offer the best quality and safety in every product and service they purchase. Highly invested pet parents focus on premium products and services for their pets, strengthening their emotional relationship with the pet, as well as providing for their health and wellness (14). Consumers of the pet superstore industry take a variety of factors into account when they shop for their pet, based on their own personal values and abilities to do so. spent just a decade ago.

In the graph on the right, the majority of pet parents place higher emphasis on the quality, price, and safety of a pet product or service, strengthening the amount of care parents physically and emotionally put towards their pet. While fluctuations can appear depending on the parent’s income, these statistics show that the stronger the relationship, the more time and money are invested from pet parent to pet. In addition, pet parents are growing in numbers and in popularity. In 2007, APPMA reported the percentage of dogs that slept in the same bed as their owners jumped from thirty-four percent to forty-two percent (5). Similarly, Bloomberg Businessweek reports growth in the astronomical pet parent spending. The amount of money Americans now spend on their pets has reached $41 billion per year. This number is significant in that Americans spend more on their pets than the gross domestic product of all but 64 countries in the entire world (8). The amount Americans spend on their pets a year has doubled from what they spent just a year ago.  

87  

83  

83  

81  

80  

63  

62  

53  

45  

34  

26  

23  

0   50   100  

Price of Item

It is a Product I trust

Product Safety

It is a Good Source of Nutrition

It is on Sale

It has Future Health Benefits

Avaliable Size Options

It has Reduced Sugar/Fat/Salt

It's Low Calorie

Dietary Restrictions

Recommended by Friends/Relatives

It's a Brand Name

Percentage

Fact

ors

Important Factors in Product Selection: Percentage of Shoppers

Rating Factors as "Important" or "Very Important"

Source: Packaged Facts Figure 9

Demographics The CEO of PetSmart, Phillip Francis, says that the typical

target audience, in which he is aiming products and services, is women in their mid-20’s and 50’s (22). According to Blackwell’s Five-Minute Veterinary Practice Management, the average [pet] owner is white, married, 46, and childless or an empty nester, as well as a homeowner with a higher household income than the rest of the nation (1). The website Quancast specifically targets PetSmart’s demographic market. The website states that sixty-two percent of PetSmart’s customers are female. Their shoppers are thirty-four percent likely to be in the age bracket 35 to 49, followed closely by those who are 18 to 34 making up thirty-three percent of the market. Eighty-four percent of their customers are Caucasian and sixty percent have no children. Simmons Research shows similar statistics; however, it gathers data for the entire pet superstore market and not just one certain store in that market. The data shows that most pet owners are female. Women make up fifty-two percent of the market and twenty percent of the customers are ages 45 to 54. Twenty-six percent of pet owners have a yearly income greater than $100,000.

15

36%  

46%  

28%   27%  

64%  67%  

49%   49%  

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00%

Veterinary Services

Non-Medical Pet Services

Pet Supplies Pet Food

Perc

enta

ge

Category

$70K+ Household Share of U.S. Pet Market Expenditures: By Category, 1998 vs. 2008

1998

2008

In the pet superstore industry, many consumers are from higher-income households. This plays a prominent role in the pet superstore market since these consumers are less likely to feel the severe effects of the economic downturn. Data shows that Americans who make $70,000 or more increased their spending in the market by twenty percent from 1998 to 2008. Their largest expenditure was veterinary supplies, which shows they also value the well being of their pets. No matter whom you are trying to market or advertise, you are most likely going to be reaching a pet owner. More than 71 million homes, or sixty-three percent of all U.S. households, have one or more pets (12). Packaged Facts believes that about 17 million U.S. households qualify as premium pet demographics. These households represent thirty percent of all pet-owning households and fifteen percent of U.S. households overall. This information allows the pet superstore industry to be divided into five groups. These groups include: Affluents, those with a household income of $150,000 or more; Specialty Shoppers, those purchasing pet supplies through pet stores or the Internet only; Married With Children, those with a household income of $100,000 or more; Empty Nesters, those with a household income of $75,000 or more; Dual-Income/No Kids, those with a household income of $75,000 or more; and Singles, those with a household income of $50,000 or more (14). These groups are all growing in spending ability and numbers, which suggests the strong potential for premium pet products and services. The growing size of these groups indicates the success of the pet superstore industry’s marketing ability. The graph below indicates what U.S. households spend the bulk of their income on in terms of the pet superstore industry. Source: Packaged Facts   Figure 10

16

Psychographics Philip Francis, CEO of Motley Fool Stock Advisor and

recommendation for PetSmart, states that the target audience for PetSmart is primarily based off of psychographic analysis rather than demographics (22). Pet parents treat their pets as a significant part of their family, and therefore have strong psychological and emotional ties with them. On PetSmart’s personal site, they reach out to pet parents by placing a high emphasis on pet adoption and welfare, through new services and outlets such as PetSmart Charities, PetsHotels, and Doggie Day Camp (19). The growth and positive response that the company has been receiving from pet parents proves that they have been successfully catering to the emotional needs of parents through promotions of safe, secure, and healthy relationships.

In the 2009 Simmons report on pet owners versus non-pet owners, we learn how the psychographics of pet owners differ from those who do not own pets. Pet superstore retailers must understand how their consumers think when shopping in order to target their audience correctly. The results indicated that fifty-eight percent of pet owners rarely go shopping. Since that is more than half of pet owners, the pet superstore industry must make shopping extremely easy for its customers and offer incentives to get them to shop at their store. Many said that coupons help draw them to stores at which they normally do not shop and fifty-nine percent said they are willing to shop at new stores. Data suggests that if you offer pet owners as incentive, they will be more likely to shop at your store. The environment of a store is crucial. Sixty percent of pet owners agree that a store’s environment makes a difference when they are shopping.

Since fifty-eight percent of pet owners rarely go shopping, pet superstore retailers must understand when and why pet owners shop. Fifty-eight percent say they go shopping when something is really needed and once they get what they need them leave. Fifty-nine percent hold out on

Psychographic Attitudes Percent Of People

Rarely go shopping 58.0%

Even when they do not make a purchase, they enjoy shopping

58.0%

Store’s environment makes a difference 60.0%

Only shop at stores nearby 58.0%

Tend to buy things spur the moment 62.0%

Will buy from non-specialty stores because of price

60.0%

Only shop at their favorite store because they know the type of service they will receive

57.0%

Shop at specialty because of employee’s knowledge

57.0%

Prefer to shop at specialty stores because they carry more brands

54.0%

Only shop for something they need 62.0%

When shopping, get what they need and leave 58.0%

buying things until they are on sale, while sixty percent will buy from non-specialty stores because of the product’s price. Fifty-seven percent of pet owners choose to only buy products from their favorite stores because they know what kind of service to expect. However, only fifty-four percent of consumers prefer to buy pet products from a specialty store than not because they believe these stores carry the best brands. Fifty-seven percent of consumers say they would shop at a specialty store because of an employee’s greater knowledge on products and services for their pet. The Simmons data clearly shows that pet parents are not picky when it comes to where they shop, but they will pick certain stores that offer them something in return, coupons, convenience, expertise, etc.

Source: SMRB, Pets Vs. No Pets Figure 11

Perceptions Likes and Dislikes

The preferences of consumers for their pets typically correlate with what the owner would choose for himself or herself. Consumers like to buy what makes them feel good, and therefore will be willing to spend more on products and services with higher quality and safety. This could include products such as food for the pet that is natural or recycled products that support the idea of “going green.” PetSmart became a big believer in environmental sustainability in 2008, beginning with an employee engagement program called Think Twice (19). In this program, the employees challenge themselves to make different, more sustainable decisions in hopes to inspire and involve consumers into making smarter decisions for the benefit of themselves, their pets, and the environment. For example, 37.2 percent of cat owners from 2009 were willing to pay more for environmentally friendly products, compared to 34.7 percent of overall adults willing to pay more. It was also found that 71.4 percent of cat owners felt that packaging for products should be recycled, versus the 67.4 percent of adults overall who agreed (14). Pet parents dislike products and services that can be physically harmful or painful to their pets, such as shock collars. Although they are intended to train a pet, people tend to dislike the idea of subjecting their pet to physical abuse in order to teach a lesson, preferring instead to implement verbal strategies or pay for professional dog training. Charity organizations and animal welfare events also take a consumer’s attention away from the negative aspects of a pet product and focus on good cause. PetSmart’s Charities organization has a vision to provide a lifelong, loving home for every pet by creating and supporting programs to save homeless pets and improve their quality of life. This emotionally appeals to pet parents because it promote healthier relationships with their pets. People for the Ethical Treatment of Animals (PETA) or The Humane Society of the United States are two national organizations that strive to involve all individuals on the positive treatment and care of animals.

Many pet parents also focus on the nutrition and health benefits for their pets. Dr. Lisa Newman, Mike Adams, and the non-profit Consumer Wellness Center compiled the worst ingredients found in pet food. Salt rated the highest, with the ingredient being found in 69 percent of pet food products analyzed (2). A less familiar ingredient, brewers dried yeast, came in second with 34 percent. Used for flavoring, protein, and B-vitamins, it is a waste product that can become toxic to the liver, as well as cause allergies and arthritis to pets.

17

18

Problems in the Category Consumers in the pet supermarket industry are increasingly sensitive over product safety. Safety is currently a huge priority in

the industry because of its potential to drastically change pet food and non-food supplies. In accordance with news for pet food, new government regulations are being implemented under the Food and Drug Administration Amendments Act (14). This act would include pet food ingredient and labeling standards, as well as, a Reportable Food Registry (14). There are of course many concerns with the changes, including, higher production costs and business-interrupting plant shutdowns from the presence of salmonella at pet food plants.

Aside from the food part of the pet supermarket industry, there is also the non-food side. According to Packaged Facts, the largest pet supplies category, flea and tick control products, have been gaining new attention due to illnesses from chemicals in the products, sometimes even resulting in death (14). Although EPA reports imply that pet owners could have applied the product incorrectly, consumer complaints of pet poisoning could decrease sales, causing companies to revise labels, discontinue products, and implement new data requirements.

Insights Through extensive psychographic and

statistical analysis, it is clear that many pet parents would go to great lengths physically and financially to make their pets happy. We can see many examples of this in categories such as pop culture, with high grossing, pet-related films such as Marley & Me and 101 Dalmatians (2). These movies tend to appeal most to younger demographics and pet parents that have children.

19

Survey Research

Research Objectives Today, pet owners have an emotional tie to their pets –

a group referred to as pet parents. The survey will be utilized to gain insight into this group to see what they are looking for in a brand and if cause-related marketing affects their purchases. In order to obtain these answers, we constructed our survey from a list of research objectives:

• To measure the target market’s pet-shopping frequency • To measure the target market’s monthly spending on pet-related products and services • To measure the target market’s awareness of brands within the pet products and services industry • To assess the target market’s attitudes/beliefs about differentiating characteristics of brands within the pet products and services industry • To assess the target market’s attitudes/beliefs about PetSmart • To assess the target market’s attitudes/beliefs about PETCO • To assess the target market’s awareness/attitudes/beliefs about current PetSmart promotional and cause-related marketing campaigns • To identify strategies to inform and promote cause-related marketing efforts for PetSmart

Data Collection Method We conducted the survey based on three key factors. First, we

surveyed a sample of pet parents. This sample included young adults from the age range of 18-25 and those between the ages of 45-60. In order to make the survey related to our research purposes, we created a screening question that does not allow those without pets to participate in the survey. Each team member surveyed at least 20 respondents to obtain accurate results. This created a sample size of 120 respondents. In order to obtain these responses, we used self-administered surveys that were issued through various online platforms. Table 1, below, shows each members intended method of distribution.

Introduction In addition to the information provided on PetSmart in

the Situation Analysis, we formed a survey in order to obtain further information on PetSmart’s targeted audience, pet parents. Using the guidelines of specific research objective points, we created a survey to guide PetSmart’s marketing strategies and tactics by using the responses of its targeted audience. In the following paragraphs, we will explain in detail our research objectives, the method and design used for the survey, along with the actual survey itself accompanied by a coding scheme.

Group Member: Distribution Method:

Lauren Baker Sent email to roster of her sorority chapter, Kappa Delta

Jenna Barb Sent email to her father who forwarded it to his AutoZone employees

Jeni Cherry Sent email to roster of her sorority chapter, Delta Zeta

Alison Embry Posted the survey link on her Twitter account

Taylor Kearns Sent link out to friends and employees

Kristin Wise Posted the survey link on her Facebook account

• To identify if there are gender and income differences for the above measures

20

Efforts to Reduce Survey Design Bias In order to avoid survey bias, we paid close attention to question phrasing and response options. We made sure to use clear and simple language in order to keep the questions short. To help keep the survey visually appealing, we listed question alternatives vertically and divided the survey into sections. To steer away from leading questions, we used neutral words that are not biased or emotionally charged.

Survey Design We conducted a web-based survey created using

kwiksurvey.com. The survey was comprised of 38 questions. The survey’s design allowed us to weed through respondents to figure out which ones were actual pet parents. By using a screening question, we ensured that all of our data is pertinent to our “pet parent” demographic. Each group member was also required to send the survey to at least 20 people, ensuring that we got ample amount of feedback to fulfill our objectives.

In order to achieve our research objectives, we prepared the table to the right displaying each objective paired with the survey question number that it satisfies.

Survey Research

21

Research Objective Survey Question Number(s)

Screening Questions 1

To help determine the target market 2, 3, 4, 5, 6, 8, 30, 32, 33, 35, 36, 37

To measure the target market’s pet shopping frequency

7, 9, 12

To measure the target market’s monthly spending on pet related products and services

9, 16, 17, 18, 19, 20, 29

To measure the target market’s awareness of brands within the pet products and service industry

19, 20, 21, 23, 24, 25

To assess the target market’s attitudes and beliefs about differentiating characteristics of brands within the pet products and services industry

11, 14, 15, 16, 17, 19, 23, 24, 25

To assess the target market’s attitudes and beliefs about PetSmart

10, 13, 22, 26

To assess the target market’s attitudes and beliefs about Petco

10, 13, 22

To assess the target market’s awareness, attitudes, beliefs about current PetSmart promotional and cause-related marketing campaigns

23, 26, 26

To identify strategies to inform and promote cause-related marketing efforts for PetSmart

26, 27, 28, 31, 32, 33, 34, 36, 37

To identify if there are gender and income differences for the above measure

3, 4, 5, 6, 7, 38

Survey Results Summary of Participants

Our survey had a total of 122 participants complete the survey; however, through our first screening question, 11 showed they did not own pets (9 percent). 38 pet owners from the survey are female and 73 are male, with valid percentages of 34.2 percent and 65.8 percent. Table 1 shows that the largest percentage of respondents are between the ages of 51-60 (32 percent). Twenty-nine percent are between 19-23, followed by 22 percent of respondents that were between the ages of 41-50. These three age group represent the majority of respondents.

Table 1 What is your age?

(n = 122)

Age Frequency Percentage

18 and under 1 1%

19-23 32 29%

24-30 4 4%

31-40 6 5%

41-50 25 22%

51-60 35 32%

61-70 6 5%

Over 70 2 2%

Table 2 What is your household’s totally yearly income?

(n = 122)

Income Frequency Percentage

Under $19,999 12 11%

$20,000-$49,999 12 11%

$50,000-$74,999 12 11%

$75,000-$99,999 20 18%

$100,000-$149,999

26 24%

Over $150,000 27 25%

According to the survey, 73 respondents indicated that their yearly household income ranged from $75,000 to over $150,000. The majority of these respondents accounted for an income level over $150,000 at 25 percent. In addition, the majority of the respondents were White with 92.79 percent, while other ethnicities were all below 3 percent.

Table 3 Influence of Pet Shopping Frequency Per Month on Gender

(n = 122)

Percentage

Measure Male Female Chi-square Value

Sig. (2-tailed)

Pet Shopping Frequency per month

65.8% 34.2% -.002 .993

Pet Shopping Frequency and Monthly Spending As displayed in Table 3, when respondents were asked about how

often they go shopping for their pet per month, males and females did not show a significant difference in shopping habits (Chi-square = -.002; Sig. 2-tailed = .993). The means between each gender proved this as well; both males and females showed a mean response of 2.53 (on a scale with 4 being the most frequent), going shopping for their pet either once a month or 2-3 times a month.

 When shopping frequency was compared with income, we found similar results. The Chi-square test yielded -.002 with a sig. 2-tailed value of .983, proving that how much income a household brings in per year has little effect on how often they go shopping for their pet(s). The same is true for the amount of money spent as well—while males showed to have spent a slightly higher amount of their pet per month (mean = 3.22 as compared to female’s 2.86 mean), the sig. 2-tailed value was .117, showing a weak correlation between the two variables.

Food/treats 93%

Health Products 3%

Luxury Goods 2% Toys

1%

Other 1%

Overall, what type of product do you purchase most often?

Figure 12

As shown in Figure 12, the overwhelming majority of respondents spent the most on food/treats for their pet(s). The variance between gender proved to be of little significance, with females answering with a mean of 1.14 (1 = food/treats) and males with a mean of 1.24. This shows that a necessity such as food is the most important factor when pet owners shop for pet products.

Products vs. Services

Grooming/Pampering  

23%  

Pet  Boarding/Daycare  6%  

Pet  SiAers/Walkers  2%  

Training/Discipline  

2%  

Veterinary  Services  67%  

Figure 13

As shown in Figure 13 below, respondents spend the majority of their pet expenditures on veterinary services, with the closest percentage at 23% with grooming and pampering. This shows that pet parents place the most importance on the health of their pet(s), but occasionally like to spoil their pet(s) as well.

Table 4 Influence of Products/Services at Pet-Specialty stores vs. Supermarkets/Discounts Stores on

Gender (n = 122)

Means

Measure Men Women

Influence of Products/Services

on Different Stores

2.13 2.29

between products and services offered at pet-specialty storre versus supermarkets.

The participants in the survey were asked to rate the differences between products and services provided at PetSmart vs. Petco. A little over half of those who responded chose to remain neutral in deciding the differences in PetSmart and Petco products and services (53 percent). A greater percentage disagreed—rather than agreed—that there is any difference between the stores’ products and services. Specifically, 24 percent of respondents chose to “disagree” and 16 percent chose to “agree.”

Attitudes and Beliefs about PetSmart vs. Petco Participants were also asked to rate the significant difference

between products and services offered at pet-specialty stores versus supermarkets and discount stores. Of those who answered the survey, the results indicated that 39 percent agree that there is a difference in products and services, 25 percent strongly agree, 29 percent remain neutral and 7 percent disagree that there is a difference. Cumulatively, 64 percent agree or strongly agree that there is a significant difference  

Which pet services do you spend the most on?

 When respondents answered which type of supermarket they preferred when shopping for their pet, 30 percent of respondents said they do not shop at supermarkets for their pet(s) at all, while a slightly lower percentage, 26 percent, said that they opt for Walmart, the most inexpensive of the listed supermarkets in the survey. When asked which type of store they preferred when shopping for their pet(s), supermarkets had the highest percentage of 35.19, with PetSmart and Petco falling behind with 25 percent and 11 percent—all shown in Figure 14. This shows that the products and services offered at PetSmart and Petco are not enough to override the prices offered at supermarkets.

Supermarkets  35%  

PetSmart  25%  

Petco  11%  

Other  19%  

Discount  stores  10%  

Which type of store do you most prefer when shopping for your pet?

Figure 14

Price vs. Quality Table 5

Correlation between pet shopping based on price vs. income

(n = 122)

Measure Chi-Squared Sig. 2-tailed

I shop for my pet based on price.

.180 .062

(Based on a scale of 1-5: 1 being “Always” and 5 being “Never”)

 When respondents were asked whether they shop for their pet(s) based on the price, 39 percent said “sometimes,” followed by nearly 31 percent answering “usually.” This shows that a majority of people consider price when shopping. However, as shown in Table 5, the comparison between income and shopping based on price proved not to be statistically significant enough to conclude a correlation (sig. 2-tailed = .062), but just barely. When can therefore conclude that although the correlation is weak, price is generally considered.

The correlation between gender was far less significant, however; males had a mean of 2.78 with females at 2.74, and showed a sig. 2-tailed value of .845 between the 2 variables, proving no statistical significance.

When respondents were asked about shopping based on quality, it showed to be even less correlated than price. In comparing income vs. quality, the sig. 2-tailed value was .291—not enough to conclude statistical significance. A similarly weak correlation was observed when comparing quality to gender, where the sig. 2-tailed value was .393 and the mean of males was 1.63 and female’s was 1.76 (based on a scale of 1-5, with 1 being “Always” and 5 being “Never”). Overall, we can conclude that price and quality are not of high importance when pet owners shop for their pets.

Awareness, Attitudes, and Beliefs of Brands in the Pet Industry

Respondents were asked a variety of questions concerning brands when they shop for their pet. When asked if brand names were worth the money, the sig. 2-tailed value in relation to gender was .698 and males and females answered equally, with means of 2.51 and 2.58 (based on a scale of 1-5: 1 being “Strongly Agree” and 5 being “Strongly Disagree”). The same happened when respondents were asked if brand names had the best quality, showing a 2-tailed significance of .151 and means of 2.62 (males) and 2.89 (females). In fact, the majority of respondents answered “neutral” when asked the two questions above, as well as a question about the health benefits of brands. However, as shown in Table 6, more than half of respondents agreed that they have brand loyalty to certain brands, also relating to the 37% that answered that they do not buy generic products.

Table 6 How do you feel about the following statement: I have brand loyalty to

certain brands. (n = 122)

Strongly Agree 21.30%

Agree 51.85%

Neutral 13.89%

Disagree 12.04%

Strongly Disagree 0.93%

(Based on a scale of 1-5: 1 being “Strongly Agree” and 5 being “Strongly Disagree”)

Attitudes and Beliefs About Promotional and Cause-Related Marketing Campaigns

When respondents were asked if they were aware of PetSmart’s Charities organization, the majority answered “No” (59 percent). When asked whether they would be willing to learn about such an organization, the results were mixed; however, the highest percentage was 35 percent with the answer of “neutral.” Respondents were also mostly neutral when asked if the organization had an impact on their view of PetSmart as a company. According to each question’s 2-tailed significance values when compared to gender, none show a correlation between the two variables.

Social Media Persuasion

22%  

60%  

18%  

Yes

No

I do not have a Facebook or Twitter social profile

             Figure 15  

 Social media has become a new and prominent media outlet that advertisers are now using to communicate with their target audience. An interesting finding from the survey shows that of the 81 who responded that they have a Facebook or Twitter account (73 percent), only 22 percent responded that they would “friend” or “follow” PetSmart and/or PetSmart Charities on Facebook or Twitter. The majority indicated that 60 percent would not follow PetSmart on two main social media outlets. 27 percent of respondents do not have an account for either social network. This information shows that the medium of the internet is not very effective when trying to advertise for PetSmart.

 Participants were asked to choose which advertising medium they are exposed to most frequently. According to the survey, respondents indicated that they are most exposed to television and internet advertisements. 47 respondents were most exposed to television (43 percent), followed by 37 respondents who were most exposed to internet advertisements (34 percent). Only 5 percent of respondents felt frequent exposure to both radio and flyers/posters. We can conclude that it would be best to advertise PetSmart through commercials.

Insights on Advertising

Table 7 Which advertising medium do you feel you are exposed to most frequently?

(n = 110)

Advertising Medium Frequency

Flyers/Posters 5

Internet Advertisements 37

Newspaper 13

Radio 6

Television 47

Other 2

Would you "friend" or "follow" PetSmart and/or PetSmart Charities on Facebook or Twitter?  

The advertising medium that best captures the attention of “pet parents” is television, which accounts for 44 percent of the survey results. Twenty-two percent of the respondents indicated that internet advertisements best captured their attention, followed by newspaper advertisements at 14 percent, and radio and billboards both at 7 percent. These survey results indicate that digital media outlets have the ability to capture the most attention of potential customers.

Table 8 On which advertising medium captures

your attention the most? (n = 110)

Advertising Medium

Frequency Percentage

Billboards 8 7%

Flyers 6 5%

Internet Advertisement

24 22%

Newspaper 15 14%

Radio 8 7%

Television 48 44%

Other 1 1%

Consumer Insights To complement our quantitative research, the web survey, we

conducted qualitative research in the form of a focus group. We conducted our qualitative research in order to gain more insight on the target audience and attempt to expand on the quantitative research results we found. The purpose of our qualitative research was to better understand the behavior and thought processes of pet parents.

As a team we decided a focus group would be the most effective form of qualitative research because the participants could be more interactive, and it provided a group setting where people could refine and hone their opinions. We found that the conversation was more stimulating, and we could analyze the focus group results much quicker than other research methods.

Focus Group Objectives • To acquire more information and data about cause related marketing • To reveal which advertisements are most affective • To learn what motivates a pet parent in terms of purchases and the stores where they prefer to shop • To answer the questions about the type of advertisements pet parents prefer and why

Focus Group Our objectives were achieved by using a focus group. It gave us detailed information into the reasons behind a consumer’s choices regarding their pet. The focus group allowed us to become better acquainted with our pet parents by probing their responses. We achieved this by asking open-ended questions that were related to our objectives. This permitted the pet-parents to expand on their answers.

As an incentive for the participants to attend we offered desserts and drinks. We sent out emails to all of our classes asking for participation and required they own a pet in order to participate so we had only pet parents in the group. We conducted our focus group on Thursday, November 17th, 2012 at 7:30 p.m., on a group study floor in Hodges Library at the University of Tennessee campus. By using two moderators to help guide the conversation, we were able to keep everyone focused on information related to the study.

Tasks Person Moderator Taylor Kearns and Alison Embry

Note Taker Kristin Wise and Lauren Baker

Video/Recording Jeni Cherry

Hospitality Jenna Barb

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Each member of our team performed a specific role during our focus group. Taylor Kearns and Alison Embry led the discussion as the moderators; they guided the conversation and topics in order to get the information that fit with our objectives. Lauren Baker and Kristin Wise took notes, copying down main points from our discussion in order to make it easier to analyze the survey results. Jeni Cherry was in charge of the audio/video recording, where she recorded on the computer a copy of the full discussion for reference. Jenna Barb was in charge of hospitality and distributed nametags and demographics sheets.  

To create an effective focus group, the moderators guided the conversation and also encouraged people to expand and validate their viewpoints. We were conscious of moderator and dominant respondent bias. In order to eliminate any bias we were careful to use unbiased words and neutral body language, we also encouraged each participant to have the same amount of input. We also strived to obtain individual data rather than general opinion to avoid generalizing all results to the group.

In order to analyze the results we used a five step process: get to know the data set, write notes & organize data, “coding out data” (identify themes, common ideas or patterns), interpret data by attaching significance to themes and patterns and report the findings we found. By listening to the interview and reading over our notes multiple times we were able to better understand our data set. Then, we wrote down notes and direct quotes from the interview for later use. By looking over our notes we could identify patterns or groupings through the use of emergent categories. We attached significance and meaning to the patterns discovered. This allowed us to compile our information in an effective way and to form recommendations to the client.

Consumer Insights Analysis Pet Store Choices

Participants were asked what qualities currently do or would encourage/deter you from shopping at a specific pet store. When the participants were asked what their ideal pet store would be we received a variety of responses including: low price, high quality, friendly service, in-store veterinary service and wide variety of products and pets. When asked “What pet store do you normally shop at and why?” all respondents said either Pet Co or Pet Smart and considered them to have the same quality of prices, products, etc. After further probing of the reason for choosing a store we received a unanimous decision that everyone chooses based on

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convenience (proximity to their residence). The qualities that would dissuade our members from shopping at a pet store included: unhappy animals, unfriendly staff and high prices.

When comparing pet specialty stores and general supermarkets, there were various responses from respondents. The benefits of pet specialty stores were the specialization of products and services and the qualification of employees. The benefits of choosing a supermarket were the convenience of location and ability to shop for themselves as well as their pet in one place, and they were generally less expensive.

Personal Pet Activities and Feelings

When probed about the respondents pets being a priority in their life, all but 2 respondents said they were very high priority. “I consider my pet more important than some family members,” (Male, 20). After further

probing as to why most people think of pets as a priority in their life, the general response was that pets love you unconditionally, never fight with you or let you down. Special activities respondents said they do with their pets to show they care included: buying Christmas presents, taking them on walks and to the park and watching animal planet with them. “I put my rabbit’s cage outside in the sun so my rabbit can sun bathe,” (Male, 18).

Many respondents include their pets in holiday celebrations and two respondents thought it was acceptable to have their pets on their Christmas cards. The ones who wanted their pets included in holiday celebrations said it was because they considered their pets as part of their family. Three respondents out of the group admitted that they celebrated their pets’ birthdays. When we asked the respondents their favorite thing about being a pet owner we received a variety of

sentimental answers. For example, “Every time I come home Mac is waiting for me at the door and ready to play and spend time with me even if no one else is there,” (Female, 21).

Advertising and Marketing When we asked the participants, “Through

what advertising medium do you obtain the most information about pet products?” they unanimously agreed on TV. They unanimously said that was the advertising medium they were exposed to the most. When asked to describe what qualities from an advertisement attract them the most, the respondents said catchy jingles, cute animals, or low prices. Everyone in the group agreed that they would be more inclined to shop at a pet specialty store if they were more aware of the store’s charitable efforts.

Conclusions Our focus group made it possible for our respondents to

share attitudes, communicate preferences, reveal wants and necessities, and share insights about how, when, why and where they care for their pets. Participants from our focus group agreed overall that price and proximity were the most important factors when choosing a store to buy pet products. They also communicated that, in general, they did not see a significant difference between Pet Smart and Pet Co. Based on the information we gathered, our respondents would be more likely to shop at Pet Smart if there were more locations closer to their residence. They also like that Pet Smart had many charities, which inclines them to choose Pet Smart over other pet specialty stores. Overall, Pet Smart was preferred over Pet Co but not over general supermarkets. This shows that Pet Smart is seen as superior in regards to pet specialty stores but there is still room for improvement for Pet Smart to surpass supermarkets.

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Sex Age

Female 21

Female 21

Female 20

Male 20

Male 19

Male 18

Focus Group Participants

Adoption PetSmart offers pet adoption services. Even though many are

aware of this benefit, highlighting it further would be very valuable to the client, PetSmart. Pet adoptions shed a positive light on the company by showing that the company does not focus merely on making a profit, but also ensuring that animals also benefit by finding loving homes. PetSmart could raise awareness in the pet adoption sector by having adoption fairs at locations other than just their store. This would open up their demographic for the adoptions tremendously. They could also hold more pet adoption events to increase the amount of pets that find good homes. By making pet adoption events highly publicized, the company will ensure that people become more knowledgeable about their pet adoption services.

Quality Throughout the entire research process, one can see how great

of an importance the “pet parent” puts upon the quality of the pet products that they are purchasing. After collecting data and conducting qualitative research, it is clear that quality well surpasses other aspects that determine the factors that come in to play when a customer purchases products for their pet. This is why quality should be one of the main focuses of PetSmart for cause related marketing in terms of advertisements or other promotions. There is an abundance of ways to do this including: stocking the store with more high quality products and also promoting the high quality products that customers can find in stores. PetSmart can also show buyers the benefits of buying higher quality products, like better health for their pets. Many “pet parents” would instantly be attracted to higher quality if it ensured the well being of their pet. We believe that targeting the quality of products offered at PetSmart would be one of the smartest ways to connect with its customers who are looking to go the extra mile for their pet.

Charity Another component that sheds a positive light on PetSmart is

their charitable efforts. Our data indicates that people are more likely to want to shop at a store who gives back to the community. People are more willing to want to learn more about a charity that is close to his or

Client Recommendations

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close to his or her cares and convenient. This is because it is a cause with which they find more familiar, and is also reassuring that their money is being used properly. One way to accomplish this is by finding charities that are more local so that customers can become more active in the charity. Another way is to make contributing to the charity easier on the customer. For example, asking them for donations as they are checking out instead of a more difficult way of donating .

Advertisements through Mediums Advertising through a medium, like television, is one of the

best ways PetSmart can gain more customers. First off, radio could be very beneficial. A few participants from our focus group distinctly recalled advertisements from the radio due to catchy slogans and jingles. They even stated that it made them want to go their every time they were in their car and heard the commercial. Another medium is television advertisements. Television is considered one of the most accessible mediums because so many people in the United States have them in their homes, which we found from our data and research. For all medium advertisements, PetSmart can promote their high quality, pet adoptions, and charitable efforts. They can also create a more dynamic advertisement plan, like the StateFarm commercials.

Incentives from Donations One way PetSmart could maximize their cause-related marketing sector is by offering incentives to those customers who donate to certain causes that the company supports. For example, give percentages off on purchase depending on how much they donate. They could also give out free gifts or samples to customers that decide to donate. Many people are more likely to help someone out if the benefits outweigh the risks. In this cause the benefit would be getting something in return for their kindness.

References 1.  Ackerman, Lowell. Blackwell’s Five-Minute Veterinary Practice Management. Westborough, Mass: Wiley-Blackwell, 2007. 2.  Adams, Mike and Dr. Lisa Newman. (2011) Pet Food Ingredients Revealed. Retrieved from http://www.dogsgossip.com/index.html 3.  Ad$pender, PetSmart and Petco. 2006-2010. Retrieved from http://blackboard.utk.edu 4.  Ad$pender, Pet Stores and Services. 2006-2010. Retrieved from http://blackboard.utk.edu 5.  American Pet Products Association. (2011). Products & the Law Overview. Retrieved from http://americanpetproducts.org/law/

lawlibrary_overview.asp 6.  American Society for the Prevention of Cruelty to Animals (ASPCA). Pet Statistics About Us-FAQ. Retrieved from http://www.aspca.org/about-us/faq/

pet-statistics.aspx 7.  Animal Legal & Historical Center. (2010, October). United Kingdom,Pet Animals Act 1951: An Act to Regulate the Sale of Pet Animals. Retrieved

from http://www.animallaw.info/nonus/statutes/stukuk1951c35.htm 8.  Brady, Diane and Christopher Palmeri. (2007, August 6). The Pet Economy. Retrieved from http://www.businessweek.com/magazine/content/07_32/

b4045001.htm 9.  Dog Gossip. (2011). Dog Movies. Retrieved from http://www.dogsgossip.com/index.html 10.  Dysart, J. (2011, February 24). Petco Names Draftfcb Orange County Agency of Record for Brand and Product Advertising. Retrieved from http://

www.draftfcb.com/press-release.aspx?press=453 11.  Enovijas, Carin. (2011, January 21). Upscale Pet Parents Power Premium Pet Product Market. Natural Pets World. Retrieved from http://

www.naturalpetsworld.com/petbizop/2011/01/upscale-pet-parents-power-premium-pet-product-market/ 12.  Formichelli, Linda and W. Eric Martin. (2007, October). Market Focus – Pet Owners: It’s Raining Cat and Dog Lovers. Retrieved from http://

www.targetmarketingmag.com/article/its-raining-cat-dog-lovers-89819/1# 13.  Germinder, Lee-Ann. Dermatological Issues: Geography and Seasons Play a Role. Retrieved from http://www.dogsgossip.com/index.html 14.  Lumis, David. U.S. Pet Market Outlook 2010-2011: Tapping into Post-Recession Pet Parent Spending. Packaged Facts, March 2010. 15.  Marigny Research Group, Inc. Pet Supplies and Pet Care Products in the U.S. 8th Edition. Packaged Facts, 2010. 16.  Pet Industry Joint Advisory Council. 2011. Retrieved from http://www.pijac.org 17.  Petco Homepage. Petco Animal Supplies, Inc, 2011. Retrieved from www.petco.com 18.  Peterson, T. (2011, February 24). Petco Launches Integrated Effort with New AOR Draftfcb Orange County. Retrieved from http://www.dmnews.com/

petco-launches-integrated-effort-with-new-aor-draftfcb-orange-county/article/197040/ 19.  PetSmart Homepage. PetSmart Store Support Group, Inc, 2011. Retrieved from www.petsmart.com 20.  RetailSails. (2001-2010) PetSmart – Annual Data. Retrieved from http://retailsails.com/monthly-sales-summary/petm/annual/ 21.  Shim, J. (2011, October). Ibisworld Industry Report 45391: Pet Stores in the US. Retrieved from http://clients.ibisworld.com/industryus/default.aspx?

indid=1103 22.  Smith, Rich. (2006, November 6). PetSmart's Animal Instincts (PETM). The Motley Fool. Retrieved from http://www.dogsgossip.com/index.html 23.  United States Department of Agriculture. Animal Welfare Act. Retrieved fromhttp://awic.nal.usda.gov/nal_display/index.php?

info_center=3&tax_level=3&tax_subject=182&topic_id=1118&level3_id=6735&level4_id=0&level5_id=0&placement_default=0 24.  Wasserman, D. (2010, October 21). New Pet Store Ready to be Unleashed on Olney. Retrieved from http://www.examiner.com/community-in-

washington-dc/new-pet-store-ready-to-be-unleashed-on-olney 25.  Where You Shop for Pet Supplies. Simmons Market Research Bureau. Experian Simmons, 2010.

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Appendix 1

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Appendix 2

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Appendix 3

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Moderator’s Guide Moderators: Taylor Kearns and Alison Embry Note Takers: Kristin Wise and Lauren Baker Audio/Video: Jeni Cherry Hospitality: Jenna Barb

(Jenna Barb will hand out the demographic sheets, which she will collect back at the end of the focus group) Good afternoon, thank you all for participating in our focus group today. (Taylor Kearns introduces herself) We are going to be asking all of you questions about your pets. (The rest of the group introduces themselves and explains their part in the study) Jenna will then give every participant a nametag in order for Taylor to be able to identify the participants.

This study will not take longer than 60 minutes. Please help yourselves to beverages and desserts. Do any of you mind if we record this session? The video will be used for informational purposes only. We will be the only people reviewing the footage. All information disclosed in this session will be classified. Please feel free to share any thoughts, experiences, etc. with us. We may use direct or indirect quotes in our report but will not expose your identity. The principle of this discussion is to speak freely. We would love to hear from each participant in this group. This is a very informal study, so please feel free to contribute to the discussion at any time.

At the end of the session, we will be collecting a form that gives us your age and gender for demographic use. Now that we are all familiar with the guidelines, let us begin. First, let’s go around the table and introduce ourselves.

Please say your name and the type of pet you have. Any questions? Let us start talking about our pets and buying habits.

1. Through what advertising medium do you obtain the most information about pet products? For example: TV, magazine ads, etc. Probe: What traits about this medium are appealing to you? How often do you utilize this medium?

2. Does a store’s charitable marketing efforts influence your desire to shop there? If so, why? Probe: Please give an example of a time when this happened.

3. What qualities in an ad influence your decision when choosing a pet store? Probe: What would you consider more important price or quality?

4. Do you remember the most recent advertisement you saw for a pet store? Probe: What about this advertisement stood out?

5.What about an advertisement influences you to buy a certain product?

6. Now, please answer a hypothetical question: You have a choice between buying a more expensive, organic bag of dog food or a cheaper bag of regular dog food, which one would you choose?

7. Do you have a pet food brand that you buy consistently? If so, what brand and why?

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8. If price was no issue, what would be your ideal brand of pet toys, food, items, etc.?

9. What is the biggest expense for your pet? Probe: Is this because it is the most imperative item for your pet?

10. What would you consider an ideal pet store? Probe: What qualities of a store makes it ideal for you?

11.What pet store do you normally shop at and why? Probe: What are the reasons: proximity, price, quality, etc.?

12. Are there certain qualities that would discourage you from shopping at a store? If so, what is the deterrent?

13. Do you see any benefits in shopping at a pet superstore versus a place such as Wal-Mart? Probe: What is the benefit? Do you go to pet superstores regularly? If you did not see a benefit, would you still consider shopping there?

14. Compared to a pet superstore, what is beneficial about shopping at a place like Wal-Mart?

15. In what way do you consider your pet a priority in your life? Please give examples.

16. Would you consider adopting an animal from a place like PetSmart or PETCO? Or are you interested in breeders?

17. How often do you shop for pet supplies? Do you do this out of necessity or because you want to?

Moderator’s Guide 18. Are there any special activities you do with your pet daily? Please explain. Probe: What about the days you are gone, for example working?

19. Some people say that it is ridiculous to take your pet to see Santa on Christmas, dress your pet up for Halloween, etc. How would you respond to these claims?

20. Do you celebrate your pet’s birthday? Probe: If so, how do you celebrate?

21. Do you have a routine with your pet? What daily activities do you do? What weekend activities do you do?

22. What is your favorite thing about being a pet owner?

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Table of Contents Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Industry Overview Brief History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Size of Industry. . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . 3 Stage in Product Life Cycle. . . . . . . . . . . . . . . . . . . . . . . . . 3 Seasonality, Growth, and Economy. . . . . .. . . . . . . . . . . . . . 4 Legal and Regulatory Issues. . . . . . . . . . . . . . . . . . . . . . . . . 4-5 Societal and Cultural Considerations. . . . . . . . . . . . . . . . . . . 5-6

Client Profile History. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Sales & Advertising Expenditures. . . . . . . . . . . . . . . . . . . . . . 7

Media Mix & Creative Strategy . . . . . . . . . . . . . . . . . . . . . . . . 8 Positioning………. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Cause Related Marketing. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-10

Competitor Analysis Primary Competitors & Brief History . . . . . . . . . . . . . . . . . . . . 10 Sales Data & Media Mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Advertising Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Creative Strategy & Positioning . . . . . . . . . . . . . . . . . . . . . . . . 12 Audience Segments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 New Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Secondary Competitors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Consumer Analysis The Pet Parent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Demographics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Psychographics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Perceptions—Likes and Dislikes . . . . . . . . . . . . . . . . 17

Important Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Problems in the Category/Insights . . . . . . . . . . . . . . . 19

Survey Research Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Research Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Survey Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Survey Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-28

Consumer Insights Consumer Insights . . . . . . . . . . . . . . . . . . . . . . . . . . . 29-31

Client Recommendations . . . . . . . . . . . . . . . . . . . . . . 32

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Appendix 1: Survey Questionnaire . . . . . . . . . . . 34-44

Appendix 2: Coded SPSS File. . . . . . . . . . . . . . . 45

Appendix 3: Moderator’s Guide. . . . . . . . . . . . . . 46-48

Situational Analysis ADV/PR 340 Dr. Park Fall 2011  

By: Lauren Baker, Jenna Barb, Jeni Cherry, Alison Embry, Taylor Kearns, and Kristin Wise