Distribution Channel and Marketing

¶ … Dog Food Company Overview of the Company Meow, Bark and Everything Else is an all-natural pet food company. The company has several lines of pet foods, created from local ingredients, starting with cats and dogs, and hopefully expanding to other types of pets as well. The products will be sold locally through a couple of different distribution channels. This presentation will focus on what those channels look like. Distribution Channels We intend to start with two different distribution channels.

The first is to have a company store at the site where we produce the pet foods. This channel has several advantages that will help us to make this particular channel successful. A lot of those advantages stem from having complete control over this particular distribution channel The second distribution channel model will be to go through local pet and grocery stores in the area. There are a couple of other models that we'll be exploring as well, including selling through local farmers' markets and selling online.

Slide: Company Store Advantage #1 The company store will be a shopfront situated where the pet foods are produced. This channel has several benefits. It uses space that we are already paying for, so is low cost. That means we can offer the discounts and free samples that we intend to use as part of our marketing. By controlling costs, we are also more likely to turn a profit. There are no shipping costs, as the customers come to us.

Slide Company Store Advantage #2 The second major advantage of selling through a company store is that we get to tell our story our way. This is important because we have 100% control over all of the branding and where the products are placed. There are other advantages, too, for example we can try new types of messaging, branding and pricing. Having an in-house store gives us much better ability to properly a/b test different marketing tactics.

An example of telling our story our way might be to bring in some pets -- or allow people to bring their dogs -- and create a holistic space for them. We could even take more of a dog spa sort of approach, with food being the main product we want them to take away, but where we are getting a lot of revenue from each client. There's room to be more creative in our own space than selling anywhere else.

Slide: Company Store Disadvantage #1 One of the major disadvantages is that we have to have the company store in an area that is zoned both for production and for retail. This might be difficult to find, but even if there is lots of this type of space available it is not always in the most advantageous location. It may make sense to think strategically about the location -- in an industrial park next to a microbrewery will give better walk-up traffic than some other locations.

In a farm setting might be an even more powerful message, though a lower traffic location. We will have to think about the best options -- location is everything. Slide: Company Store Disadvantage #2 Even with the best location, we will not be able to get the turnover we need to be a viable business. This distribution channel, even when done perfectly, is not enough.

So we can only put so much money and energy into this storefront, and inevitably it may become a distraction as much as anything else, if people aren't visiting. Slide: Retail Distribution Advantage #1 To get the sales we need to be viable, retail distribution is critical. This means selling in area pet stores, grocery stores, and anywhere else that makes sense. Retail gives us a lot of opportunity to sell as much product as we can, and expand our distribution footprint quite quickly, more than otherwise would be possible.

Slide: Retail Distribution Advantage #2 Stores can be partners in sales, and we should work with that. When you offer stores discounts, they can put your goods on sale. You can get the option of putting a person in a grocery store to give out samples. Retail stores are high traffic areas that really provide a great opportunity for the company to get a lot of exposure, fast. Slide: Retail Distribution Disadvantage #1 The biggest disadvantage with retail stores is competition -- we would be on shelves alongside larger and better-financed companies.

This invites direct comparisons. In a sense, this disadvantage is really just a challenge that we need to work around, forcing us to identify our key value proposition and then differentiate ourselves properly. Slide: Retail Distribution Disadvantage #2 There are other issues with retail. You sell to a distributor, to a retailer. whatever approach you take you're going to sell for less because other people are taking markups on your product. Thus, you need to sell a lot more. And it costs more. If you self-distribute, that costs money.

Packaging can be expensive if you want to do it right. And you are always fighting for attention with the retailers, which usually involves spending money to cultivate those relationships. Retail is powerful channel, but can be quite expensive for a small company. Slide: Farmers' Markets These are popular ways to sell artisanal products. They hit our target market really well. You can take higher margins and do a fairly large amount of business in a short amount of time. But there are downsides to farmers' markets as well.

They are sporadic -- not every day. You often have to travel. To do a big enough business you might need to visit markets in several counties. If they are all on the weekend that makes it much tougher to do. Slide: Online Lots of people buy online, and you can get a really good reach. If you leverage the amplification power of something like Amazon you could sell a lot of pet food, all over the country, and that can be a great way to build sales.

The downsides of this channel are high. First, pet food is heavy.