Omega Paw
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Executive SummaryOmega Paw has tapped into the North American Market with a Unique Self Cleaning Litter box for cats. The litter box has received positive reviews and has been accepted by major distributors. With a steady line of weekly production and availability of a significant Financial Budget the company is looking forward avenues to increase its sales and profits.Problem StatementWith the presence of Direct & Indirect competition and there been no barriers for future competition as well Omega Paw has to plan and implement Marketing & Distribution channel to increase presence and sales.Situational AnalysisObjective/GoalsAfter being in business for just over a year and reaching impressive Sales and hoping to continue the favourable trend Omega Paw is aspiring to reach $1.7M Sales in 2012, $3M in 2013 & $5.7M in 2014 and contemplating what changes are required for the existing strategy to achieve the aggressive growth planned.Background/Normal ForecastThe company started out with directly shipping to customers on pre-orders received advertisements in Magazines and TV Commercials. There were dents in the reputation of the company due to Production problems with initial mould causing delays in meeting pre order sales and supplying not yet perfected litter boxes through the distributors in Canada.SWOTStrengthsCompared with 3 major competitors Omega Paw litter box is simple and user friendly.Proved to be the only Self-Cleaning Litter Box in the US Market in 2011 and seven of the eight distributors whom were contacted picked up the product right away.Readily available marketing budget of $100,000Manufacturing capacity of 3500 units per week.WeaknessesDent in the reputation with the Canadian Distribution for selling not yet perfected products.Not keeping up to the Delivery time for pre-sold products.Lacking of experience of the Management at Omega Paw.Market AnalysisThere are estimated to be 84.2million cats in North America (74M in United States & 10.2M in Canada). The Cat population has risen by 7% between 2010 & 2012 and estimated to grow at an annual rate of 3.6 for the next few years. The growth is mainly due to the Condo type living, ageing population and the ease of care and maintenance for cats relative to other pets.Market SegmentationOmega Paw has divided the Cat owners to three main consumer groups, New Pet Owners which is 5%, who will need all applicable pet care & products , Existing Cat Owners which they assume to be 80% and who well care for their pets and stock with traditional cat care and maintenance supplies15% labeled as “gray zone”, where the owners lived mostly in the country and Cats are one of many pets they own. and who will not purchasing only cat food.Competitive AnalysisThe company has three direct Competitors”Ever clean Self Scoop Litter Box” by First Brands Corporation,, The products are priced between $53-$63 and spends lots of money on advertising to pet stores via trade magazines and has a North America wide distribution.”Quick Sand” marketed by Smart Inventions- Product is priced at $29 which is very competitive and where the acquirer of the company spent around $200k-$300k weekly for 6 months on advertising and gained exposure in Canada & United States.”Lift & Sift” which is marketing through Wal-Mart. Product is priced at $27but does not have much advertising exposure.Omega Paw has a competitive advantage due to the simplicity of the Omega Paw Product and with proper marketing and distribution, it could capture a larger market share.It also has Indirect competition and there are no barriers to New entrants to the market in the future.Financial AnalysisWith the current Selling price of $18 and Total Variable Cost of $8.88 and weekly production of 3500units and a Marketing Budget of $100k Omega Paw is considering four distribution channels which involved additional Variable & Fixed Costs as follows.
Existing AdvertisingMail OrderMass DistributionGrocery StoresWeekly Sales3500350035003500Selling price (MSP) 18.00 18.00 18.00 18.00 Mark Up-Variable 7.20 15.51 3.00 18.00 18.00 25.20 36.51 63,000 63,000 88,200 127,785 Variable Cost Production 6.00 6.00 6.00 6.00 Shipping 1.50 1.50 1.50 1.50 Packaging 1.38 1.38 1.38 1.38 8.88 8.88 8.88 8.88 Mark Up Cost 7.20 15.51 8.88 8.88 16.08 24.39 Variable Cost 31,080 31,080 56,280 85,365 Margin 31,920 31,920 31,920 42,420 Fixed Cost 1,000 10,000 50,000 10,500 Profit30,920 21,920 -18,080 31,920 Margin Per Unit 9.12 9.12 9.12 12.12 Break Even Units 110 1,096 5,482 866