Zeocon Case Study
Zoecon’s mission was to be the marketing arm of their producer in the animal health and insect control areas. Zoecon sells many products under different brand names as revealed in exhibit 1. They sell animal health products to small animal veterinarians and clinics, pest control chemicals for farm animals, insecticides for household pets and pest control to supermarkets, pet stores, and pest control companies. Finally, they also sell chemical compounds to firms engaged in marketing pest control products to the consumer market .
The products target consumer, and pest control market. The new objectives emphasized a focus on high financial-return products and businesses, and to introduce insecticides that are safer to the household. The change in the focus of research and development from new insect adulticides which kill adult insects to chemical compounds that disrupt insect reproduction was in an attempt to meet the demand of customers’ increasing concerns for safer compounds. Zoecon’s products are spread in the U. S market where 80% of roach insecticide were sold .
Zeocon Case Study Essay Example
However, executives had aims to expand more in the U. S market and go International in 1987. Case Analysis: The issue in the corporation was to analyze and discuss the test market results for the Strike ROACH ENDER, after it was placed in a consumer test market for 6 months in the cities that represent the 19 city market . The cities were Charleston, South Carolina, Beaumont, Texas, Charlotte, North Carolina, and New Orleans , Louisiana. The decision is how they can best allocate technical, financial, and marketing resources for their IGR compounds.
Suggestions were discussed, some executives called for consumer market expansion with the ROACH ENDER, others said that the company should concentrate its effort on opportunities in the pest control market. Also, some executives suggested that the company should reconsider any plans to market the product itself, whereby Zoecon should sell its IGR compound to firms who are actively engaged in reaching the consumer insecticide market . These firms included d-Con company, S. C Johnson and son ( Raid), and Boyle-Midway Division of American home products ( Black Flag). SWOT Analysis: Strengths:
Zoecon has many products divided between adulticides and growth regulators that kill fleas, cockroaches, rats, mice, spiders, rodents, crickets, and others. Insect Growth Regulators are synthetic analogs that prevent the continuity of the reproductive cycle in fleas, and when used on cockroaches, it makes them incapable of reproducing. This unique and high tech product that Zoecon uses is extremely effective in eliminating insect population. Besides, as chemicals, IGR’s are much less toxic than other compounds typically used in household insecticides since they are chemical analogs of juvenile hormones specific to insects.
The scientific breakthrough Zoecon achieved in PRECOR and GENCOR provided competitive advantage among competitors. The unique feature of IGR’s is that the immediate effects of an application are not observable. Another thing is the company’s ability to create products for the two market segments; the consumer and the pest control market whereby sales were forecasted to grow at an average rate of 10% per year through 1990. Zoecon products had controlled the market since we notice a very high market share in the firms who sell their products such as Raid that captured 45% , and Black Flag 12%.
The most important is that the company’s products are dominant in the market, since no other competitor company could have a share greater than 8%. Finally, the large commitment to ongoing research on IGR’s, and the scientists who comprised more than 25% of the company’s employees had synthesized more than 1,250 IGR’s and 175 patents had been issued for these inventions. This signifies the strong technological presence, high manufacturing abilities, and important research capabilities. Weaknesses: Zoecon is on the verge of taking some decisions pertaining to increasing future profits and sales.
Although the product is very unique and almost friendly environmental in the means of lower toxicity however there was reluctance in expanding distribution, in introducing new products, and reconsiderations of the market plan and the product were put into account. Zoecon was selling the FLEA ENDER in around 19 cities in the States. This distribution limitation may raise concerns about distribution strategies and financial strength as the question arising is why such high tech and sophisticated products can’t go World Wide.
Besides, the premium-price strategy followed led to having ZOECON’s products priced higher than the other existing Roach insecticides by 50% to 75%. Also Zoecon had no experience dealing with supermarkets, this is why they focused on pest control market and approached competitors to include the trade name of the product they use that was PRECOR, but only which was d-Con expressed ineterst. Opportunities: The success of PRECOR prompted Zoecon to introduce their own brand for sales through supermarkets under the name Strike FLEA ENDER. It captured 11% of the flea product sales in the 19 cities.
In 1985, the product FLEA ENDER had an 18% market share , but it didn’t yet achieve its profit objectives. The success led to continuous research, and in 1984 the result was hydroprene marketed under the trade name GENCOR and that was a roach compound. This created another opportunity for Zoecon since they can also introduce the ROACH ENDER in the 19 cities where the other product was being sold. Threats: The threats that went with introducing the ROACH ENDER were to determine consumer acceptance of the product, and to qualify the trade and consumer marketing program.
Also, the cost that will be incurred on the promotion and advertising , and the market test itself was estimated to equal $ 1,478,000. A final threat was the new innovations and timing . Patents will eventually time out. This will give competition access to the controlled compounds that Zoecon formulated. This might potentially affect their existence in the PCO market. Market Analysis: The insecticide market is divided into 2 segments, the consumer market and the PCO market which is a business market.
Distinction is based on distribution systems and product forms, as in consumer markets we see packaged and easy to use products, whereas in the PCO markets, products are sold in a diluted form . The FLEA ENDER was spread in the 19 cities and the test market for the ROACH ENDER was in four cities which signifies a limited geographic segmentation. Estimated annual sales for all consumer-disbursed insecticides were estimated to be $ 400,000,000 in 1985, and sales were to increase at an average rate of 10% per year .
This consumer market segment is also sub-divided into insect specific insecticides which increased the product variety . The sales in this segment were seasonal and varied by geography. The usage rate was heavy in the 6 month period between May and October which was considered a prime sales time. 75% of sales were made in the northern tier , and 50% in the southern tire of the states. Regarding the business market segment, it accounted 6% of the revenues estimated in 1990. This market had been dominated by small PCO’s, and insecticides were sold through distributors.
This points out that channels of distribution in PCO market was more effective as ZOECON had no significant experience with supermarkets that led them to approach Raid and Black Flag . Market Test for ROACH ENDER: The market test had two objectives that were previously mentioned, and it targeted four cities that were considered as representatives of the 19 city market since 80% of the insecticides were sold . It addressed 25-to 54-year old women living in households of three or more .
Upon applying segmentation, they selectively chose the market segments on three basis: 1: The end-problem-permanently segment 2: The product that lasts segment 3: Convenience/ Low cost segment The product was highly positioned and was considered as a scientific breakthrough because of its unique qualifications especially GENCOR that was desired by the targeted segments. Positioning was also effective because of the promotions used as shown in exhibit 5. Due to promotion, 57% of the household became aware of the product which created an opportunity to Zoecon.
This signifies the quality of the consumer marketing program . The product was packaged in two separate ways : 1: 10 ounce aerosol spray that was priced $ 4. 49 /each 2: 6 ounce fogger with a price of $ 3. 99 per bottle. This emphasizes product differentiation and unique packaging since it was sold in the form of aerosol sprays, liquid sprays, solids, strips, traps, and baits. Knowing that the new product is packaged as an aerosol spray signifies a positive sign since aerosol sprays account for 74% of retail sales. Regarding the price, Zoecon uses a premium price strategy .
The higher priced products not only represented Zoecon as a better quality product than other roach insecticides, but also provided supermarkets with a higher margin than the margin it received from its competitors. By analyzing package economics revealed in exhibit 4 for ROACH ENDER, we notice that gross profit fro the 10 ounce aerosol spray is higher than the 6 ounce fogger. The spray makes more favorable sales accounting for 66% of the sales, while the fogger accounts for 34% of sales. Besides, the high number of cases shipped for each location signifies the high demand .
Aerosol spray constituted of 44,700 cases , and the fogger spray 24,300 cases. A disadvantage is clarified in exhibit 6, as it shows that out of the $ 1,478,000 spent on expenditures, $ 1,016,000 was spent on promotion and advertising which points out that customer awareness is low and Zoecon can accelerate its sales only in this way which is very costly. On the other side, this $ 1,016,000 spent on advertising created higher brand awareness since 57% of the households became familiar with the ROACH ENDER, 6% have tried it, 30% of those who tried it repurchased it.
This acceleration in sales was the result of promotion that resulted in the consumer awareness. The heavy promotion and media strategy consisted of cents off coupons to stimulate a first time trial, along with the “ Blitz Strategy”. Heavy promotion was targeted, guest appearances were scheduled on radio channels, television talk shows, and press kit mailings to newspapers were dispersed and an 800 number consumer hotline was addressed on television to answer consumers’ concerns. Final Considerations:
If Zoecon’s executives expect a return as large as the $ 400 million dollars, their advertising and promotion will have to measure up , not to forget that a minimum of $ 10 million must be spent on promotions in order to launch a new product when the customer are familiar with the brand name according to the past history product introductions. Moreover, Zoecon has the greatest opportunity if it directs its resources towards PCO’s, since the professional pest control market is very much responsible for Zoecon’s success in the insecticide market, and in 1985 this market produced $ 2. billions as revenues. Since the trade relationships between Zoecon and PCO’s, veterinary clinics, and pet stores was well established, by continuing to direct their resources towards the PCO’s, they would promote benefits of GENCOR through spreading a good word of mouth, and this would also contribute to more brand awareness and their products will be used by professionals, thus creating results customers expect to see, and Zoecon will soar above competition.
However, one might think that directing resources to the PCO market will cannibalize and take advantage of the opportunity of Zoecon’s growth in the consumer market, but results may be worse if they jump into the consumer market before gaining the reputation and earnings from the PCO market. This company is backed by strong scientific research , however a major threat would be new innovations or lack of timing. Thank you