Every Global Pet or Super Zoo show, there are hundreds of new pet products. Many of these are from budding pet entrepreneurs eager to enter a booming industry. Over my years advising pet start ups, I’ve come up with a list of 5 common mistakes that most entrepreneurs encounter along the way.
#1 Introduce non-differentiated pet products.
Introducing a product into the pet category is a less intimidating venture than launching into many other sectors. Barriers to entry are low, consumers like the variety and authenticity that mom & pop companies can provide and everyone thinks they know what will sell because everyone is a pet owner! Sprinkle on top of this the industry mantra that the “pet category is growing at astronomical rates” and you have an irresistible combination for many would-be entrepreneurs.
Hundreds of new pet products are introduced every year labeled “natural” or “organic,” packaged in colorful bags all labeled “Made in America.” Ingredient trends sweep through and every product is quick to add their pumpkin or bison variety.
So where’s the harm? Trying to sustain sales of an undifferentiated pet product within a constant stream of new products is a tricky business. Entrepreneurs may enjoy quick sales only to find themselves pushed aside for the next wave of new products. Sustaining interest (and shelf space) can quickly require more trade monies or digital advertising than budgeted.
Successful pet entrepreneurs need to introduce products that fill a real or perceived consumer need. Look for the insights that uncover real pet owner’s unmet hopes, needs and “pain points” and you will start from a position of strength.
The insights are not hard to find – professionally managed online chat rooms, telephone interviews or focus groups can provide a rich understanding from which to mine new pet product ideas.
Target your product to functionally or aspirationally address a deeper or emerging need and you will introduce a pet product that will sell better with less marketing money needed to prop it up.
#2 Solicit feedback from friends and family alone.
Your Aunt Betty may have fantastic business sense and be mainstream enough to truly represent the average cat owner – or not.
A mistake I see over and over amongst pet entrepreneurs is the belief that because their product has value to them and their circle, it will sell. Within the term “circle” I include feedback received on crowd funding and pet social media sites. These feedback loops are simply not robust enough to determine market potential. A reliance upon friends & family feedback may cause you to overlook the category crossing potential of your new product, may contribute to unrealistic sales expectations and may even discourage your idea because it is not relevant within this small circle.
New product evaluation can be easily accomplished with an online concept test amongst a sample size of as little as 150 potential users. Does a nationally representative sample of pet owners see this product as fulfilling a need? Is it worth the price? Importantly, which segments value this idea the most and would represent the best target audience? An investment of as little as $20K can ensure that development monies are not wasted.
Don’t let the thought of market research intimidate you, there are internet and telephone options that are robust enough to make the difference between success and failure.
#3 Don’t Invest in a true marketing resource.
Too many pet entrepreneurs turn product development, brand strategy, or marketing plan development over to a non-qualified individual. Perhaps it’s the brilliant whiz-kid founder that created several previous companies, the sales person who knows how to get distribution, the sister-in-law that’s an anesthesiologist by trade… Creating a differentiated pet product is the most important thing on the entrepreneur’s plate and it usually requires talent beyond their skillset.
Normally there are three obstacles to taking this step: Young companies don’t know where to turn to hire marketing help, they don’t think they can afford it, or they don’t think they need it because crowd funding campaigns and social media interaction suffices.
Venture capital and crowd funding campaigns push hard for speed-to-market and growth. These pressures can cause pet entrepreneurs to make bad decisions that damage credibility and waste time and money. An example is Bark Shop’s introduction of Bark Care, a concierge vet service providing house calls in major cities. In a Forbes interview, the founder admitted that they had misjudged demand and hurt credibility by positioning the new venture too casually. Bark Care foundered and resources were wasted on a sound idea that could have been better priced and positioned under the care of a marketing professional.
In terms of where to locate marketing talent and how to pay for it, there are a plethora of agencies small and large that can shepherd a pet product to launch. If an agency is beyond financial means, entrepreneurs can turn to freelance consultants with deep resumes and a network of specialized contacts. Breaking up development or marketing tasks into manageable projects with an agreed upon hourly rate can decrease surprises and greatly increase new product success.
There is nothing that can replace true consumer insights and a trained marketing brain that knows how to build a brand.
#4 Underestimate expenses, particularly distribution and marketing.
There is nothing more fun than launching a new brand. I have seen pet entrepreneurs develop a brand name, logo, packaging and website before they developed a realistic budget. It is a difficult moment when they realize that Amazon’s minimum 15% margins, coupled with estimated digital cost per acquisition marketing spends of, for example, over $100, plus product shipping (consumers expect free…) can collectively, destroy a brand’s margins. What follows are difficult questions about alternate marketing plans, less expensive agencies and higher pricing that negatively impacts demand.
Another angle to this is the misunderstanding that a level of marketing investment must be sustained. I have seen new brands frustrated by the fact that their PR investment got them early press attention, but then the world moved on and momentum slowed. Their margins weren’t created with the ability to fund ongoing marketing and new pet products without ongoing marketing budgets will disappoint.
It is far more cost efficient to do distribution feasibility research and spec out basic marketing plans with potential agencies prior to full brand asset development.
#5 Set unrealistic sales forecasts.
To create a sales forecast requires an understanding of the size of the potential marketplace. Entrepreneurs can buy pet industry research reports that estimate the size of various categories, however, particularly innovative products will often bridge categories and published data is not useful.
How to create a sale projection? It is possible to estimate the size of any pet category with a quick online quantitative survey that determines how many people own a device and how frequently they replace it, etc. The trick is to identify that % of category volume your new pet product can realistically expect to achieve. Some entrepreneurs select an arbitrarily low % of volume (e.g., 1%) and build a plan around that number. It never sounds hard to get 1% of a very large category, until you actually try to do it. Success will depend on your product’s appeal, its price and your marketing plan.
The only real way to estimate potential new pet product sales volume is to do a modeled volumetric test or to conduct a test market on a small scale.
In closing, pet entrepreneurs tend to value the strength of the technology and speed to market, however, doing some homework upfront and investing in the strategy will help realize the idea’s full potential and pay for itself in the avoidance of expensive mistakes.