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2019 Healthcare Trends
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Spring case presentation

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My team and I worked to provide a lucrative business plan for a network of 100 veterinarians by cutting costs, increasing marketing tactics, and implementing inventory software as well as a pet health insurance plan.

My team and I worked to provide a lucrative business plan for a network of 100 veterinarians by cutting costs, increasing marketing tactics, and implementing inventory software as well as a pet health insurance plan.

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  1. 1. 76% 54%
  2. 2. Veterinary Clinic Network: Pet Food and Medication Analysis Dynamic Consulting 4/21/2017
  3. 3. The Problem • Shift of medication/pet food sales to other retailers, including big-box retailers and online retailers • Lowering of margins due to veterinary clinics selling less high margin goods like food and medication, instead revenue just driven by low margin veterinary care
  4. 4. The Macro Problem • Pet owners don’t embrace preventive care • Google and anyone at pet stores seen as a go-to source of knowledge • Sticker shock about veterinary care Source: Bayer Brakke Study
  5. 5. The Solution and How it Unlocks Value Educating consumers about pet insurance and the benefits, promoting policies Loyalty and Referral Programs Marketing and Differentiating from Competition Inventory Management Software and Hardware
  6. 6. Outline Financials and Timeline Inventory Management Software Loyalty and Referral Program Interaction Plan Pet Insurance New Marketing Plan Industry Overview
  7. 7. The Industry at Current Local Vets and Veterinary Networks Traditional Corporate Big-Box Pet Retailers Consumer Stores/Online
  8. 8. A Quick Look at Current Mars Banfield VCA Issues and Allegations • Deceptive marketing/practices about prescription food, tied with overcharging allegations • Mistreating pets, leading to pet deaths that could've been avoided • Terrible conditions for pets awaiting exams, pets kept without water, exams often last less than 90 seconds each • Lack of consideration about individual pet when choosing treatment plans
  9. 9. Your Veterinary Clinic’s Image and Mission Statement • Our network’s veterinary clinics strive to provide a premium pet care experience for clients who want to ensure their pets receive the care and comfort they deserve, and wish to find the best value in their pet care. • Ways We Fulfill and Market Mission Statement • Differentiating from “standardized” pet care • Emphasis not on bottom lines but on value, pet wellbeing, and treatment quality • Strong human connections, trust, and customer service • Diverse animal treatment options Customized all-in-one care for your pet
  10. 10. Room for Improvement- Marketing Small Pet Care • Multiple lawsuits accuse VCA and Banfield of mishandling the care of small dogs • Animal hospitals that focus on standard practices for dogs regardless of size don’t provide proper care plans for small dogs (vaccines are not scaled to body weight for pets) • Increased customer trust in pet care will lead to higher sales in food and medication
  11. 11. Target Markets and Strategy Research shows millennials care lots about what food their pets eat, love to buy premium pet food Millennials are further developing “the humanization-of-pets” trend, says APPA CEO Research also shows when it comes to pet care, millennials are far more educated Care far more about value than cost, want to know how products will influence their pet’s health and quality of life Millennials Affluent 40-60 Year Olds Research shows this demographic also likes to buy premium pet food, particularly fresh pet food, for which they are identified as a target market Research shows this demographic is also value- driven More likely than millennials to own more than one pet More concerned with convenience than millennials, less likely to regularly visit big box retail complexes than other demographics
  12. 12. Local Marketing Plan • Mailers emphasizing sales, expertise, events • Reaching out to local newspapers/news channels to get segments on pet advice, the lack of attention large pet stores give, the unique programs at local vets • Corporate communication -> working with large local companies to encourage awareness about pet insurance • Have receptionist be in charge of responding to comments on social media pages quickly
  13. 13. Network Wide Marketing Plan • Ads on TV and in larger newspapers/magazines about the premium experience for pets offered at vets within the network • Emphasizing the strength across the network to capture millennials as customers even if they frequently move
  14. 14. Pet Health Insurance: A Primer • Record growth in pet insurance sales rates in US • Pet insurance reimburses for covered illnesses and injuries, if you add wellness coverage, it includes reimbursing for services such as vaccines, blood work, dental cleanings, flea medication • Pet insurance allows everyone to focus primarily on quality of veterinary care and makes the cost of care a secondary concern. Pet insurance drives owner compliance with diagnostic and treatment recommendations • When consumers have vet insurance, NAPHIA shows a 29% spending increase for dog owners and 81% increase for cat owners
  15. 15. Pet Insurance Not Just a Niche, Could Be Huge Source of Revenue Growth 1/3 of
  16. 16. What Pet Insurance Means for You • Recent major market survey found that very large percentage of veterinarians wished all their clients had pet insurance, yet very few do more than have the brochures around • 94% of pet owners know that pet insurance exists, but are confused about it, and say the only people they trust to understand it are their veterinarians • 71% of pet owners are more likely to purchase pet health insurance if veterinary practice insures staff pets • Many clinics give the staff discounts on pet care, this is expensive and not tax efficient, much better system to subsidize pet health insurance
  17. 17. What Pet Insurance Means for You, Continued Partner Partner with top pet health insurers to market their services, perhaps receive royalties or other deal for this Promote Find out which local companies offer pet health insurance to employees, send materials advocating pet health insurance to others, and Encourage Encourage clients to purchase pet health insurance that includes a wellness plan for checkups and other preventive care that leads to increase revenue. More traffic = more food/drug sales Capitalize Insurance will lead to much higher rates of patients buying their pets the necessary medication, and buying it there, instead of taking prescriptions elsewhere
  18. 18. Importance of Human Interactions • One of the biggest identified draws of buying food/medication at store other than vet is lack of professional input • A unique advantage local veterinarians will always hold over national retailers and corporate veterinary networks is the ability to have experts interact with and build relationships with clients • Marketing needs to emphasize the quality interactions that will take place, and illustrate the value that is derived from such interactions • Prove value proposition • Commissions to staff to motivate sales
  19. 19. Loyalty Program and Referral Program
  20. 20. Inventory Tracking Software and Hardware • We recommend Cubex 1000 for smaller clinics, Cubex 2000 for much larger clinics • $200-550 a month when financed (depends on 1000 or 2000 model), including delivery, setup, and training, plus $100-130 a month for cloud software • Most small practices spend four to five hours a week on inventory, much more time at larger practices • Pays for itself by reducing expensive inventory work, eliminating lots of busy work, reducing amount of expired medicine, and automating billing, also provides lots of valuable data • Most customers recognize a return of their investment within one year • Could be used to facilitate pharmacy benefit manager system across network
  21. 21. Implementation Plan and Timeline Month 1: Begin drawing up marketing plan, contact Cubex to begin consultation period Month 2: Begin marketing plan implementation, Cubex installations Month 3: Begin seeing increased customer traffic, initial windfall from Cubex utilizing old inventory Month 4: Peak return growth from marketing and Cubex implementation Month 5 Month 6: Return rates begin to normalize, veterinarians meet to discuss networkwide pharmacy benefit manager possibility
  22. 22. First Year Month-by-Month Financial Model Change from Year Prior Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Food Sales 2,250.00$ 2,475.00$ 2,574.00$ 2,599.74$ 2,625.74$ 2,651.99$ 2,678.51$ 2,705.30$ 2,732.35$ 2,759.68$ 2,787.27$ 2,815.15$ % Growth Month over Month 0% 10% 4% 1% 1% 1% 1% 1% 1% 1% 1% 1% Medication Sales 4,250.00$ 4,675.00$ 4,815.25$ 4,959.71$ 5,108.50$ 5,261.75$ 5,419.61$ 5,582.19$ 5,749.66$ 5,864.65$ 5,981.95$ 6,101.59$ % Growth Month over Month 0% 10% 3% 3% 3% 3% 3% 3% 3% 2% 2% 2% Veterinary Care 18,500.00$ 19,425.00$ 20,396.25$ 20,600.21$ 20,806.21$ 21,014.28$ 21,224.42$ 21,436.66$ 21,651.03$ 21,867.54$ 22,086.22$ 22,307.08$ % Growth Month over Month 0% 5% 5% 1% 1% 1% 1% 1% 1% 1% 1% 1% Revenue 25,000.00$ 26,575.00$ 27,785.50$ 28,159.66$ 28,540.45$ 28,928.03$ 29,322.54$ 29,724.16$ 30,133.04$ 30,491.87$ 30,855.44$ 31,223.81$ 46,739.49$ Facilities 1,750.00$ 1,750.00$ 1,750.00$ 1,750.00$ 1,750.00$ 1,750.00$ 1,750.00$ 1,750.00$ 1,750.00$ 1,750.00$ 1,750.00$ 1,750.00$ General Expenses 3,250.00$ 3,250.00$ 3,250.00$ 3,250.00$ 3,250.00$ 3,250.00$ 3,250.00$ 3,250.00$ 3,250.00$ 3,250.00$ 3,250.00$ 3,250.00$ New Marketing Expenses -$ 500.00$ 500.00$ 500.00$ 500.00$ 500.00$ 500.00$ 500.00$ 500.00$ 500.00$ 500.00$ 500.00$ New Technology Expenses -$ 300.00$ 300.00$ 300.00$ 300.00$ 300.00$ 300.00$ 300.00$ 300.00$ 300.00$ 300.00$ 300.00$ Medication and Supplies (inventory) 3,750.00$ 3,500.00$ 3,500.00$ 3,550.00$ 3,550.00$ 3,575.00$ 3,580.00$ 3,585.00$ 3,590.00$ 3,590.00$ 3,590.00$ 3,590.00$ Support Labor 5,500.00$ 5,415.00$ 5,415.00$ 5,415.00$ 5,415.00$ 5,415.00$ 5,415.00$ 5,415.00$ 5,415.00$ 5,415.00$ 5,415.00$ 5,415.00$ Vet Salaries 6,250.00$ 6,562.50$ 6,890.63$ 6,959.53$ 7,029.13$ 7,099.42$ 7,170.41$ 7,242.12$ 7,314.54$ 7,387.68$ 7,461.56$ 7,536.18$ 9,903.68$ Expense Total 20,500.00$ 21,277.50$ 21,605.63$ 21,724.53$ 21,794.13$ 21,889.42$ 21,965.41$ 22,042.12$ 22,119.54$ 22,192.68$ 22,266.56$ 22,341.18$ 15,718.68$ Gross Profit 4,500.00$ 5,297.50$ 6,179.88$ 6,435.13$ 6,746.32$ 7,038.61$ 7,357.13$ 7,682.04$ 8,013.51$ 8,299.19$ 8,588.88$ 8,882.63$ 31,020.81$ 223% 21,408.00$ Year 1 Cash Flow Return on Invested Money Real Return
  23. 23. Five Year Model Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 $ Totals for Years 1-5 % Change from Year 0 Food Sales 27,000.00$ 33,750.00$ 35,437.50$ 37,209.38$ 39,069.84$ 41,023.34$ % Growth Year over Year 0% 25% 5% 5% 5% 5% Medication Sales 51,000.00$ 73,440.00$ 88,128.00$ 96,940.80$ 101,787.84$ 106,877.23$ % Growth Year over Year 0% 44% 20% 10% 5% 5% Veterinary Care 222,000.00$ 233,100.00$ 244,755.00$ 252,097.65$ 257,139.60$ 262,282.40$ % Growth Year over Year 0% 5% 5% 3% 2% 2% Revenue 300,000.00$ 340,290.00$ 368,320.50$ 386,247.83$ 397,997.29$ 410,182.96$ 1,903,038.57$ 37% Facilities 21,000.00$ 21,525.00$ 22,063.13$ 22,614.70$ 23,180.07$ 23,759.57$ General Expenses 39,000.00$ 39,975.00$ 40,974.38$ 41,998.73$ 43,048.70$ 44,124.92$ New Marketing Expenses -$ 6,000.00$ 6,150.00$ 6,303.75$ 6,461.34$ 6,622.88$ New Technology Expenses -$ 3,600.00$ 3,600.00$ 3,600.00$ 3,600.00$ 3,600.00$ Medication and Supplies (inventory) 45,000.00$ 62,107.93$ 71,857.72$ 78,046.93$ 81,949.28$ 86,046.74$ Support Labor 66,000.00$ 66,604.50$ 68,269.61$ 69,976.35$ 71,725.76$ 73,518.91$ Vet Salaries 75,000.00$ 78,750.00$ 82,687.50$ 85,168.13$ 86,871.49$ 88,608.92$ Expense Total 246,000.00$ 278,562.43$ 295,602.33$ 307,708.59$ 316,836.64$ 326,281.93$ 1,524,991.94$ 33% Gross Profit 54,000.00$ 61,727.57$ 72,718.17$ 78,539.23$ 81,160.64$ 83,901.03$ 378,046.64$ 41% Profit Margin 18.00% 18.14% 19.74% 20.33% 20.39% 20.45% 19.87% Assumptions CPI for All Fixed Expenses and Support Labor Salaries 2.5% Food + Medication Increase Buyout Valuation Net Present Value $290,509.08 NPV $535,087.78 IRR 49% IRR 56% Discount Rate 9% Discount Rate 9% Dynamic Consulting: Individual Veterinary Clinic Years 1-5 Financial Analysis Methodology: We provided figures for a buyout in year 5 due to current industry consolidation trends, to reflect the value-add that this strategy would include through boosting revenue signficantly Valuation without Buyout Factored In Valuation with Buyout in Year 5 Factored In Year 5 Gross Revenue (standard for veterinarian practices) Calculated using weighted averages multiplied by % growth year over year
  24. 24. Conclusion • Locally tailored marketing plan • Network-wide marketing plan • Pet insurance awareness and promotion • Inventory Management Software and Hardware • An IRR of over 49%, or 56% if factoring in a clinic buyout in year 5 of the analysis, a number that could potentially move higher due to strong industry consolidation trends
  25. 25. • Bloomberg: Mars/Banfield/VCA Allegations • WSJ: Mars to Buy Vet Operator VCA for $7.7 Billion • PetSmart • Millennial Pet Trends: Fresh Food • PetSmart/Banfield Overcharge Allegations • Forbes: PetSmart Chewy Acquisition and Values • Petco • FreshPet • Blue Buffalo Fresh Food • Cat Friendly Reasoning • PetMed Express • Eli Lilly Anti-Competitive Concerns • Pet Insurance • Inventory Management Advantages Appendix
  26. 26. The High-Cost, High Risk World of Modern Pet Care from Bloomberg • Banfield Pet Hospitals uses software program, PetWare, to standardize care • Also puts hospitals into PetSmarts, turning medical care into product to be purchased along with dog food, chew toys • “Vet in a box” is term given to Banfield • Pet care undergoing same sort of consolidation that transformed health care in the 1990s • VCA, Veterinary Centers of America, consolidator that has bought hundreds of animal hospitals • Banfield owned by Mars, the candy and pet-food manufacturer • Accusations that Banfield pushes vets to put profit ahead of health and safety of animals • In US, human birthrates are falling and pets are taking place of children in some families • In 2014, 179 million cats and dogs in the US, up from 98 million in 1980 • American Animal Hospital Association (AAHA) says more than 80% of pet owners think of themselves as their pets’ moms and dads, and Americans spend more than $35 bil annually on vet care • American pet insurance requires consumers to pay vets up front, then take on insurers for reimbursement • Corporations now own 15-20% of America’s 26,000 pet hospitals, and consolidators are buying up practices quickly • Most brands don’t build their own clinics, they just buy existing ones • In 2014, chain of 250 hospitals called National Veterinary Associates purchased by Ares Management for $920 million (useful for modeling later) • VCA spent $344 mil for a group of 56 hospitals pooled together by smaller consolidator for express purpose of flipping them • Most states ban corporations from owning vet practices, as corporations are seen as having a harder time exercising independent judgement for pets, so instead management service agreements are used to get around this • VCA’s original idea in the 1980s was to apply modern management techniques to poorly run, undercapitalized hospitals that could benefit from economies of scale • Most important acquisition has been labs, as bloodwork and other tests are extremely high profit margin, 41% for VCA, and diagnostics is growing very fast • Cost of veterinary care has risen even faster than cost of human health care, more than doubling since 2000, according to US Bureau of Labor Statistics
  27. 27. • Animal doctors at almost all practices ignore guidelines from AAHA, which has recommended since 2003 that dogs not be given core vaccines more than every three years, and that a single series is probably already enough for lifetime of immunity • Three years already a compromise, as anything longer would deprive vets of too much money • Vaccines are the only pet medications that are not scaled to body weight, 120 pound Great Dane or 3 pound Chihuahua, all get asme • Dogs and cats more or less considered livestock, US Dept of Agriculture is responsible for safety of pet vaccines • Risk of adverse reaction from vaccines is anywhere from 0.4 percent to 3-4%, so doing vaccinations annually when not necessary is very dangerous • Center of Banfield’s main product is preventive care packages called wellness plans, for a monthly fee of $30-60, wellness plan covers exams, office visits, diagnostic tests, and shots for cats and dogs • Considered a great value, because vaccines can be $40 each, plus $50 for each doctor visit • PetWare is more or less a long flow chart for how to treat pets, and items marked Required are mandatory for doctors to do, regardless of if they’re actually necessary • PetCare now less mandatory, but wellness plans are still giving tons of pets the same treatment • Banfield requires pets to be dropped off for the entire day, which is huge for maximum efficiency, they can fit in exams between surgeries, walkins, and other appointments • Banfield terrible to the pets during the day, kept in wall of kennels, sometimes without water since that would cause urination, and exams run through in less than 90 seconds • A veterinary hospital is worth, as a rule of thumb, about one year’s gross sales. (example in story did $1.6 mil in revenue in 2011) • Half-dosages are now available for some dogs but not being used by Banfield
  28. 28. WSJ: Mars to Buy Vet Operator VCA for $7.7 Billion • Mar’s petcare division, with addition of VCA, contributes more than half of Mars’ $37 bil in annual sales, topping that of chocolate, gum, other confections. • VCA has $2 bil in yearly sales (can get a lot of sales data from VCA annual reports) • Sales growth and high profit margins motivating factors in the industry • Consumers more likely to buy fancy, organic food for their pets, as they do moreso for themselves • American Pet Products Association estimates Americans spent $16 bil on vet services, $15 bil on OTC meds and supplies, and $24 bil on food for their pets last year, a 30% rise since 2010 • By purchasing VCA, Mars would gain network of about 800 animal hospitals, veterinary diagnostics labs that serve 17,000 clinic, as well as Camp Bow Wow day care centers • Mars already has 1100 Banfield and BluePearl animal hospitals • Owners going to greater lengths to keep their dogs alive longer • Mars entered pet hospital business in 2007, bought Iams and other pet food brands from Proctor and Gamble in 2014
  29. 29. PetSmart • Over 1500 pet stores, focus is competitively priced pet food and products, and then additional services include pet focused services, as well as dog and cat boarding services • Mission, pre Michael Massey, president and CEO, is “to be the trusted partner to pet parents and pets in every moment of their lives. We are focused on improving our customers’ experience in-store and online as we continue to execute against our long-term strategic initiatives. Chewy’s high-touch customer e-commerce service model and culture centered around a love of pets is the ideal complement to PetSmart’s store footprint and diverse offerings… PetSmart and Chewy will provide the most convenient customer experience to a wider base of pet parents across every channel.” Bloomberg • Bloomberg Source for Following • Acquired Chewy Inc, 8/1/17 • Online pet retailer • PetSmart seeking to be most convenient, best in class pet retailer • Acquisition to enhance company’s capability and reach, offering widest selection of pet products and services available both in store and online in North America • Started in 2011, it has extensive product selection and subscription model that has attracted and retained a significant customer base that has contributed to growth of customer purchasing through online channels • Both PetSmart and Chewy’s have significant time and resource donations to nonprofit animal welfare organizations • AllPaws online platform, 10/19/16 • Critter Comforts Go High Tech, STORES Magazine January 16, 2017 by Bruce Horovitz, interviewing Eran Cohen, chief customer experience offer at PetSmart • PetSmart now very focused on digital engagement and sales • Both opening new stores as well as expanding online • Opening new test stores that are smaller, such as Pet Spa’s, service focused stores instead of product based stores • “Large-scale technology upgrades are inherently difficult to implement and require thoughtful and very detailed work. Each new technology needs to integrate with other systems in our enterprise -legacy and new- and there are hundreds of points of interconnections at the corporate and store level.” • Amazon owns PetMD, as well as BlogPaws, a pet blogger and influencer network • New same-day delivery offers • Due to trying to roll out a lot of new technologies, trying to turn to existing enterprise technology, using Salesforce Commerce Cloud for website • New loyalty program coming • Research shows that Millennials are concerned what their pets eat and where it comes from, so PetSmart expanding selection of these products, as well as celebrity pet collections such as Ellen Degeneres pet collection
  30. 30. Business Vancouver: Millennials Boost Premium Pet-Food Business • Consumers have a growing interest in adopting the raw-food diet trend and extending it to their pets • American Pet Products Association said pet industry spending in US in 2016 hit $66 billion, up $6 bil from 2015 • Number driven higher by young adults reaching adulthood, and are now the biggest group for pet ownership, they love premium pet food • “Now that millennials have officially taken the reins as the primary demographic of pet owners, they stand to further develop the humanization-of-pets trend,” Bob Vetere, president and CEO of APPA • New generation of better educated consumers genuinely has an interest in what goes into what they buy • Looking for transparency from the companies as to how and why they make the food they do • Millennials are starting to focus on value of products, not just cost, they want to know what products will do and how it will benefit quality of life for the pet • How long a pet lives matters to everybody, as losing a pet can be like losing a relative
  31. 31. PetSmart Overcharges for Prescription Pet Food, Suit Says • 4/4/17 • PetSmart, Banfield Pet Hospital, others created prescription requirement that allows sale of prescription pet food at high price, consumers say • US pet owners spent more than $28 billion on pet food in 2016, industry trade group statistics show • PetSmart is the largest pet goods retailer in the US, and most of its stores include an onsite Banfield Pet Hospital, largest veterinary chain in the US • PetSmart requiring prescription for prescription pet food, which doesn’t even contain special drugs, despite no govt. Requirement to do so, which leads to artificial price boosting
  32. 32. Forbes: PetSmart’s Recent Acquisition Shows How Valuations Have Changed • Nov 14, 2016, Richard Kestenbaum • Companies need credibility with customers, need to generate legitimacy and authenticity for their products and create a relationship with their consumer at the same time, creating customer loyalty • Half of population and 35% has a cat, but among Americans in their 30s, 75% have dogs and 51% have cats. Pet industry is exploding, race to grab these customer’s loyalty, playing to their values is big
  33. 33. Petco • 4/4/17 • Acquires PetCoach, which connects consumers with experienced vet professionals for personalized answers to improve the overall health and well-being of their pets by providing convenience, data, and easy access to expert advice • “Nurturing powerful relationships for better lives together is at the heart of all we do,” said Petco CEO, Brad Weston, “as we continue evolving our value proposition- helping pet owners wherever and however they want to improve the health and well-being of their pet -- we believe than an entrepreneurial and digital leader of Brock’s caliber will help Petco exceed the ever-changing digital expectations of the modern pet parent.” • Petco emphasizes that “Grocery, mass, club, and online-only retailers do not and cannot offer the total pet experience. We believe that our instore experience, which features services including bathing, grooming, dog training, and vet services like vaccinations-- when combined with our online offerings, is a winning strategy that will continue to resonate with pet parents who want only the best for their pets.” • Campaign activated across multiple touch points, including national print and broadcast, digital, social, email, instore, and more
  34. 34. FreshPet • Provides fresh, natural food choices to help improve the lives of cats and dogs, also owns Freshpet Kitchens and Freshpet Fridges • 390.8 million market cap • Company strategy is currently to ramp up marketing and drive brand awareness in order to increase same store sales, grow new store penetration • Sold at over 10,000 stores, including mass market, natural food retailers, pet specialty, and retailers. Target, Walmart, Whole Foods, Petco, and Petsmart are included • Packed fresh and must be served accordingly • Meets human grade manufacturing standards • Marketing focuses on empty nesters between ages 45-54 with income in excess of $100,000 • Partnerships with Whole Foods
  35. 35. Blue Buffalo Pet Products • Market cap of $4.5 billion • Develops, produces, markets, and sells dog and cat food, as well as cat litter, distributed to national, regional, and neighborhood pet stores • Fastest growing major pet food company in the US, its main draw is using high-quality, natural ingredients, its current market share is 6% of the pet food market • Very well positioned to capitalize on consumer care about quality of pet food
  36. 36. Room for Improvement: Cat-Friendly Practice • A decreasing feline patient base is one of the six greatest factors affecting an overall decline in veterinary visits • 53 percent said they would bring their cats to the veterinarian more often if they knew it would help their cat live longer • 49 percent said they would bring their cats to the veterinarian more often if they really believed that he/she needed more frequent exams.
  37. 37. PetMed Express • Pet pharmacy • Offers prescription and non-prescription pet medications, as well as supplements, offers these products via telephone, fax, mail, and internet to customers throughout US • Has had to adopt more aggressive pricing strategies while dropping marketing, not going well • Limited consumer spending due to change in product mix to mostly generics, trying to get veterinarians to prescribe additional brands • Working on changing advertising plan to improve new order sales, shift sales to higher margin items, including generics, while increasing product offerings
  38. 38. FTC Puts Conditions on Eli Lilly’s Proposed Acquisition of Novartis Animal Health • Dec 22 2014 • $5.4 bil acquisition would likely be anticompetitive, required divestments for it to happen • Worried it would raise prices
  39. 39. Pet Insurance• Record growth in number of insured pets in North America, 1.6 million as of 2015 in the US, accounts for less than 1% of owned dogs and cats in US and Canada, compared to 60% of dogs and cats in Sweden • This insurance breaks annual or semiannual visits into small monthly payments, and covers anything that comes up, people more likely to help their pets if it’s covered • 94% of pet owners know that pet insurance exists, but experts say main issue is most don’t understand how pet insurance works, confused about myriad policies, options, and companies • The same people say the only people they trust to understand it are their vets • Recent major market survey by NAPHIA, very large percentage of veterinarians wish all their clients had pet insurance, yet very few do more than have the brochures around • Increased use of pet insurance provides benefits to all involved, as pets receive care, pet owners do right thing by following recommendations for care, veterinary practice income increases • When consumers have vet insurance, NAPHIA shows a 29% spending increase for dog owners and 81% increase for cat owners • Insured client doesn’t have to worry about cost so they’ll bring pets in at first sign of illness, instead of waiting too long and letting costs climb and pet feel bad • Vets no longer have to adjust their treatment recommendations based on cost • Pet insurance allows everyone to focus primarily on quality of veterinary care and makes the cost of care secondary. Pet insurance drives owner compliance with diagnostic and treatment recommendations • Growing number of companies offer pet health insurance as a group benefit • Vet clinics should give it to their employees or discount it so that they can educate customers. 71% of pet owners are more likely to purchase health insurance for pets if veterinary practice insured staff pets • Giving employees insurance would actually save money in most cases, as most vets give their staff large discounts on pet care, which would no longer be necessary. Better for taxes as well • Companies that give their employees pet insurance include Walgreens, Deloitte, Exelon, Federal Reserve Bank of Chicago, and Caterpillar, Microsoft, T Mobile, HP, Xerox, Yahoo, Ikea, (Goldman benefits site mentions Health Paws Pet Insurance, but not clear if it’s included or just discounted. Walmart dabbled in trying to sell consumers pet insurance plans) • ⅓ of Fortune 500 companies offer pet insurance • Best time to cover a pet is when they’re young because pre-existing conditions aren’t an issue • If a pet requires at least one surgery over their life, which is likely, that makes policy worthwhile • Pet insurance reimburses for covered illnesses and injuries, if you add wellness coverage, it includes reimbursing for services such as vaccines, blood work, dental cleanings, flea medication
  40. 40. Veterinary Practice News on Inventory Management Programs • Clinic’s highest expense is payroll/labor, followed by inventory • In well-managed practice, inventory costs still about 20% of revenue • Patient management software digitally tracks patient information, and tracks when patients need refills, digital timeline, increases profitability, drives efficiency and prevents mismanagement • Cubex is a cloud-based technology to manage medical supplies and narcotics, besides improved inventory tracking, the promise to decrease theft and have less over/under stocking of supplies while increasing practice’s overall profitability is great • Cubex reportedly cuts time in half for staff members in charge of tracking inventory, as it tracks every item a practice owns through electronic devices • Human error is the #1 cause of poor inventory tracking, cloud based system prevents this from happening, ensures cost-savings with inventory and labor costs, and increases revenue • If you let doctors order whatever they need, this leads to duplicates, which leads to expired drugs, and lost money • Solution is meeting with doctors quarterly to decide which drugs are mandatory, which can be eliminated, this will simplify inventory and increase profits • If an item doesn’t sell, manufacturer frequently will take it back, even after expiration date, so try this always • Put one person in charge of inventory, in order to have personal relationships with reps, fewer double orders, anticipation of seasonal needs, tighter inventory control, negotiation of lower prices, keeping expiration dates on track. Have two people trained on this, so whenever one person is off, the other can continue • Be proactive, by having centralized inventory control and cloud software you can order ahead of time to save money • Labor is #1 cost, so don’t waste time comparing suppliers for saving very small amounts of money, better to consolidate products and manufacturers, and try to get bundling promotions from suppliers

Hinweis der Redaktion

  • Kiyahn
    76% of Americans consider their pet to be part of the family, 54% consider themselves”pet parents” instead of “pet owners”
  • Kiyahn
  • Connor
  • Connor
  • Connor
  • Connor
  • Griffin
  • Griffin
  • Griffin
  • Griffin
    -Big box favors large dogs instead of care needs of smaller dogs
  • Griffin
  • Griffin
    Mailers emphasizing sales, expertise, events
    Events will include weekly “expert shopper” hours where a veterinarian will be available to assist customers choose the best products for their pets, often based on their pet’s medical record
    Reaching out to local newspapers/news channels to get segments on pet advice, the lack of attention large pet stores give, the unique programs at local vets
    Corporate communication -> working with large local companies to encourage awareness about pet insurance
    Email campaigns to existing customers using enterprise email management software such as MailChimp
    Have receptionist be in charge of responding to comments on social media page quickly, as 2015 study shows customers expect direct response in less than 60 minutes, and this will be a huge edge on national brands

  • Griffin
    Making sure every practice is on Google Maps, Yelp, and Facebook with lots of photos and accurate information
    Buying targeted Facebook advertising for pet owning demographics who have very strong affinity for their pets- they are more likely to shift
  • Matt
  • Matt
  • Matt
  • Matt
  • Matt
  • Matt
  • Matt
  • Matt
  • Griffin
  • Griffin
  • Kiyahn
  • Griffin

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