CONDUCT MARKET RESEARCH

WHISKAS
CAT FOOD

Development and introduction of new environmentally innovative forms of packaging

JADDAN BRUHN

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Executive Summary To substantiate the business case for the development and introduction of new environmentally innovative forms of packaging, Whiskas cat food have undertaken to investigate the environmental sustainability values and attitudes of cat food purchasers, and to find out more about the underlying motives behind the selection criteria the cat food shopper processes whilst at the supermarket. The hypothesis framing this research is that cat food purchasers are accepting of packaging innovations designed to reduce wastage and environmental impact. This research supports the hypothesis. Cat owning respondents were recruited from Sydney, Melbourne, Adelaide and Broken Hill to participate in a quantitative survey facilitated by SurveyMonkey (surveymonkey.com), of twenty two questions in a Likert scale format. The survey responses reflect an overall positive attitude to the environment, sustainability, recycling and brand variation; most cat food purchasers find issues like nutrition and palatability to themselves quite important considerations, however convenience a hitherto core focus for cat food manufacturers was a criterion that split survey respondents.

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TABLE OF CONTENTS

Introduction............................................................. 3 Hypothesis ............................................................... 5 Method .................................................................... 5 Scaling...................................................................... 5 Sampling Procedure ................................................ 5 Quantitative Procedure ........................................... 5 Results ..................................................................... 5 Conclusion ............................................................... 6 Bibliography............................................................. 8 Appendix 1 Exploratory Research ........................... 9 Appendix 2 Quantitative Survey and Result............ 11 Appendix 3 Research Proposal ................................ 15 Figures 1 Environmental Responsibility ............................... 5 2 Environmental purchasers ................................... 5 3 Environmentally Responsible costs more ............ 6 4 Product innovation costs more ............................ 6 5 Content Analysis Table ......................................... 10

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Introduction In the Australian supermarket product category cat food, packaging innovation has hitherto only been introduced to enhance a products premium perception, prolong content shelf life or vary sizing options to mimic convenience meal offerings developed for human consumption. Packaging innovation for environmental sustainability has not been considered necessary. The Packaging Council of Australia identified in their 2008 report The Status of Packaging Sustainability in Australia that Environmental aspects of packaging affected 3% or less of purchasing decisions, well behind price, product and convenience.1 Without the impetus of an emissions trading scheme, the report identifies that only concern for their own reputation willing the dominant supermarket chains to exert influence over their suppliers will lead to wide spread adoption of environmentally sustainable packaging in Australia. In contrast, Deloitte found in their 2009 report for the US Grocery Manufacturers Association Finding the green in todays shoppers Sustainability trends and the new shopper insights that of 6,498 shoppers surveyed in the US 95% wanted to buy green products, though only 22% actually did. Of their shoppers surveyed who purchased pet products, only 11% purchased green products.2 Noting the effect of governments in shaping the developing supply chain environmental imperative, the global authority on packaging Pira International stated in their 2009 report Market Intelligence Guide for Packaging that Developments in materials technology will lead to growing use of natural polymers driven to a large extent by environmental concerns and regulatory requirements.3 In the report Industry Insight: Developments in Private Label Packaging Ashley Gange identifies another important focus in the introduction and uptake of environmentally sustainable packaging A factor that may significantly encourage the development of the market is improved price competitiveness. This may be expected to be obtained via economies of scale in production, new production methods and forecast important comparative increases in the cost of resources used in the manufacture of conventional mineral oil-based plastics.4 There are significant financial gains to be had for cat food manufacturers that embrace environmentally sustainable packaging innovations. The packaging industry resource www.packaging-gateway.com has highlighted the Swedish cat food manufacturer Doggy AB as a case in point. Working with Tetra Pak, Doggy AB introduced a new packaging concept for their line of wet cat food in Sweden in April 2005. As noted in the packaging-gateway appraisal Consumer tests conducted by the company reveal that innovative packaging is a big draw for consumers. Consumers also appreciate environmentally-safe packaging solutions.5 Aside from all other considerations the company now saves enormously on logistics. The new packaging stacks and stores more efficiently, with one delivery truck now able to transport the equivalent volume of fifteen trucks laden with the previous package design.

The Packaging Council of Australia, MS2, Perchards, The Status of Packaging Sustainability in Australia, July 2008, pg77 2 Deloitte, Finding the green in todays shoppers Sustainability trends and the new shopper insights, 2009, pg 10 3 Pira International, Market Intelligence Guide for Packaging, September 2009, pg4 4 Gange, A., Industry Insight: Developments in Private Label Packaging, 2009, pg11 5 www.packaging-gateway.com , Doggy Mjau Wet Cat Food Packaging from Tetra Pak

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Hypothesis Cat food purchasers are accepting of packaging innovations designed to reduce wastage and environmental impact. Method Exploratory Study Initially, nine cat owning individuals were interviewed to foster a broad understanding of consumer selection criteria when purchasing wet cat food at the supermarket. Quantitative Survey Fifty five individuals in Sydney, Melbourne, Adelaide and Broken Hill were invited via e-mail to participate in an online survey of twenty two questions facilitated by Survey Monkey (www.surveymonkey.com). The selection criteria required they either own a cat or be responsible for purchasing cat food or both. Scaling The quantitative survey undertaken was responded to using an ordinal scale format, employing a Likert Scale framework for respondents to indicate whether they Strongly Disagreed, Disagreed, Agreed, Strongly Disagreed or had a response of Neither to the propositions put forth to them. Sampling Procedure The sample for this survey was a convenience sample (non-probability sample) of fifty five people, recruited for participation because they owned a cat / had purchased cat food, and were known to the researcher. The small size of the survey increases the likelihood of random sampling errors; the narrow scope for recruiting respondents also subjects the data to systematic errors.
Quantitative Procedure The Likert Scale format of the survey assigns a value to the responses (Strongly Agree=1, Disagree=2, Agree=3, Strongly Agree=4, Neither=0). The mean value for each question reflects the average response of all respondents to the question.

Results
I have a responsibility to help save the environment. Disagree 2% Strongly Neither 2% Disagree 2% Strongly Agree 47% Agree 47%

Neither 7%

I strive to purchase environmentally Strongly responsible products.

Disagree 18%

Disagree 6%

Strongly Agree 24% Agree 45%

Figure 1 - 94% of respondents have a positive attitude towards the environment

Figure 2 - 69% of respondents seek to purchase responsibly

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Products labelled "environmentally friendly" are more expensive than competitors in the same category.
Neither 4% Strongly Agree 29% Disagree 24%

I believe that a product innovation must equate to a higher price at the Strongly check-out.
Strongly Agree 20% Neither 6%

Disagree 9%

Disagree 25%

Agree 43%
Figure 3 - 72% expect to pay more for environmentally friendly products

Agree 40%
Figure 4 - 60% of respondents expect product innovation to cost more

The survey data demonstrates that cat food purchasers have an overwhelmingly positive attitude towards the environment. However, while 94% of respondents indicated that they either agreed or strongly agreed with the proposition that they had a responsibility towards the environment, only 69% of respondents carried that attitude through to the supermarket. The results also indicate that 72% of respondents believe a product labelled environmentally friendly will cost more, while 60% of respondents expect product innovations introduced to supermarket products will actually cost them more. Conclusion The results of the research support the hypothesis that cat food purchasers accept packaging innovations. The strong positive attitude towards the environment in general extends to a desire to encourage peers to be environmentally responsible consumers, to select environmentally responsible products, and to seek out goods in recyclable packaging at the supermarket. There is, though, the perception that environmentally responsible products will cost more, that product innovation will lead to a more expensive product, and, paradoxically, a willingness by 62% of respondents to pay more for those products that fit this criterion. Though the reliability of these inferences is contextualised by the systematic and random sampling errors, these results are still strongly positive for Whiskas. The implications for the introduction of an environmentally innovative form of packaging by Whiskas are twofold. Firstly, the introduction of environmentally sustainable packaging will most likely lead to large long term cost savings (as input costs for new packaging raw materials increase with the introduction of an emissions trading scheme / carbon trading system, the cost of using environmentally sustainable alternatives will be cheaper; implicit in environmentally sustainable packaging is the imperative to improve overall product volume per carton / per pallet ratios, dramatically reducing logistics costs). By taking a category leader role Whiskas could introduce its range as a premium product, taking advantage of positive consumer sentiment. Or, Whiskas could introduce its environmentally sustainable range whilst maintaining its current product position, but still benefit from directly attributable growth in its market share; Deloitte found in their report for The Association of Food, Beverage and Consumer Products Companies (Grocery Manufacturers Association, USA) Finding the green in todays shoppers: Sustainability trends and new shopper insights that environmentally friendly was the single most significant secondary product attribute that acted as a tiebreaker when supermarket shoppers were deciding between two products that in all other aspects were at 6 parity.

Deloitte, Finding the green in todays shoppers Sustainability trends and the new shopper insights, 2009, pg 9

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Bibliography Deloitte, Finding the green in todays shoppers: Sustainability trends and the new shopper insights, 2009 Gange, A., Industry Insight: Developments in Private Label Packaging, 2009 Pira International, Market Intelligence Guide for Packaging, September 2009 The Packaging Council of Australia, MS2, Perchards, The Status of Packaging Sustainability in Australia, July 2008 www.packaging-gateway.com , Doggy Mjau Wet Cat Food Packaging from Tetra Pak, http://www.packaging-gateway.com/projects/doggy/

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Appendix 1 Exploratory Research

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Open Questionnaire (n=9) 1. How do you feel about your current brand of cat food? 2. Are you concerned by waste of product inherent in the packaging design of your current cat food? 3. Did environmental values impact your product type choice for your brand of cat food (i.e. pouch, single serve tin, medium / large / x-large tin)? 4. Do you alternate cat food brands or do you always purchase the same brand? If you do alternate, what is the basis for the alternation (i.e. budget, variety, dietary concern, like to try new things, cat likes different styles of food)? 5. Do you select cat food flavours that appear palatable to your own tastes or flavours that you believe are enticing to your cat?

Content Analysis Table Factors in selecting processed cat food (wet) at supermarket Budget Flavour variety Product size Premium product Cat's preferred product Flavours that appeal to owner Convenience Nutritional benefit Environmental impact of packaging / recyclability Innovation Product waste from package design Loyalty to current brand Fig 5 Content analysis table of nine people questioned. Frequency of Respondents 5 4 3 3 9 2 5 5 4 2 6 3

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Appendix 2 Quantitative Survey Questions & Results

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CMR A - Cat Food Gender You (or main household grocery shopper) Age You (or main household grocery shopper)

Male

Female

10.9% (6) 16-20

89.1% (49) 21-25

26-30

31-35

36-40

41-45

Employment Status You (or main household grocery shopper)

7.3% (4) 46-50 3.6% (2) Student

10.9% (6) 51-55 1.8% (1) Volunteer

18.2% (10) 56-60 1.8% (1) Casual

34.5% (19) 61-65 5.5% (3) Part-time

12.7% (7)

3.6% (2)

Full-time

Self employed

25.5% (14) Independently Wealthy 1.8% (1)

1.8% (1) Unemployed 7.3% (4)

7.3% (4)

5.5% (3)

34.5% (19)

16.4% (9)

Read the following statements and consider how they relate to you and your purchase selection criteria whilst you are performing your regular household supermarket shopping. Strongly Disagree Disagree Agree Strongly Agree Neither Rating I strive to purchase environmentally responsible products. 5.5% (3) 18.2% (10) 45.5% (25) 23.6% (13) 7.3% (4) 2.94 I actively seek out "ecofriendly" alternatives in every product category. 5.5% (3) 32.7% (18) 36.4% (20) 20.0% (11) 5.5% (3) 2.75 I am willing to pay more for goods that I confidently believe will have a reduced impact on the environment. 5.5% (3) 29.1% (16) 47.3% (26) 14.5% (8) 3.6% (2) 2.74 I actively select goods sold in recyclable packaging. 9.1% (5) 30.9% (17) 36.4% (20) 18.2% (10) 5.5% (3) 2.67 I actively encourage others to act as environmentally responsible consumers. 5.5% (3) 23.6% (13) 49.1% (27) 18.2% (10) 3.6% (2) 2.83 I am aware that manufacturers' shift to environmentally sustainable product packaging may result in traditional household brand goods appearing on the supermarket shelf in non-traditional styles of packaging. 3.6% (2) 10.9% (6) 60.0% (33) 20.0% (11) 5.5% (3) 3.02 I believe that a product innovation must equate to a higher price at the check-out. 9.1% (5) 25.5% (14) 40.0% (22) 20.0% (11) 5.5% (3) 2.75 I stick to brands and products I have always used. 1.8% (1) 29.1% (16) 45.5% (25) 23.6% (13) 0.0% (0) 2.91 Products labelled "environmentally friendly" are more expensive than competitor products in 0.0% (0) 23.6% (13) 43.6% (24) 29.1% (16) 3.6% (2) 3.06

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the same category.

I have a responsibility to help save the environment. 1.8% (1) 1.8% (1) 47.3% (26) 47.3% (26) 1.8% (1) 3.43 Answer the following questions focusing on your considerations whilst at the supermarket purchasing processed (tin/pouch) "wet" cat food. Strongly Disagree Disagree Agree Strongly Agree Neither Rating I bulk buy when it is cheaper, irrespective of flavor variety or previous brand association. 14.5% (8) 29.1% (16) 41.8% (23) 14.5% (8) 0.0% (0) 2.56 I place the same level of effort and consideration into selecting cat food as I expend selecting food for myself and my family. 5.5% (3) 34.5% (19) 45.5% (25) 10.9% (6) 3.6% (2) 2.64 I read nutritional claims on cat food packaging. 5.5% (3) 47.3% (26) 36.4% (20) 7.3% (4) 3.6% (2) 2.47 I consciously select a nutritionally balanced meal for my cat. 1.8% (1) 34.5% (19) 47.3% (26) 10.9% (6) 5.5% (3) 2.71 Freshness and quality are important. 0.0% (0) 3.6% (2) 74.5% (41) 21.8% (12) 0.0% (0) 3.18 I select flavour varieties that sound appealing to me. 1.8% (1) 20.0% (11) 63.6% (35) 12.7% (7) 1.8% (1) 2.89 I select flavour varieties I believe my cat will enjoy. 0.0% (0) 5.5% (3) 69.1% (38) 23.6% (13) 1.8% (1) 3.19 I regularly seek out new flavour varieties / combinations for my cat to try, even if they are manufactured by a brand that is not my preferred / regular brand of cat food. 3.6% (2) 23.6% (13) 54.5% (30) 12.7% (7) 5.5% (3) 2.81 I always select varieties from the same brand of cat food. 0.0% (0) 47.3% (26) 41.8% (23) 9.1% (5) 1.8% (1) 2.61 I have a preferred volume per unit and my selection is exclusively limited to flavour varieties provided in that volume (e.g. pouch, single serve tin, 400g tin, 800g tin). 5.5% (3) 38.2% (21) 38.2% (21) 14.5% (8) 3.6% (2) 2.64 I consider my cat to be a "fussy eater". 7.3% (4) 18.2% (10) 38.2% (21) 29.1% (16) 7.3% (4) 2.96 I consider the health, happiness and wellbeing of my cat to be of the same importance as that of my children / immediate family 0.0% (0) 18.2% (10) 45.5% (25) 32.7% (18) 3.6% (2) 3.15

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Residential Postal Code.

SYDNEY 2000 2000 2000 2010 2016 2017 2021 2026 2028 2031 2044 2049 2049 2076 2077 2088 2099 2100 2111 2114 2134 2203 2221 2234 2745 2770 2770 27 49%

MELBOURNE 3011 3030 3031 3071 3084 3121 3121 3141 3144 3181 3676

ADELAIDE 5008 5022 5022 5022 5024 5024 5024 5032 5041 5045 5048 5062 5063 5112 5159

BROKEN HILL 2880 2880

Total Respondents

11 20%

15 27%

2 4%

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Appendix 3 Research Proposal

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There are estimated to be 804,000 cats in NSW/ACTi alone. With a downward trend in the overall Australian cat population and in the average number of cats per cat owning household, but with the percentage of households with cats increasing (approximately 25% of Australian households), there is an opportunity to develop specialised cat food options that appeal to consumers informed knowledge on the latest developments in cat food science while concurrently exploiting consumer social trends. In 2005 it is estimated that there was $417m expenditure on overall pet care for cats in NSW/ACT, of which 44% is spent on cat foodii. Approximately 61% of cat food expenditure is on canned food. The market leader in grocery sales is Master Foods (makers of Whiskas) representing 64.7% of the canned cat food market in Australia, followed by supermarket generic brands with 20.9%iii. Despite the value in this sector there is very little product differentiation between brands. To capitalise on current consumer interest in sustainability and environmental impact Whiskas has undertaken to explore the viability of introducing a revolutionary new packaging design that will place it as the only environmentally responsible cat food manufacturer in Australia. In the current market options for processed cat food on the supermarket shelf lack innovation and do not reflect the environmental and social values of purchasers. To confidently and prudently progress further with their planned implementation strategy Whiskas must determine if cat food purchase decisions are based on tradition, nutrition and budget alone or if purchasers would be willing to alternate and vary the types of cat food bought in response to the products positive attributes, testing acceptability of the product for their needs where the product is commensurate with their attitudes towards processed wet cat food in tandem with their environmental and social values. Uptake and acceptance of novel product packaging design changes will most likely hinge on consumer interest in and concern for environmental issues, with choices encouraged to reflect popular trends and awareness; divergence from historic brand differentiation based primarily on flavour variations and nutritional content has never previously been attempted. Whiskas have developed their novel packaging concept with the view to ultimately replace the pouch and tin packaging styles currently utilised by the brand. The new packaging is an innovative flip-capped tube design that is constructed of materials that are 100% recycled and recyclable, eliminates wastage of food when feeding, allows the product to be refrigerated for a longer period of time without spoiling, and is of a size and flexibility that will support a greater volume of cat food per unit to continue offering choice in sizing options. The progression of the strategy to adopt and introduce this revolutionary style of packaging is based on the hypothesis that cat food purchasers are accepting of packaging innovations designed to reduce wastage and environmental impact. From initial exploratory research, issues of product wastage and environmental impact are given less consideration than product choices that owners know their notoriously fussy cats will definitely prefer from experience, and straddle the significance of budget, convenience and nutrition. Product size and the perception of a product as being premium were not seen as substantial factors. To determine the validity of the hypothesis and the relative strength and significance of the competing factors that must be satisfied and addressed to ensure successful introduction of the new package design, quantitative research using a Likert scale to investigate consumers beliefs and convictions is proposed. As it appears that owners put a greater level of importance on satisfying the needs of their cat, the proposed quantitative research needs to examine the willingness to switch to a better product for

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the environment provided the flavours, textures and shelf-life of the product is unchanged or enhanced; whether perceptions of difference would equate to the notion of it being a premium product and therefore act as a deterrent; how slight changes in cost will impact uptake; and whether additional inducements would be required to encourage consumers to crossover to the new product (i.e. new/exclusive flavour varieties, larger sizes for bulk purchase discount, improved nutritional benefits, cash back offers). The target market for Whiskas is 30-40 year old married and single employed females living in suburban capital cities. To determine the impact on and responsiveness of the target within the limitations of time and budgetary constraints we propose to conduct our research on a convenience non-probability sample of 50 people over the age of 18 who preferably own and are responsible for feeding a cat and whom either are or can confidently express the beliefs, experiences and opinions of a married or single employed female. This is intended to allow for research to be conducted by a single person within a four week timeframe utilising online data capture and analysis methods and reporting functionality. Data collected from respondents will be analysed using inferential statistical methods to determine correlation between importance of positive product and design attributes; cost and consumer budget sensitivities; and attachment to traditional methods of wet cat food packaging; to reinforce or reject the hypothesis underpinning the strategy to roll-out the new product packaging. The completed research report and recommendation will be submitted for review on 20/11/2009 via a single hard copy document (with the option of an electronically issued soft copy), followed by an onsite presentation in-house on either the 23rd or 30th of November (final scheduling to be advised). The accepted quote only allows for provision of a very brief on-site presentation following submission of final report. Prior to initiating phase two of the research schedule the initial tax invoice consisting of 40% of the agreed quote must be paid. Billing will be progressively issued with the tax invoice constituting 50% of the agreed quote to be issued in conjunction with the submission of the final report. The final tax invoice for the remaining 10% of the agreed quote will be due and payable prior to the on-site presentation. Invoice retentions will not be accepted and variations to scope will extinguish all outstanding contractual obligations and trigger immediate invoicing of remaining component of agreed quote value without further engagement or provision of findings (including raw data). Tax invoices are due and payable on receipt.

Australian Companion Animal Council Inc, Contribution of the Pet Care Industry to the Australian Economy, 2006 p9 ii Australian Companion Animal Council Inc, above p3 iii Australian Companion Animal Council Inc, above p37

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