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Omega Paw Incorporation

Essay by   •  November 29, 2012  •  Case Study  •  3,198 Words (13 Pages)  •  2,675 Views

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Omega Paw Incorporation:

Executive Summary:

Michael Ebert invent self cleaning litter box in the year 1996 to improvise the procedure of getting rid of the litter in an effective manner. Traditional cleaning methods were being used before and most of them quite messy and despised by many. Ebert started distribution of the self cleaning litter box in North America with the help of several distributors. His product provided an easy way to dispose off the litter of cats.

With an increasing number of cat owners in the United States, the popularity and demand of such products as self cleaning litter boxes and related pet care product increased to a large extent. The company has witnessed record sales during the first year of its inception and the there was still a larger chunk of market unexplored and had the capacity to expand the business in those parts of the world as well.

Omega Paw Incorporation manufactured litter boxes are made up of moulded plastic with round edges. The litter boxes are manufactured in two different sizes to cater to the needs of one and multiple cat owners affectively. Due to easy and efficient cleaning process of the Self Cleaning litter box, it was gaining popularity in the market. Litter box and relevant pet care products manufactured by the Omega Paw incorporation had a great demand in the market for the same reason.

Diversification and opting for international distributors for the products introduced by Omega Paw incorporation would be a good choice for the organization keeping in mind the rapidly growing market of pet care products.

Problem Statement:

After a year of completing the business of manufacturing and distributing self cleaning litter box and other pet care products, the biggest aim of the Omega Paw Incorporation right now is to expand its business both domestically and internationally. The company has achieved record sales during the first year of its inception and there is still room for improvement in the overall production and distribution process. Omega Paw incorporation has the required resources and brand image in the market to extend its operations and increase its market share consequently. The current financial position of the Omega Paw Incorporation is very strong and since a number of new entrants are entering into the market of pet care products, it is the right time for the Omega Paw incorporation to expand its business and benefit from its long established brand name in the market of pet care products.

Problems/Sub Problems/ Issues:

Despite its tremendous increase in sales and demand, Omega Paw incorporation was faced with a number of specific problems and other related sub issues at the same time to deal with. Over the last one year since its inception, due to rapidly growing market of cat owners in the United States, the company had been able to create a market niche for its litter box and relevant pet care products in the market.

For now, the president of the company had though that the company had enough and suitable financial and other resources to expand the business in the market however, expansion was not that simple a task keeping in mind the issues and sub issues faced by the company. The biggest of these issues was the continuous threat from the direct and indirect competitors entering the market. Pet care products had a rapidly growing market and due to this fact, a number of new companies had been entering this market every day.

Price management of its products was another issue for Omega Paw Incorporation, especially in case they expand their business internationally keeping in mind the shipping cost and the occasional delays in the manufacturing of its products. This has been observed in the past that the company had to send apology letters to international buyers in some cases where there was a delay in the manufacturing of the litter boxes.

Effective time management was necessary and currently the company was faced with this problem. Keeping in mind that the company was thinking about expanding its business, the production and ensuring timely manufacturing of its products was the most important issue faced by Omega Paw incorporation right now.

In order to successfully expand its market share and market penetration, the company will have to ensure that the manufacturing process is effective and efficient enough to meet the production need of a larger market segment. Otherwise, delays in delivering the product to the market and apology letters to compensate for these delays will just destroy the brand image of the company in the market.

Marketing and advertising of its products was another issue faced by the Omega Paw incorporation right now. According to Bass and Sethi (2005)," advertising depends on the cost and effectiveness of each type of advertising for each firm, the allocation of market expansion benefits, and the profit margins determined endogenously from price competition. We find that generic advertising is proportionally more important in the short term and that there are free-riding effects leading to suboptimal industry expenditure on generic advertising that worsen as firms become more symmetric. Due to free-riding by the weaker firm, its instantaneous profit and market share can actually be higher. The effectiveness of generic advertising and the allocation of its benefits, however, have little effect on the long-run market shares, which are determined by brand-advertising effectiveness. Extensions of the model show that market potential saturation leads to a decline in generic advertising over time." (p. 556)

Competitors of the company were using exclusive marketing and advertising tools to cater to a larger market needs, whereas marketing and costly advertisements were bit of an issue for the company. Although the company had the resources to expand yet large advertisements needed some professional help planning at the core level to develop effective campaigns.

Analysis:

The company's overall performance over the last one year has been amazing keeping in mind the direct and indirect competitors of the company available in the market. The company has shown tremendous increase in its sales over the year as compared to its competitors despite the initial problems and delays in the manufacturing of the moulds due to certain technological problems in the procedure. The company pre sold almost 2500 units of self cleaning litter boxes due to its unique concept and effective cleaning method.

The company has expanded internationally to Canada but one problem was that instead of opting for distributors and distribution channels for the company internationally, the company rather opted

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