Increasingly engaged, empowered and values-driven consumers are prompting changes in the route veterinary products take from manufacturers to pet owners.
The result is a trend representing a shift to human-grade standards for handling and distribution of veterinary dietary supplements and nutritional foods. This development has significant implications for manufacturers, trading partners and consumers.
PETS ARE PEOPLE TOO
People are getting more pets and becoming more attached them. In the United States, households with pets increased by approximately nine million from 2007-2016 representing 55% of all U.S. households. (1)
In a survey about pet ownership, 81% of respondents stated their dogs had equal importance in their families as their children. (2) The same study revealed 54% of survey takers preferred to be called ‘pet parents’ instead of ‘pet owners.’
The nature of pet ownership is changing relative to previous generations, elevating their status within the family unit.
Several factors play an important role in the growing connection between pet ownership and emotional attachment (3). First, more households have multiple pets and owners with multiple dogs in the same house are likely to spend more to satisfy them compared with single-dog owners.
Second, the generation of Baby Boomers are not slowing down when it comes to pet ownership. In 2006, just 34% of people 70 years of age or older owned pets. This statistic jumped to around 40% ten years later. Speculation about this increase centers on the realization among older Americans that pet ownership conveys health benefits.
Third, minority segments of the population are taking to pet ownership in greater numbers. For example, the number of Hispanic cat owners increased 71% in the decade from 2007-2016
Finally, the Millennial age cohort views pet ownership as a testing ground for effective parenting. And in a related development, women are delaying becoming pregnant. Women in their early 30s were more likely to have children compared with women under 30 in 2016, marking the first time the median age reached this threshold (4).
With greater attachment comes greater willingness to sacrifice for our animal companions, to take steps to assure their well-being and to associate with brands that share the mindset of their owners.
HIGHER ENGAGEMENT COMPELS HIGHER SPENDING
The increase in pet ownership and the attachment of owners to pets are growing trends.
Pet parents are so enamored with their furry family members that their affection is measured by their willingness to splurge on their well-being.
With over 24 million pet owners in the United States, 18-35 year-olds are the largest segment of the pet-owning population. According to a recent study, they spend generously on their pets. (5) The same study reveals that 76% of millennial pet owners responding to the survey stated they were more likely to make a large purchase for their pets instead of themselves.
Market research firm Euromonitor labels this trend ‘Premiumization.” (6) This concept relates that because more products are available at more price points than ever before, consumers are able to prioritize spending more on certain items – pet products, for example – and economize elsewhere on their shopping lists. One brand of fresh prepared dog food sold from refrigerated cases doubled their retail sales between 2012-2016 despite their premium price positioning in the pet food market.
Another spending priority for more consumer segments including pet owners involves ethical, sustainable, and ‘green’ products. According to a study by Wakefield Research (7) pet owners seek out products for themselves and their pets with natural, organic ingredients. Pet parents extend their own expressions of living a healthy lifestyle onto their pets. And as ‘clean’ products often have a higher price tag compared with products made with artificial ingredients or traditional production methods, spending on pet products increases.
A byproduct of higher price is often heightened scrutiny of products to confirm they meet pet owner expectations for product quality and corporate authenticity.
“SHE WORKS HARD FOR THE MONEY”
Empowerment is another important component of consumer behavior underlying the shift of progressive pet product manufacturers to more stringent supply chain requirements.
Consumer power is growing with greater access to information, broader selection of available goods and services and the ability to share experiences with a wide network of contacts. (8) In fact, most shoppers believe that they know more about products in brick-and-mortar store locations then the sales associates. (9)
This information explosion places more power in the hands of consumers relative to brands. The power shift disrupts the traditional relationship between purchaser and seller. The path to purchase is complex, involving multiple information sources for price comparison, peer validation, product research and personal satisfaction.
Brands must respond to the complex purchasing decision-making process in order for their products to prevail over competitors. After the choice is made, the sale could be lost based on non-product related issues including shipping, delivery and return options. Free and fast shipping and returns are the expected norm for product fulfillment, based on the model pioneered by Amazon. (10)
The sales ecosystem for brands extends beyond product quality and includes the entire end-to-end experience of consumer engagement through research, service, purchase, fulfillment and returns.
BRANDS ARE PEOPLE TOO
A growing number of pet owners are willing to spend money on their pets instead of themselves. This influential consumer segment expects a seamless experience throughout the purchase process including high quality, competitive price, expedited and free fulfillment and friendly customer service after sale.
But there’s more. Based on the added complexity of the purchasing process, consumers understand brands covet their loyalty. For many consumers, brand loyalty depends on the corporate behavior of the company.
Corporate strategies about the environment, transparency, sustainability, animal welfare, production and labor practices, charitable causes and community action are taken into account by progressive consumers when evaluating purchases. Pet owners have a heightened interest in the corporate behavior of veterinary manufacturers because their company policies directly affect the health and well-being of their beloved animals.
NO MORE SECRETS
Whether in the grocery store or in a restaurant, ingredient transparency is a concept gaining traction among consumers as a measure of corporate authenticity toward the public. The mission of this grassroots is to convince manufacturers to disclose a complete list of ingredients on products that go beyond current requirements of government authorities. (11) The food industry opposes ingredient transparency so voluntary efforts to increase ingredient transparency are viewed positively by many consumers (12). A recent study concludes that 73% of consumers consider transparency more important than price. (13)
Label transparency enables pet owners to acquire advance product information about products their pets consume. Important health considerations based on dietary requirements, physiological conditions including high blood pressure, allergens and non-GMO ingredients can be determined with complete label disclosure.
Pet parents who value their pets equally to their children demand to know each ingredient in food and other products they apply, touch and consume.
The degree to which companies willingly share full information about their product ingredients is a determining purchasing factor for a growing number of consumers. In some consumer circles, the concept of transparency is being advocated not only to verify product ingredients, but also to confirm the integrity of the product from point of manufacture all the way through to the point of consumption. This is the notion of supply chain transparency.
Consumers who pay a premium for high quality products are learning to question the conditions and methods used to handle, ship and deliver the item. To these discerning consumers, product quality may be affected by the journey it takes within the supply chain. Supplements requiring refrigeration that are delivered without temperature-sensitive packaging, for example, may be ineffective or worse, harmful to the consumer or pet.
Consumers and governments are demanding the ability to monitor the movement of products as the move from origin to final destination. (14)
There is a growing expectation for manufacturers to show the same level of heightened care in fulfilling product orders as they take in making the product itself. Premium ingredients fully disclosed on product labels that are handled with the highest quality standards and delivered free and fast is the new formula for customer satisfaction that earns brand loyalty.
The solution to achieve each of these stated goals exists within the pharmaceutical supply chain. This fulfillment pipeline is expanding beyond prescription medications to include human and animal health and wellness products.
PHARMA SUPPLY CHAIN SOLUTIONS
Products moving within the pharmaceutical supply chain are among the most regulated and scrutinized of any industry. Progressive manufacturers of veterinary products utilize the pharmaceutical supply chain in response to questions about supply chain integrity and to demonstrate their commitment to the highest levels of product integrity to pet owners.
Requirements for the proper manufacture, storage, handling and distribution of pharmaceutical drug products are strict, demanding precise and consistent compliance. Guidelines in the United States are known as Current Good Manufacturing Practice (CGMP) regulations. These guidelines are listed in the Code of Federal Regulations that is enforced by the U.S. Food and Drug Administration (FDA). The two sections of federal regulations governing pharmaceutical drugs are 21CFR210 and 21CFR211. (15)
There are additional cGMP guidelines for sanitation, training, facility maintenance, hygiene, operations and inventory control of finished pharmaceuticals beyond those listed in 21CFR507 required for animal drugs, feeds and related products.
The more stringent standards that exist within the pharmaceutical supply chain increase confidence and reduce potential negative implications for animal health manufacturers that utilize pharmaceutical logistics services providers.
Of equal importance, consumers, including pet owners, expect that the companies behind brands they trust are taking every precaution to assure their product integrity at every step. This includes taking every available precaution during the fulfillment process. For them to discover otherwise may be interpreted as a deception on the part of the manufacturer, despite full compliance by the brand owner.
This culture of ‘perception deception,’ where a company complies with regulations that do not match the high standards of their loyal customers, is a potential marketing problem prone to exposure with serious negative business ramifications.
The specifics of cGMP requirements for finished pharmaceuticals compared with veterinary food grade requirements may be surprising, even to supply chain professionals. For example, a reading of the guidelines state that hot and cold water in bathrooms is not mandatory for veterinary food grade distribution facilities. Written Standard Operating Procedures (SOPs) mandated for pharmaceutical warehouses is not specifically required to comply with veterinary food grade facilities. High security, redundant power and entry/exit logging is optional for veterinary food grade facilities. Off-floor storage of products is prohibited in pharmaceutical grade facilities but is allowed for animal health products. This is not an exhaustive listing of these qualitative differences.
Although veterinary products manufacturers may work with pharmaceutical logistics services providers, the expense for additional compliance may be commensurate with other facilities. And the potential savings from added safeguards can potentially save a business from financial loss.
PHARMA-DOODLE: MIXING ANIMAL HEALTH WITH PHARMA LOGISTICS
The cost/benefit analysis for animal health brands working with pharmaceutical logistics services providers includes important factors beyond price.
For many animal health brands that have traditionally operated within a distributor fulfillment model, working with a logistics services provider is a departure from the norm. It is important to note that manufacturers working with logistics services providers retain ownership of their products. Unlike the distributor model, where manufacturers sell their product to distributors that then sell to their customers, logistics services providers fulfill orders to destinations as instructed by the brand owner. The sales network is developed by the brand owner in the logistics services provider fulfillment model.
The retention of product ownership in the LSP model enables the free flow of important customer data directly back from the LSP to the brand owner. Distributors own the relationship with end-consumers and may guard key data points about customer behavior for their exclusive benefit. Sales data transparency enables brand owners to refine marketing outreach strategies, gain information to develop new products and interact directly with customers for valuable feedback and two-way communication.
A HEALTHY ANIMAL HEALTH SUPPLY CHAIN
Pet owners are part of changing purchasing behavior among consumers who are more engaged with their pets, empowered with an abundance of informational resources and predisposed to support brands and products that share and actively promote shared values.
The culture of expectation for product excellence extends to service and support before, during and after sale. Ingredient and label transparency are important measures of brand authenticity that influence purchasing decisions.
The concept of transparency creates a halo effect that includes price, quality, customer service, shipping, delivery, returns and also the fulfillment process and supply chain operations. There is an expectation among discerning consumers that the brand owners maintain product integrity from point of manufacture to final destination.
For pet owners and the brands they entrust to maintain their furry friends’ health and well-being, this complex formula for business success may be achieved with confidence by utilizing a pharmaceutical logistics services firm for receipt, storage and fulfillment.
Strict quality guidelines required for compliance by pharmaceutical logistics services providers as well as their keen understanding of the importance of on-time product delivery generate confidence among progressive animal health companies lacking in other warehouse facilities. Transparency of customer data is another benefit enjoyed by veterinary manufacturers with their own sales networks that partner with pharmaceutical logistics services providers.
Although several options exist for successful order fulfillment of animal health products, important consumer research and demographic indicators suggest veterinary manufacturers may benefit from closer examination of their supply chain practices to satisfy their valued customers.
For further information about veterinary products in the pharmaceutical supply chain contact Larry Hotz at (561) 998-3885 x304 or firstname.lastname@example.org
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- Coren, Stanley. “Do We Treat Dogs The Same Way As Children In Our Families?” Psychology Today, Sussex Publishers, 2 May 2011, www.psychologytoday.com/us/blog/canine-corner/201105/do-we-treat-dogs-the-same-way-children-in-our-families.
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