Pets are great companion for humans. Therefore the market for pet food and accessories is a very special market. The current industry structure is driven by innovation in the channels, but the internet will allow new and fresh business models. The slides are from a presentation I held at the annual PETS INTERNATIONAL conference, Berlin January 26-27, 2012

1. “!The competition of the
future is between business
models not just products or
solutions.”!
6 Thesis on the Pets Industry!
by Dr. Patrick Stähler!
fluidminds GmbH, Zürich!
!

2. “How can you dare to buy pet
food at Aldi? !
!I buy my personal grocery at
Aldi, but never for my dog.”!
!
Quote from a dog owner to a friend
of mine who buys his dog food at Aldi!

3. Agenda!
! The economics of the pet food industry!
! Shift happens!
! Innovation in Pets Industry!
! More choice is not better!
! The Internet is more than a channel!
! Reinventing your industry. That is your job!!
!

4. A word of warning!
I’m not a pet industry expert.
I am an expert for the
process of re-thinking and
re-inventing business
models!
!

5. My childhood pets ! Dr. Patrick Stähler!
! Partner @fluidminds – the
business innovators, Zurich!
! Expert on Business Model Design
& Innovation!
! Passion for customer experience
& authenticity !
! Passionate mystery shopper!
! Managing Director of Internet
Firm Experteer (90 FTEs)!
! 2 pets in my lifetime (Hannibal,
turtle and Arpat, dog )!
! First website 1996, digerati ever
since!

6. Humanization in
marketing at
the extreme

7. Your customers ! Your consumers !
(they pay)! (they eat and use)!

8. Your customers! Your consumers!
! Marketing & ! extreme high variety
communication of breeds/sizes and
aimed at needs of therefore of needs!
the human being! Offer!
! Humanization of pet ! life stage products!
food and pet ! therapy food for
accessories ! better joints food or
! Highly emotional! for weight reduction!
! Ideologies regarding ! special food for all
what pets need breeds!
(BARF, Vegan, no
preservatives, etc.)! Complex market with
two different
stakeholders with
different needs

9. f
The application o
ing
consumer market
ion
was a big innovat
some years ago.
! 4 pet food manufacturers control
80% of the market*!
Procter & ! Originally, they are all fast-moving
Gamble, consumer goods companies that
Nestlé, Mars, have transferred their skills to the
and Colgate- pet food market!
Palmolive! ! logic consequence: humanization!
*Source: Wikipedia!

10. The humanization
of pet
food is the logic st
ep.
That is the core b
usiness
of FMCG companie
s
The market leaders are champions!
! to deal with big retailers like "
Carrefour, Metro, Tesco, Aldi or Rewe!
! to build brands like Frolic, Royal Carnin!
! to attract customers to retailers by
traditional advertising!
But they are still mass production firms
that have no direct contact to their end
customers or end consumers (the pets).
They know almost nothing about the individual
consumer (pet)!
*Source: Wikipedia!

11. Large pet food firms are !
Masters of branding &
1!
channel management!
not of customer experience or
production economics

12. but…!
Shift!
happens…!

13. Disruptive Innovation in the pet industry came
from the retail side!
! The pets industry is following other industries where category
killers like Toys “R” US, Home Depot, Media Markt, Globetrotter
or Ikea revolutionized their industries!
! Fressnapf or Qualipet are disruptive innovators or category killers
in the pets industry!
! Due to strong retailers, trade and private label pet food is doing
well not only at Fressnapf & Co but also at Aldi and other
discounters!
! Private label became brands in their own rights!

14. Business Model Innovation so far:!
Disruptive innovation in
2!
the pet industry came
from the channels!
and more will come due to the
Internet

15. Getting the right balance of nutrients is not
entirely simple and depends on a seemingly
endless amount of variables such as breed,
activity level, age and medical condition.*!
!
Why is the pet food
g
industry not providin
?
this individual food
*Source: http://www.k9magazine.com/life-stage-dog-food/
#ixzz1ic35kWAS!

16. The tyranny of choice!
Consumers find too many
options troubling because of the “risk of
misperception and miscalculation, of misunderstanding the available
alternatives, of misreading one’s own tastes, of yielding to a
moment’s whim and regretting it afterwards”, combined with “the
stress of information acquisition”*!
*Source: Daniel McFadden, The Economist, The
tyranny of choice, Dec 16th, 2010!

17. Distri
bution
as the
bottle
neck!

18. Customer Insight to build upon!
Consumer want !
3!
the right choice!
not more choice!

19. the
Another challenge:
of
ecological footprint
pets

20. ot
Don‘t w orry! We do n
. We
fo llow the hype
s
cov er the basic

21. Electrification at We can learn from other
the end of the 19th general purpose
century technologies like electricity!
Dr. Patrick Stähler | 21

22. It took 40 years between
the of diffusion of electricity
and …!
At the beginning, steam
engines were replaced by
electric motors and power
was transported by
converter belts.
Dr. Patrick Stähler | 22

23. ... and new processes and business
models that were based on
electricity like the assembly line!
It much easier to
distribute electricity
than mechanical
energy

24. Tradition is not a business model!
The Internet will spark
4!
business model
innovations "
but it will take time!

25. The internet is
not facebook!
The Internet is
not Twitter.!

26. Failed business models
due to lack of
understand what the
The Internet is not Internet is all about
TV , just a bit better!!
The Internet is not a
newspaper, with some
interactive features!!

27. More failure
The Internet is not just
another distribution
channel, this time
electronic!
The Internet is not a
telephone, just with music
and video.!

28. New Media are!
1. active (can act by themselves)!
2. ubiqutious (space & time)
3. interactiv (human can interact with and through the
medium, but also the medium with other media)!
4. interlinked (mashups are possible)!
5. multimedia (text, voice, video)!

29. Tradition is not a business model!
The Internet has very
5!
special idiosyncrasies.
Build your business
models on top of them!"
!

30. technology!
X! value / utility!
creates!
enables! business model!
defines!
The business model
business strategy! creates value not
technology or a product
itself !

31. To develop a business model, is "
To Do the "
right things "
And Not to do things right!

32. „What is a
business
model?“!

33. Are you
aware o
f
your DN
A?!
The business model is the
DNA of your business!

34. The business model gives
meaning to your employees
and customers!

35. 4 key questions for a successful business:
What How do we How do we Who is on
excites our create value earn money? our team?
customers? for our custo- What value
mers? do we
pursue?
Value Proposition Value Architecture Revenue Model Culture and Values
The core
business
challeng
e

36. 4 key questions for a successful business:
What How do we How do we Who is on
excites our create value earn money? our team?
customers? for our custo- What value
mers? do we
pursue?
Value Proposition Value Architecture Revenue Model Culture and Values
The core
business
challeng
e

37. 4 key questions for a successful business:
What How do we How do we Who is on
excites our create value earn money? our team?
customers? for our custo- What value
mers? do we
pursue?
Value Proposition Value Architecture Revenue Model Culture and Values
The core
business
challeng
e

38. 4 key questions for a successful business:
What How do we How do we Who is on
excites our create value earn money? our team?
customers? for our custo- What value
mers? do we
pursue?
Value Proposition Value Architecture Revenue Model Culture and Values
The core
business
challeng
e

39. „ What industry are
!
we in? Who are
our competitors?!
“ !

40. „ In which industry
!
are we in?!
“!

41. „That was the job
!
the customer
wanted to do.!“!
Dr. Patrick Stähler | 41!

42. Value Proposition
Customers
Who are our customers?
What job do we solve for our
customers?
Customer Benefit
What benefit do we create for our
customers?
What benefit do we create for our
partners?

43. Value Architecture
O er Distribution & Communication
What is our o er? Channels
How do we reach our customers?
How do we communicate with
our customers?
Value Chain
What are our value creating steps?
What is our value chain?
Core Capabilities Partner
What are the core capabilities Which partners do we need?
we need?

44. Revenue Model
Cost Structure Revenue Sources
Cost structure is defined by the With what do we earn money?
value architecture.

45. Team & Values
Team Values
Who is on our team? What values do we pursue?
What competencies do we have How do we interact with each
on the team? other and the customers?

46. Questions for successful Business Model Innovation
Value Architecture Value Proposition
O er Distribution & Communication Customers
What is our o er? Channels Who are our customers?
How do we reach our customers? What job do we solve for our
How do we communicate with customers?
our customers?
Value Chain Customer Benefit
What are our value creating steps? What benefit do we create for our
What is our value chain? customers?
What benefit do we create for our
partners?
Core Capabilities Partner
What are the core capabilities Which partners do we need?
we need?
Revenue Model
Cost Structure Revenue Sources
Cost structure is defined by the With what do we earn money?
value architecture.
Team & Values
Team Values
Who is on our team? What values do we pursue?
What competencies do we have How do we interact with each other
on the team? and the customers?

47. Questions for successful Business Model Innovation
Value Architecture Value Proposition
O er Distribution & Communication Customers
What is our o er? Channels Who are our customers?
How do we reach our customers? What job do we solve for our
How do we communicate with customers?
our customers?
Value Chain Customer Benefit
What are our value creating steps? What benefit do we create for our
What is our value chain? customers?
What benefit do we create for our
partners?
Core Capabilities Partner
What are the core capabilities Which partners do we need?
we need?
Revenue Model
Cost Structure Revenue Sources
Cost structure is defined by the With what do we earn money?
value architecture.
Team & Values
Team Values
Who is on our team? What values do we pursue?
What competencies do we have How do we interact with each other
on the team? and the customers?

48. If you are in a market for
giants...!

49. .. and you play with their
rules you will get
nowhere…!

50. „…but if you can create your own rules
of engagement than you can compete
even in a market for giants. “!

51. Innovation is all about being
different!

52. But if everybody is doing he
same, you have to find
something else!

53. Path to business model innovation
Lead, don’t follow. Break
6!
rules. Create markets.
Throw away your market studies!

54. If you want to find a disruptive business
model innovation you just have to
follow the prescription to the right."
"
Your success is guaranteed!!

55. Sorry, life is not a fairy tale."
You can find sustaining innovation with
a structured process, but not disruptive
business model innovation. "
Business model innovation are all about
try and error under high uncertainty!

56. Your Head!
THE greatest working tool "

57. Creating Business model
innovations is a creative and
analytical process "
There is a reason why god gave us
two brain hemispheres !

58. The fluidminds Way to Business Model Innovation
1 2 3
Understand Unlearn & mobilize Ideate
Find fresh customer Unveil tacit assumptions Generate as many ideas as
insights via jobs-to-be-done about your industry and possible for:
Describe current business your business model Value proposition
model Create discomfort with (customers & benefits)
Understand market trends current situation Value architecture
& mechanisms Secure backing of top Revenue model
management for the Values & culture
rethinking process and the
necessity for change
4 5 6
Design Select & prototype Build & learn
Decide on three to four stra- Select the optimal business Execute business model
tegic directions to work on models Gather customer data &
Design of business models Test prototype with feedback
on canvas potential customers Adapt & improve business
Check interdependencies Build prototype model
of all components of the Write business case
designed business model Select the business model
Work on uniqueness of your to start with
positioning
Optimize components
Created with the friendly support of Wolfsburg AG | Designed by Gottschalk+Ash Int’l

59. What is a good strategy?!
trend!
differenti
focus!
ation!
build on strengths!

60. It’s about finding the right
trend to surf! !

61. „Business model innovation is
about being!
!DIFFERENT!“!

62. NO, REALLY !
DIFFERENT!

63. Dr. Patrick Stähler | 63!

64. DOING!
not learning to do,!
is the essence of
!entrepreneurship!
Guy Kawasaki, The Art of the Start 2004, p. xi!

65. „Scary to be this nail. Where
will the hammer hit next
time?“!

67. More information
http://blog.business-model-innovation.com
Dr. oec. Patrick Stähler!
fluidminds GmbH!
Seefeldstrasse 5a!
CH-8008 Zürich!
Patrick.Staehler@fluidminds.ch!
www.fluidminds.ch!
@business_inno!