Pfizer Inc.

Introduction on Pfizer Inc.

Pfizer Inc. focused on animal health products for the U.S. cattle industry, especially cows. The Cow/Calf Division of Pfizer Inc. offers a full range of products to cattle ranchers, including vaccines for both newborn calves and their mothers, medications (for example, dewormers, antidiarrheals). Pfizer positioned its products on the combination of superior science (resulting from its significant R&D efforts) and high-quality production or quality control techniques. Pfizer’s pride in its sophisticated research and development was shown in its new and useful products for the market. The company invests more in research and development than any other animal health company.

Current Market Background

The current market is not doing so well for Pfizer and their customers. The industry faces a situation of overcapacity, which depressed prices, as demand for beef products had declined over the years. In addition, flood of imports resulting from NAFTA regulations worsen the situation.

Market share of beef products had declined from 44 percent in 1970 to 32 percent in 1997, whereas pork and poultry gained share. This was due to several reasons, which are concerns about cholesterol and fat, preparation issues (beef products require cooking and preparation time, which limits consumer selection), and new branded and well recognized products from the poultry and pork industries.

To increase market share, beef quality would have to improve and be better marketed and packaged to meet consumers’ changing lifestyles. Currently only 25 percent of beef cattle meet the criteria or quality assessed based on the U.S. production targets for tenderness, juiciness, flavoring, and marbling (fat) of the cuts of beef.

About 40 percent of ranchers have participated in the Beef Quality Assurance program in the past two years, of which 67 percent have changed the way they managed their cattle.

This is a voluntary quality control program based on education, awareness, and training of cattle producers to influence safety, quality, and wholesomeness of beef products.

It specifies injection sites (neck versus rump) for shots, a seven-step quality check for cows, method and location of branding, and so forth.

Current Segmentation Plan

Currently, the customers of Pfizer are grouped into three main segments, based on herd size, namely hobbyist, traditionalist, and business. This customer segmentation will determine the categories and types of products to be offered. The summary of information pertaining to the segments is portrayed in the table below:

Hobbyist Traditionalist

Business

Ranchers run their cattle as a side line to some other job held, minor percentage of their overall income

Their main livelihood is their cattle operation

Large ranch business owned by either a family or a corporation

Average age of hobbyists is 50 years old

Average age is 51 years old

Ranchers who average age is 53 years old

15 percent hold a college degree

26 percent hold a college degree

22 percent with a college degree

They have been in cattle business for 26 years

They have been in the cattle business for 30 years

33 years in business

Spend 51 percent of their time with their cattle business

Spend 70 percent of their time with their cattle operation

Spend 80 percent of their time with their cattle

Normally, sales representative visited the ranchers to inform them of products, to offer seminars on herd health, and to sponsor industry activities such as stock shows. Ranchers then buy the animal health products they need from a veterinarian or a distributor/dealer, typically animal feed stores. The field sales reps also call on the vets and distributors/dealers to help them manage inventory and to inform them of new products and merchandising programs.

The Cow/Calf Division had been segmenting the market of ranchers on the basis of herd size for at