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MANAGING COSTS

Focusing on What Works

How the founder of Dogswell got his business back on track by cutting costs and focusing on his new product: dog food

The Problem
In our December 2009/January 2010 issue, we wrote about Dogswell, a maker of dog treats that got off to a strong start after its launch in 2003. But founder Marco Giannini overreached when he branched out to the pet-food market. The 2008 rollout of two new dog-food lines ran up a tab of nearly $1 million, four times the original budget. Giannini had to explain to investors how he intended to stem the runway costs. After examining where the launch had gone wrong, he jettisoned a costly coupon campaign and limited his focus to a few key markets, including California and New England.

What the Experts Said
Eric Ries, founder of StartupLessonsLearned.com in San Francisco, argued Giannini should have done more market testing before undertaking the pet-food product launch. Andrew Whitman, managing partner of 2X Consumer Products Growth Partners, said Dogswell may have been better served by focusing on its core business rather than diversifying into dog food. And Fetching Communications founder Kristen Levine said the company's coupon campaign, which included free pet food with the purchase of treats, devalued the new products.

What's Happened Since
By the fall of 2010, with the rollout costs under control and the dog-food line gaining popularity, Dogswell launched a line of pet food called Nutrisca, a grain-free and potato-free product designed to keep dogs from packing on the pounds.

Giannini says the new products have helped build sales. With three distinct food products, in addition to the treats, Dogswell meets retailers' strong preference for stocking brands with a variety of offerings. "We didn't have enough presence on the shelf" with just two lines, says Giannini. "All three lines are growing substantially, and the dog-food segment now makes up 20 percent of sales."

Dogswell continues to focus its dog-food push in regions of the country in which it has a loyal following.

What's Next
The company will soon introduce a salmon version of Nutrisca, as well as new treats. "We have gotten back our focus and our ability to innovate," says Giannini.

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From the May 2011 issue of Inc. magazine




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