Zoetis Market Dynamics Series Overview v3

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MARKET

DYNAMICS

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MARKET DYNAMICS SERIES The companion animal veterinary industry is undergoing rapid change, creating both business

challenges and opportunities. The Zoetis Market Dynamics Series intends to highlight the “must know” insights and stories that will help your practice adapt and thrive in this changing world.

State of the Industry

Pet Owner Trends

Veterinary Team Wellness

Human-Animal Bond +

Bond-Centered Practice +

Moments of Calm

Balancing Price and Value to

Promote Your Vet Practice +

+ Corresponding Sharable Zoetis Product/Service Discussion Guide

Making Care Affordable and

Your Practice Profitable

Blue Ocean Strategy +

Investing in a Veterinary Practice

In Development

Protect the Pharmacy +

Zoetis Societal Value

Wellness Matters

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STATE OF THE COMPANION ANIMAL VETERINARY INDUSTRY

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Pet owner spending has been growing rapidly for over two decades, but competition for those dollars is intensifying both within and outside of the veterinary industry. Predicting which business activities can help best position the veterinary practice for future success can be gleaned from AAHA State of the Industry research findings. Recent AAHA data highlights the five critical factors correlated with “outgrower” and “consistent outgrower” practice success.

Understand pet industry sale segments and major drivers of veterinary practice revenue

Become aware of recent trends in patient visits, active patients, and practice revenue (AAHA data)

Learn what makes “outgrower” practices (i.e., those with two consecutive years of >10% revenue growth) different from practices labeled as “growers” or “decliners”

ZOETIS MARKET DYNAMICS SERIES STATE OF THE COMPANION ANIMAL VETERINARY INDUSTRY

DESCRIPTION LEARNING OBJECTIVES

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PET OWNER TRENDS

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The modern day pet owner as a consumer of veterinary services is often quite different from yesterday, and will be even more different tomorrow. The millennial is driving this new consumerism and significantly influencing the way in which veterinary healthcare will be delivered in the coming decades. Understanding generational attitudes and differences toward pet care and the major trends driving purchasing behavior can help position vet practices to best meet the needs of these new consumers.

Understand the basic attitudinal differences by generation toward veterinary healthcare

Become aware the major trends influencing consumer demand for veterinary services through the traditional brick-and-mortar practice

Learn how to use these trends to better position vet practice’s products and services for the pet owner of today and tomorrow

ZOETIS MARKET DYNAMICS SERIES PET OWNER TRENDS


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VETERINARY TEAM WELLNESS

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Awareness of the well-being challenges for veterinarians and staff has grown quickly over the last couple of years, but most practices are not yet actively addressing this topic within their own teams. Each member of the veterinary team should have a basic understanding of “veterinary wellness” with ready access to an array of helpful well-being resources (included).

Learn the basic language of veterinary wellness (e.g., compassion fatigue, Lone Ranger Syndrome, moral stress, and caregiver’s guilt)

Receive the wellness resources list to make available to all members of the veterinary practice team

Discuss how to help create an environment where it’s “okay” for anyone on the team to talk about wellness concerns for themselves or their colleagues

ZOETIS MARKET DYNAMICS SERIES VETERINARY TEAM WELLNESS


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HUMAN-ANIMAL BOND

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The bond between humans and animals is ancient, yet our awareness to the physiological influences of animal interaction and ownership is relatively recent. Pet owners often think of the HAB as simply an emotional connection, but research is demonstrating that the impact is deeper with implications that may be very important to our mental and physical well-being. Ongoing research into the pet – pet owner bond may have practical implications both for human and veterinary healthcare.

Explore the meaning of the HAB and the evolving relationships between pets and people (from the backyard to the bedroom)

Discuss the “One Health” impact of the HAB, from zoonosis to zooeyia

Discover HABRI and the health areas where pet interaction can positively impact human well-being

Learn what human physician’s are saying about the health benefits of pet ownership

ZOETIS MARKET DYNAMICS SERIES HUMAN-ANIMAL BOND


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THE BOND-CENTERED PRACTICE

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As the marketplace for veterinary healthcare becomes increasingly fragmented (more and more practices) and competitive (from within and outside of the industry), the differences between practices can become blurred for pet owners. Bridge the communication and perspective gaps between the client and veterinary team with a “back to the basics” focus on building relationships, protecting the pet – pet owner bond, and providing a compassionate experience for every client at every visit.

Explore the meaning of a bond-centered practice through both the positive and negative impact of vet healthcare on the pet and pet owner

See how a focus on the pet – pet owner (“keystone”) bond could positively impact practice revenue

Discuss how being more bond-centered through thoughtful communication and compassion could impact the veterinary team’s approach for a variety of pet health symptoms and conditions

ZOETIS MARKET DYNAMICS SERIES BOND-CENTERED PRACTICE


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MOMENTS OF CALM

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The growing awareness that fear has unintended, negative consequences has led many practices to adopt new pet owner communication approaches and less severe pet handling methods. However, the freedom from fear is just the first step toward a more serene, more “calm” veterinary visit experience. Further, the association of the vet practice and calm can extend beyond the classical visit and into the pre-visit, post-visit, and even inter-visit space. Moments of Calm offer opportunities to create a highly differentiating patient, client, and veterinary team experience.

Review the factors that can inhibit or promote pet, pet owner, and veterinary team “calm”

Discuss the consequences of lost calm and alternatively, the benefits from having a calm practice culture

Learn the Four P’s of calm (Pets, People, Practice, Pharmaceuticals)

Explore the Moments of Calm at each step of the patient – client veterinary journey (pre-visit, visit, post-visit, and inter-visit)

ZOETIS MARKET DYNAMICS SERIES MOMENTS OF CALM


BALANCING PRICE AND VALUE TO PROMOTE YOUR VET PRACTICE

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Numerous factors influence each pet owner’s ability and willingness to spend on veterinary healthcare, with price and value being the primary determinants. Veterinary practices should carefully balance client fees with the veterinary team’s ability to promote the value of those products and services. Perceived price – value mismatches can reduce client acceptance for and compliance with the healthcare recommendations, and even suppress the veterinary team’s willingness to consistently offer best medicine.

Consider the spending needs and choices that influence pet owner’s available “share of wallet”

Review common shopped and non-shopped veterinary fees including how prescription medication choices can either encourage or discourage client shopping pressure

Explore why inconsistent care recommendations (e.g., with varying dog size) are common and often unfair to some pets and pet owners

ZOETIS MARKET DYNAMICS SERIES BALANCING PRICE AND VALUE TO PROMOTE YOUR VET PRACTICE


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MAKING CARE AFFORDABLE AND YOUR PRACTICE PROFITABLE

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To sustain itself, every business must exceed expenses with revenue (i.e. called “profit”). Most veterinary practices are for-profit by necessity, so the burden of payment falls to the pet owner and the burden of fee collection falls to the business. While balancing price and profit isn’t easy, an awareness for the everyday costs to provide products and services, and a careful approach to setting fees can drive both more demand for, and more profit from your healthcare offerings.

Learn why profit is necessary, what profit is used for, and why “breaking even” is not sustainable

Understand costs to operate and the daily relationship between revenue and cost (fixed and variable)

Visualize the relationship between cost and profit, and the pros/cons of mark-up vs. margin pricing methods

Explore why practice revenue and profitability depends on actual profit dollars times the frequency of sales

ZOETIS MARKET DYNAMICS SERIES MAKING CARE AFFORDABLE AND YOUR PRACTICE PROFITABLE


BLUE OCEAN STRATEGY

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The post-recession companion animal veterinary industry is undergoing rapid change, creating both business challenges and opportunities. Business activities (i.e., strategies and tactics) with the highest potential impact on future veterinary practice success should guide the strategic planning approach. These activities should drive demand for veterinary practice products and services and ensure that the business prospers in this rapidly changing healthcare world.

Learn how veterinary products and services fit into the marketplace competition concept:

– “Red Ocean, Blue Ocean”

See why “Blue” products and services offer the best opportunities to drive veterinary healthcare demand, creating new revenue growth and higher profits

Understand the business value for 3 year horizon planning and starting with a simplified strategic plan with 3 month mark outs

ZOETIS MARKET DYNAMICS SERIES BLUE OCEAN STRATEGY


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INVESTING IN A VETERINARY PRACTICE

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Veterinary practice ownership should be considered in the context of alternative investment vehicles and opportunities (i.e., what to do with your personal profit?). There are innumerable possible reasons to own or not to own, but the return on investment (ROI) should be an important component of that decision. Understanding the big picture of where veterinary practice money comes from and goes can provide helpful context for a veterinary practice ownership or partnership investment decision.

Learn basic financial concepts (e.g., risk/return, inflation, stocks and bonds, default, and credit score)

Put veterinary practice ownership in the context of other investments and predict professional and non-professional owner’s pay and ROI

Explore the sources of revenue and expenses along with the typical causes of poor practice profit

Understand the Latte Factor and Reverse (Business) Latte concepts

ZOETIS MARKET DYNAMICS SERIES INVESTING IN A VETERINARY PRACTICE


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ZOETIS MARKET DYNAMICS TEAM

THANK YOU TO THE FOLLOWING CONTRIBUTORS

• Tom Kaminiski; SAM, Orlando, FL

• Patrick Patchen; SAM, Syracuse, NY

• Sarah Gomes; SAM, Boston, MA

• Kelly Kopcik; Sr. TBM, Denver, CO

• Steve Markham; Sr. TBM, Little Rock, AR

• Julianna Ciarlante; SAM, Northern VA/Washington DC

• Clete Bohon; SAM, Dallas/Fort Worth, TX

• Brett Wallander; Sr. TBM, San Francisco, CA

• Dr. Dennis Chmiel; Veterinary Lead, Digital Services, Parsippany, NJ

• Kristin Ruff; Director of Mature Brands, Parsippany, NJ

• Kristi France; USSL CAD Program Lead, Parsippany, NJ

ZOETIS HEADQUARTERS TEAM

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ZOETIS HUMAN-ANIMAL BOND TEAM

THANK YOU TO THE FOLLOWING CONTRIBUTORS

• Dr. Patrick Flynn; Sr. PSV, Clearwater, FL

• Tom Kaminski; SAM; Orlando, FL

• Dr. Kristy Earley-Murray; PSV, Portland, OR

• Dr. Kathleen Andre; Sr. VMIPS, Exton, PA

• Colleen White; Director of Communications – CAD; Parsippany, NJ

• Dr. David Rousseau; PSV, Boston, MA

• Dr. Josh Schulz; PSV, Seattle, WA

• Kim Backlund; ABM, Cleveland, OH

Documents

Zoetis Market Dynamics Series Overview v3