In an exclusive interview for WARC’s Marketer’s Toolkit, MJ Wang – Chief Marketing Officer at Catlink, a scale-up pet care brand – speaks to WARC’s Jenny Chan about innovation in petcare, sustainability and demographic cross-overs in wellness.
Can you share your experience in various industries and how it has shaped your current work?
I have been a marketing practitioner for more than ten years, starting with the clothing industry and e-commerce at Alibaba and then transitioned into sports gyms. Throughout my career, I've observed many new-consumer brands rise and fall. I believe that to achieve long-term success, one must cross the chasm and adapt to different cycles. This is the approach we're taking with our brand, focusing on the long term and aiming to improve pet health through our technology.
Can you describe your business model and how it has evolved over time?
Catlink is dedicated to creating a seamless Internet of Things ecosystem that connects people, cats and technology. Our commitment is to "link everything for a cat’s life" and this drives all our efforts.
Our business model initially focused on procurement cooperation, which didn't require us to establish ourselves as a brand. This approach was more channel-based than brand-based. However, we understand that in the future, we need to elevate our operations to the brand level and engage our existing audience more effectively. Otherwise, they may perceive us as a functional entity without a brand identity.
When was your company established and how has it grown since then?
Our startup was established in 2017 in Shanghai, but our first product went live in 2019. So, in essence, we've been operational for about 5 years. However, we still feel that our brand is in the process of development and hasn't fully matured yet. Our focus has been more domestically oriented, and our organizational structure is still not perfect.
Our brand investment budget is relatively small, constituting a minor percentage of our sales. Our core investment focus is on channel and product. We are building our e-commerce channel and investing in product research and development. We only started financing in 2021, which allowed us to expand our R&D team from about 10 to nearly 40. This year, we are beginning to see the dividends of that investment, with five or six new products coming out. We use blue as a dominant colour in our marketing because we associate it with technology and health, which are key aspects of our brand.
Can you describe your product line?
We started with selling one cat litter tray for three years, from 2019 to 2021. Our product line is quite limited and we believe we are still in the early stages of development, perhaps at 0.5 on a scale to one to ten.
What do you think it would take for your company to reach a 'one' on this scale?
To reach 'one', I believe we need to focus on repurchase rates and brand loyalty. However, our products are slow consumables, similar to appliances like refrigerators, which aren't purchased frequently. Therefore, our repurchase rates depend on other products we offer, such as water dispensers. We believe that building an ecosystem around our products will lead to higher repurchase rates.
How do you evaluate your competition in the industry?
The competition is intense and our prices have increased from RMB 299 to around RMB 1000 to compete. Our ultimate goal is to become a household name for catcare, but we're far from achieving that. Our repurchase rate is around 50%, which we believe is quite good compared to industry standards. We've been recognized by Alibaba for our high repurchase rate.
However, the overall industry penetration rate for smart products like ours is only 6%, which is low, meaning more than 90% of people are buying non-smart or non-electric cat supplies. This indicates that the market for smart cat products is still underdeveloped and requires more education and awareness. This data is from last year and we believe there should be an improvement this year.
How has the pandemic affected your company in China?
The pet market, including our brand, has actually benefited from the pandemic. Our company was fortunate to be in a position to capitalize on the situation. The pandemic led to an increase in pet adoption as people stayed home, particularly in tier one and two cities. This trend has helped our business develop as pet supplies are a necessity. This year, we're growing at a rate of between 50% to 80%.
How has the overall economic slowdown affected your business, both domestically and internationally?
The economic slowdown has had some impact on us, but it's not significant. We've noticed differences between domestic and international markets. For instance, our orders from Japan are growing, possibly due to their aging society or the influx of dollars from the United States.
As for cost fluctuations, as our volume increases, our costs are actually going down. This is because the supply chain works in such a way that as volume increases, costs decrease.
Where are your products manufactured and how does this affect your costs?
Our products are made in China, which allows us to control costs. We're considering becoming a transnational supply chain and studying other locations like Vietnam due to potential tax exemptions. However, we also have to consider factors like local production costs, labour costs and logistics. This is an idea we're considering, but implementing it will take time.
What factors do you believe determine your sales volume?
We believe the determining factors are the pet owners themselves, their social class, life stage and even societal factors like an aging population that might need more pets for companionship. We've conducted specific research and analyzed data and behaviours to understand this better. Our core focus is on the domestic China and US markets, as these are the largest. We also see strong performance in developed countries like Japan, South Korea and Thailand, where there is a cultural affinity for cats.
Can you describe the demographic profile of your customers in China and the United States?
In China, our customer base tends to be younger, while in the United States, it's typically older by about 5 to 10 years. In China, our customers are usually between 25 and 35 years old, while in the US, they're between 28 and 45 years old. However, this varies depending on whether the product is smart or semi-smart. For instance, our semi-automatic product, which is manually operated, sells better than the fully automatic one, especially among older US customers who prefer simpler technology.
Pet ownership has been common in the United States for many years, with pets often seen as family members. This trend is newer in China, having become popular only in the last three or four years.
How do cultural differences affect your sales and customer interactions?
Cultural differences do play a role. For example, in the US many middle-aged and older people still use basic mobile phones and prefer face-to-face interactions. They find using smartphones and apps time-consuming and prefer direct communication. This could be why our semi-automatic product, which doesn't require linking to the internet, sells well in the US.
How does your brand plan to handle potential challenges in the US market, considering the current political climate?
While we have considered risks in the US market, our current focus remains on our products and addressing the needs of our cat owners. We define ourselves as a global brand and do not emphasize our origins in our marketing, though we acknowledge that we are made in China. In case of any political issues that may arise, we believe that businesses can find ways to navigate and overcome such challenges.
What is the gender distribution among your customers?
Regardless of the market, our customer base is predominantly female, accounting for 60% to 70% of our consumers. Women seem to have a natural attraction to cats and often have more decision-making power when it comes to shopping for pets, regardless of the family structure. This is true in both China and globally.
Why did you decide to focus on cats specifically, and not dogs or other animals?
The decision to focus on cats was based on market experience and careful judgment. While we acknowledge the love and acceptance for various animal species in different countries, we chose to concentrate on feline companions.
When we were considering our business direction, we looked at the overall market potential. My boss conducted some market research and found that the pet market, particularly for cats, had a significant volume. We also noticed an upward trend in cat ownership, which suggested that the market ceiling was continually rising. Another factor was our own strengths and experience. We have 13 years of experience in the pet supply chain, specifically in cat litter boxes. After testing the domestic market with overseas brands, we found that even high-priced products sold well. This gave us the confidence to proceed with our business plan.
Can you elaborate on your approach to making marketing decisions?
Our company is quite pragmatic. Given our boss's background in supply chain management, we rely heavily on data and arithmetic for decision-making. Unlike some companies (like Perfect Diary) that might have a marketing or brand background and prefer to aim high, we prefer to conduct AB tests to make informed decisions. We believe in a more scientific approach that is logic-oriented. This approach may not be as flashy, but we believe it's the right way for us.
Can you share a story that significantly impacted your brand?
Certainly. When we first launched our cat litter box in 2019, we sold out our inventory of 1,000 units in 20 seconds during the Double 11 shopping festival. We were very product-focused.
However, in October 2020, it was a story from a customer in Thailand that truly shaped our brand. This customer, Kanda, had 18 cats and used our product, which can monitor a cat's toilet frequency and weight. Our system notified him when one of his cats, Dumpling, was frequently using the cat toilet, suggesting a potential health issue. The owner found that Dumpling was indeed unwell and took it to the vet, who confirmed that the cat was suffering from kidney stones. If treatment had been delayed by two hours, Dumpling might not have survived. The owner sent us a thank you letter and video, which deeply moved us and affirmed our brand mission to use technology to improve pet health. This Dumpling story was a leap for us, from focusing on the product to understanding the significance of the brand.
This had a profound impact on us. As a result, we decided to focus exclusively on smart cat appliances that use WiFi and data to monitor cat wellbeing. This is why we later developed a smart water dispenser and feeder. While we could have expanded into other products like cat collars, cat clothes, or cat food, we chose to stick to our core business of smart cat supplies.
We believe that brand recognition requires time. Our goal is to be remembered in more than 10 years, and we aim to operate for five or six decades, similar to Alibaba's 102-year goal. We don't believe in pursuing marketing strategies for the sake of novelty. Instead, we believe in the importance of stability and consistency in building our brand.
How does your product help cat owners in their interactions with veterinarians?
Our product provides data that can be crucial during a vet visit. For example, a vet might ask if the cat has used the toilet, how much it weighs, or if it has eaten or drunk anything. Without our product, the owner might struggle to describe any abnormal behaviour accurately. However, with Catlink data, they can simply check the app for precise information. This can make the vet visit more efficient and ensure the cat gets the most appropriate care.
Can you explain your approach to product development and how it aligns with your brand vision?
Our approach to product development is driven by our vision to improve pet health through technology. We invest heavily in research and development, with 40-50% of our budget going towards it, while only 5% is allocated to branding. The remaining portion to e-commerce channels, staffing and customer service. This is because we believe in the power of innovation driving brand value.
For instance, this year we're launching a cat face recognition feature, which is a first in the industry. For example, our cat litter tray has two pulleys to make it easier for owners to clean, and a pedal for cats to shake off litter when they exit. This design is both convenient for owners and friendly for cats, reflecting our commitment to serving both pets and people.
Our brand vision is to extend the lifespan of cats. According to data, the average lifespan of a cat is thirteen years. We hope to extend this to twenty years through our products and data.
Customer service is a significant focus for us, as we cater to a predominantly female customer base who may have many concerns about our Catlink technology. We also offer innovative services like trade-ins, door-to-door maintenance and litter box cleaning to make our customers' lives easier.
Can you explain more about the "cat morphing" feature in your app?
This feature is integrated into our app and uses AI to simulate the actions of a cat based on the data collected from a collar worn by the cat. For example, if the cat is sleeping, the app will show a dynamic image of a sleeping cat. This allows the cat owner to visualize what their cat is doing at any given time, even when they're not at home.
How has AI impacted your business?
AI has increased our efficiency in various aspects of our startup. For example, we have optimized our branding department by using AI for tasks like copywriting, meeting summaries and planning. This has allowed us to reduce one employee who was dedicated to these tasks while maintaining high-quality output.
We are also exploring the use of AI in customer service to automate some processes and improve efficiency. While AI-driven customer service solutions are already available overseas, we expect them to become more prevalent in the domestic market by the end of the year. We plan to implement AI in customer service to provide automated responses with emotion and analysis, which is a challenge. Currently, our customer service system is more of an auto-reply chatbot, but we aim to make it more interactive and efficient with the help of AI. We believe that this will greatly appeal to our female customers who may have less desire to research technical reasons when issues happen.
While we haven't used AI extensively for creating graphics or videos due to our limited demand for such materials, we recognize its potential for this.
How does your company cater to the needs of male customers?
We understand that in many households, men are often responsible for tasks like cleaning the cat litter box. Therefore, our automatic litter box product can be particularly appealing to male customers as it can free up their hands and make the task less burdensome. While the decision to purchase may still be made by the women in the household, men are often excited about the convenience that our product offers.
We've found that male and female customers often have different perspectives. Men often appreciate the practical benefits of our products; women, on the other hand, often focus more on the health benefits for their cats that our products can provide.
We've gained these insights through direct communication with our customers, particularly at exhibitions where we can interact face-to-face. This communication is crucial for us to ensure our brand and products are meeting the actual needs of our consumers, rather than just our assumptions of what those needs might be.
As of now, we don't specifically tailor our language or marketing to male or female customers, as our core focus is on the benefits for both the cats and their owners. However, understanding these different dynamics is valuable for our overall approach to product development and customer service.
How does Catlink view sports sponsorship?
At this stage, we don't have a specific plan for the sports market due to budget constraints. However, we have noticed that people who are into sports, like yoga, often have a close affinity with pets. We have participated in outdoor sports bazaars where we noticed a lot of interest in our brand from the sports crowd. In the future, if our budget allows, we might consider sponsoring sports events or creating sports-related content as we see a high overlap between the sports and pet-loving demographics.
What is your opinion on brands using sports sponsorships for positive publicity or to counteract controversy, known as sportswashing?
Sports sponsorships can indeed provide positive energy and a significant boost for a brand. They can inspire people and create a sense of excitement and positivity. However, if a brand is using sports sponsorships to whitewash controversy, it's important to remember that genuine brand values and actions speak louder than publicity stunts.
If there are other sponsors at the same sponsorship tier as you that are controversial, would you continue with the sponsorship of the event?
Normally, our decision to sponsor an event is based on our brand's values and the essence of the event itself, not on the actions of other sponsors.
If another brand with negative associations sponsors the same event as our brand, we would carefully consider the potential impact on our brand image. If we believe that the association with the controversial brand could harm our reputation or confuse our target audience, we might consider withdrawing our sponsorship. It's crucial to protect our brand's integrity and ensure that our marketing efforts align with our values and objectives.
How do you approach sustainability in your products?
While we haven't specifically focused on sustainability, our products, like the litter tray, are designed to be long-lasting. Our goal is to keep consumers with us, so we offer a trade-in service. Our core consideration is to ensure that once consumers use our products, they will not want to change. For example, if a consumer uses our first-generation smart litter box, they will upgrade to another one of our products rather than going to a competitor.
Can cat litter be made environmentally friendly?
Yes, cat litter can be made environmentally friendly. For example, it can be made from natural materials like bentonite clay, which is biodegradable and doesn't require any additional processing or chemicals. Some types of cat litter can even be composted or used as soil for plants.
Bentonite clay is good for cats' health. It's sterile and produces less dust, which can help to prevent urinary tract infections. However, it's important to change the litter regularly to maintain its cleanliness and effectiveness.
We do not recommend to use tofu sand as cat litter. Tofu sand, made from food scraps, can potentially harbor bacteria if not changed regularly.
From the cat's perspective, they don't really like the feel of tofu sand under their feet. Today's domestic cats retain a number of characteristics from their desert-dwelling ancestors. We aim to simulate the desert environment as much as possible. Materials like bentonite clay mimic the feel of desert sand, which cats find comfortable.
Is it important for employees at Catlink to own a cat?
Owning a cat is important for our employees because it helps them understand the needs and behaviors of cats better. If you don't have a cat, you might be detached from the cat's perspective. Our teams need to have a close connection with cats.