Case Study: NicoBloc

Business Description:NicoBloc is a natural smoking cessation product marketed globally by Rosen Holdings Ltd., a privately held, U.K.-based company.

Theme: NicoBloc is competing against larger, deep-pocketed competitors to bring a differentiated product to market that is seeking innovation. Critical to its success is finding the right distribution and promotion platform to reach and educate consumers.

Background: NicoBloc is a 100% natural product that involves applying a fluid onto the filter of a cigarette, which creates a barrier and stops tar and nicotine from reaching the smoker. The fluid can be applied in varying amounts and thus smokers can wean themselves gradually off nicotine (a six-week period has been shown to be the most effective timeframe). Depending on the dosage of NicoBloc, it is possible to block up to 99% of tar and nicotine. Since 1990, almost $2 million has been invested into R&D, clinical trials, government clearances, and patent and trademark registrations. The product is unique in that the majority of its competitors are nicotine replacement therapy (NRT) products, which involve the smoker quitting smoking altogether and receiving a nicotine boost from patches or other products, whereas NicoBloc does not involve the immediate cessation of smoking and instead changes the need and behavior of the smoker. NRT products typically have success rates of around 12% (up to 20% with counseling), while NicoBloc has been shown in two U.S.-based clinical trials to have success rates of nearly 60%. Originally, NicoBloc was launched in the 1990’s within the U.K. and Ireland as a corporate offering to help companies reduce smoking amongst their employees. The program gained significant press coverage, confirming the need to make it available to a wider audience. So in 2001 a new consumer concept was launched. It is currently marketed in 12 countries, including Portugal where it has about a 10% market share.


Situation Assessment: Smoking is the world’s biggest healthcare problem. It kills one in 10 adults and resulted in three million smoking related deaths in 2000 alone; this figure is estimated to rise to 10 million by 2030. Within the U.S. there are about 50 million smokers with 70% of smokers wanting to quit, about 40% actually trying, and less than 5% actually succeeding. The global smoking cessation market is predicted to be worth $2 billion by 2007, with the U.S. market accounting for approximately $500 million. The market is concentrated, being dominated by two brands, Nicorette, a gum, and NicoDerm, a patch, and the majority of purchases occur through pharmacies. Despite the consumer need, the market is in a slight decline due to variety of issues, including the continued bad news surrounding the negative effects of nicotine.


Opportunities: NicoBloc has been marketed in the U.S. for two years and is currently sold through approximately 3500 retail and pharmacy outlets. The company’s experience in the market has helped highlight challenges that exist in two key and mutually reliant areas: (1) sufficient funds to support the promotion of the product and education of consumers; (2) obtaining sufficient distribution reach to drive overall sales to support the promotion campaign. NicoBloc has had success in gaining shelf space in top retailers like Eckerd, Wal-Mart and Target, yet it has not been able to gain enough distribution density to support local advertising in a way that success can be seen in local markets. National advertising campaigns require very large amount of cash, and for a category where they typically expect one quarter inventory turns per month, a key risk is having the launch spread too thin and not being able to execute promotions that reach an adequate number of people with an effective number of exposures.


Lessons Learned: (1) Based on international sales, NicoBloc has proven that it meets the needs of smokers. Due to its limited promotional funds and the strategic need to educate consumers, a regional launch may make best sense for FDM (food, drug and mass market). This would allow the marketing push to be focused and establish success. (2) This is a product that needs to be explained to smokers, as it has several benefits that will be valued by consumers once they are informed about them. In many ways, this product may fit extremely well in a Direct Marketing approach either via TV or radio. Currently, most smoking cessation products are sold through FDM, but the opportunity here lies in recognizing that alternative channels have potential.