Broadening Horizons

To reach the most consumers it is very important to broaden the appeal and state the many benefits of your products.

By Greg Kitzmiller

Too many nutraceutical firms over the years have tried to introduce or develop a strategy for product launches based on one key factor to support it. This has proven to be far too narrow a strategy for most nutraceutical products simply because today’s marketplace and consumers are much more complex.

Based on the success of Wal-Mart in the grocery business, or Sav-A-Lot and Aldi grocery chains, a lot of strategists believe the market is very price sensitive. While this may be true, the rapid growth of chains like Whole Foods indicates the opposite. The reality is, today’s consumer seems to care equally about all of these factors when deciding what products to purchase, especially in the case of nutraceuticals.

Smart Shoppers

Smart shoppers seek quality at a low price. After all, U.S. consumers have been trained by manufacturers and retailers over the course of many years to buy products based on price. However, given consumers’ discretionary spending on high-ticket electronics, cellular phones, and even finer foods and wines, they clearly have the money to spend and will spend it when they perceive a quality difference in products. But do not confuse “smart” shoppers with “cheap” shoppers.

What this means in the nutraceuticals business is that there are at least two key winning strategies—one that is value-based and another that is based on perceptible quality. Notice that value-based does not always translate into “lowest” price. Value-based products offer a good deal in the eyes of the consumer.

The second winning strategy is perceptible quality. This is not the same as offering products that contain quality ingredients where the consumer can’t appreciate them. Perceptible quality means the consumer can perceive a difference.

Expanding the ‘Function’ of Functional Foods

It is not enough to sell a functional food product with emphasis only on function. A manufacturer must offer a host of benefits in order for today’s consumers to purchase products. In the case of functional foods this means they must have good taste, an appropriate value in pricing, adequate distribution (making a product easy to find), and clear communication of benefits. If consumers don’t understand the product or its benefits, can’t find the product, or don’t approve of the taste, price, appearance, or packaging, then they simply won’t buy it. That’s why companies must consider the functional health benefit of a product not as the primary benefit, but rather as one of many benefits to be acknowledged by the consumer. Many products touting only a health benefit have failed because often it is all they have to offer.

It is also important to decide what the product’s messaging will entail. While there is a segment of the population very much struggling with a single health issue, most consumers would rather focus on health, well-being, wellness and ability, rather than disability or debilitating disease.

Many experts believe the most success with nutraceuticals comes with products that target a wider audience. In other words, products will have the greatest chance at market success if they are positioned as part of a healthy lifestyle, rather than focusing on just one health issue like cholesterol reduction, for example. Consumers seem to accept broad claims much better than claims tied to “bad news,” such as “prevents” or “avoids.”

Many of the product failures in functional foods resulted from too narrow a focus of the target consumer. For instance, the Aviva functional food line from Novartis was too medicinal in focus, tasted poorly, and was hard to find in some countries. Although it carried a positive rather than negative message, the focus was solely on health, with no other convenience or taste benefit attached to the products. There was also a product called BodySmarts from Pfizer that, while innovative, was confusing as it straddled the health and confectionery segments. The product also suffered because it was difficult to find. In addition, the products were sold alongside other candy products, which probably led consumers to believe the health benefit was out of place.

Having a Point of Difference

All products need to stand out from their competition by offering a unique selling proposition. It is not enough for products to be “good” anymore—most of the time in order to be successful they have to be “better” than their competitors. This does not necessarily mean products must be superior, it simply means that products have to offer benefits not seen with competing products.

For instance, it is difficult to argue that Aquafina filtered water is better than any other bottled water. How then does PepsiCo’s Aquafina currently hold the largest market share? There are many reasons for this, including a powerful distribution system, strong advertising and therefore instant brand recognition, and competitive pricing. You have all of these benefits alongside good taste and an impression that water is, after all, good for you.

Perhaps the same factors that made Aquafina and Dasani major brands of bottled water also caused competitors to outperform Nestle’s probiotic product, LC1. The product was competitive with the positioning of other probiotic products, even though it was high priced and lacked broad distribution. Unfortunately, when compared with Actimel or Yakult, LC1 was not fully competitive because its competitors exercised more marketing muscle. LC1’s ultimate failure was a result of its underdeveloped product strategy.NW