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    Columns

    Business Insights: Critical Success Factors for Nutraceutical Products

    Developing a successful nutraceutical product is a battle, but sticking to the right criteria might lead a company to victory.

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    Gregory Stephens, RD01.01.07
    With the increasingly substantial investment required for launching a new product into mainstream food/ drug/mass market channels, it has become vitally important to assure it achieves market expectations. To manage risk, new products should be clearly focused on meeting the needs of targeted consumers.

    There are numerous factors that are critical for the market success of a nutraceutical product, including:

    • Superior sensory attributes
    • Clear and compelling benefit
    • Unquestionable efficacy and safety
    • Lifestyle, eating patterns and convenience
    • Good value


    Superior Sensory Attributes



    Sensory attributes, specifically taste, is addressed first for good reason. In years past, natural products consumers accepted the unpalatable nature of some “health foods.” With the broadening base of natural food available to consumers, however, this has changed. Today, consumers are generally unwilling to compromise taste in a functional food when evaluating it relative to a comparable traditional product. Taste can even be an issue for tablets and capsules (the dominant dosage form for nutraceuticals), which are prone to digestive after-effects involving organoleptic consequences (e.g., certain fish oil products).

    According to Rosemary Riley, PhD, RD, Abbott Nutritionals, which produces the EAS and Zone Perfect brands, taste has become critically important to the success of nutritional products, with the possible exception of sports nutritionals. Some athletes still seem to believe that if it tastes too good, it cannot be good for them.

    Further support comes from the Natural Marketing Institute (NMI), which reports that taste is the #1 attribute in importance when consumers select food and beverages. In fact, over half of all shoppers (52%) agree that healthy foods should taste good and, moreover, they are not willing to give up taste for health—28% of shoppers agree that taste is more important than the health benefit (NMI, 2006).

    New and improved technologies, from encapsulation and flavor masking to new ingredient alternatives, are playing a significant role in improving taste. Sugar alternatives are increasingly being formulated into foods and beverages. High-intensity sweeteners like sucralose bring no calories to low-cal beverages, while bulking sweeteners like erythritol provide physical and sensory functionalities. Such sweeteners are also capitalizing on the burgeoning interest in low-glycemic foods and beverages.


    Clear and Compelling Benefit



    Clearly communicating the health benefit of a functional food is vital to initiating consumer trial. NMI data indicate that 57% of shoppers are looking for foods that have a specific health claim.

    Mainstream retail layouts of dietary supplements are not yet conducive to locating products addressing specific health conditions. Products are often presented in brand sets, alphabetically, or by general health and wellness categories. A new consumer looking for a condition-specific solution is very often confused and leaves without making a purchase.

    One notable exception to this shelf layout dilemma is the diabetic product set where nutritional (medical foods and dietary supplements), OTC and diagnostic products are grouped together and easily located. This trend toward solution shelf sets can be expected to proliferate in the mainstream pharmacy. Still, a product that can clearly communicate its benefit on the primary display panel has a significant advantage over less visible competitive products.

    Subsequent to the enactment of DSHEA, structure/function claims have assisted marketers to some degree; however, regulations limiting reference to a specific “disease” have provided their own set of challenges. Research has shown that, with the exception of certain diseases (e.g., cancer), consumers seeking a specific medical benefit prefer the clear message of a health claim over a structure/function claim. A good example can be seen in the cholesterol reduction segment where, by a 4:1 margin, consumers actively managing their cholesterol prefer a health claim (e.g., helps lower cholesterol) over an FDA-allowed structure/function claim (e.g., helps maintain healthy cholesterol levels in those whose cholesterol is in the normal range).

    Health claims, both qualified and unqualified, are increasingly finding their way to dietary supplements. Soy, phytosterols and oat beta-glucan are permitted to make unqualified health claims for heart disease prevention (e.g., helps reduce cholesterol), along with an expanding list of qualified health claims, including omega-3 fatty acids and chromium picolinate.

    Products offering multiple benefits, particularly when they are unrelated may also confuse consumers. For instance, a typical label claim for SAM-e (S-adenosylmethionine) may include benefits related to joint health, moderate depression and liver disease. Though there is clinical substantiation, albeit to varying degrees, for each of these benefits, consumers are skeptical of a product that may be perceived as a “cure-all.” More sophisticated marketers have developed single-benefit line extensions. Of course, maintaining shelf-space for three products in mainstream retail settings may present additional challenges, particularly for those indications with lower volume potential.

    Cardiovascular health is one of the most rapidly growing nutraceutical categories. Though soy products offer multiple health benefits, there is significant confusion amongst consumers—consumers may wonder, for example, if the cardiovascular benefits outweigh the potential cancer risk of consuming phytoestrogens found in soy. Additionally, in the realm of functional foods, soy has retained a perception of inferiority, primarily with middle-aged consumers, due to poor communication of its many health benefits. Contrast that to omega-3 fatty acids, which have been successfully marketed for multiple benefits related to inflammation, including cardiovascular and joint health. The market potential for both segments is huge, and by addressing issues with “fish oil” taste and related side-effects, reputable manufacturers have laid a strong foundation for continued growth.


    Unquestionable Efficacy & Safety



    Consumers often harbor a high degree of skepticism for claims made by dietary supplements. Such skepticism can persist even though there may be a powerful label claim. On the other hand, a compelling reason to believe a claim generally leads to improved consumer trial and, ultimately, long-term compliance (i.e., re-purchase).

    Compliance is significantly improved when consumers experience the product benefit. The simplest example may be the reduction in joint pain experienced subsequent to a few weeks of taking glucosamine or omega 3 supplements. Consume the product and the pain goes away; quit and the pain returns.

    Published clinical research is also important to consumers and may serve to initiate trial. Sixty-four percent agree that proven clinical research has considerable impact on the believability of a supplement’s claim, and a resounding 68% of shoppers prefer to purchase supplements that have been clinically proven to be effective. (NMI, 2006)

    Nonetheless, realizing a tangible benefit is more compelling to the consumer than an unperceived benefit that has been clinically proven. This is the case even though the tangible benefit may not be realized immediately. From a disease management standpoint, benefits can be categorized as either prevention/wellness or therapeutic/management. Compliance tends to be significantly lower for preventative products. Experience has shown that if consumers don’t notice a benefit, they are less inclined to continue with a product. Compliance is better for joint health products because they are conspicuously effective, albeit after a delay; however, a product that may reduce the risk of heart disease some years into the future tends to be less compelling.

    If the benefit is not readily perceived, compliance may be aided if there is a biomarker that can be easily and routinely assessed. Cholesterol reduction is a good example.If just preventing heart disease was the extent of the consumer perception of the benefit, even though “clinically proven,” there would be a significant impediment to consumer acceptance of such supplements. However, this hindrance is substantially lessened by the fact that consumers can fairly easily monitor their LDL levels, thereby opening a predictive window into the state of their cardiovascular health.


    Lifestyle, Eating Patterns and Convenience



    A product whose consumption adds an element of difficulty, or is more complex than the consumer is accustomed to, will not be widely accepted in the marketplace. Thirty percent of consumers agree that they typically choose foods based on whether they make them feel good emotionally, rather than the nutritional content.

    Additionally, nutraceuticals must be in acceptable forms. Convenient functional foods, nutritional bars and beverages fit the U.S. lifestyle best. Elixirs and injections, such as those preferred in certain Asian and European countries, do not fit the general pattern of U.S. consumption.

    Americans have been characterized as a “pill society,” however, it is important to remember there is a limit. Research has shown that a dose in pill/capsule delivery form should not require the consumer to swallow more than two of anything—and the smaller the better. Nearly 20% of consumers indicate that they have physical difficulty when swallowing pills and capsules.

    Almost two-thirds of mainstream consumers indicate they are interested in healthy foods/beverages that can be eaten “on the go.” Accordingly, distribution should strive to put the product within easy reach for the “grab & go” consumer.


    Good Value



    Although U.S. consumers have demonstrated their willingness to pay for dietary supplements, value is a significant consideration. Forty-three percent of consumers indicate that “value for money” is the most important attribute when selecting foods and beverages for their households. (NMI, 2006)

    Different functional ingredients often provide similar benefits. For example, highly concentrated oat beta-glucans provide cholesterol reduction benefits comparable to phytosterols; however, historically, the cost per serving to make the FDA-approved health claim is significantly less for sterols. Though consumers may be more comfortable with the familiarity of oat ingredients, are they willing to pay a significantly higher price?

    Additionally, consumer confusion over similar benefits can affect value. A functional food that is fortified with an ingredient qualifying it for a heart disease prevention health claim may end up competing with a similar product fortified with low-cost vitamins allowing a heart health message. Research has demonstrated that many consumers do not distinguish between such health claims as “may prevent heart disease” and the less stringent “heart healthy.” Savvy marketers employ creative label graphics further compounding the situation.

    There are several reasons consumers indicate they prefer dietary supplements to drug alternatives, including safety and the absence of negative side effects. When comparing the cost of dietary supplements to prescription alternatives, one should also consider the trend toward minimal co-pay for prescription alternatives—currently moving toward $4.00 per script. A monthly supply of a cholesterol reducing dietary supplement could easily retail for $20.00. These factors must also be considered in the value equation.


    Summary



    The criteria discussed in this column are specific to the consumer. There is an additional set of criteria that must meet the needs of others in the supply chain. Manufacturers and retailers are driven by acceptable margins, quality and uninterrupted supply, competitive insulation and promotional programs. Additionally, the uniqueness of a product can be instrumental in securing increasingly constrained shelf-space.

    The success of any new product in the highly competitive nutraceutical marketplace is always problematic. However, by conducting appropriate research focused clearly on measurable criteria that address consumer needs, the odds favoring success can be substantially improved.NW

    *References furnished upon request.*
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