Branding and Marketing Practices for Successful Nutraceutical Business

Dilip Ghosh

With intensifying competition & increasing consumer sophistication, Brand Building is becoming inevitably essential to ensure consumer trust & loyalty. While providing insights, this article also articulates success factors for Branding & Marketing practices in nutraceutical business

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hy brands matter? Over the past Over-the-counter (OTC) pharmacological decade or so there have been foods and beverages companies are moving Wsporadic attacks against the idea of towards the extremes of the diet–health

brands and branding. However, the presence of continuum, adopting both category creation and a large number of strong brands across different category substitution market entry strategies. categories, be it hospitals, dishwashing liquids, The objective of this cross-category washing machines, or nutraceuticals, has clear innovativeness is to deliver new brand and line advantages for society. Ingredients are the core extensions in lozenges, sprays, and capsules of a nutraceutical product, yet it is not the targeted at colds and influenza, and in ingredients but the brands themselves that drive analgesics; examples include GSK's Panadol value. For example, there may be 50–100 Cold and Flu range, Wyeth's Anadin Max brands of vitamin C in US supermarkets/ Strength and Tramil capsules, and, more pharmacies, but Wal-Mart's 'Spring Valley' recently, Reckitt Benckiser's Lemsip Max and store brand enjoys nearly four times the market Max Sinus capsules.share. In addition to food manufacturers, the pharmaceutical industry has become interested This radical cross-category innovativeness also in this fast-moving field; prominent examples introduces a high element of risk for food and include Novartis Consumer Health, Glaxo beverage companies. For example, while plant SmithKline, Johnson & Johnson, and Abbott stanol esters and probiotic cultures have Laboratories. One important motivation for successfully made the transition from spreads these such companies to invest in functional and yoghurts to dairy drinks, probiotic juices food is the shorter development times and lower such as Valio's Gefilus and Skane's ProViva product development costs compared to Shots have been relatively less successful in pharmaceutical products. Also, owing to the select European markets.brand image of the companies, acceptance of new products in the market should not be an Another growth strategy is to reposition issue. existing products to meet consumer needs. The most successful example is Calcium Sandoz, Choice which was switched to the OTC route from the Although too much choice can have its own ethical pharmaceutical route by Novartis India disadvantages (e.g. selection paralysis), people in 2000. Also, in 2002, Ranbaxy has fundamentally enjoy having the power to transitioned its adult health supplement choose between comparable options. In the 'Revital' from prescription to the OTC category.absence of brands with a strong image, the consumer will naturally prefer to buy the Consistent Qualitycheapest product. The current market is flooded When many brands compete in a category, there with a large variety of products, but to survive in is simply no room for poor quality. Today's this competitive environment, brands must consumers will never choose a product or fulfill the promises made to the market, or service quality that is below an acceptable level. consumers will no longer support them with And, it is very hard to lure back customers who future purchases. This is natural selection at have switched to another product. A recent AC work in a commercial sense. Nielsen survey of consumers in 13 Asia Pacific

countries including India showed that more Innovation than 30% of customers do not believe the

Given the competitive nature of brands product-related claims made by companies. competing for customers, there are two main Thus, brands must ensure that quality control is options available for brands who want to maintained at all times, which would lead to improve their competitive position – innovation incrementally improved quality in the long-in product and marketing. To pave the way to term.success, the following three key drivers need to be explored: How to drive this to the next level?Developing customer-focused products that Any given market contains a multitude of

address specific needs of different customer distinct consumer segments with different demographics (Product Development) needs and desires and therefore a one-size-fits-?Differentiating products by focusing on all approach won't necessarily work. For

credibility building and/or lowering prices of successful branding and marketing of products (Product Differentiation) nutraceuticals, market segmentation based on ?Increasing awareness of a product among sex, age, and physiological conditions;

physicians and consumers through advertising innovations in branded activity ingredients, and education (Product Promotion) format, and supply chain; and category

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encroachment should be exercised. the case of functional foods and beverages, Reputation most consumer segments would be expected to Reputations are earned, not given, and brands make trade-offs between the functional benefit, have to continually work to maintain the trust of price, and carrier attributes, given the complex consumers by continuously meeting or and multi-faceted nature of consumer food exceeding their promises. Consumers choose choice. However, more recent consumer between brands based on a range of variables, insights would suggest the importance of including value for money, function, and, often, pursuing a strong technological orientation for emotional connection. In terms of building new product success in the case of medicinal consumer trust and brand recognition, joint products such as OTC pharmacological ventures and co-branding strategies with beverages. Innovators who are first to market pharmaceutical or consumer healthcare new products targeted at specific usage companies potentially represent viable strategic occasions or specific market segments need to orientations for food and beverage companies maintain a balanced marketing and entering the market with medicinal products technological new product development such as OTC pharmacological foods and (NPD) orientation in order to remain responsive beverages. to consumers' diverse and changing needs.

Investing in consumer education Concept ideation and generation represent the Increasing consumer sophistication is leading earliest stages in the NPD process and entail the to more opportunities for shelf space in generation of new product ideas from various mainstream retailers. Thus, there is an eminent internal and external sources. Orthodox threat that a competitor will be hot on one's approaches to innovation are leading to heels, releasing a similar product within weeks. incremental innovations, which result in the Also, many countries use widely differing product being poorly differentiated from the approaches to nutraceutical labelling other products in the market. However, while regulation, making the creation of global 'radically innovative' new products offer marketing strategies difficult. In order to potentially greater rewards to both consumers survive, it is imperative that manufacturers re- and manufacturers, the level of risk increases evaluate their marketing strategies to take into along the product development continuum. In account brand development, product that sense, from both an operational and NPD authentication, and consumer education. management perspective, concept ideation and Companies must be prepared to invest in generation have also come to represent the most educating consumers before they can expect to critical stages in the NPD process for new sell to them; further, companies must be product success. Another major challenge is the innovative in changing the point-of-sale incoming Health Claims Regulation in Europe environment. which will both increase the cost of healthy

product innovation and challenge current Brand building is now essential to ensure innovation practices. consumer trust as well as interestCompetition is intensifying with growing sales. ReferencesHowever, with massive increases in media Aarikka-Stenroos L and Sandberg B. 2011. spend; marketing is an increasingly risky F rom new-produc t deve lopmen t t o business. Brand building is now essential to commercialization through networks. Journal ensure consumer trust as well as interest. of Business Research.Brand-building strategy development is more Bogue J. 2009.Cross category innovativeness complicated than developing the products as a source of new product ideas: consumers' themselves as it requires an in-depth perception of over the counter pharmacological understanding of the complex motivations beverages. Food Quality and Preferencespurchasing decisions. Identifying your specific Capaldo A and Peruzzelli A. 2011. In search of consumer is the first and most important step. alliance-level relational capabilities: Balancing

innovation value creation and appropriability in Commentary R&D alliances. Scandinavian Journal of Thus far, there have been very few nutraceutical Management.or functional food brands that can be recognised Harman C. 2003. The global report on for their strong brand image. One standout nutraceuticals. ABOUT Publishing Group, example is Yakult. It has been suggested that, in London.

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Mr. Dilip Ghosh, PhD, FACN, is director, Research and Development of Neptune Bio-Innovations Pty Ltd, and Nutriconnect, Sydney, Australia.