VIDEO CASE 7

naive to treat 'international' as one big market-par-arly within aTC," explains Marti Morfitt, presidentCEa of CNS, the company that manufactures Breathe

;ht® nasal strips. "There are many discrete, uniquecets, and local expertise is needed to understand the

icswithin each and address them effectively."aTC" refers to over-the-counter medical products,as aspirin or cough syrup, that customers can buyut a doctor's prescription. Breathe Right nasal strips

as an aTC product. But, that does not mean therea lot of technology and medical science behind it.

reathe Right nasal strips are innovative adhesivewith patented dual flex bars inside. When

ched to the nose, they gently lift and hold open nasalages, making it easier to breathe. Breathe Right

are used for a variety of reasons, all to help- e better through the nose: athletes hoping to play- best (particularly when wearing mouth guards);rer (and their spouses hoping for a quiet night's

I: and allergy, sinusitis, and cold sufferers lookingrug-free relief from nasal congestion.

W IT ALL BEGAN

r e Right strips were invented by Bruce Johnson, aic nasal congestion sufferer. At times, Johnson put- or paper clips in his nose at night to keep hispassages open. He eventually came up with atype for Breathe Right strips. He brought hision to CNS, Inc., which recognized its marketial. CNS took the strips to the U.S. Food andAdministration for approval of claims for relief ofg and nasal congestion.

_-S, a small company, had a limited marketinget. However, it got a big public relations breakJerry Rice, the wide receiver for the San Fran--lgers, wore a Breathe Right strip on national TVored two touchdowns during the 4gers' 1995Bowl victory. Demand for the strips soared.fiat really helped sales of Breathe Right strips

t CNS had done a very effective job of gettingkits in the hands of news and sports media," says. "When people on television asked, 'What isnny looking thing on his nose?' the reporterstalk about how the strip was an effective con-product for everyone. And a $1.4 million busi-

.umed into a $45 million business in just onehe explains.

DECISION TO GO GLOBAL

areness and trial were building domestically,gan to get inquiries from people in other coun-

eNS Breathe Right® Strips: Going GIOba~

tries asking where they could buy these strips. In 1995,C S decided to take advantage of the global interestand introduce Breathe Right strips internationally.

What countries did CNS choose to enter with itsBreathe Right strips? "Countries we focus on are thosewith a large aTC market, high per-capita spending inthe aTC market, and future prospects for growth," saysKevin McKenna, vice-president for interna-tional at CNS. Allthese factors relate tomarket size. "But thereal key to success in amarket is a local part-ner that is entrepre-neurial and has anability to execute interms of achieving dis-tribution and sales."

IMPORTANCE OF LOCALPARTNERS

Dynamic world market changes in the last 30 yearshave influenced opportunities for global sales ofBreathe Right strips. Key trends include increasedavailability of aTC products formerly available only byprescription and a global push toward self-care, spurredby the increasing cost of health and medical care.Additionally, aTC products have extended beyondthe traditional boundary of the pharmacy and intogrocery and other channels; and the role of the pharma-cist has expanded from that of medical professional toone that includes selling and marketing aTC productsto consumers.

At the same time, changes were taking place withinCNS. When Morfitt joined CNS in 1998, she beganpulling together a new management group with exten-sive experience in marketing consumer packagedgoods, including globally. CNS began seeking "hun-gry" international partners who would bring greaterlocalized market expertise and direct-selling capabili-ties than past partners. Morfitt also wanted partnerswith demonstrated entrepreneurial spirit to match thatof the new management team.

The company's partner in Italy, BluFarm Group,uses its local knowledge and direct selling skills topartner with pharmacists to teach them how to increasesales of Breathe Right strips in their stores. In Italy, asthroughout much of Europe, aTC products, such asantacids, aspirin, and nasal strips, are typically placedbehind pharmacy counters and therefore not visible tocustomers. The only way to sell a product is for a

Stage 1: Explore/Test

Stage 1 to Stage 2 Criteria Screen

• Relevant market: Cough/coldcategory size, GDP and GDPgrowth

• Quality of partners• Product acceptance• Oost to launeh/support• Political stability

Stage 2: Establish the Product

Sta!iJe 2 to Stage 3 Criteria Screen

• Proven partner and distributionstrength

• Effective consumer ad andeducation programs

• Met initial trial and repeattargets

• Clear path to profits

Stage 3: Manage the Product

customer to ask for it by name. BluFarm Group recog-nized the importance of in-store advertising and salesexecution to build awareness and created point-of-salematerials, such as window and counter displays (seephoto) to let customers know that Breathe Right stripswere available in the store. "BluFarm's ability to cap-ture consumers' awareness of Breathe Right strips asthey walk in the retailer's door has beneficial resultsfor CNS, BluFarm, pharmacists, and consumers," saysMcKenna.

"Working with an experienced local partner helpsovercome surprises in global markets," says Nick Nau-mann, senior marketing communications manager atCNS. One surprise: Universal Product Codes (UPC) onpackaging are not "universal"-they are used only inthe United States and Canada. "Different forms of thosecodes in other countries can take a few weeks to sixmonths or more of government review to obtain," hesays.

Even the same packaging colours do not workaround the globe. Research with domestic consumersrevealed that they wanted darker packaging to suggestthe strips' use at night by snorers and those with stuffednoses. '''Too grim and negative' Asian and Europeanconsumers told us," says Naumann. Breathe Rightstrips in those countries have a lighter, airier look thanthe domestic packages, to convey the open feeling onegets from the nasal strips.

Understanding I:::!uyers and Markets PART TWC

MANAGING GLOBAL GROWTH

Today, Breathe Right strips are sold in over 25 coun-tries, and global sales make up a growing percentage o;CNS business each year. To ensure the Breathe Righ;brand continues to meet growth expectations, CNS nouses a three-stage approach to penetrate and develonew markets:

• Stage 1: Explore/test the concept- Use screening criteria to identify high-potentia.

markets- Identify potential partners- Validate concept with research- Develop strategy and launch test market

• Stag~ 2: Establish the product- Penetrate the marketplace- Refine messages for local market- Evaluate partnership and marketing strategie

• Stage 3: Manage the product- Achieve sustainability/profitability- Exploit new product and new use opportunitie

Overall, this approach starts with what works domesti-cally and extends it into new markets, paying clo eattention to local needs and customs. Throughout thethree stages, CNS conducts market research and makefinancial projections.

As shown in the figure, at each stage of the markedevelopment process, performance must be met for thproduct to enter the next stage. Once success witBreathe Right nasal strips is established in a countrythe groundwork is laid and international partners hawthe ability to introduce other Breathe Right products.such as Snore ReliefTMThroat Spray, and Vapor Shot'?personal vaporizer.

LOOKING FORWARD

"We believe the Breathe Right brand has great poten-tial, both domestically and around the world," saysMorfitt. "Growth will come both from further expan-sion of Breathe Right nasal strips and from other drug-free, better-breathing line extensions," says Morfitt.

QUESTIONS

1 What are the advantages and disadvantages for eNS tak-ing Breathe Right strips into international markets?2 What are the advantages to eNS of (a) using its three-stage process to enter new global markets, and (b) havingspecific criteria to move through the stages?3 Using the eNS criteria, with what you know, which coun-tries should have highest priority for eNS?4 Which single segment of potential Breathe Right stripusers would you target to enter new markets?5 Which marketing mix variables should eNS emphasizethe most to succeed in a global arena? Why?