The Ides of March are upon us and perhaps the nutraceuticals industry should learn a lesson from Julius Caesar, who was not wary enough to prevent his assassination that day. It seems some firms interested in nutraceuticals are wary of something in today’s business, although they are not sure what. After all, Kellogg pulled back from its strategy of building its own brands and instead bought an existing one. Kraft recently bought two brands. On the supplement side, marketers are groaning that there is no big hit product this year. What must nutraceutical makers beware of to avoid plunging millions into development, only to have failure?

Marketing As Science

Avoid forgoing science. I’m not talking about the kind of science that provides substantiation for the substances. Marketing and strategy have a great deal of science that should be attached to them. In Sergio Zyman’s book of last year, The End of Marketing As We Know It, he suggests that much marketing needs to be replaced with the scientific examination of customers, the marketplace and competitors. His hypothesis that led to his book title is that many marketers would have others believe marketing is mostly art, that there is some mystical discovery of a product with highly desired attributes and that the creation of the right advertising by creative types will make a brand millions overnight. That may actually be true for a few products that are being sold via infomercials (although the cost of entry is higher than most people think), but it is not as important as approaching marketing scientifically.

Some in the marketing community spend a lot of effort winning awards, rating which Super Bowl spots were most liked and perpetuating a myth that marketers can wave a magic wand and cook up some mystical success. That is bologna. I agree with Sergio! To be clear, awards are not bad, but a number of award-winning spots have not sold nearly as much as ads that would never win an award. We should not care about Super Bowl spot ratings-those paying the $2 million should have developed ads that are based on strategy and are pre-tested; then they must care about how much they sell as a result.

We must construct systematic market research that helps us understand what the consumer wants even though he or she cannot tell us outright. We must use qualitative and quantitative techniques that are valid, reliable and representative in the technical sense. We must be ready to correct our course when we get new information. We must merge product development with consumer research so that we are bringing to market a product with an appropriate mix that consumers will respond to. We must understand why a blind taste test, absent of brand name, may lead us to a different conclusion than a branded concept with a product. We must understand that we must measure results. We must see “marketing” and the development of strategy as scientific. And we must have a strategy!

Given this rather brief description of marketing as science, what is going on with nutraceuticals to which this can be related? Many current brands with ongoing success-from Tropicana calcium-fortified juice to Gatorade to Centrum to Powerbar-have been developed over time. They have had their share of modifications and in some cases even minor failures. If we wish, we can make the case that one of those, Powerbar, was somewhat less market research driven and more methodically driven. Company founder Brian Maxwell went from what he wanted to what other runners wanted to what other athletes wanted to taste improvement, with a few rather poor products along the way from his telling of the tale. He also distributed from the back of this car at marathons in the early days, then used small space ads and today is a leading advertiser, having learned much about the message. This is the old experimental model of science. It is also the path chosen by most entrepreneurs-and keep in mind that many of them face failure. Nevertheless it is a scientific discovery.

A Question Of Time

Many of the top food and supplement firms do not feel they have the luxury of time to develop. While I’m not certain the question is as much one of time as it is one of discipline, many have, instead, chosen an alternate strategy. We are seeing a number of acquisitions. Brands that are now being acquired by bigger firms have also developed over time. Boca Burger (now Kraft) and Worthington Foods (now Kellogg) are not overnight successes. In fact, if I have my history correct, Worthington was previously an acquisition and divestiture of a very large firm. Each of the acquisitions has been nurtured through trial and error learning curves over quite a long time. The scientific process is at work.

What about the new brands being developed by the big firms? Benecol has course-corrected many times. From the outside looking in, the people at Johnson and Johnson seem to be methodically and scientifically pursuing success. I’m not as convinced, as I’ve written before, that the other brands that have been pulled from the market had pursued the same methodological rigor, though I must admit we do not know of their market research prior to and during launch. My point is that those brands that are methodically approaching this scientifically will have a greater likelihood of succeeding. At this point Benecol seems to be one of those.

The dietary supplement industry is characterized by brands that are umbrella names with many different items in their line, by a proliferation of brands in the marketplace and by a number of fad items especially in the last five years. There have been more entrepreneurial firms that were less likely to worry about exclusivity but made money on the fad items. Some of those firms are now concerned that the fads have faded. Yet this is a prime example of not building, scientifically and methodically, a sustainable business. In addition, a few of the major national brands were late in entering the herbals market. Finally, the supplement industry has more umbrella brands than most industries. This may not be the formula for long-term sustainable brands.

So I wish to challenge you, the reader. I know from many conversations about nutraceuticals that firms wish to cut development and market launch timing to develop the next $200 million sustainable brand. This may lead to quick decisions. It may not lead to the type of precise marketing science it takes to develop sustainable brands, especially when firms are as anxious to quickly discontinue a market entry if it’s not immediately successful. How many brands can you think of that have been launched in the food industry or supplement industry in the past five years that have been a two year sustainable brand above $150 million? If you come up with much of a list, send them to me. It appears to me that all of the rushing has not led to that many successes.

NW

Greg Kitzmiller is a marketing faculty member at Indiana University’s Kelley School of Business, Bloomington, IN. He is also on the Board of Advisors and is part of the faculty for the Johnson Center for Entrepreneurship at Indiana University ‘s Kelley School of Business. He combines international and domestic strategic and marketing management experience with university teaching, professional speaking, executive education and consulting. Mr. Kitzmiller can be reached at 1309 East Tenth St., Bloomington, IN 46405-1701; 812-855-1004; Fax: 812-855-6440; E-mail: [email protected].