Building Concentric Circles

It’s more than just the core that’s important in product positioning.

By Greg Kitzmiller

When you look at building a strong brand, people tend to forget that it takes a lot of time and effort and that we are still a very young industry. In addition, on the supplement side of the business we are still dealing with quality issues. While there has been consolidation—a sign of a maturing industry—there is not consolidation into a handful of firms that would not risk their reputations by marketing questionable quality product. There is not consolidation to the point that there is a strong balance between in­dustry and regulators. There is not consolidation to the point that a few key marketers communicate clearly about product benefits. These things happen in many developed industries. There is also a lack of overall knowledge of botanicals to the point that even when tests are done to in­vestigate quality or potency it is possible that a good lab will still use the wrong measure. These are signs that the industry is still in a somewhat early stage of development.

Many industries went through this turmoil early in their history, which for most involving food products was a long time ago. In the U.S. whiskey business, for example, it is rather interesting the legal struggles they’ve had over the years especially during the early years when there were hundreds of U.S. distillers. Now, in such developed industries, there are a limited number of key players and one large trade association, which deals with legislative issues and assists in determining quality standards and GMPs.

This is clearly not the case with the supplement industry. On the one hand, Whitehall-Robin’s Centrum accounts for one-third of all multivitamins sold though food, drug and mass merchandisers (Tan Sheet 2/26/01 referencing IRI). On the other hand there are so many players in each channel that keeping a list is quite a task. The industry tends to organize by sales channel, so there are multiple trade associations. While there have been some cooperative efforts between the CRN, NNFA and AHPA, that is still not the same as representation in one trade association. What does this have to do with individual firms’ strategies and future planning? If there is less coordination at the top it is much more difficult for a group of firms to influence the market, the consumers or the regulators. It also becomes somewhat more difficult for an individual firm to predict the future. All of this leaves firms operating in a somewhat chaotic market.

So How Do You Define Product Strategy?

When chaos reigns, it is often wise to go back to some basic principles and to think through product strategy carefully. Some executives tend to see product strategy as simple and one-dimensional. I see product strategy as a group of concentric circles. In the center is the core product—which is usually generic. A product is a car, or in this case a supplement. The next circle provides more specifics such as—the product is ginseng. The concentric circles coming out then represent all of the attributes or features of the product that may be of interest to the purchaser. With supplements these layers may answer such questions as: Is this safe? Is this unique? Will I notice an effect? Can I trust this? Is this a popular or recommended product?

Notice that those series of questions make up the brand and address issues such as quality, safety, efficacy and other key variables. The consumer peels away these circles like peeling an onion. The more complete the circles the better the consumer is likely to feel about the product. If a product relies on inner circles, such as a generic substance, when the generic substance is the subject of negative publicity, that product suffers as a result. Mega-brands like Coca-Cola, Gator­ade and Centrum don’t operate with only the ingredients as their base. Some might mistakenly believe that Centrum relies on its ingredients. Instead, Centrum relies on its positioning as complete and up-to-date. They’ve spent millions helping people trust the brand by building their concentric circles of product layers through revising the product, modern packaging, strong communications and product quality.

Many brands in the supplement industry have not built their concentric circles. It appears many have labeled a generic substance, tacked on a structure function claim and put product into distribution. Yet we can build more concentric circles than those listed so far.

There is yet another outer layer of concentric circles that some call the augmented product. These provide features not directly associated with the physical product itself. Does the product provide information for the user? Is there an 800 number, website or both for the user to access? Is there a guarantee? Is the product readily available in many outlets? These circles really build the brand to a greater level of customer satisfaction. You may play with your own concentric circles. You may find some for supplements not included here. There is evidence that the more you can build concentric circles as your product positioning, the stronger your total product will be.

In addition to firms working on product positioning, it appears the industry could indeed use some overall industry guidance. As more firms build their complete product positioning built on this concentric circle concept, it is possible that more strong brands would emerge. As strong brands emerge, the producers of these strong brands are in a strong position to provide industry leadership. There are already substantial firms in the industry. Some of those firms and many of the trade associations are providing some leadership. A key to solid strategy for supplement firms would seem to be to build on the positives by building stronger brands.NW