Taking compliance up to 100%?!?

A small population study is in progress that is working determine if packaging can increase patient compliance (actually taking medication once you get it home).  This is a key for not only pharma items and could also lift the usage of vitamins and supplements.  I’m awaiting the final results because the interim control compliance is very high at this point at 71% (I’m basing this on other studies I’ve seen where compliance is around 50%).

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The packaging used is described as “The bottles, called GlowCaps and produced by Cambridge, Mass.-based Vitality, alert patients with light and sound when it’s time to take their medicine. The bottles also generate missed-dose reminder phone calls and refill reminders. Automated progress reports also are sent to the patients’ physicians, family or caregivers.” And they are getting compliance of 98% so far!!!

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We’ll check back at the end of the year to see if there are any options for bringing some of the key features of this packaging to OTC options.

What happens to non-OTC companies when they dapple

The FTC cracked down on Nestle’s claims for its BOOST Kid Essentials claims, specifically:

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  • prevents upper respiratory tract infections in children
  • protects against colds and flu by strengthening the immune system
  • reduces absences from daycare or school due to illness

For anyone who has been a copy approval process at the large OTC manufacturer, you’d  notice that these claims are very definitive for supplements.  Nestle was pushing the envelope with their claims and I’m surprised the regulatory lawyer or someone similar allowed them to go out with prevention and protection claims all based on the combination of:

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  • 25 essential vitamins and minerals
  • 7 grams of muscle-building protein
  • 244 energy-packed calories - such a difference appealing to parents of picky eaters and adults looking to save calories
  • A good source of antioxidants (Vitamins C and E, as well as Selenium) - I’m assuming these are included in the 1st bullet

One of the keys to the claims is that “containsLactobacillus reuteri Protectis, delivered through the straw”, i.e. the straw is full of probiotics.  When basing your probiotic claims on general scientific literature, you should either have a no question human clinical study (which Nestle doesn’t) or use the softening words like “help”.  There is always internal arguments around how strong your claim is and the potential benefit of going out strong and pulling back (the public won’t actually know the FTC did anything – look at Airborne still doing well).  I believe better to be honest and claim something like “helps build the immune system to tackle colds and flu” better than either misleading claims or saying nothing.

How will McNeil's other brands recover?

Today BNet published an interesting article, basically calling for J&J to fire someone over the recent McNeil issues (read it here).  I actually think the more interesting question raised in the post was – “Can Motrin, Benadryl and Zyrtec ever recover?”  When the FDA comes out and says you can purchase the generic offerings (here for the kids products) instead of the branded versions, this is a big blow to all the work that CPG companies put into creating brands and differentiating them from private label.  I agree with Jim Edwards, who authored the article – McNeil will invest to get Tylenol back on track, it is the headline brand at McNeil and one of the keys within J&J (from a “face of J&J to consumers” POV).

So, once the FDA has blown the cover off your brands, what can you do?

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Zyrtec – In general, I don’t think that the Zyrtec brand will suffer too much, as it was only the children’s that was recalled, and most of the sales (~90%, thanks Euromonitor) are adult based.

The children’s options, Motrin and Benadryl – Motrin is a horse for the children’s franchise and they’ll need to figure out how to regain parent’s trust across the the Tylenol/Motrin/Benadryl line-up.  Motrin is as big as Tylenol, and Benadryl will just come along for the ride.  McNeil will spend here to regain the trust, no doubt.

For adult Motrin, which has always been a secondary concern behind Tylenol, I think it is on a downward slide that it won’t recover from due to three reasons:

  1. No money – Tylenol and the kids franchise will take all the investment McNeil can muster
  2. Branded competition – Motrin trails Advil in the category, and there is no reason to think that Advil won’t get more aggressive in capitalizing on the recall
  3. Private label – who wouldn’t have a field day with the FDA saying to buy private label instead of brands, and this is an easy one to push over the edge.  Retailers may decide to reduce facings for Motrin, increasing both PL and Advil

I’ll definitely be watching to see how McNeil approaches rehabbing the brands, as it will be a fascinating case study if done well.

Really, this is a mission?

Wal-Mart: love them or hate them, it is hard to make really serious money in CPG without them.  Bill Simon, newly appointed CEO, put out a standard re-org memo that had an interesting paragraph.  The 2nd paragraph states:

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As I said earlier this week, our mandate is clear: increase customer traffic, make sure our products are relevant to our customer and never give an inch on price leadership. These areas matter most for the continued growth of our business. They require strong leadership and a sense of urgency. Today, I’d like to tell you about the Walmart US senior leadership team that will move us forward.

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Wal-Mart’s mandate is clear:

  1. Increase customer traffic
  2. Make sure our products are relevant to our customer
  3. Never give an inch on price leadership

And this is why shopping at Wal-Mart just plan sucks – it isn’t about the customer experience, ease of shopping or loyalty – it is price and pushing more people through the store.  This is the mandate that lead to a -1.4% decline in US same-store sales in Q1, whereas Target saw sales increases.

People ran to Wal-Mart when the economy tanked, but with a little more cash in the pocket or hope in the heart, they didn’t want to spend time in these stores and went back to Target et al.  And Wal-Mart does not plan on focusing on the customer experience, because back in January 2010, then COO Billy Simon put out a memo saying “Our customers tell us that our stores have never been better..”  so they are pretty content with the current situation.  As one of my favorite bosses used to say (thanks Lynne)  “don’t benchmark off failure” – and telling yourself that you’re stores are better than ever is just that.

What can we learn here – focus on the customer needs and benefits will bring in more dough in the long run.  Customers aren’t just walking wallets that make decisions only on price – they want a good experience/product along with value.

  • about me

    Leading the consumer healthcare and CPG research/analyst team for SmartAnalyst.

    4+ years at Johnson & Johnson in consumer marketing across a variety of different franchises

    Practicing naval architect (ship design) for 10 years post undergrad. It taught me there is always more than one way to get something done and to think about the 3 ways to attack a problem from the start.

    Orange - love the color, hate the fruit.