Raisio Group and the Benecol Launch Case Analysis

Benecol was launched in 1955 by the company Raisio in Finland (“Benecol,” 2010). Benecol has become a successful additive to multiple product lines due to its unique ingredient of plant stanol ester. The ingredient has been proven to reduce cholesterol levels and can easily be added to any food (Grant, 2010). Raisio, up until 1997, produced much of the plant stanol it needed and was self-sufficient in its exploitation of stanol ester technology (Grant, 2010).

Raisio then made the decision to become part of Johnson & Johnson in order to gain global marketing, manufacturing, and distribution capabilities. Through this partnership, Benecol has maintained its position well within a very diverse group of products. Benecol has stood out with its competitive advantage and its differentiation advantage by having products that contain cost premiums, but that are unique in the way they help lower cholesterol

Synopsis of Benecol

Benecol became very popular in the 1990’s when people had a growing concern over cholesterol levels and how to control them (Grant, 2010). When a group of scientists in Finland determined that plant stanol ester could lower cholesterol levels, they created margarine to incorporate the ingredient (Grant, 2010).

Raisio put systems in place and established technology to make it one of the few companies that could produce its own plant stanol ester. Benecol is now the world market leader in cholesterol reduction and is a forerunner in the innovation of new products that can incorporate the ingredient, plant stanol ester (“Benecol,” 2010).

Hey have a great reputation and have had numbers of success with trials and food authority exams to show that the plant stanol ester does indeed lower cholesterol. Just this past year, Europe acknowledged that Benecol is proven to lower cholesterol (“Benecol,” 2010). Benecol is international and has products in over 30 countries, with the newest market control being in Columbia.

Relevant Factual Information about the Problem or Decision the Organization Faced

Raisio as a company faced many challenges while developing Benecol. While the company had a great product that it knew would be a great seller, it also realized that it would have a hard time just being a supplier of the ingredient and not having a great networking, marketing, or distribution outlet.

The Johnson & Johnson merger seemed to be the best option for the company to allow for mass marketing and distribution. Benecol also faced numerous competitors, such as Unilever, who also believed they had found a way to incorporate plant stanol into its foods (Grant, 2010). Aside from direct competitors, there were also many competitors in the ways to reduce cholesterol. While Raisio believed it owned the process to extract plant stenol ester, the company realized there were many other additives to food that could make it be lower in cholesterol levels.

There were other statins such as Zocor and an atorvastin named Lipitor (Grant, 2010). All of these alternatives were FDA approved pills that worked by slowing down the production of cholesterol. In addition to the medicine options, there were also many natural additives such as fish oil and flax seed oil in the market.

Benecol had to prove why its product was better and worth the price compared to other alternatives. Benecol also faced a hard look from the FDA. It is what the market considers a “functional food,” meaning it has a beneficial functional effect on the body. The FDA had first suggested that Benecol was not safe to use for lowering cholesterol and therefore, they could not claim it did so. Benecol then chose to market the item without health claims, until the FDA approved the item in 1999 (Grant, 2010).

Explanation of Relevant Concepts, Theories and Applications Derived from Course Materials

When Raisio first realized that they had a great technology on their hands of producing plant stanol ester, they immediately began to create a detailed strategy development plan.

Their success was based on its innovation to create technology to extract and produce the main ingredient in Benecol. By using a differentiation advantage which singled them out in a very specific market (foods that lower cholesterol) they were able to put plans in place to guarantee the success of the product. By merging with J&J, they create a large market for their product with multiple distribution capabilities.

Because differentiation is only affected when consumers are made aware, Benecol was marketed widely to lower cholesterol and most people know it now as a “health food” (Grant, 2010). The process of innovation and competition is also very important in the position that Benecol is in its life cycle. The product began with short production runs, with limited specialized distribution channels in 1996. It then emerged into the growth stage of its life cycle when it partnered with J& J to create multiple product lines, mass production, and competition for distribution.

Benecol seems to be in its Maturity stage at the present time, allowing for long production runs, and distributors carrying fewer lines, due to economy and less demand for high end food products (Grant, 2010). Because there are only a handful of companies that can create products with plant stanol ester, Benecol is a leader in its innovation for the technology.

Benecol is also very well diversified, and it continues to create products that incorporate the tasteless and odorless ingredient plant stanol ester in them. The newest innovation from the company has been to put the ingredient into soy based, non-milk products to appeal to those who are lactose intolerant yet still wish to decrease their cholesterol and use healthy food products (“Benecol,” 2010).

Recommendations

Benecol seems to have a place in the market when it comes to finding foods that will help with one’s health. Due to the awareness programs out on cholesterol in the recent years. More and more people are becoming fans of foods that claim to lower cholesterol. There are, however, some challenges that Benecol will have to face in the future.

While the FDA approves Benecol as a “functional food’ it may at one time decide that Benecol isn’t as beneficial as a pill. Because Big Pharma control much of the health claim disputes in the field, Benecol may one day be told it actually does not have enough proof to lower cholesterol.

A similar even happened to Cheerios, which has been claiming it lowers cholesterol for years (“Cheerios,” 2010). Benecol should continue to do multiple trail and studies to ensure that every new product with plant stanol continues to prove to be effective in lowering cholesterol.

Another strategy for growth for Benecol may be to be more aggressive in advertising. The product does not seem to be advertised widely and could benefit from more exposure, especially in the USA, whom has become health food crazed and has a large market on consumers that are always looking for new health foods to help their health. Benecol came out with an item called “ Smart Chews,” that allow consumers to enjoy a chocolate flavored, plant stanol induced chew to help lower cholesterol (“The maker’s of Benecol introduce new Smart Chews,”2004).

This item would be a big hit with consumers that are weary about taking pills adding a powder component to food. It has been out since September of 2004, yet the advertising on it seems to lack. It can be seen on store shelves, but Benecol would seem to benefit from a more aggressive marketing approach, partnered with the J&J name.

Alternative Recommendations

Benecol is also facing a slow economy in the USA and all over the world. Many people that once could afford $5 margarine or Smart Chews, cannot buy those luxuries at the moment due to job loss or pay cuts. Benecol may need to reorganize some of its units to become cost effective and to lower some of its overhead spending. But cutting out overhead costs, and concentrating on keeping its consumer market, Benecol shows signs of maturity in its life cycle (Grant, 2010).

Conclusion

Benecol seems to be a healthy alternative to taking a prescription when it comes to lowering cholesterol. Raisio did an excellent job of developing its product strategy and allowing J&J to become partners with the firm to allow for mass marketing and production.

Benecol products must continue to evolve in uniqueness and must be advertised to customers about their differentiation from other products of similar benefit. If they can continue to market well and reach out to those who are health conscience and will buy their products, Benecol has no reason to believe that it will be in decline in its life cycle anytime soon.

References

Cheerios. (n.d.). Home – Cheerios. Retrieved September 16, 2010, from http://www.cheerios.com

Grant, R. (2009). Contemporary Strategy Analysis (7th edition ed.). Chichester , West Sussex: John Wiley & Sons Ltd.

Grant, R. M. (2010). Contemporary Strategy Analysis and Cases (7th Revised edition ed.). Chichester , West Sussex: John Wiley & Sons Ltd.

The Makers of BENECOL(R) Introduce New Cholesterol-Lowering Smart Chews. (2004, September 29). Medical News Today. Retrieved September 16, 2010, from http://www.medicalnewstoday.com/articles/14137.php

What is Benecol?. (n.d.). The Official International site of Benecol . Retrieved September 16, 2010, from http://www.Benecol.net