brand strategies: Profit in Loss

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A customized diet program has consumers asking for more.

The Memo

The year: 1998.

The challenge: Launching Xenical, a prescription obesity drug.

The prize: A share of the 54 percent of the U.S. population that is overweight. Not everyone uses prescription drugs to lose weight, but the market potential is huge.

The complication: Redux, the first prescription obesity drug, had recently been yanked off the market by its manufacturer because of the high-profile "Phen/Fen" fiasco - a combination of two diet drugs that was implicated in heart valve damage in some patients. Roche Laboratories, makers of Xenical, had to figure out a way to overcome the negative halo that had enveloped the category. "First, we had to make it clear that Xenical was a totally different product. It's non-systemic: It's not absorbed in the blood stream, it works locally in your stomach," says Dan Reinhardt, product leader at Roche.

The company also had to ensure that consumers understood other important information - and not all of it was pleasant. For example, Xenical patients must stick to a low-fat diet. If you're on the drug and have a meal that has more than 30 percent of its calories from fat, you can wind up with a symptom typically not discussed in polite company: uncontrollable bowel movements. Failure to communicate the side effects would not only torpedo good word of mouth, it would be bad for patient health.

Roche execs also had to convey to diet-weary consumers that the product could really help shed pounds while still creating reasonable expectations about its effectiveness. Finally, the team at Roche had to figure out some way to meet its business objective, keeping people on the program long enough for refills to pour in.

The Discovery

The team at Roche needed ideas. So, in late 1998, the firm hired Strategic Business Research in Horsham, Pennsylvania, to conduct 10 focus groups around the country. The research revealed that the company's target market of obese patients was far from cohesive. Gender, the presence of children in the household, employment status: all created different challenges and barriers to sticking with a weight-loss program. For instance, a parent might have to prepare two different meals - a low-fat dinner for himself and good old mac and cheese for the kids. A single working person might find office lunches to be the biggest hurdle.

To verify and flesh out their findings, Reinhardt next commissioned a quantitative study of 1,000 consumers from Attitude Measurement Corporation in Southampton, Pennsylvania. The company tested 800 variables in the weight-loss experience, including demographic and psychographic measures. It also tested for ratios - how important one variable was to dieters versus another.

Attitude Measurement discovered an even more complex segmentation. Gen Xers, for example, had more fast-food eating habits than baby boomers. The company also discovered a wide array of reasons why people wanted to lose weight. Some consumers wanted to improve their health, others hoped to fit into a dress for a special occasion. Younger patients were more concerned about the cosmetic aspect of obesity, whereas older consumers were more interested in the medical implications such as hypertension, high cholesterol, and diabetes.

Armed with this information, Roche execs realized they would have to tailor their consumer education messages to specific demographics. They then set out to determine how to market Xenical to disparate groups, from the single male concerned about his abs to the mother of four thinking about the calories from family pizza night. "If the content isn't relevant, people aren't going to read it and they won't remember it." says Reinhardt. "We were going to have to go way beyond the brochure."

The Tactics

"Our research led us down the path to create a one-to-one marketing program," Reinhardt says. Roche named the two-year program XeniCare and offered it free to Xenical patients. Launched along with Xenical in April 1999, the program is personalized around 75 different variables.

Consumers find out about XeniCare through their doctor, in accompanying literature when they fill their prescription, or from Xenical's direct-to-consumer ads. To enter the program, consumers either log on to the Web site or dial an 800 number and answer a detailed questionnaire. (Roche tapped MicroMass Communication, in Raleigh, North Carolina, to create the program materials.) The questions range from basic demographic information to more complex inquiries about barriers to weight loss. For example, patients give the most important reason they want to lose weight and how often they eat away from home. They even indicate whether they eat out for business, at fast food restaurants, or with friends and family.

The answers determine the mix of information on fitness, nutrition, and the weight-loss psychology that the customer will get. The customer receives a special four-page brochure that incorporates the patient's name and some of the information he had provided in the questionnaire. For the first 12 weeks, a series of new brochures arrives, each with different food, nutrition, and exercise articles. The mailings come every two weeks to start, on a monthly basis from week 13 until one year, and then every three months after that. Via the Internet, patients move at their own pace.

The Payoff

Some 150,000 patients have enrolled in XeniCare, according to Reinhardt. People in the program have lost an average of 17 pounds in eight weeks, compared with an average weight loss of 13 pounds of non-enrollees. Program members are also less likely to experience side effects than people who are taking Xenical without participating, and they report making positive changes in their eating behavior and physical activity. What's more, XeniCare has less than a 2 percent dropout rate.

XeniCare is also meeting its business objectives: The refill rate for program enrollees is 77 percent, higher than the 69 percent for those who use Xenical but aren't in the program. And XeniCare patients tend to stay on the medication longer. In fact, 80 percent of XeniCare participants say that the program increases their ability to stay on a weight-loss schedule over the long term. Datamonitor estimates that worldwide sales of Xenical will reach $2 billion in 2005, doubling their 2000 sales estimate.

What the Critics Say

"The advanced level of customization and personalization really sells the program," says Joyce Flory, principal of Communications for Business and Health, a health care Internet consulting firm in Chicago. "But I would have advised them to be more comprehensive with their Web site, to make it a lifestyle portal in a sense. What you want to do is create a relationship with a potential customer. Hopefully, they won't be taking Xenical for the rest of their lives, so you want to create an ongoing relationship with the customer and maybe the entire family about weight loss and food."

Kym White, managing director of Ogilvy PR Worldwide in New York, says XeniCare could benefit from becoming more interactive, perhaps by adding more features, like a support group element or a buddy system. "That's a challenge for any Web site - telling consumers why they need to tune in more than once or twice," she says.

Reinhardt says they are planning to make the site more comprehensive. He points out, however, that only 20 percent of XeniCare participants receive their information on the Web, although 40 percent have Internet access. XeniCare's online participants match general trends on the Internet, says Reinhardt: They tend to be younger, and, although 88 percent of XeniCare participants are female, Web users tend to be male. He speculates that men may feel more comfortable working through the Web site because it provides anonymity. The snail mail version, on the other hand, allows people to easily keep the information on hand.

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