Chris Fontes

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• By
• Chris Fontes
• Virginia Genao
• Jennifer Pique
• Jeana Townsend
• Rob Vassel

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Olean Is A Revolutionary ProductProduct
Development Background

• Initially scientists were looking for an easily
  digestible fat that would help premature babies
  gain weight
• 25 years in development
• Over 250MM invested in RD
• Olean is the brand name for olestra
• FDA approved in 1996 for savory snacks

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Olean Is A Revolutionary Product
Nonmetabolizable Fat

• Unlike other fat replacements, olestra is a true
  fat
• Heat stability, texture and taste is extremely
  similar to normal fat
• Sucrose polyester molecules are too big to be
  absorbed by the body
• No calories, absorbs some essential vitamins,
  some gastrointestinal distress

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Olean Is A Revolutionary Product Visual
Representation
Regular Fat
Olestra
glycerol
sucrose
3 fatty acids molecules
7-8 fatty acids molecules
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Olean Is A Revolutionary Product Radically New
Continuous Dynamically Continuous Discontinuou
s
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(No Transcript)
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OlestraHouse of Quality
Product Specifications
User Needs
Cost
Consistency
Scientific
Flavor
color
composition
enhancers
(in order of importance)
offer health benefits and no health risk
o
o

-
o


o
maintain or improve texture of product
maintain or improve taste of product
o

o

be socially acceptable
o

o

be similarly priced to normal cooking oil


o
-
strong positive effect positive effect
0 no effect - negative effect
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Stakeholders are key to Oleans
successStakeholders
Farmers
Procter Gamble
Regulatory Bodies
Medical Community
Distributors
Customers
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Critical Issues Have A Large ImpactPolitical
Company
Ecosystem
Infrastructure

• International regulatory approval
• Impact of warning labels
• Life of patents

• Co-branding and licensing agreements
• Cooperation of players

• Establishing a standard

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Critical Issues Have A Large ImpactBehavioral
Company
Ecosystem
Infrastructure

• Changing consumer attitudes
• Dimensions of value evolve from taste and texture

• Attitudes towards Olean as an ingredient
• Attitudes towards products with fat-free
  ingredients

• Consumer attitudes towards fat substitutes and
  health trends

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Critical Issues Have A Large ImpactEconomic
Company
Ecosystem
Infrastructure

• Huge investment required
• Potential huge returns

• Amount consumer will pay for a new fat substitute

• Soybean farmers of the world
• Soybean supply
• Potential international expansion

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Critical Issues Have A Large ImpactSocial
Company
Ecosystem
Infrastructure

• Opinion-maker effect
• Jay Leno

• Will consumers think of Olean as the standard?
• Negative halo effect on other fat free products
• Effect of media PR
• Reaction of medical community

• Acceptance of serving Olean to guests
• Acceptance of serving Olean to children

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Critical Issues Have A Large ImpactTechnological
Company
Ecosystem
Infrastructure

• Trade secrets and patent infringement possibility
• Impact of competition

• Olean requires process changes
• higher frying temp
• Production changes

• Educational Curriculum
• home ec
• culinary schools
• ag science
• Impact of other fat replacements

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The Bayesian NetworkOverview of Network

• See Hugin

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The Bayesian Network Top Threats/ Opportunities

• New Substitutes 3.71 (/-)
• Word of Mouth 1.10
• Competitor RD Levels 1.01
• Supply Available 1.01
• Snacking Trends .93
• Health Trends .87

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The Bayesian NetworkTop Impactful Decisions

• Plant Ownership 3.04 (/-)
• Manufacturer Price 2.88
• Cooperative Marketing 1.61
• Advertising 1.29
• Patent 1.04
• Scientific Improvements .82

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The Bayesian NetworkThe Upside

• Own Plant Manufacturer P is Low Patent Y
  Cooperative Marketing Y Advertising H
  Scientific Improvements H 10.20 (65.43)
• All Above New Sub N WOM P Competitor RD L
  Supply Availible Y Snacking Trends H Health
  Trends H 19.08 (74.05)

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Further Research Will Clarify PotentialResearch
Questions
Network Node
Research Question

Product Benefit
1.
How do consumers value the various possible
nutritional
characteristics? Which are most valuable and
what is the utility of
each characteristic?

2.
What is the expected price elasticity of consumer
and manufacturer
demand?

Behavioral Trends
3.
What are the key drivers of snacking frequency
and snacking
choice?

Social Trends
4.
What impact will social (Jay Leno/activist)
opinions have on
snacking choices?

Consumer Awareness
5.
What type of advertising will be most effective
in building
consumer awareness?

Competition
6.
What is the competitive set for Olean as
perceived by
consumers and manufacturers?
7.

How do consumers perceive the value of these
competitive products
relative to Olean?
8.

What is the product development and marketing
capability of
existing and potential competitors?

9.
What is the benefit of legal protection (patents,
trademarks, and
trade secrets) in protection/retaliation against
competitors?

Manufacturing
10.
What are the various manufacturing options and
what are their
Capability
relative costs/values?
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Questions???