Buyers Decisions on Dietary Supplements in Mass Market

Stephen Holt, MD

I am passionate and dedicated to the future of natural medicine, but I cannot approach commerce without a sense of humor. The start of a New Year (2007) is a time for reflection. Reflections can generate contrarian thoughts which, in turn, serve to challenge the status quo. The individual who exercises the wholesale buying decision in retail practice wields enormous power in the mind of the potential vendor. Therefore, let us intrude into the thought process of some buyer’s decisions.

Certain buyers of supplements for retail locations may worship at the shrine of unreliable IRI data, while they ponder the accuracy of new databases e.g. Nielsen ratings. Did the buyer who utilizes these data ever pause and think that the data does not include information about the dedicated dietary supplement purchaser who shops with repetition at independent and aggregate health food store enterprises? Perhaps, these are customers that should become the focus of business growth for mass market……a challenging concept in the health food industry.

IRI data are often the “chicken or egg” argument used by the buyer to challenge the vendor. These data are often used, perhaps naively, to disqualify a purchasing decision. This sequence of apparent “logic” in decision making, by using existing product sales information, may mislead the buyer into believing that product moving in other retail locations is the key indicator of potential success in their stores. However, I test the logic of this circumstance. Few people with smart money buy a stock when the news has pushed the stock value in the market!

If something is selling in high volume in one retail location, it does not necessarily mean that it will sell well in another retail location, for many reasons. Should the wholesale buyer focus on the “type” or characteristics of the customers who comprises the group that determined the reported sales information? The characteristics of shoppers differ by location, demographics etc. Retail organizations want to brand products in their own identity for their consumers, but these organizations may forget that “vendor-branded” products are often perceived by the consumer to be part of the overall identity of the retailer. This situation may have positive or negative impact for retailers.

If buyers select dietary supplement products that are not evidence-based, efficacious or safe, then they may be playing with the consumer perception of the retail organizations that they serve. The dietary supplement industry in mass market is characterized by branding a commodity (e.g. “weight loss” nutraceuticals), often by the use of exaggerated or even illegal health claims which are not sustainable or defensible to industry “watchdogs” (FDA and FTC). In fact, the dietary supplement industry often fails to accept that a drug claim is illegal e.g. weight loss. Is the buyer for mass market insulated against false claims made by vendors or third parties about supplements?

Pushing up IRI data by misleading of even false treatment claims about dietary supplements has resulted in many negative outcomes. Such outcomes have not been forgotten by a large number of consumers or “buyers” who got their “fingers bitten”. The end result of this product pushing activity is usually short lived. Sometimes handsome sales ensue but they may rapidly be accompanied by the “bundle back” strategy, determined by mass market vendor contracts which leave both vendor and retailer dismayed, perhaps by necessity.
Retailers in the dietary supplement industry seeks indemnifications from vendors concerning safety, quality, efficacy and compliance with regulatory guidelines. Is this merely a false sense of security, in some circumstances?

Indemnification is a “Napoleonic phenomenon”, but Napoleon met his match at the Battle of Waterloo, with predictability and inevitability. However, buyers and their supervising management team must be aware of the phenomenon “duty of care”, at law. In fact, there are examples of sanctions taken against retailers who supported vendors directly of indirectly in contraventions of regulatory guidelines, most notably promoting illegal treatment claims about dietary supplements. These circumstances have resulted in some retailers having to operate under a Federal Government “consent decree”, usually after a run-in with agencies such as the FTC. Legalities aside, buyers of dietary supplements must be increasingly aware that the safety and efficacy of any healthcare intervention determines consumer satisfaction, sustainability of sales and confidence in the retail location that sold the product.

Beyond the legal “mish-mash” and “one-sided” attempts to analyze buying decisions about supplements, it may be more important for buyers in chain markets to “get inside the head” of the supplement purchaser. Marketing predators are very successful in promoting the “one-time” purchase of a supplement that has no real health benefits, but the culture of large retail organizations is to focus on clientele who repeat purchases. These cultures clash in monotonous continuity. In fact, one of the most dynamic sets of shelf space in many retail locations is the supplement section where store staff has to “play musical chairs” with defunct, branded supplements.

Would it be better to sell a supplement that actually promoted health, with a credible evidence-base for well-being? Perhaps a buyer could reflect upon issues such as strategic advantages of certain dietary supplements that may provide consumer satisfaction with market sustainability. Let me draw upon the analogy of a branded OTC drug, which often has a stalwart following. This consumer following cannot be duplicated by dietary supplements as they are currently sold. It may be marvelous to have a dietary supplement line that behaves like a branded OTC drug, where marketing initiatives create a sustainable annuity and retail peace?

Reams of information exist on the model of “strategic advantage” in business practice. Few people have taken any trouble to think about such advantages in dietary supplement presentation in retail practices. Working against supplement purchases are the powerful forces of confusion about supplements among both retail store staff and consumers. Of course, such confusion can be overcome by staff training, if health food chains can avoid chronic problems with rapid staff-turnover. Look at supplement shelves in retail and see how confusing retail purchase decisions are to customers.

Education of retail store staff, (including pharmacists) is known to move supplement products and provide greater sales per square foot of a retail location, but consumer education is even more powerful, providing that the education is credible. The average healthcare consumer does not walk into retail stores thinking about the specific dosage of a vitamin or nutrient, they shop with a healthcare concern in mind. Therefore, the first strategic advantage of an ideal line of dietary supplements is to have label conformity with condition specific product titles e.g. Heart Naturally TM, Sleep Naturally TM, Menopause Naturally TM etc. This approach removes both retailer and consumer confusion and it is ideal for stores that do not have staff who perform direct, hand selling to customers e.g. supermarkets, hypermarkets and even chain pharmacies.

A second and increasingly important strategic advantage of any dietary supplement line rests with the scientific basis of the formulation and a “credibility factor”. More than 85% percent of all dietary supplements are formulated by individuals with no substantial biomedical training or clinical experience in healthcare. This circumstance has led to variable degrees of success because marketing and salespeople tend to know what will sell. However, there is a major difference between what will sell once versus what will sell in continuity with consumer satisfaction.

The modern consumer of dietary supplements has started to ask “who formulated the supplements that I may consider taking?” Without losing friends, I wonder how many buyers are now asking “who formulated the supplements that I may consider purchasing for retail distribution and what credibility underpins the dietary supplement? Of course, this dialogue has nothing to do with paying homage at the shrine of IRI data.

The modern dietary supplement consumer is well educated in natural medicine with a knowledge base that may transcend that of retail store staff. Inevitable as this circumstance may be, the individual with the buying decision for store placement must know more than the educated consumer. After practicing medicine for 35 years, I am tired of hearing the opinion that treatment decisions made by physicians are based on education from pharmaceutical representatives. Arguable as this opinion may be, where do wholesale buyers get their education on dietary supplements?

I have given educational lectures to mass market buyers at trade meetings (e.g. ECRM Expo etc.), in the hope that I may help them develop a knowledge base about dietary supplements that they may purchase with informed judgment. In this forum, there is no room for specific product nepotism or promotion. I believe strongly that there should be credible, unbiased sources of educational material for supplement buyers and their management team in mass market. This need remains unfulfilled, even though there is enough “spare change” in the market to develop unbiased education in dietary supplement usage. The philosophy of “say anything or do anything to sell a dietary supplement” is the antithesis of the current needs to promote health and well being.

I submit to the readers of this article that my proposals are the real future of the dietary supplement industry. Our industry must be evidence based and sustainable in its market presence to support the health of the nation.

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