By:

Chris Fontes

Virginia Genao

Jennifer Pique

Jeana Townsend

Rob Vassel

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 R&D Olean is the brand name for olestra FDA approved in 1996 for savory snacks

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

Olean Is A Revolutionary Product Visual Representation

Regular Fat Olestra

glycerol

3 fatty acids molecules

sucrose

7-8 fatty acids molecules

Olean Is A Revolutionary Product Radically New

Continuous Dynamically ContinuousDiscontinuous

OlestraHouse of Quality

User Needs

(in order of importance)

Cost Consistency& color

Scientificcomposition

Flavorenhancers

offer health benefits and no health risk o o ++ -maintain or improve texture of product o ++ ++ omaintain 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

Product Specifications

Stakeholders are key to Olean’s successStakeholders

Regulatory Bodies

Medical Community

Customers

Distributors

Procter & Gamble

Farmers

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

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

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

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

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

The Bayesian NetworkOverview of Network

See Hugin

The Bayesian Network Top Threats/ Opportunities

New Substitutes 3.71% (+/-) Word of Mouth 1.10% Competitor R&D Levels 1.01% Supply Available 1.01% Snacking Trends .93% Health Trends .87%

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%

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 R&D L + Supply Availible Y + Snacking Trends H + Health Trends H = 19.08 (74.05)

Further Research Will Clarify PotentialResearch Questions

Network Node Research QuestionProduct Benefit 1. How do consumers value the various possible nutritional

characteristics? Which are most valuable and what is the utility ofeach characteristic?

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

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

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

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

Competition 6. What is the competitive set for Olean as perceived byconsumers and manufacturers?

7. How do consumers perceive the value of these competitive productsrelative to Olean?

8. What is the product development and marketing capability ofexisting and potential competitors?

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

ManufacturingCapability

10. What are the various manufacturing options and what are theirrelative costs/values?

Questions???