11.01.05
Case Study: Cognizin
Business Description: Cognizin is a branded citicoline ingredient marketed in the U.S. by Kyowa Hakko U.S.A. for improving brain health and cognitive function.
Theme: Brain health takes on many meanings and interpretations in the marketplace. Kyowa Hakko U.S.A. is focused on creating and leading a distinctly new category of cognitive function products.
Background: Kyowa Hakko, Tokyo, Japan, is committed to developing, manufacturing and marketing advanced ingredient products (derived primarily through fermentation), which improve the health and well being of people worldwide. In fact, Hakko translated in Japanese means fermentation, reflecting a key technology of the company. The company operates in more than 80 countries. Its North American arm is Kyowa Hakko U.S.A., Inc., which is headquartered in New York City, NY. Citicoline has been used extensively within Japan, China and other Asian countries for the treatment of neurodegenerative disorders associated with stroke, cerebrovascular pathology, brain aging and head trauma. Kyowa Hakko has a long history of manufacturing and marketing the pharmaceutical ingredient in that market. Citicoline (cytidine 5’- diphosphocholine) is involved in the synthesis of phospholipids, which leads to increased production of neurotransmitters, and results in improvement in cognitive capabilities, as well as vision. Phospholipids have a long history of academic and clinical study related to brain function. A typical phospholipid will lead to an increase in only that phospholipid, where citicoline stimulates the body’s production of a variety of membrane phospholipids. Cognizin was launched in the U.S. last year and has several layers of competition. Currently the ingredient competes against other non-branded citicoline products, specific phospholipids, choline substitutes, and other products addressing the brain health market with different modes of action.
Situation Assessment: The U.S. dietary supplement market for brain health, which includes memory, mental acuity, cognition, mental energy, mood, and growth and development, was about $250 million at the consumer level in 2004. Products positioned solely for cognition represent about 20% of the market. The overall brain health market presents a crowded field with about 20 different ingredients vying for share, including herbals, fatty acids, vitamins and specialty ingredients. Based on a private Health Strategy Consulting study, several additional complexities exist in the market: (1) most brain health ingredients are also targeted for non-brain function markets; (2) the market is dominated by multiple ingredient formulas with only about 6% of the products using a single ingredient, and over 60% of the brands using over five ingredients in formulations; and (3) market penetration varies greatly by distribution channel, with the number one channel being the practitioner market. Eighty percent of the practitioner market is made up of leading brands that have at least one brain health product; only 20% of the top mass market brands have a brain health product.
Opportunities: The brain health market is evolving. As with other nutrition markets, through a combination of consumer demand and product supply, the market is creating definable sub-segments that address the specific needs of consumer targets. Cognition is currently a term that invokes different meaning to marketers and customers, and a distinct opportunity exists for a company to shape that definition for the market. Cognizin is focused on creating a new category that addresses the role of cognition in a variety of consumers, from students that are looking to be more alert, to professionals that need to solve problems, to seniors who want to fight the aging effects of the mind. This effort will require the articulation of a unique selling proposition, which clearly states why it should be valued in the marketplace by various consumer segments.
Lessons Learned: (1) Creating a new category requires more than having a product with unique capabilities, it is dependent on being able to clearly detail the uniqueness of the product and its connection to a consumer need. It must be positioned differently than other products on the market, and typically should articulate a distinct mechanism. (2) This effort requires focus and discipline, particularly since Cognizin provides multiple benefits, such as vision health. The essence of the brand will be clouded and diluted if other benefits are discussed, which are viewed by the market as disconnected. Once a brand positioning is chosen, it is often harmful to look to lateral positioning platforms. Likewise, as other brain health categories surface, Cognizin must confront the threat but still remain focused on its own category. (3) Success in building a new category can be measured in more ways than just sales volume. The willingness of retailers to label and allocate shelf space around cognition will be a powerful reaffirmation that it’s a category that matters to the trade and consumers. (4) This effort must begin with educating the market on how the brain works, and detailing why there is a function of the brain that benefits from Cognizin’s unique mechanism of action in a way that can not be adequately matched by other products.