REPUBLIC CENTRAL COLLEGES

Angeles City

CASE 1: HEALTH PLUS

As 2016 came to a close, Anna faced a familiar situation: Health Plus was once again unable
to meet its targets for the year. Health Plus was among the first entrants in the nutraceuticals market
when she took on its leadership role ten years ago. But despite an early presence in the country as
well as the company's expansion over the years, Health Plus remained a small player and was left
behind by its competition.
Health Plus was trying to directly compete with the market leaders, Healthy Options and GNC
Live Well. "While there is nothing inherently wrong with direct competition, the problem Health Plus
faces is that we don't really look all that attractive to the AB market relative to our competition, Anna
noted. "Not only do they have more stores than us, their stores look much nicer than ours too. Ours
are much smaller and just look cluttered as we try to cram our diverse product lines into the space."
Then, there were inefficiencies that continued to plague the company: stockouts and product
expirations.
"Even if we did do something better than the competition, it is not like we get enough of a
marketing budget to get the message across,' added Anna. "But it is a Catch-22 situation: I can't get a
bigger budget unless I grow sales, but I can't grow sales unless I get a bigger budget!"
The nutraceuticals industry is usually described under different names, such as health
supplement industry or food supplement industry. Products that can be included under nutraceuticals
are over-the-counter (OTC) drugs, sports nutrition products, vitamins and dietary supplements, weight
management products, and herbal/traditional products. The inclusion of some over-the-counter drugs
is due to FDA regulations that consider these products as "drugs" once the products contain a given
quantity of ingredients. Despite their being labeled as drugs, OTC drugs under nutraceuticals are not
allowed to promote medicinal benefits. Dietary supplements, herbal/traditional products, as well as
OTC drugs under nutraceuticals are required by law to bear the label "No approved therapeutic
claims."
The top two pharmaceutical companies in terms of market share for vitamins and dietary
supplements are United Laboratories, Inc. and Pfizer Philippines, Inc. Together, they had some 43%
of the market for vitamins and dietary supplements. Aside from these two giants, there are at least 30
other pharmaceutical companies involved in the Philippine market as well. The nutraceuticals industry
operates as a part of the pharmaceutical industry despite being non-prescription products. Not only
do they share pharmaceutical company origins, but they also share pharmacies as their most popular
distribution points.
Health Plus had always been a multi-brand retailer. For its nutraceutical products, each store
carried two to three brands of the same type or similar products. The company also introduced dietary
supplements that bore the Health Plus brand. Like their other products, these were manufactured in
the US. However, these were packaged in bulk and sent to the Philippines where they were
packaged by a manufacturing partner. The cost savings enabled Health Plus to offer these products
at lower prices versus their US-branded products. Health Plus operated 13 stores, all of which were
located inside malls. Eight of these stores were located in Metro Manila, while the remaining five were
located in major cities in Cebu, Bacolod, Cagayan de Oro, and Davao.
 Store operations require from two to four people per store. Each store must be manned by one
pharmacist. Depending on the size of the store, the pharmacist is supported by one to three
consultants. The staff is required to be knowledgeable, especially with the nutraceutical products to
assist customers even without the licensed pharmacist.
The company's marketing consisted of both above- and below-the-line efforts. Health Plus
made use of print ads, internet-based marketing, newspaper press releases, as well as sponsored
newspaper articles for its promotions. The company tapped health-oriented magazines for its print
ads and had its own website, Facebook account, and Twitter account for Internet-based efforts. The
approach of their marketing efforts was mainly informational and promoted either a single product or
a set of products that were aimed at specific segments based on age, gender, or health issue.

Questions:
1. Given the case facts, what do you think was the problem of Héalth Plus?
2. What generic strategy was Health Plus attempting to pursue?
3. Given the strength of the competitors that Health Plus was up against, what recommendations
would you propose in order to give them a competitive edge in the market?