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

Olean Is A Revolutionary Product Product Development Background n Initially scientists were looking for an easily digestible fat that would help premature babies gain weight n 25 years in development n Over $250MM invested in R&D n Olean is the brand name for olestra n FDA approved in 1996 for savory snacks

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

Olean Is A Revolutionary Product Visual Representation Regular FatOlestra glycerol 3 fatty acids molecules sucrose 7-8 fatty acids molecules

Olean Is A Revolutionary Product Radically New Continuous Dynamically ContinuousDiscontinuous

Olestra House of Quality User Needs (in order of importance ) Cost Consistency & color Scientific composition Flavor enhancers offer health benefits and no health risk oo++- maintain or improve texture of product o++ o 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 Product Specifications

Stakeholders are key to Olean’s success Stakeholders Regulatory Bodies Medical Community Customers Distributors Procter & Gamble Farmers

Critical Issues Have A Large Impact Political CompanyEcosystemInfrastructure n International regulatory approval n Impact of warning labels n Life of patents n Co-branding and licensing agreements n Cooperation of players n Establishing a standard

Critical Issues Have A Large Impact Behavioral CompanyEcosystemInfrastructure n Changing consumer attitudes n Dimensions of value evolve from taste and texture n Attitudes towards Olean as an ingredient n Attitudes towards products with fat-free ingredients n Consumer attitudes towards fat substitutes and health trends

Critical Issues Have A Large Impact Economic CompanyEcosystemInfrastructure n Huge investment required n Potential huge returns n Amount consumer will pay for a new fat substitute n Soybean farmers of the world n Soybean supply n Potential international expansion

Critical Issues Have A Large Impact Social CompanyEcosystemInfrastructure n Opinion- maker effect – Jay Leno n Will consumers think of Olean as the standard? n Negative halo effect on other fat free products n Effect of media PR n Reaction of medical community n Acceptance of serving Olean to guests n Acceptance of serving Olean to children

Critical Issues Have A Large Impact Technological CompanyEcosystemInfrastructure n Trade secrets and patent infringement possibility n Impact of competition n Olean requires process changes – higher frying temp n Production changes n Educational Curriculum – home ec – culinary schools – ag science n Impact of other fat replacements

The Bayesian Network Overview of Network See Hugin

The Bayesian Network Top Threats/ Opportunities n New Substitutes 3.71% (+/-) n Word of Mouth1.10% n Competitor R&D Levels1.01% n Supply Available 1.01% n Snacking Trends.93% n Health Trends.87%

The Bayesian Network Top Impactful Decisions n Plant Ownership 3.04% (+/-) n Manufacturer Price2.88% n Cooperative Marketing1.61% n Advertising 1.29% n Patent1.04% n Scientific Improvements.82%

The Bayesian Network The Upside n Own Plant + Manufacturer P is Low + Patent Y + Cooperative Marketing Y + Advertising H + Scientific Improvements H = (65.43) n All Above + New Sub N + WOM P + Competitor R&D L + Supply Availible Y + Snacking Trends H + Health Trends H = (74.05)

Further Research Will Clarify Potential Research Questions Network NodeResearch 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 Capability 10. What are the various manufacturing options and what are their relative costs/values?

Questions???