Lux’s framework helps companies construct winning strategies
BOSTON, M.A., AUGUST 6, 2020 – The global healthcare industry is under pressure to reduce rising costs and the prevalence of chronic diseases, with personalized nutrition in focus. In its latest report, “Finding Business Success in Personalized Nutrition”, Lux Research outlines its “four P” framework for constructing a winning strategy: price, product, people, and partnerships. The report details why multiple high-profile companies have failed in the personalized nutrition space, and what is necessary for businesses to succeed.
Innovation interest in personalized nutrition is surging, increasing more than threefold between 2017 and 2019. With more than 1 billion people worldwide diagnosed with diet-related diseases, costs for their care have ballooned to more than $1 trillion per year. The COVID-19 pandemic has only exacerbated the need to address these diseases, with illness severity from COVID-19 correlated to underlying chronic conditions.
Despite the immense promise, Lux has seen many companies fail to make headway. “We’ve seen major companies fail by not honing in on each of the four Ps to provide a lasting value proposition,” explains Thomas Hayes, lead report author and analyst at Lux. “One of the biggest barriers to success with personalized nutrition has been in pricing and aligning product value to what users need,” Hayes continues. When this is coupled with lack of business experience and valued partnerships, it’s impossible to sustain an effective business model.
Most personalized nutrition options are out-of-pocket consumer expenses not covered by insurance, meaning price is either a powerful driver or inhibitor. Lux suggests that products should not be overly complex, nor should they be generalized solutions meant to fit all customers’ needs; a straightforward product offering is easier for consumers to understand and adopt. When pricing and customer value proposition are clear, companies do much better, but they still need to have a strong and diverse management team within the company with both business and science backgrounds, plus the right sales, research, and investment partnerships.
Companies can utilize the “four P” framework for personalized nutrition to leverage and evaluate future opportunities in the space. Is the price competitive and cost-effective for its target market? Can the product be aligned to a specific demographic to fix a specific problem? Does the core management team have the right experience, or is diversification needed? And lastly, what partnerships are necessary to drive further research and sales?
Personalized nutrition solutions will have to evolve to become genuinely useful to consumers –either those who are healthy, managing diseases, or somewhere in between – else the entire industry will fail. Companies must adopt multifaceted models that allow customers to select the goods or services relevant to their needs. To be successful, companies will need to reduce consumer costs as testing costs come down. Only those that can adequately address all four Ps have any real chance of success.
To learn more, download the report’s Executive Summary.