Marketing Topic: Product Design & Positioning, Company Profiles

---New-Product Development
---Procter & Gamble Launches Olestra

Procter & Gamble spent over $200 million during a period of approximately 25 years to develop olestra, a calorie-free fat replacement. It also built a $200 million national-scale manufacturing plant in Cincinnati to make it. Olean, the brand name for olestra, offers a similar taste to regular fat in potato chips and other foods, but passes undigested through the body because the fat molecules are too large to be absorbed. As a result, one ounce of potato chips containing Olean contains only 75 calories compared to 150 calories for regular potato chips.

In January of 1996, the U.S. Food and Drug Administration approved olestra for consumption. However, the FDA also required the following warning label: "This product contains olestra. Olestra may cause abdominal cramping and loose stools. Olestra inhibits the absorption of some vitamins and other nutrients. Vitamins A, D, E and K have been added."

Despite the health controversy surrounding olestra, the product has been a huge commercial success. The company reported that over 18 million servings of olestra snacks were sold or sampled in test markets in Columbus, Ohio and Indianapolis, Indiana. From February to June of 1998, Frito-Lay sold 80 million bags of olestra-based snacks for $150 million in sales, according to Lynn Markley, a Frito-Lay spokeswoman. While P&G forecasts sales of up to $400 million for the product, some analysts predict that P&G will eventually sell over $1 billion each year of olestra for use in snack foods and other foods, making it the most successful new food product launched in the 1990's.

Read some of the articles below to learn more about how olestra was developed and marketed and to help you in answering these questions:

1. From initial product development to marketing the final product, what actions has the company taken to ensure olestra's success? See how thorough a list you can prepare.

2. What risks does the company face that may affect sales of olestra in the future? Be creative in thinking out your answer: risks can come from many different directions.

Olestra snacks ready for market by Jeff Harrington, The Cincinnati Enquirer. Extensive article about P&G's launch of olestra in snack foods, including test marketing, advertising and its collaboration with Frito-Lay. Accompanying the main story are several other informative articles: Mission: Get People to Try One, The Making of Olestra and Chronology of Development and Marketing.

Consumers are voting for olestra chips with their lips by Lisa Biank Fasig, The Cincinnati Enquirer. This article has a section covering P&G's initial test marketing of the product

Is Olestra Everything It's Promised to Be?

Individuals and Groups Criticize Olestra

Ad Leakage by Laurel Druley.

CSPI protests deceptive labeling and advertising,
Warns of health risks from fake fat by the Center for Science in the Public Interest.

The Press Covers the Controversy

Olestra Label Under Scrutiny by Paul Barton, The Cincinnati Enquirer.

FDA panel declares fake-fat olestra safe, but label warning will be continued by Paul Barton The Cincinnati Enquirer.

Procter & Gamble spent over $200 million during a period of approximately 25 years to develop olestra, a calorie-free fat replacement. It also built a $200 million national-scale manufacturing plant in Cincinnati to make it. Olean, the brand name for olestra, offers a similar taste to regular fat in potato chips and other foods, but passes undigested through the body because the fat molecules are too large to be absorbed. As a result, one ounce of potato chips containing Olean contains only 75 calories compared to 150 calories for regular potato chips. In January of 1996, the U.S. Food and Drug Administration approved olestra for consumption. However, the FDA also required the following warning label: "This product contains olestra. Olestra may cause abdominal cramping and loose stools. Olestra inhibits the absorption of some vitamins and other nutrients. Vitamins A, D, E and K have been added." Despite the health controversy surrounding olestra, the product has been a huge commercial success. The company reported that over 18 million servings of olestra snacks were sold or sampled in test markets in Columbus, Ohio and Indianapolis, Indiana. From February to June of 1998, Frito-Lay sold 80 million bags of olestra-based snacks for $150 million in sales, according to Lynn Markley, a Frito-Lay spokeswoman. While P&G forecasts sales of up to $400 million for the product, some analysts predict that P&G will eventually sell over $1 billion each year of olestra for use in snack foods and other foods, making it the most successful new food product launched in the 1990's. Read some of the articles below to learn more about how olestra was developed and marketed and to help you in answering these questions:
1.	From initial product development to marketing the final product, what actions has the company taken to ensure olestra's success? See how thorough a list you can prepare.
2.	What risks does the company face that may affect sales of olestra in the future? Be creative in thinking out your answer: risks can come from many different directions.
Olestra snacks ready for market by Jeff Harrington, The Cincinnati Enquirer. Extensive article about P&G's launch of olestra in snack foods, including test marketing, advertising and its collaboration with Frito-Lay. Accompanying the main story are several other informative articles: Mission: Get People to Try One, The Making of Olestra and Chronology of Development and Marketing. Consumers are voting for olestra chips with their lips by Lisa Biank Fasig, The Cincinnati Enquirer. This article has a section covering P&G's initial test marketing of the product Is Olestra Everything It's Promised to Be? Individuals and Groups Criticize Olestra Ad Leakage by Laurel Druley. CSPI protests deceptive labeling and advertising, Warns of health risks from fake fat by the Center for Science in the Public Interest. The Press Covers the Controversy Olestra Label Under Scrutiny by Paul Barton, The Cincinnati Enquirer. FDA panel declares fake-fat olestra safe, but label warning will be continued by Paul Barton The Cincinnati Enquirer.