Smoking Cessation

Drug Store News, July 20, 1998

New Category is Born Delivering Incremental Sales and Enhanced Image

Drug chains, always on the lookout for new revenue sources, have found one in the Smoking Cessation category. Over-the-counter category sales have soared from a zero base just a few years ago to $555 million in 1997, according to AGNielsen. Sales are projected to hit $644 million by the end of 1998. Smoking Cessation is now the ninth largest category in all trade channels based on retail dollar sales. And, on a dollar per stock keeping unit basis, Smoking Cessation is the most productive category. The best news for retailers is that this category represents sales that are almost entirely incremental. And, household penetration is still relatively low-only 13% of smoking households- meaning there is tremendous unlocked opportunity.

Fueling category growth is a simple market dynamic-people want to quit smoking. And, they want a program that is effective and convenient to purchase. SmithKline Beecham debuted the first Rx-to-OTC switch product three years ago and has continued to be the catalyst for growth in the category. The company boasts almost a 95% market share with its Nicorette Gum and NicoDerm CQ Patch the two most productive healthcare brands.

Since many Smoking Cessation items were first available only with a prescription, drug stores have a competitive market edge in the business. Drug stores control about 58% of sales. However, that share is down slightly from the first year products were available when the drug channel garnered 63% of sales.

What has happened at retail is a familiar story with red-hot categories. Demand has been so strong that drug store retailers have not been able to adequately gauge inventory needs. That's resulted in out-of-stock conditions on key items.

It is a critical juncture for the Smoking Cessation category, said Steve Kapur, director of promotion smoking control for SKE. "It is a good time for retailers to evaluate the mix to make sure they have the right inventory and a current assortment. If not, adjustments should be made now because there are even more product innovations coming. You need to be prepared now for future innovations," he suggested. Crucial to examining the mix is the need to ensure the items stocked are what consumers want. Shopper's desire FDA approved products that are proven to work. The success of the Smoking Cessation category has invited many competitors, some without clinically proven claims. When interviewed about the category, retailers cautioned that inferior products could tarnish the entire image of Smoking Cessation and create disillusioned consumers. "Also," said Kapur, "these products produce lower retails that take away from profits" Products such as Nicorette and NicoDerm CQ carry doctor recommendations. NicoDerm CQ also has a tested delivery system providing 24 hours of therapy.

SKB is also the leader in share of voice; meaning consumers are aware of its brands and will look for them in stores. SKB has several recommended best practices to help retailers maintain the proper inventory and to assist in re-allocating inventory dollars to the skus that are often out of stock. It is extremely critical in Smoking Cessation to have both the brands and the type or product consumers desire. For example, only 23% of gum users are willing to switch to another form. Only 13% of patch users can be swayed to try something else. Moreover, one-out-of-three consumers will leave the store if the product they want is out-of-stock. Business lost to competition may be as high as 2- to-4% of potential sales. The location of Smoking Cessation products is also paramount in building awareness and sales. A study from Willard Bishop revealed that the preferred site, according to 59% of those polled, is near pharmacy. The next most popular location is in proximity to pain relief, It is important that the Stop Smoking category is available over the counter and is stocked with proper inventory levels. OTC locations generate 73% greater sales than sites behind the pharmacy counter.

SKB makes available a permanent category management cabinet that helps retailers feature Smoking Cessation items. The cabinets have helped increase sales by 35%, according to Jeff Olson, category promotion manager smoking control, The company can work on an account-by-account basis to determine the proper size based on the velocity of movement. Also important to nurturing sales is to seek secondary locations, especially during key promotional periods like New Year's and for November during the Great American Smokeout. At these times, retailers can generate tremendous additional sales by positioning Smoking Cessation at checkouts and other high-traffic locales. Tests of dual locations reveal sales jumps as high as 23% during non-promotional times. SKB, in addition to receiving recommendations from physicians, helps build awareness of the category through community stop-smoking campaigns and a wealth of support materials to aid in stopping. Also, SKB has the unique advantage of linking other brands from its po rtfolio together for promotions such as Smoking Cessation and Aquafresh tooth whitening toothpaste. The company also works in tandem with pharmacists on continuing education programs to aid in consumer use and compliance called the National Smoking Cessation Specialist Certification Program. For the second year. SKB will take its message on the road with a 34-foot motor home called the NicoVan. On board are experts who offer tips on how to quit smoking.