How ProPhase Labs’ Ted Karkus made the improvement of Cold-EEZE a team effort

Ted Karkus

Ted Karkus, chairman and CEO, ProPhase Labs Inc.

When Ted Karkus became the chairman and CEO of ProPhase Labs Inc. in 2009, he knew he had a flagship product that could carry the company. Cold-EEZE lozenges had been the face of the company for 15 years, but with several straight years of declining revenue, Karkus knew some changes were in order.

Consumer feedback pointed to the taste as the primary product deficiency. With that information, Karkus decided to form a plan aimed at improving the taste and redesigning the packaging in an effort to inject new life into consumers’ perception of Cold-EEZE — and by extension, ProPhase Labs, which generated $14.5 million in 2010 net sales. Karkus says the company is anticipating an uptick in revenue in 2011 after four years of declining numbers.

Smart Business spoke with Karkus about how he revitalized the Cold-EEZE brand and how he got everyone in his company on board with the change.

What was the impetus for expanding your brand and improving your flagship product?

That was my COO’s idea. He wanted to include an insert in every package of Cold-EEZE as a way of communicating with our consumers. In that insert, on one side we had a testimonial. On the other side was a message from me that included a personal e-mail address, where any consumer could provide me with their thoughts and comments about Cold-EEZE. I personally read and respond to every one of those comments, and it was based on those comments that we came to the conclusion that it was time to improve the product.

We have loyal consumers that go back 15 years, but our consumers didn’t love the zinc aftertaste caused by the active ingredient going to work. So we listened to our consumers, and that motivated us to improve the taste. There are new flavor technologies available that didn’t exist 15 years ago, and that has helped us to improve the taste and, in turn, the overall product.

With regard to improving our packaging, we did an extensive amount of research. It was our consumers that helped us create the package, which we then tested in field studies comparing our new package to our old package.

How did you begin to roll out the plan and bring the improved product to market?

That requires careful reviews of our vendors and consultants, in much the same way we do a careful analysis of every employee we hire. Every vendor and consultant we hire goes through a careful interview process that includes meeting with several other vendors or consultants in the same category, and it requires an enormous amount of very careful thought.

How do you connect your employees to the plan?

I found the best way is through direct contact and communication and by involving the employees in the crafting of the communication. I don’t sit in a room by myself and make all the decisions while isolated from the employees of our company. Our employees work very hard, and they’re also very knowledgeable about our products, so I’m happy to include them in all steps of the decision-making process regarding our company’s future.  At the end of the day, I have to sift through all of the ideas of all of our employees, as well as our vendors and consultants and come up with an optimal strategy for the future. But by including the employees, they’re informed.

How do you continue to ensure that the plan stays on track once it has been rolled out?

It is not an easy process. Where it starts is with creating a strategic vision for the future, and then analyzing ideas that either fit or do not fit into that vision. For example, our short-term goal was to decrease overhead, improve our relationships with retailers, and improve our flagship Cold-EEZE brand. We improved the relationships with retailers by travelling around the country as a senior management team. We met with all the major retailers who sell our product and came up with a plan to turn around the Cold-EEZE brand through changing the packaging, as well as improving the flavor.

We accomplished those goals. The next set of goals is to leverage the brand by introducing extensions of the Cold-EEZE brand, such as an oral spray. Moving forward, we plan to leverage our distribution platform by introducing products outside of our current category. The key is that it’s a multitiered approach combining short-term and longer-term goals.

How to reach: ProPhase Labs Inc., (215) 345-0919 or www.coldeeze.com

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