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INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip INVESTING Investing: Europe Annual Reports BW 50 S&P Picks & Pans Stock Screeners Free S&P Stock Report SCOREBOARDS Hot Growth 100 Mutual Funds Info Tech 100 S&P 500 B-SCHOOLS Undergrad Programs MBA Blogs MBA Profiles MBA Rankings Who's Hiring Grads | | NOVEMBER 7, 2002 SMART ANSWERS By Karen E. Klein Making a New Product Gleam You've come up with a revolutionary innovation, but finding a cost-effective way to promote is a puzzle. Here's the experts' views
A: Before you can truly determine which marketing tactic promises the greatest return on investment, you must be crystal clear about your target customers and why they will want your product. Does it solve a cleaning problem that you have experienced yourself? Can you be certain that others have had the same problem -- and will they be willing to shell out for a solution? Do some research and make sure there is a market before investing time and money to sell it. Once you've got your customers nailed down, reaching them is just a matter of research and strategy. Believe it or not, the best way to get answers to specific business questions like yours is also the simplest: Ask. Search out successful entrepreneurs, introduce yourself, and ask politely about the lessons they've learned -- and how they rate the odds that will you emulate their success. Find people who have promoted their own products via the avenues you're considering, and get them to tell you how it worked -- or didn't work. HOT SOURCES. Where do you find such folks? Look within the industry that you're interested in entering. Find people in the cleaning-products sector through your local business organizations, and ask if you can treat them to lunch or dinner in exchange for an hour of their valuable experience and advice. With the Internet, it's easier than ever to find pioneers, inventors, and red hot businesses, and e-mail makes approaching someone new almost painless. There are many business Web sites that host interactive forums you could participate in, some geared exclusively to marketing strategy, suggests Robert D. Reid, principal of Los Angeles-based Reid Product Development. A more costly and focused way to get help would be to hire a marketing expert to brainstorm the possibilities. "For a consultation to help you plan your promotional strategy, engage a professional marketer who is experienced at conducting low-budget consumer product promotions," Reid says. But he also cautions: "Beware promotion companies that demand up-front money to promote your product in lieu of a success fee." Tim Cohn, of Advanced Marketing Consultants in Nichols Hills, Okla., took time to evaluate your specific marketing avenues and list some pros and cons: Trade Shows. "Attending trade shows is a good -- albeit costly -- way to gauge and validate market potential," Cohn says. "Compare your new product to existing products. Visit the show as an attendee to conduct hands-on market research, vs. exhibiting, if your budget won't allow. Study the trade magazines that serve your primary market to determine which trade shows are considered the most important before committing to any one particular show." A trade show also provides a wealth of general information about the industry. For instance, you should be able to meet -- or at least be referred to -- the top distributors in your product line. Cable shopping channels. "In order for any product to qualify for these direct sales channels, a product must be able to sell at a rate of approximately $15,000 worth of goods every three minutes," explains Cohn. "Even if your product is capable of selling at this pace, it would behoove you to consider other sales channels first, in order to avoid placing all of your proverbial eggs in one basket and being dependent on one large customer versus having 100 small customers." Distributors. You may have to use distributors if your prospective customers are accustomed to buying from middlemen. Notes Cohn: "Distributors can connect you to an established and successful network and establish a presence for your product in a timely fashion. However, distributors typically rep anywhere from 10 to 30 product lines simultaneously, and your product can easily get lost in their briefcase when it comes time to make a presentation to a buyer." Licensing to manufacturers. "Few product developers succeed with this strategy," Cohn says. "If you think developing a product yourself is time consuming, try getting someone else to manufacture and market your idea for you. In today's economy, most manufacturers have excess capacity and oversupply of product. Unless your product clearly solves a problem unlike any other product, and does so at a price that makes your solution irresistible, then the average manufacturer will continue to spend their time, effort, and money solving their existing customer's known problems." Media pitches. "Publicity is one of the most effective, yet least utilized, of the marketing strategies available to business owners. It's been said an inch of publicity is worth a foot of paid advertising, and it's true," Cohn says. "Where most business owners fail is that they attempt to sell the media on their product instead of telling the media how they solve their audience's problems better than anyone else." Advertising in targeted magazines. If you can reach your buyers through publications catering to their specialist needs and interests, then advertising can give you a solid launch platform for your new product. "Approach the industry trade publications with an offer to write articles related to your product's specialty, to position your company as a resource," Cohn suggests. Local TV ads. Forget them, says Cohn, who explains that they're simply not focused enough -- and too costly. "Sales representatives will sell anyone commercial advertising time, whether it will work or not," he says. "It is entirely possible a single new product will generate direct-response sales from the geographically, demographically, and psychographically diverse group of people who watch network television, but the odds are stacked firmly against the average new product developer." Samples and endorsements. This is a must for any new-product developer, says Cohn. At a minimum, samples will generate feedback regarding the reliability of any claims you've made on behalf of your product. "The sampling process can give you valuable insight into your customers' desires and expectations," he adds. "If your product delivers as promised, asking for and getting an endorsement confirms receipt of the value you promised to deliver. If getting an endorsement is out of the question, you'll know it's time to go back to the drawing board." So do your homework, investigate the possibilities, make sure you know your market, and pick up tips from seasoned entrepreneurs. If you do your work well, you'll learn the pros, cons, steps, risks, benefits, approximate costs, and probable ROI's for the various promotional methods. Suggests Reid: "The most successful promotional methods may require more cash than you have, so keep alert for a potential partner who is skilled in marketing, believes in your product, and is willing to add seed money and effort to yours in return for a share of the profit."  Have a question about running your business? Ask our small-business experts. Send us an e-mail at smartanswers@businessweek.com, or write to Smart Answers, BW Online, 46th Floor, 1221 Avenue of the Americas, New York, NY 10020. Please include your real name and phone number in case we need more information; only your initials and city will be printed. Because of the volume of mail, we won't be able to respond to all questions personally. Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | NOVEMBER |
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