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Archive for September 10th, 2009

How to Snatch Commercial Failure From the Jaws of Victory

Thursday, September 10th, 2009

by: Geoff Ficke

As readers of my articles well know, I run a marketing and product development-consulting firm. We review hundreds of novel consumer products, new service concepts and prototypes each year. The level of creativity contained in some of these offerings is truly stunning and always amazes.

Entrepreneurs have always found the United States to be the mother lode of places to birth ideas and bring them to successful fruition in the worlds most aggressive, cluttered marketplace. As Frank Sinatra crooned in his classic song New York, “if I can make it there, I can make it anywhere, New York, New York”! If you have an idea and you can not make it happen in this country, you might not have such a good idea. But, this is the country in which to try.

I recently saw a great product, offering excellent features and benefits, a clearly defined unique selling proposition and wonderful margins, crash and burn because of a totally flawed launch strategy. This product was in the Health and Beauty Aids (HBA) category. HBA can be a wonderful space to launch differentiated products. The barriers to entry in HBA are relatively low. The market hungers for the freshest, most advanced product and price resistance is limited.

This product was not one that my firm developed, perfected and then launched. We looked at the product and declined the opportunity. Based on what I have written above, why would we turn down such an option to work on a cosmetic beauty program that offered real commercial potential? The answer to this question identifies the single biggest reason that good concepts fail in the marketplace: people!

The entrepreneur is as important as the product they have created. An unrealistic, deceptive, bombastic or flighty character is almost always death to an otherwise product offering. Investors become wary of such a person. Suppliers are put off. Buyers want to look into someone’s eyes and feel they are dealing with an honorable resource.
In this case, the entrepreneur was an immigrant, spoke excellent English, American educated, very bright, very driven. The product regimen was in the very hot skin care/anti-aging category. The performance (we signed Non-Disclosure Agreements) of the products was special, demonstrable and an advance over the competition. The potential channels of distribution were varied and international. Our excitement, initially, was very high.

However, as we did our due diligence we became concerned. Ingredient specifications, clinical testing, testimonials and proof of performance results that were supposed to exist were never produced. The entrepreneur held severely inflated estimates of the initial equity value of his product, which had as yet, sold not a single unit. For these, and a number of other reasons, we declined the opportunity to contract to consult on the project.

We pass on the vast majority of projects we review. Usually the product is not commercial. When the project does pass muster, then we have the issue of the entrepreneur, their wants, needs, perceived valuations, project harvest goals, etc. Are they realistic? In this case we chose not to proceed, but kept loosely in touch with the owner out of professional curiosity.

Over the next year we started to lose touch with this skin care project. The product did not appear on store shelves, there was no infomercial that we could find and there was nothing we saw on the internet. Then surprisingly, we attended a huge international cosmetic industry trade show and saw the products, and the developer, presenting the anti-aging regimen to distributors from all over the world.

After cursory greetings with the owner, we perused the public presentation that he had assembled. In product development business there is one almighty truism that can never be bent: “you only get one chance to make a great first impression”. This most important of all absolutes had been severely abused by this entrepreneur.

Visuals, branding, sales collateral, display, tester units and demonstration elements were uninspired, uncoordinated and appeared to be of poor quality. The owner had fallen in love with his product. It was of excellent quality but he felt it was good enough to stand alone without supporting the brand with top quality esthetics. Disaster is imminent when shortcuts are taken.

The first day we visited the stand the entrepreneur was understandably excited about his prospects. We stopped back each day to touch base at his stand. It became more and more obvious as the exhibition progressed that disappointment had replaced excitement and the products were not receiving the reception he had expected. By shows end he was totally deflated. By going it alone, and his inexperience, he had doomed a truly innovative product to failure.

Having a good, or even a great product, is simply not enough. The marketplace is cutthroat. Success is difficult to achieve unless the entrepreneur anticipates and addresses each aspect of their product, its performance, packaging, marketing, branding and sales and distribution strategy. Failure to offer buyers and investors a comprehensive, professionally constructed package of features and benefits is the key to a very short shelf life, minimal or no sales and then death.

Imagine What Would the World Be Like Without the Simple Screw

Thursday, September 10th, 2009

by: Geoff Ficke

We take the simplest devices for granted in our modern technologically advanced world. We turn a tap and water is delivered, hot, temperate and cold. We hit a wall switch and darkness is overcome by light. We open the refrigerator door and peer into a compartment that contains climate controlled stored foodstuffs. These conveniences are omnipresent in the developed world in the early 21st century.

And yet, we reflect little on the simplest, most important inventions that make all forms of product possible. Consider the humble screw. Yep, the little fastening vehicle that is ubiquitous in every tool-box, do it your self pre-pack, or kitchen catchall drawer. The ability to affix two opposing elements or surfaces together and insure that their attachment is permanent is essential to the structural integrity of virtually every non-consumable product we use today.

No one knows who invented the screw. We do know that wooden screws were in use during the time of Christ. They were widely used in the Middle East in pressing grapes for wine, olive oil production and woodworking. The applicable uses for screws really did not change much until the 18th century. Englishman James Ramsden invented the first “screw cut lathe” to mass- produce steel screws in 1770. This advance made screws more economical and their usage in industrialization processes began to increase exponentially.

In the 1930’s, Henry Philips, in response to the booming automobile industry’s need for closer tolerances, invented the Philips Head Screw. This square headed screw was a significant advance as it enabled machine tools to apply more torque to the screw head, thereby providing much tighter fit and finish between conjoined parts.

Billions of screws are now used every year in millions of applications. Screws of all sizes and metallic composition are essential to every product that we manufacture. As useful and universal as the common screw is in our lives, we never really reflect on it’s importance, it’s efficiency, it’s economy and what the world would be like without these ingenious little linkage devices.

There is a contemporary lesson here. The simple screw has made life easier and more comfortable for every consumer. Jobs are created to produce screws, distribute screws and utilize screws. Prosperity is enhanced by the usefulness of this simplest of inventions.

Many entrepreneurs and inventors seek to improve life and profit commercially by creating new innovative products. The lesson we can all learn from the plebian screw is that sometimes the most valuable, most useful concepts are the simplest. It is not necessary to re-invent the transistor or discover a new system of water desalinization to profit. Looking into your universe of work, family or play and finding a simple improvement that will benefit consumers is the easiest path to commercial success.

In my consumer product development and marketing consulting company , Duquesa Marketing, we review hundreds of product submissions each year. The best, most commercial are inevitably the simplest. They offer the most utility for the greatest number of consumers. These concepts typically do not require re-educating the consumer, which can be a difficult and expensive proposition.

So keep it simple and apply the simple “screw” test to determine simplicity, facility, cost effectiveness and applicability. This is a wonderful template that can be transferred from an ancient product to modern inventions to determine prospects for success.

The Great Warrior King That Always Thought Outside of the Box

Thursday, September 10th, 2009

by: Geoff Ficke

Prospective entrepreneurs are always encouraged to think outside of the box when striving to commercialize their idea for a new business. The ability to see things differently and identify a niche for a product is so essential. Unfortunately, there is no book, course or advice that enables a person to perfect this skill. Some of us stumble into an opportunity. Others are introduced inadvertently to an idea in their line work or at home. Many other successful entrepreneurs do develop an ability to see things a bit more weirdly than the rest of us.

There are many historical examples of great people that achieved great things by thinking differently. Alexander the Great was such a success. Alexander was a warrior at 14, general at 18 and king of tiny Macedonia at 20. He conquered most of the known world before his death at the age of 32.

An example of his unusual thought process was his approach to solving the famous 4th century problem of the Gordian Knot. Outside the Temple of Zeus, at Gordus, stood an oxcart with an unusually complicated knot attached to the hitch. The world famous Gordian Knot was made of densely packed comer bark and there appeared to be no beginning or end to the confusing mass. Oracles of the day proclaimed that Zeus had promised that whoever could unravel the knot would rule the world.

Adventurers from all over the world ventured to Gordus to try solving the puzzle of the Gordian Knot. None ever succeeded. Alexander planned for his encounter with the knot as if he were strategizing his famous military campaign against the Persian King Darius.

Alexander spent hours pondering the Gordian Knot. He realized that success in unraveling the knot would further trumpet his reputation as the world’s greatest warrior. Success would motivate his troops and sow fear in enemies.
Finally, after interminable study, Alexander stood. He reached for a great axe and with violent suddenness, swung mightily. Striking the immense knot dead center, it fell open like a pear. The gnarled bulk of the knot fell to the ground and the oxcart was freed for the first time in centuries.

Alexander saw a problem that had vexed men for centuries. He applied a creative, innovative, indeed the simplest approach to the task. The puzzle of the Gordian Knot did not come accompanied with a fixed set of rules that had to be followed in order to claim success. The puzzle of the Gordian Knot simply required the oxcart be freed of the massive tangle. Alexander understood that conventional approaches to the problem, followed for centuries by all others attempting to untie the knot, was not relevant or of any import.

Alexander the Great said that his greatest victory was his success in solving the problem of the Gordian Knot. This achievement confirmed for the whole world that this man was gifted, clever, an outside the box thinker (a term certainly not used during the Alexander’s time).

Successful entrepreneurs think differently. They are problem solvers. Novel features, utility and new benefits must be included in any product offered in today’s competitive market. Just as Alexander the Great addressed the puzzle by looking at the problem differently, entrepreneurs need to address their development hurdles by identifying and filling needs that others have not yet seen.

An Exclusivity Strategy Can Be Crucial To Successful Brand Marketing

Thursday, September 10th, 2009

by: Geoff Ficke

Many of the inventors and entrepreneurs we deal with in our consumer product marketing business approach us with dreams of selling product to the masses. This can be lucrative and a proper launch strategy in cases where all of the stars in the galaxy line up properly. How often does that happen?

Mass marketing success is contingent on economies of scale, production advantages and large budgets for penetrating a clamorous commercial environment. Large, established companies, think Procter & Gamble, Unilever, Rubbermaid, have all of the tools needed to launch products into this maelstrom. Most small entities and individuals do not.

Our preferred strategy is often to create a branding strategy based on exclusivity. When a product is sold in a limited distribution basis, available in select stores, and usually at a higher price than similar products, consumers tend to attach a higher perceived value to these items.

There are numerous examples of exclusivity that can be used as a template when considering the proper strategy to utilize for a new consumer product launch. Retailers that sell high-end limited distribution products are very profitable and enjoy exceedingly high profiles. Bloomingdales, Tourneau, Neiman Marcus, Harvery Nichols, Harrod’s, and Ralph Lauren are just a few of the stores that appeal to the “carriage trade”. These stores seek goods of high quality, that can be priced at a premium, and that are not available from competitive outlets. This creates a loyal customer for the types of merchandise that can only be found in these doors.

Automobiles, jewelry, ready-to-wear, cosmetics, watches and home décor are only a few product categories where exclusivity is validated as a marketing and branding strategy.

Ferrarri, Mercedes-Benz, Porsche and Jaguar are world famous automobiles franchises. Ferrarri has created a worldwide thirst for these sleek, super fast, super priced sports cars with the “Prancing Horse” on the hood. There are only a handful of authorized Ferrarri dealers in the United States. Production is kept very small and all cars are typically sold two years before they are produced. This insures that value for used vehicles remains very high. Indeed, many old Ferrarri’s appreciate in value, something that can be said of very automobile brands.

Rolex, Baume Mercier, Audemars Piguet, Chopard and Patek Phillippe are a smattering of the very expensive watch brands that are considered to be prized for their exclusivity, beauty, artisan craftsmanship and perceived value. They are sold in very few retail stores. The very fact that they are hard to find, expensive to buy and limited production makes each of these watches highly desirable.

Cosmetics houses at the highest end of the market differentiate themselves by limiting distribution to a select few stores in any given trading area. Clarins, La Prarie, Guerlain, Crème de la Mer, and Estee Lauder are very choosy about where their products are placed. This insures that consumers recognize that by their very lack of availability these products are special, and therefore, justify higher retail price points.

We look at hundreds of new products each year. A select few offer that unique blend of novel consumer features and performance benefits that insure success. A strategy we often use to launch such products is built on exclusivity, at least initially. It is very easy to “knock yourself off” and replicate high-end success with less expensive mass-market versions of your product. If you do not secure this space, competitors certainly will.

Alfred Sloan, the business and organizational genius that created General Motors in the 1920’s, crafted the multi-price point strategy of offering something for everyone. Cadillac was exclusively for the rich. Buick and Oldsmobile were positioned for the middle class, older customers, seeking unobtrusive styling and soft rides. Pontiac was sportier and Chevrolet was the mass market, entry level brand. Sloan recognized that today’s Chevy driver, as they prospered and aged, would move up the GM food chain.

Charles Revson adapted this multi-level channel distribution strategy with Revlon cosmetics. Etherea was his very exclusive carriage trade brand. Ultima II was for fine department stores. For broader distribution in general department stores and boutiques Revson sold his Revlon brand. These Revlon corporate lines were each differentiated by price point, packaging, product claims and performance. He offered something for every range of consumer.

There are a number of advantages to an exclusivity strategy. Typically initial inventory build out is mitigated, freeing up capital for sales promotion. Limited distribution means that the entrepreneur can be more attentive to each individual door carrying their items. Fewer doors can mean that product features and benefits can be demonstrated to individual consumers. This creates word of mouth and referrals. It minimizes the need for expensive media advertising. In-store merchandising is more manageable when distribution is limited. The opportunity to grow organically, the turtle approach; often enables the new company to establish a much more stable foundation from which to expand.

A type of exclusivity strategy can be constructed for products in virtually any category. From liquor, to beer, to hardware, to foodstuff, to lingerie, to pet products, the list goes on endlessly, there are opportunities to successfully commercialize ideas and make them successful using limited distribution techniques. This tried and true methodology is under-utilized, but often the best way to penetrate a very tough marketplace.

Adding Features to Products Can Create Blockbuster Opportunities

Thursday, September 10th, 2009

by: Geoff Ficke

I have written in the past about the huge commercial opportunities afforded divergent products and inventions, as opposed to convergent features added to existing products. Divergent products are truly groundbreaking, destructive, disruptive breakthroughs. However, very few truly innovative divergent technologies are invented and make it successfully into the marketplace.

The original light bulb, the phonograph, the radio and the steam engine are examples of innovations that set the standards in their respective product categories and are still in use today. The inventors of these needed items enjoyed great riches and fame. We know the names of Edison, Fulton, Sarnoff, Marconi and many others because of the total market penetration that their inventions achieved.

Convergent products build on the already formed base of existing technologies. Adding a clock to a radio is a useful improvement. This type of embellishment can be extremely valuable. Typically, however, the convergent inventor is not rewarded, or as greatly revered as the initial inventor of the divergent platform product. Nevertheless, there are exponentially more opportunities for entrepreneurs and inventors to capitalize on their convergent creativity.

Consider the ubiquitous lead pencil. The original lead pencil was first created in England in 1564. Actually, the pencil was made possible by the discovery of graphite in Northern England. The pencil utilized graphite, not lead. Over many years, mined graphite was manipulated to varying thickness and hardness, allowing pencils to be sold offering degrees of performance.

This was the state of the pencil for almost three centuries. In 1858, Hyman Lipman of Philadelphia perfected and patented the eraser pencil. Lipman’s novel feature was to add a groove in the top of the wood barrel of the pencil and glue on a piece of soft rubber. Until his invention, erasers were blocks of unrefined gum rubber. The simple convenience of combining the eraser with the pencil made the new eraser pencil commercially interesting.

Hyman Lipman sold his patent and technology for $100,000. In 1858 this was a fortune. Lipman had taken a 300-year old commodity product and simply mated it with a pre-cut, glued gum eraser. The combination made him rich and is still used worldwide to this day. Inventors should keep Hyman Lipman and convergent product features in mind as they create their product improvements.

My product development firm reviews hundreds of new product and invention submissions every year. Like everyone, we are most keen to discover the next divergent product: paper clip, lead pencil or light bulb. After thousands of submissions we have seen only a few truly divergent offerings.

Product features that improve existing technologies, offer fresh benefits or fill unanswered needs are always needed. We counsel entrepreneurs to build their ideas around the following: a Unique Selling Proposition. Another way to say this is to build your product to fill an identifiable niche in the marketplace. In every huge product category there are small, under served niches. Attack these holes with creativity and convergent ideas will be hugely rewarded. Remember Hyman Lipman as you continue your endeavours.

If you have an idea or new product concept you would like to introduce to the marketplace contact Geoff Ficke at www.duquesamarketing.com to discuss potential opportunities to commercialize your invention.