Jul 26, 2011

Three Ways to Intro a New Product

[caption id="attachment_393" align="alignright" width="426" caption="Three Ways to Intro a New Product"]

[/caption] Luck plays a part in getting the marketplace to notice a new product. But so do research, persistence, and thinking outside the box. It seems there are almost as many ways to bring a product to market as there are entrepreneurs with the will to stick it out until sales revenues catch up with development costs. The ideas below do not rely heavily on the use of social networking. Videos and Facebook pages are part of the marketing programs, but the basic strategies are retailing mainstays. And there’s a reason for that: They work. 1. Find a licensee. Brian Fried, a New York inventor who hosts the “Got Invention Radio”¹ show on his website, advises other inventors to find partners or licensees. If you have just one product, you won’t make an impact on your own, even if you do manage to get some shelf space next to the five or six shelves displaying Johnson & Johnson’s brands. However, a licensing agreement with that company just might be possible, and it would give you better positioning on the shelf as well as distribution and manufacturing. Where to start? Go to a store where you envision your product to be sold, and look around at the other brands displayed in the appropriate section of the store. “See where your product would align with another company” in your chosen line of business, then contact that company, he said. He has licensed one of his products with KitchenAid and Farberware. Do your research and make some phone calls, he added. See if there’s an opportunity to present the product to the company you hope will license it. If all goes well, the company rep will agree to add your invention to the company’s product line. Trade shows are another way to find potential partners. Using the Trade Show News Network,² Fried types the industry name in the search box (for example, housewares) and gets a list of major and minor shows in that industry in any city and state he chooses. “Go [to a show] as a trade guest and go prepared,” he said. On the website of the show, you can usually search for exhibitors by product category. Before the show, call the companies you want to see and ask if you can set up a meeting. Also, “I take my products and I walk the floor,” said Fried. (It was at a trade show that he met a buyer for QVC, who ultimately offered him airtime to promote his inventions.) So, what do you give up in a licensing deal? A large part of the profits, because the licensee takes on all the risk. A licensee will give you an advance and a guarantee—how much he expects to sell—securing an intellectual property license from you. Fried said that one of his clients was offered a 10 percent royalty by one company and a 5 percent royalty by another. The licensee puts up money for tooling, manufacturing, distribution, perhaps even marketing, “and then they’re seeing if it’s going to be received in the market. … You’re getting a small percentage, because there’s very little risk to you,” said Fried, who invented Pull Ties³ and Eggstra Space.⁴ Don’t assume that a smaller royalty offer is not worth pursuing. Fried said that his client who chose the 5 percent deal did so because it involved distribution to Toys R Us, Target, and other large retail outlets. Not so with the guy offering 10 percent. “I always tell people, ‘Find the right partner, the partner that has the manufacturing capability and has a good product line and has great distribution channels,’” said Fried, who has been asked for advice by so many people that he finally authored a book on the subject: “You & Your Big Ideas.”⁵ 2. Grab a decision-maker. Amy Davis, an MBA graduate of Sacred Heart University in Fairfield, Conn., turned a class project into a winner by sending samples of her Kiss-u Tissue Tube that fits in the cupholder of a car to “executives and board members of the companies I wanted to work with.” In an email exchange, she emphasized the need to be original and send something clever, such as a product in special packaging, or a link to a funny YouTube commercial—something that is targeted to the individual. “I would guess there are probably hundreds of ways to get the attention of decision-makers in big companies—the point is to think outside the box and find people within these companies who you think will get your product,” she wrote. Davis did the work on her own. However, if you can afford to hire help, you might want to consider a small public-relations company as a creative partner to formulate original, clever ideas that align with your product’s “brand promise.” Davis sent samples to corporate executives whom she selected using Hoover’s.⁶ She was specifically looking for profiles of women in their 40s with children (Davis has three children and targets multitasking, carpooling moms with the Kiss-u Tissue Tube and refill packets).⁷ She made a connection with Walgreens and let the company lead—company reps set pricing and signed a contract with her. Walgreens is unusual for a large retailer in that it offers a one-time-buy program for products that have not been market tested. That Walgreens trial (7,600 cases of 16 Kiss-u tubes) helped her find other retail outlets. Davis handled her own manufacturing. She found a company in China via a web search. 3. Offer a free trial. This is a time-honored method to get buyers to bite: Try it and if you don’t like it, just send it back. But before you create such an offer, be advised that if you do not play fair with consumers, you could be labeled a deceptive marketer. In 2009, about 100 online merchants had their payment processing terminated by Visa because of numerous complaints to Visa, the Better Business Bureau, and the Federal Trade Commission. Now there is a law prohibiting the worst of the practices. Called the Restore Online Shoppers’ Confidence Act, it was signed by President Obama on December 29, 2010.⁸ The new law targets what’s known as negative-option marketing. That’s when unless the consumer cancels or rejects the free item in the trial, he is billed for additional products. The companies that were engaged in these practices were third-party sellers, who obtained lists of customers and their billing information from internet retailers. The Federal Trade Commission released a statement⁹ about the Restore Online Shoppers’ Confidence Act in December 2010. Here are some excerpts from the release that will could help you stay out of legal trouble:

Disclose the terms of the offer in an understandable manner.
You must obtain the consumer’s express informed consent to be charged before you charge his or her card or bank account.
If the offer involves recurring charges, you must tell the customer how he or she can stop the charges.

Response Magazine¹⁰ reported that in 2009, the FTC’s Division of Enforcement released five principles regarding “negative-option” marketing. The principles came out before the Restore Online Shoppers’ Confidence Act became law. For more information, visit: 1. Got Invention Radio 2. Trade Show News Network 3. Pull Ties 4. Eggstra Space 5. “You & Your Big Ideas” 6. Hoover’s 7. Kiss-u Tissue Tube 8. Restore Online Shoppers’ Confidence Act 9. "Statement by FTC Chairman Jon Leibowitz Regarding House and Senate Passage of Legislation to Combat Deceptive Online Sales Tactics" 10. “Legal Review: Getting Strict With Negative Option Marketing”