so-youve-invented-the-next-great-gadget-and-youre-sure-itll-be-a-hit

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How To Market A New Product

So you’ve invented the next great gadget, and you’re sure
it’ll be a hit. In fact, you’ve got cartons of inventory stored in every room
of your house that you’re itching to sell, sell, sell. Your test market said
they love it, but how can you reach the legions of consumers you’re sure will
want to buy it?

Welcome to Sales 101. While there are countless books you
can read about sales and .entrepreneur.com/marketing/”>marketing,
here’s a relatively simple, proven strategy that’ll teach you how to market a
product and grow your sales.

Create a Sales Plan
First, define your market as accurately as possible so you have a deeper
understanding of exactly who you’re selling to. For example, instead of all
women, it may be working women with above-average incomes and kids under age 5.
Instead of all men, it may be divorced men in their 40s with six-figure
salaries. The more specific you get, the more accurately you’ll be able to
target your sales and marketing efforts, choosing the sales channels most
receptive to your product.

Next, you’ll need to develop a sales plan. Before you groan,
“Another plan,” understand this can be a simple document for your
eyes only that’ll help you organize and think through your sales strategy.
Write it in a way that makes sense for you. Typically, it should include the
following:

  • Sales
    goals:
    These goals should be specific and measurable, not
    something like selling a million units. Base them on the nature of your
    product and try to break them down into manageable parts. For example,
    sell 50 units to end-users in 30 days and sell 100 units to local
    independent retailers in six months.
  • Sales
    activities:
    These are your tactics–how you plan to make the
    sale. You may say you’ll sell direct-to-consumer through a website or via
    craft shows, for instance. Or this part of the plan may include activities
    like developing a sell sheet to send to independent retail stores.
  • Target
    accounts:
    Your sales plan should also include the accounts you
    want to sell to. If it’s end-users, for example, plan how you’re going to
    reach them through eBay, classified ads or your website.
  • Timelines: Put
    dates to all of the above elements so you can define your steps within a
    realistic timeline. Don’t forget that your timelines should be fluid–if
    you’re underachieving, your sales plan can help you figure out why and
    define the corrective steps you need to take.

Finally, follow a proven process for growing sales over
time. While it would be fabulous to have Wal-Mart carry your product right out
of the gate, it may not be realistic. Most large retailers want to see a track
record of successful sales before agreeing to take on a new product.

Build Your Market
To learn how to bring a product to market, begin by selling directly to
end-users. This’ll give you confidence that there’s demand for your product and
will also create referenceable customers that you can contact for product and
packaging feedback before you hit the bigger leagues. So where can you reach
your end-users?

The web is one highly effective channel, and you can reach
your market through your own website or via a site like eBay. You can also tap
into your own personal network as you begin. Host a home party to share your
product with friends and friends-of-friends, sell through local community
groups and e-mail your network.

Once you get feedback directly from your customers, refine
the packaging and price point before approaching your next market–wholesalers.
You’ll probably start with small, independently owned, local stores. It’s a
good idea to start with them before hitting larger chain stores because it’s
easier to get in touch with the direct decision-maker, and they’re more
inclined to take on new, unique or hard-to-find items to differentiate themselves
from larger stores. To sell to these retailers, be prepared and bring a product
sell sheet, photos, product samples (if possible) and a succinct introductory
letter to explain what’s in it for them, highlighting your product’s profit
margin, features and benefits, and proven sales record.

Expand to New Markets
Once you’ve established sales strength with independent retailers and are ready
to support new markets, it’s time to sell to the big guns. Of course, exactly
who those big guns are will depend on your product. For some, it’s powerhouse
general mass retailers, like Wal-Mart and Target, while other products will fit
more specialized but equally powerful retailers, like Williams-Sonoma, The
Sharper Image and Sephora.

Note that when dealing with these major accounts, the sale
is just the beginning of the deal. Handling fulfillment, returns, rollbacks,
slotting fees, advertising and more will require strengthening your business’s
infrastructure and resources.

But back to the sale. What’s the best way to approach a
larger retailer? Here’s a quick cheat sheet:

  • Get
    the correct buyer:
    One of your biggest challenges is finding the
    right buyer within a large organization, so do your homework. If you’re
    experiencing roadblocks, consider hiring a distributor or manufacturer’s
    rep who already has established relationships in your industry.
  • Be
    prepared:
    Develop a presentation and have professional-looking
    sell sheets ready. Your product should also have packaging that’s ready to
    go.
  • Know
    your target:
    Understand what products they already carry and how
    yours will fit in. Don’t waste your time pitching to a retailer who’s
    unlikely to carry your product.
  • Take
    advantage of special programs:
    Some mass retailers, such as
    Wal-Mart, have local purchase programs that give managers authority to try
    local items. And other retailers may have different initiatives, such as
    minority business programs.
  • Be
    patient:
    It can take up to a year or longer before you see your
    product on store shelves, so don’t get frustrated. And if the final answer
    is no, try to turn it into a learning experience.

Finally, remember there are other sales channels besides the
traditional brick-and-mortar retail store. Catalogs, TV shopping networks and
online stores can also be excellent methods to enable you to learn how to
market a product online.

Product Development

Definition: The overall process of strategy,
organization, concept generation, product and marketing plan creation and
evaluation, and commercialization of a new product.

Innovative new products are the fuel for the most powerful growth
engine you can connect to. You can grow without new products–AT&T sold
essentially the same telephones for decades while becoming the world’s largest
telecommunications concern–but most small companies will find it difficult to
grow at all, much less rapidly, without a constant stream of new products that
meet customer needs.

How do you know when you need new products? Early detection
of a problem with existing products is critical. The following eight symptoms
of a declining product line will provide clues far enough in advance to help
you do something about the problem before it’s too late. Not all the symptoms
will be evident in every situation, but you can start suspecting your product
line when more than just one or two crop up.

1. You’re experiencing slow growth or no growth. A
short-term glitch in product sales can happen any time. If, however, company
revenue either flattens or declines over an extended period, you have to look
for explanations and solutions. If it isn’t the economy or some outside force
beyond your control, if your competitors didn’t suddenly become more brilliant,
if you still have confidence in your sales force, and if there are no major
problems with suppliers, examine your product line.

2. Your top customers are giving you less and less
business.
It may not be worth your trouble to determine your exact
market share when a rough idea of where you stand will suffice. But knowing how
much business you get compared to your competitors is critical. Every piece of
business your competitors are getting is business you aren’t getting–and may
never get. If your customers’ businesses are growing and the business you get
from them isn’t, your product may be the culprit. Chances are, someone else is
meeting your customers’ needs.

3. You find yourself competing with companies you’ve
never heard of.
If you’ve never heard of a new competitor or don’t
know much about them, watch out! They have found a way to jump into a market
with new products and technology that could leave you wondering what hit you.
It might not be that your product has a fundamental flaw. It’s more often the
case that someone has brought innovation to the industry. You earn no points
for status quo thinking.

4. You’re under increasing pressure to lower your prices. No
one likes to compete strictly on price. When your product is clearly superior
and offers more value than lower-priced competitors, you don’t have to.
Everyone understands that great new products eventually run their course and
turn into commodities. One day, a customer tells you she can’t distinguish the
benefits of your widget from those of one or more of your competitors, and now
you are in a price squeeze. If you want the business, you have to lower your
prices to stay competitive. If that was where it ended, things might stabilize,
although at a lower price level. But lower prices usually mean lower profit
margins, which usually mean less investment in keeping the product current,
which means more price pressure, lower margins?and so it goes.

5. You’re experiencing higher-than-normal turnover in
your sales force.
Good salespeople want to win customers so they can
make more money. When they have trouble competing, they can’t win customers or
make money. So they look for new opportunities and challenges that will bring
them what they want. You’ll always have turnover, but heavy turnover is a
symptom of something very wrong. It could be an ill-advised change in the
compensation scheme or a new sales manager coming in with a negative attitude.
But it could also be that members of your sales team are frustrated because
they’re having trouble selling your products. When business owners start to
pressure their sales forces to get order levels up, morale drops because the
salespeople know there isn’t much they can do.

6. You’re getting fewer and fewer inquiries from
prospective customers.
We all dread the time when the phone stops
ringing and prospects stop coming in. When advertising or other forms of
promotion aren’t creating the results you want, and you see fewer positive
results from the money spent, something could be wrong with the way customers
see your company. An obsolete product line positions you as an obsolete
company.

7. Customers are asking for product changes you can’t or
don’t want to make.
Here is a not-too-subtle sign that your product
may no longer meet market needs. There will be times when you have to decide
whether filling a customer’s request is in your company’s best interests. When
customers say “I want it this way,” you may want to say no because
you doubt you could ever recover the costs of the change, even by raising the
selling price. But when the customer says “I want it this way, and it’s
standard at ABC Widgets,” you should suspect you aren’t keeping up with
changing customer needs. When your competitors have leapt ahead of you in
features and benefits, you must either catch up or leap ahead of them with
innovations of your own, or you’ll fall so far behind you become a marketplace
postscript.

8. Some of your competitors are leaving the market. In
the short term, this sounds great. Your competitors drop out, and you pick up
the business they leave behind. The pie is shrinking, and as it does, business
gets better than ever. But beware: This is a classic signal of a declining
market. Nobody walks away from a growth business. Vibrant growth markets
attract new competitors; they don’t discourage them.

If you decide to develop new products as part of your growth
plan, you’re in good company. Small companies like yours contribute at least
half of the major industrial innovations occurring in the United States,
according to the SBA. At the same time, approximately one-third of all new
products are unsuccessful, and in some industries the percentage of failures is
much higher. The way to increase your chances of coming up with good ideas is
to follow the tested track to new product development success.

New product development can be described as a five-stage
process, beginning with generating ideas and progressing to marketing completed
products. In between are processes where you evaluate and screen product ideas,
take steps to protect your ideas, and finalize design in an R&D stage.
Following are details on each stage:

  • Generating
    ideas.
    Generating ideas consists of two parts: creating an idea
    and developing it for commercial sale. There are many good techniques for
    idea creation, including brainstorming, random association and even
    daydreaming. You may want to generate a long list of ideas and then
    whittle them down to a very few that appear to have commercial appeal.
  • Evaluating
    and screening product ideas.
    Everybody likes their own ideas, but
    that doesn’t mean others will. When you are evaluating ideas for their
    potential, it’s important to get objective opinions. For help with
    technical issues, many companies take their ideas to testing laboratories,
    engineering consultants, product development firms, and university and
    college technical testing services. When it comes to evaluating an idea’s
    commercial potential, many entrepreneurs use the Preliminary Innovation
    Evaluation System (PIES) technique. This is a formal methodology for
    assessing the commercial potential of inventions and innovations.
  • Protecting
    your ideas.
    If you think you’ve come up with a valuable idea for
    a new product, you should take steps to protect it. Most people who want
    to protect ideas think first of patents. There are good reasons for this.
    For one thing, you will find it difficult to license your idea to other
    companies, should you wish to do so, without patent protection. However,
    getting a patent is a lengthy, complicated process, and one you shouldn’t
    embark on without professional help; this makes the process expensive. If
    you wish to pursue a patent for your ideas, contact a registered patent
    attorney or patent agent.
  • Many
    firms choose to protect ideas using trade secrecy. This is simply a matter
    of keeping knowledge of your ideas, designs, processes, techniques or any
    other unique component of your creation limited to yourself or a small
    group of people. Most trade secrets are in the areas of chemical formulas,
    factory equipment, and machines and manufacturing processes. The formula
    for Coca-Cola is one of the best-recognized and most successful trade
    secrets.
  • Finalizing
    design research and development.
    Research and development is
    necessary for refining most designs for new products and services. As the
    owner of a growing company, you are in a good position when it comes to
    this stage. Most independent inventors don’t have the resources to pay for
    this costly and often protracted stage of product introduction. Most
    lenders and investors are trapped by a Catch-22 mentality that makes them
    reluctant to invest in ideas until after they’re proven viable in the
    marketplace. If you believe in your idea, you can be the first to market.
  • R&D
    consists of producing prototypes, testing them for usability and other
    features, and refining the design until you wind up with something you
    think you can make and sell for a profit. This may involve test-marketing,
    beta testing, analysis of marketing plans and sales projections, cost
    studies, and more. As the last step before you commit to rolling your
    product out, R&D is perhaps the most important step of all.
  • Promoting
    and marketing your product.
    Now that you have a ready-for-sale
    product, it’s time to promote, market and distribute it. Many of the rules
    that apply to existing products also apply to promoting, marketing and
    distributing new products. However, new products have some additional
    wrinkles. For instance, your promotion will probably consist of a larger
    amount of customer education, since you will be offering them something
    they have never seen before. Your marketing may have to be broader than
    the niche efforts you’ve used in the past because, odds are, you’ll be a
    little unsure about the actual market out there. Finally, you may need to
    test some completely new distribution channels until you find the right
    place to sell your product.
  • The Secret to
    Successful Product Design? Simplicity.

    The more
    immediately someone understands a.entrepreneur.com/topic/product-ideas”>product or message, the greater chance you have of selling him
    or her on it. Everyone recognizes Apple’s white ear buds without explanation.
    Visual perception occupies by far the largest area of the.entrepreneur.com/topic/psychology”>human brain — 80 percent — followed by hearing at 10 percent,
    making sight the most influential of the senses.

    Add to this
    the fact that people spend as little as three seconds at the.entrepreneur.com/topic/retail-businesses”>retail shelf, meaning they do not even
    see text, much less read or understand it. The time spent looking at a.entrepreneur.com/topic/online-marketing”>digital ad is even shorter. So why not
    simplify your product,.entrepreneur.com/topic/packaging”>packaging and messaging for more memorable communication?

    Thinking of
    your business in terms of pictures from the outset will help you find
    points-of-difference that will carry through your brand. We should be on a
    mission to convert as many words as possible to icons and images on our
    products, packaging and marketing efforts.

    Here are
    three simple and effective ways to get started:

    1. Make
    your product intuitive.

    When packaging, product design or even messaging is cluttered, we don’t
    actually register what’s being conveyed. Our brain gets fatigued and we may
    give up and move on. Clean, simple silhouettes with fewer bells and whistles
    reduce the message to an idea that is both immediate and clear: “I am not
    difficult to use. I am intuitive.”

    The tablet
    is a good example of this approach, which is also easily recognizable in
    non-tech consumer products. For example, OXO, a New York-based gadget producer,
    has a wooden hand-held.oxo.com/p-464-wooden-lemon-reamer.aspx”>lemon reame.oxo.com/p-464-wooden-lemon-reamer.aspx”>rwith a simple design that is immediately recognizable
    in terms of its functionality.

    2. Use
    icons in place of words.

    The written word is valuable, but pictures need to play a larger role in a
    world where consumers are bombarded with information. Icons that embody the
    prime characteristics of your brand or product are memorable and instantly
    identifiable on the shelf or online. We are both culturally and biologically
    programmed to gravitate toward those things that we recognize. They give us a
    feeling of comfort and security.

    I like to
    cite the example of Milton Glaser’s “I Love N.Y.” logo. In the 1970s
    Glaser harkened back to our deepest emotion — love — using the already
    familiar heart symbol to create the “I Love N.Y.” logo. It was such a
    huge hit because its meaning was instantaneous, making it a classic icon for
    New York tourism ever since.

    3.
    Develop packaging that’s visually compelling.

    Products and packaging have to echo each other. After you’ve envisioned your
    product’s characteristics, those consumer touch points should fit the look of
    its packaging as well. In its broadest sense, packaging is the delivery of the
    entire experience.

    Take, for
    example, the classic 1915 Coca-Cola contour bottle that we all recognize. This
    packaging was actually a radical break from convention at a time when beverage
    bottles were straight and featureless. The design was inspired by the cocoa
    pod, but over time, it became known as the Mae West bottle because of its
    feminine and curvy shape, which helped reinforce Coke’s efforts at the time to
    be associated with health, discreet sexiness and vigor.

    Take a step
    back and consider how you can make your brand and products more visual and
    intuitive. What simplifications and visual cues would make the product easier
    to use and more immediately understandable? The more elegant and
    straightforward your design, the easier it will be for you to win customers.

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