Taking your big idea from dream to reality is exciting and challenging. But getting an idea to market requires worrying about so many details, it's easy to forget the most important steps to making a product succeed:
1. Perfect the product's design and prove it will sell.
2. Find a distribution network to sell the product in a limited market.
3. Establish widespread distribution.
Most people with ideas concentrate on the first step and overlook the other two, not realizing how crucial--and difficult--they are. The best way to generate quick success? Prepare for the final two steps early in the process by determining what distribution network you'll use to sell your product, developing contacts in those channels, and pre-selling your idea to the channel six months to a year before introducing it.
Step 1: Prove the product will sell.
Wendy Murphy, owner of W. Murphy Enterprises Inc. in Toronto, has made it through the first key step of profiting from an invention. Murphy is a medical research technician who has worked in several hospitals. After watching rescue workers on TV during the Mexico City earthquake of 1985, she realized there had to be a better way to evacuate infants from hospitals in an emergency.
In 1990, Murphy launched her product, a six-infant stretcher dubbed the WEEVAC 6. She went to conventions, made sales calls to children's hospitals and eventually sold about 200 units. So far, her best year has brought in sales of $89,000.
Murphy has proved her product will sell, but she can't break the $100,000 annual sales barrier. One person can only make so many sales calls, and Murphy hasn't found a distribution network to take on the sales burden. "It's extremely frustrating to have trouble finding distribution for a product I know will save babies' lives," says Murphy. Most people feel the same way when they find themselves stuck in a sales effort that can't build up enough momentum to take off.
Distribution refers to how a product moves to market. This might be through a sales agent, wholesaler, distributor, retail store or any other organization that gets a product to the consumer. A strong distribution system is the most important aspect of marketing a product. You should spend 10 percent to 30 percent of your time locating distribution channels and promoting your product to them.
To jump-start her distribution efforts, Murphy should:
1. List key elements of her selling situation: The product has a six-month to two-year sales cycle (the time needed to complete the sales process, from initial cold call to authorization, requisition and approval of the purchase), the target customers are hospital evacuation committees, and the average unit price is $1,000.
2. Read trade magazines and visit trade shows to find products with similar selling characteristics (price point, sales cycle, target market, etc.).
3. Learn how those products are distributed. (She can do this by talking to people who market or sell the similar products.)
4. Establish contacts in the distribution network by attending trade shows and directly contacting buyers and marketing people at key distributors, wholesalers or retailers. This isn't easy: You might have to contact 25 to 30 organizations before you find one willing to handle your product.
Step 2: Find a distribution network to sell the product in a limited market.
Selling to a distribution network is much harder than selling to consumers, who compare your product to competing products. The distribution network compares your product not only to competing products, but also to all the other noncompeting products it could potentially sell. Their goal: to earn the most money for the least effort.
The distribution network also considers factors consumers don't, such as minimum order size, terms, shelf space, promotional budgets, packaging appeal and pricing discounts. To work out such issues and build sales momentum, your next step is to get into a small distribution network.
John Mueller, owner of The Idea Factory in Menomonee Falls, Wisconsin, got a fast start selling his product, the Rinse Ace, thanks to home shopping network QVC. In 1995, the network aired a segment showcasing products from Wisconsin inventors--and Mueller's product was chosen as "Best of the Show." But that initial success didn't help in other distribution networks. "[Large retailers and distributors] won't talk to any new business until it's been around for a few years," says Mueller, 35.
The Rinse Ace is a valve that fits onto a shower arm right before the shower head. It has a nozzle that attaches to a hose and sprayer to spray the entire shower. The product is ideal for television because it offers a powerful demonstration. Unfortunately, most distribution channels want products that sell based on a package, not a demonstration, so Mueller had trouble getting hardware stores and mass merchants to carry Rinse Ace.
Instead, he concentrated on catalogs like Miles Kimball and Damark. Today, Rinse Ace is in more than 35 catalogs, and Mueller estimates 1998 sales at more than $1 million.
Catalog success got Rinse Ace into Menards, a Midwest home improvement chain; a few distributors; and scattered hardware stores nationwide, where it's selling well. This has established Rinse Ace's sales potential and generated the momentum needed for the next step: widespread distribution.
People often wonder why distributors won't give a new product a chance. Setting up paperwork and sales training for a new product is a lot of work, and distributors don't want to spend the time unless they're sure the product will sell.
Having an "introductory stage" when you sell to a limited market allows you to lavish extra attention and promotional efforts on that market. Promise promotions, demonstrations, extra-long payment terms, frequent restocking services, and any other service you can to get the distribution network to take your product and to help it sell. The initial momentum from your first distribution channel is crucial to lining up a larger network (Step 3). Another good reason to limit your market initially: You probably can't afford to launch a product in more than one market.
Step 3: Establish widespread distribution.
Having spent years in advertising and marketing, inventor Tony Loiacono, 42, knows the value of distribution. He follows a strategy I recommend: Start working with distribution networks at the earliest stages of the inventing process.
Loiacono's inventions, Kid Soap and Kid Soap Plus, are soaps shaped like animals and made without chemicals that are harmful to children. They come with a free toy; Kid Soap Plus also includes a background scene that wraps around the inside of the tub. (A lion-shaped soap, for instance, might come with a jungle background.)
Loiacono, owner of Heads & Tails in Bonsall, California, got his idea in January. He made models, took them to contacts in the distribution channel for feedback, then made the suggested changes. "Personal contacts in the distribution network are essential to introduce new products," he contends. "They allow [you] to minimize advertising expenses on a product launch." Getting feedback from contacts also helps perfect a product--and you'll almost always get orders from a buyer if you make changes based on his or her input.
Because Loiacono pre-sold the distribution network, his soaps went straight to broad distribution. Loiacono got orders from Wal-Mart, Kmart, Hallmark stores and Toys "R" Us, as well as distribution networks serving advertising specialty suppliers and small gift stores, and introduced his soaps in June--just six months after getting the idea.