Got A Lemon?
Frito-Lay Lemonade. Noxema Solid Anti-perspirant Deodorant. Ben-Gay Aspirin. Surprised you've never heard of these products? You shouldn't be--after less-than-phenomenal sales, these name-brand products were shelved for good.
If a huge company with a famous name behind it can't launch a successful product, what does this mean for you, the independent who doesn't have millions to back your product? According to Robert M. McMath, author of What Were They Thinking? Marketing Lessons I've Learned From Over 80,000 New-Product Innovations and Idiocies (Times Books, $23, 800-733-3000), anyone launching a successful product should have an original idea, be prepared to do a lot of research and be ready for a big struggle.
As founder of the New Products Showcase and Learning Center in Ithaca, New York, a product-consulting firm that's amassed an extensive collection of grocery-store products spanning 30 years, McMath has witnessed the rise and fall of thousands of products. Here's his take on the most common mistakes new-product entrepreneurs make--and how to avoid them.
1. Good product? I can do it better. No, you can't, cautions McMath. "Too many `me-too' products is the main reason so many products fail." During the mid-'80s, a small company introduced California Coolers on the market. Soon, McMath recalls, there were more than 150 companies marketing wine coolers. How many do you think were stocked on supermarket shelves? Hard to tell, but you can bet it wasn't 150. Find out what people want instead of what they already have. Get off the "trendwagon" and create your own product frenzy.
2. No, really, we're the first. "[Entrepreneurs] aren't doing enough research. They don't know what's happened in the past," says McMath. "We're seeing people launch products that were done 10 years ago with no idea that anybody had ever done it." If you research your product category, you may find your "unique" product is already out there or maybe did poorly in a previous incarnation.
3. What do you mean, margins? McMath recalls an entrepreneur looking for advice on selling his sports-equipment invention. McMath asked him what he was charging for the product, and the young man said $15. How much did it cost to make? $11. "I said, `Don't you know anything about margins? In a sporting goods store, they'll expect [about] 50 percent of the $15. [To profit,] you'd have to charge $30 or $35. Will your product support that price?" The entrepreneur didn't know because he'd never researched the product's viability in the sporting goods market. "You should be asking what [customers] expect to pay for it, where they expect to buy it, and what the margins will be," he says.
4. Trademark? What's a trademark? At a trade show, McMath told an exhibitor she was advertising with another company's trademarked slogan. Yep, you guessed her reply: What's a trademark? Apply for a trademark and patent before you start marketing. McMath advises hiring the best attorneys to ensure you get a strong patent that will hold up in court if ever challenged.
5. Sure, I'll send you a sample right away. McMath estimates 95 percent of the companies he requests samples from never send them, missing out on the free publicity he offers by using product samples in his articles, speeches and showcase. Follow up on your leads, and make sure your marketing materials include all the pertinent contact information so you can be found if you do "forget" to send the sample.
6. No, I've never sold one, but it's a fabulous product. Prove yourself before you try to meet with large distributors or buyers. Sell your products in local stores, set up a Web site, create a catalog. Use these sales to prove there's interest in your product. (Who knows? You may even make enough profit on your own to ditch the whole distributor/major-store route altogether.)
Some 25,181 new consumable products were released in 1998, according to Marketing Intelligence Service, a new-product reporting service for the packaged-goods industry. McMath estimates that the average supermarket stocks between 10,000 and 15,000 products.
Releasing a new product takes more time than you'll ever imagine and more money than you want to imagine. But that doesn't mean it can't be done. So remember, if you want to stand out in this enormous crowd, you've got to have a unique product, a creative marketing strategy and a savvy business sense.
New Products Showcase and Learning Center, http://www.showlearn.com