Finding a Market for a New Product
Question: I have developed a proprietary fluid that spontaneously produces the full rainbow of colors. I have a prototype but need to know how to commercialize the product. I am trying to find those markets in which this will command the highest possible price, and I have attended some gift shows. What other routes are available for me?
Answer: Inventing a product is not the same thing as creating a business. The most important aspect of developing a business is to determine what the right market is for the product you have developed.
The “right market” is not necessarily customers who will pay the highest price, said Marshall Toplansky, founder and chairman of Core Strategies Inc., a marketing strategy and research firm. “It is a combination of price and volume that ultimately determines how much you sell and how much profit you make,” he said.
In order to bring your invention to market, you’ll need to entice investors or lenders into giving you money. They will want to see several things from you, including a business plan that contains credible evidence that there is a market for your product and that realistically estimates the size of that market.
“Ideally, they want to see a large market that is growing rapidly and has a number of competitors in it already -- thus validating that the market actually exists,” Toplansky said.
Second, lenders or investors will want to see that you know how to reach your market. That means you must convince them that you understand your potential customers, know what their needs are, understand how to promote to your customers in a way that will differentiate your product and know how to price your product for maximum effect.
Finally, and most important, investors will want to see that you have assembled a team of people who know what they are doing.
“Preferably, they have experience in the industry you are going after with your product,” Toplansky said. At the very least, having had success in a past venture is an absolute must.
For more on starting a business, Toplansky recommends contacting the Tech Coast Angels at www.techcoastangels.com, and attending an entrepreneur conference sponsored by the Harvard Business School Assn. of Orange County. The conference is scheduled for May 8 at the Anaheim Marriott. You can get more information at www.hbsaoc.org/conference.
Steer Clear of Those on ‘Do Not Call’ List
Q: I own an 8-year-old company that provides free home delivery of a private-label dog and cat food. One of our most successful marketing tools is sending free samples by mail. In the past, we have followed up with telephone calls. Can we still call potential customers off purchased lists of pet owners, or does the government’s “do-not-call” list prohibit us?
A: Don’t call people who are on a “no-call” list. The potential of converting a few of them is likely to be offset by the collective bad temper of the rest, said Steve Rapier, executive vice president of Artime Group, a Pasadena marketing and advertising firm.
It is usually safe to assume that individuals who are not on “no-call” lists have opted to receive information from companies such as yours, Rapier said.
“Another idea you may wish to consider, following your free sample mailing, is to coordinate your mailing list with a corresponding e-mail list. Individuals may find an e-mail response easier, simpler and more convenient than a telephone call-in or mail-in response,” Rapier said.
Of course, making it easier for customers to respond will increase the likelihood of getting that response. The same kind of “no-call” restriction applies, however, for those who have opted out of receiving e-mail solicitations.
“Ignoring their preference not to be solicited could result in your being reported as a spammer,” Rapier said.
Another idea you could pursue would be to direct people who have received your free sample to a “landing page” on your website.
“Similar to the convenience of e-mail replies, individuals may prefer to interact with a website at the time of their choosing, instead of a dealing with a person on the telephone,” Rapier said.
Because such a page is invisible to everyone but the customers you direct there, you can measure the specific response that you’re getting from your free samples.
For extensive information about the do-not-call registry and how it applies to telemarketers, see the website of the Federal Trade Commission, www.ftc.gov/bcp/conline/pubs/alerts/dncbizalrt.htm.
