Alternative Marketing Strategies Successful Entrepreneurs Must Consider

The hundreds of entrepreneurs, inventors and small businesses that approach my marketing consulting firm each year with new product ideas all confront the same, basic hurdles in attempting to achieve commercial success. Issue number one, they perceive, is how to fund the project. Issue number two, how to market their product.

Let's review the marketing options. Invariably, the bulk of the entities we work with approach marketing with the belief that they need to immediately place their product in big box retailers. This is a laudable long-term goal, but almost always would be the kiss of death for new products and startup companies.

Big box retailers are exceedingly demanding in requiring huge levels of logistical support. The technology required to simply process orders, data entry, shipping, receiving and billing is highly technical and specific to each chain. The software and systems required to communicate with these giants can be prohibitively expensive for new, small vendors. These are just the logistical hurdles. The sell-through and marketing challenges are much more difficult to conquer.

The alternative to running off to Best Buy or Wal-Mart is to utilize "guerrilla marketing" strategies to mitigate expense, lower risk and insure that the new product has a fair opportunity to achieve success. In recent years we have begun to use a "backdoor strategy" to push products into big box store distribution without confronting the up-front challenges that are so daunting for new companies.

Here is an example. Recently we had a dentist approach our consulting firm with a very novel stylized toothbrush. He had deduced from his dental practice that people typically did not brush for three minutes, twice daily, as recommended by the American Dental Association. They really did not know how long they brushed, but the gum and tooth problems he was confronting in his patients indicated they were not brushing enough each day. His new toothbrush was cleverly designed to address this deficiency in oral wellness.

The dentist typically wanted us to create a marketing strategy for the toothbrush that would place the units on mass-market store shelves for the launch. We explained the difficulties, risks and expenses involved in such a strategy and why he should consider alternatives. This was when we described the "backdoor" option.

Big box chains have local and regional management structures. Most people believe that all new items are purchased through home office buyers or merchants. For example, Bentonville, AK is the home office for Wal-Mart. Troy, MI is the buying office for K-Mart. JC Penney is bought out of Plano, TX. Walgreen is located in Deerfield, IL. The Kroger Company is located in Cincinnati, OH.

Each of these, and other national chains in every retail category, have local managers that have the authority to bring product into their doors on a local basis. Few people realize this. These local, regional managers can cut purchase orders and by-pass the national buying process that can be so vexing.

We packaged the novel toothbrush, had our graphic designer create a pop-up shelf display with a header card, created sales collateral and presented the item to the regional manager of a national drug store chain. He was responsible for 36 stores in two southeastern states. He loved the item and even commented, "we love to show the home office that they miss on too many neat products". We left the meeting with a hand written purchase order for 144 pieces of the toothbrush for each store.

To support the launch of the product we wrote copy for a 30-second television spot with a tag for the drug chain. We went to the local cable television studio and they produced the spot for nothing, in lieu of our buying a small cable spot schedule. The dentist, in his smock, was the on air expert detailing the product.

The product was shipped to the 36 individual stores and the regional manager had forwarded a merchandising directive to each store manager. He advised the product was scheduled for delivery, end cap display was to be provided and that there was cable television buy to support the launch. We hired a college student to get to the stores and make sure the merchandise was prominently displayed and rotated.

Every few days we checked in with the regional manager and he provided sales updates. Within a week, he was able to project turnover and re-order needs. As soon as we secured re-orders, we had the regional manager call the home office with his sell-through report. Within two months we were invited into the buying office for a corporate presentation and to plan a national product launch.

We have used this "backdoor approach" a number of times with different products in different retail channels. It works. Local managers love to take successes, their discoveries, to the home office to prove their mettle. Our clients are in a much stronger position to negotiate terms with national retailers when we have already proven sell-through success on local, test market basis. It also enables us to extrapolate chain wide sales projections based on hard numbers, not best guess assumptions. This is a powerful strategy and many more entrepreneurs should take advantage of this approach that mitigates their exposure.

Licensing, bootstrapping, partnering, joint venturing and receivable financing/factoring are other alternative strategies that can be employed to launch new products. The most successful entrepreneurs overturn every stone to find the one route that will get their idea into play. Keeping all options open is essential if you are to realize your goals.

Geoff Ficke has been a serial entrepreneur for almost 50 years. As a small boy, earning his spending money doing odd jobs in the neighborhood, he learned the value of selling himself, offering service and value for money.

After putting himself through the University of Kentucky (B.A. Broadcast Journalism, 1969) and serving in the United States Marine Corp, Mr. Ficke commenced a career in the cosmetic industry. After rising to National Sales Manager for Vidal Sassoon Hair Care at age 28, he then launched a number of ventures, including Rubigo Cosmetics, Parfums Pierre Wulff Paris, Le Bain Couture and Fashion Fragrance.

Geoff Ficke and his consulting firm, Duquesa Marketing, Inc. (http://www.duquesamarketing.com) has assisted businesses large and small, domestic and international, entrepreneurs, inventors and students in new product development, capital formation, licensing, marketing, sales and business plans and successful implementation of his customized strategies. He is a Senior Fellow at the Page Center for Entrepreneurial Studies, Business School, Miami University, Oxford, Ohio.

Customizing Products and Services Presents Entrepreneurs a Great Way to Bootstrap a Business

We live in a world where mass production and scalability have enabled consumers around the world the opportunity to enjoy a wider range of Consumer Products and Services than ever before. Large scale production drives down prices. Items that were once luxuries are now within reach of masses of consumers on every continent.

Overwhelmingly the benefits of scale and industrialization are beneficial to society. Jobs, distribution opportunities, global trade and finance have all thrived in large part because of the benefits of a consumer driven world. The Benetton sweater or MAC cosmetic that is purchased in Denver is the same as a unit of either sold in Sydney.

There is a downside to mass production, a downside that presents opportunities for those seeking to position their enterprise successfully within the whirl of this hyper--competitive consumer marketplace. Most mass produced products are impersonal. They offer value, utility and uniform performance features. They do not, however, differentiate themselves significantly from competitors. This is where the creative and craft minded producers can maximize their offerings.

Hermes purses and scarves are famous, but simple examples of a Brand that has been built from scratch, painstakingly over time and by being extremely protective of distribution channels for their limited production, hand crafted products. Hermes controls the price and design of each unit produced with a discipline that borders on fanaticism. When a design becomes popular and demand soars, the family owned Company caps production far short of maximum sales potential. This is a classic example of a limited distribution strategy that serves to increase Hermes' product desirability among discerning consumers.

Ferrari automobiles, Zegna menswear, Piaget watches, Tory Burch fashions and La Prairie Skin Care and Cosmetics are other examples of Brands that have created world-wide franchises by avoiding any taint of a mass production model. They sell service, customization and personalized product that elite customers demand. The strategy does not need to be limited to exclusive couture brands, however!

The Branding and Marketing Consulting firm that we manage utilizes many different forms of personalized service or customized product assembly to differentiate our clients. In order to be able to compete with behemoth, multi-national brands a new company must be able to identify their Unique Selling Proposition (USP). A better ingredient story or a better mousetrap design will not suffice.

Recently a prospective client approached us with a Perfume concept. The Fragrance world is huge and brutally competitive. The perfumer we met with was keen to commercialize a range of scents, mainly by utilizing generic top notes. We spent a good deal of time trying to define a USP that would differentiate her product, while creating a niche she could occupy. The final, agreed suggestion was to sell a value added personalized blending service with each offering customized, value added and unique to each client. There are a number of added special service features which insure that the Brand will be perceived as unique by her "alpha" clientele.

We have utilized one form or another of this strategy for Gourmet Food products, Toys, Cosmetics, Wellness regimens, Service Providers and many other client projects. An important feature of this strategy is the opportunity to bootstrap the product or service when limited resources are at hand. Local sales can be leveraged to regional sales and beyond. The enterprise can be grown at a pace that is more easily handled by thinly resourced entrepreneurs.

Red Bull, Snapple and Arizona Iced Tea did not start as national and international brands. They were bootstrapped. They found holes in saturated, developed marketplaces and they filled niches. This model is available to creative entrepreneurs who are driven to compete, but understand that they must deal from a different, smaller deck of cards.

by: Geoff Ficke

Geoff Ficke has been a serial entrepreneur for almost 50 years. As a small boy, earning his spending money doing odd jobs in the neighborhood, he learned the value of selling himself, offering service and value for money.

After putting himself through the University of Kentucky (B.A. Broadcast Journalism, 1969) and serving in the United States Marine Corp, Mr. Ficke commenced a career in the cosmetic industry. After rising to National Sales Manager for Vidal Sassoon Hair Care at age 28, he then launched a number of ventures, including Rubigo Cosmetics, Parfums Pierre Wulff Paris, Le Bain Couture and Fashion Fragrance.

Geoff Ficke and his consulting firm, Duquesa Marketing, has assisted businesses large and small, domestic and international, entrepreneurs, inventors and students in new product development, capital formation, licensing, marketing, sales and business plans and successful implementation of his customized strategies. He is a Senior Fellow at the Page Center for Entrepreneurial Studies, Business School, Miami University, Oxford, Ohio.

What Potato Chips Can Teach Entrepreneurs?

America, and the developed world, is saturated with cheap, convenient, pre-packaged snack foods. These tasty treats are available in sweet, salty, chilled, or warmed styles and presentations. None is more popular, and ubiquitous, than the potato chip.

The potato chip in America was historically a very local mom and pop business until the 1930's. The end product, the potato chip crisps; were very difficult to ship, handle and preserve without advanced packaging techniques. Prior to the invention of coated bagging components, chips were made in local kitchens and sold in a few local stores, typically out of barrels. As soon as the barrels were opened, and the shop owner scooped the sold product for the consumer, air entered the barrels and the potato chips became stale. Consumers of these chips were taught to heat the chips at home before serving to mitigate the lack of freshness.

This type of trade was adequate for a local service business model, but it did not allow for economies of scale or national distribution. In addition, each town and region developed a favorite type of chip that enjoyed local popularity only. The opportunity was ripe for an entrepreneur to consolidate and commercialize the snack business in a major way and revolutionize the category.

That entrepreneur was Herman Lay. Mr. Lay was a route salesman for the Barrett Food Company of Atlanta. He sold the Barrett brand of potato chips in an assigned territory in Nashville, TN during the 1930's. He was a natural sales talent, developed and quickly grew his territory and soon hired route salesmen to work for him. The owners of Barrett noticed his success and offered to sell Herman Lay the whole business. He struggled to cobble together financing. This was at the height of the depression. Somehow, a combination of loans, savings and preferred stock was assembled and the $600,000 selling price was secured.

The new Company immediately changed the name to the H. W. Lay, Company. Mr. Lay recognized that mechanization was necessary to expand his distribution and lower costs. He invested every dollar of profit in self-contained potato processing machinery that took a whole potato and produced a finished chip. The crisps were then packaged in the new non-permeable bags that insured freshness for the product as they were shipped and sat on store shelves until purchased and consumed.

The onset of World War II proved most profitable for the salted snack industry. Chocolate and sugar were heavily rationed during the war and products that utilized these ingredients became rare and expensive until the war was complete. Salt, however, was never rationed and the availability of salty snacks made them the preferred choice of consumers seeking a quick treat during the war. In addition, these salty snacks were consumed in huge quantities by the troops.

Lays Potato Chips and snacks became ubiquitous on store shelves in the American south during and after the war. The Company bought up small, under-capitalized competitors and expanded aggressively. Eventually the H. W. Lay Company purchased the Frito Company of San Antonio, Texas. Frito had perfected the production of a corn chip which we eat in huge quantities to this day. The combined Frito Lay Company became the strongest national salted snack producer.

Frito Lay and a number of regional brands dominated the salted snack category through the post-war years. The simple potato chip was basically unchanged in appearance, flavor and consistency, except for adding new tastes such as garlic, green onion and bar-b-cue. The industry seemed to have settled into a maturing, slow growth category, with limited entrepreneurial opportunities for new offerings. However, the most entrepreneurial consumer product Company in the world, Cincinnati's Procter & Gamble (P&G), is always seeking to cultivate and grow new product niches. They had their corporate eye on the snack industry and, in particular, the P&G management felt they had identified a chink in the armor of the potato chip producers.

That chink was in packaging. Potato chips had been sold since the late 1930's in flexible, pliable bags. While this insured freshness, it made breakage an issue. Consumers taking part in focus groups had told P&G that they did not like the small, cracked, broken pieces of chips that settled in the bottom of the bags. Research and Development at P&G began to work on an answer to the problem.

P&G is famous for its creation of Brand Management. Brand Management enables the responsible team assigned to each specific product to treat the brand as a stand- alone business and profit center for the Company. The success of this management style is legendary and has been studied in Business Schools and adopted by many other businesses. The Brand Management system encourages each team to pursue aggressively new product adaptations and inventiveness.

P&G Research and Development for the Company's food group worked on the potato chip project throughout the 1960's. Their answer to the problem created a wonderful example of how an entrepreneurial firm, or individual, can profit immensely from a convergent product innovation. The innovation that became a billion dollar brand, and revolutionized snack food marketing, was the introduction of Pringles.

P&G obviously did not invent potato chips or salty snack foods. However, by adapting the classic potato chip in form, taste and presentation they created a novel, blockbuster brand that is sold to millions of consumer around the world every day.

Pringles are 42% potato. They are formed by mixing potato flakes with liquid slurry and then dried to form each chip into an almost perfectly identical curved oval crisp. The genius of Pringle's lies in the cylindrical cardboard tube invented for P&G by Fredric Baur. The Pringle crisps are stacked inside the tube so there is virtually no breakage of the individual chips. The tube closure is a snap on plastic lid. Pringles was test marketed in 1968 and consumers were enthusiastic. The product has been constantly improved and over 40 flavors have been added to the original style. Many of these flavors are sold in specific countries or regions to suit prevailing taste preferences, such as jalapeno in Mexico and Cajun in Louisiana.

Entrepreneurs are driven to seek and create "divergent products". The invention of disruptive "divergent products" such as the light bulb, the cotton gin or the internal combustion engine is the "Holy Grail" that these visionaries seek to perfect and leverage to fame and fortune. However, the most often realized and realistic road to success is to create a niche product improvement. Explore existing products and technologies and identify needs that are not being addressed by these products. The creation of novel "convergent products" that simply add incremental benefits and small performance enhancements can result in huge profit.

Procter & Gamble has built the largest consumer product Company in the world and one of the most admired innovation factories by seeking both "divergent" and "convergent" opportunities. Pringles is an example of a huge "convergent product" innovative success. The history of P&G is rife with examples of new "convergent product" successes. The "divergent product" innovations are fewer and harder to discover and bring to market. This is a great Company that looks for opportunity anywhere it can find it.

Entrepreneurs should take note of this process. Frito Lay is today owned by PepsiCo. The evolution of this great brand owes much to the simple drive and vision of H. W. Lay. He took a simple product that suffered a poor distribution model and turned the opportunity into immense wealth. P&G took the breakage problem inherent in bagged potato chips and through innovation in recipe and packaging created a huge worldwide success with the introduction of Pringles. P&G and H. W. Lay are examples of the elegance of simple ideas. Remember the old axiom: KISS = Keep it Simple Stupid! The best ideas are often the most obvious.

Geoff Ficke has been a serial entrepreneur for almost 50 years. As a small boy, earning his spending money doing odd jobs in the neighborhood, he learned the value of selling himself, offering service and value for money.

After putting himself through the University of Kentucky (B.A. Broadcast Journalism, 1969) and serving in the United States Marine Corp, Mr. Ficke commenced a career in the cosmetic industry. After rising to National Sales Manager for Vidal Sassoon Hair Care at age 28, he then launched a number of ventures, including Rubigo Cosmetics, Parfums Pierre Wulff Paris, Le Bain Couture and Fashion Fragrance.

Geoff Ficke and his consulting firm, Duquesa Marketing, Inc. (http://www.duquesamarketing.com) has assisted businesses large and small, domestic and international, entrepreneurs, inventors and students in new product development, capital formation, licensing, marketing, sales and business plans and successful implementation of his customized strategies. He is a Senior Fellow at the Page Center for Entrepreneurial Studies, Business School, Miami University, Oxford, Ohio.