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THE ONLINE INVENTOR
(C) 1998 Market Launchers, Inc. -- September, 1998
http://www.marketlaunchers.com
Editor: Paul Niemann
E-mail:
[email protected]
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In this Premiere issue:
Article #1. "How To Get Your Products Into Retail Stores," as told in an interview with one successful inventor.
Article #2. "The First 10 Commandments of Inventing," re-printed with permission from Inventors’ Digest.
Article #3. "Marketing Research," by Paul Niemann
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Article #1. "How To Get Your Products Into Retail Stores," an interview with inventor Gary Kellmann:
The following interview was with Gary Kellmann, inventor of 8 different products, including the Hair Holder Holder, Soapasaurus, and other novelty and accessory products. So far, Gary’s products have accounted for sales of over $1 million. His products have been sold in over 300 different retail outlets, including Wal-Mart and Claire’s Boutiques. When interviewing Gary, 3 things became obvious about his approach to bringing a new product to retail:
KELLMANN: Most inventors, when they come up with a product, automatically think that they want their product in the huge retailers – Wal-Mart, K-Mart, Target, etc. Through my experience, as an independent inventor with one product, when you go to the buyers at a big retailer, the buyers aren’t going to want to talk to you because you only have one product. You have no track record, you’re not a proven company, and you don’t have any cash flow. All you have is just this product, even if it is a great product.
THE ONLINE INVENTOR: How do you get around that?
KELLMANN: What I’ve done is find companies that are already in those stores. This is the biggest thing: You research the industry. If you have a product that’s ready to go to market, then you better know the industry, know who the big players are, what your price points should be, what the wholesale price should be, what reps are selling to who, who the players are. Then you start calling these companies up (the companies that are already doing business with the big retail chains); they might be looking for another product to add to their product line.
My recommendation to an inventor is to link up with a big company, even if you do the manufacturing. Let them take half the risk and share in the cost.
There are a couple different ways that you can do it. If you’re a manufacturer yourself, then you can just sell it to them outright. They can design the packaging to go with their product line, their brand name, and their company name. Or you can do a licensing arrangement. It’s just so hard to try to get into a 200-store chain.
THE ONLINE INVENTOR: Should a first-time inventor go straight for the big chains, or should he start out with some of the smaller, specialty stores?
KELLMANN: The best thing is the specialty stores; but it depends on the type of product you have. If it’s a commodity-type of product, then you’re in trouble, being a small inventor. Then, once you have some success, and you go to more trade shows, more and more people start seeing it. The company that came out with the Beanie Babies is a good example. They started out small in 1981, selling to small store chains and they stayed small but had consistent sales. Their big break came when they retired their first ten products in 1991, and then, all of a sudden, everybody wanted one. Scarcity is what caused the big sales increase. Plus the fact that people love plush animals.
THE ONLINE INVENTOR: How do you go about approaching a retail chain, big or small? Do you call on them in person, send them a letter, or call them on the phone?
KELLMANN: You used to be able to call up a buyer on the phone, and set up a time to meet with them. But if a company isn’t taking on new vendors, then you have to join up with a company that is already selling to them, by working on a co-op basis or a joint venture. Wal-Mart, for example, isn’t taking on new vendors right now. And K-Mart requires that a new vendor send a sales sheet, not a product sample, because they receive hundreds of submissions per day. So you have to have an excellent sales sheet to get your point across, to get your main features across and have some good pictures of your product, in order to get their attention. And a good cover letter that explains that your product is in x number of other stores (if applicable), what the sell-through rates have been, and so on. You want to show them data that indicates the kind of success that your product has had.
But even that doesn’t guarantee that they’re going to buy from you, because you’re still competing with fifteen hundred other products. Some of the chains expect you to have their UPC code on your packaging, too. You have to have all your ducks in a row; for example, who’s going to pay for the shipping, and so on.
THE ONLINE INVENTOR: Does the inventor need to have the packaging already finished, or will the retailer help with that?
KELLMANN: Generally, retailers will not help with that. You need to have your packaging done by the time you go to present it to the buyer. If you’re going to do a promotion, they’ll suggest that you have something like an end-cap type of display. They’ll expect you to be the expert, and know what the consumer wants because the buyers at the big chains (which have eliminated a lot of their middle management people) don’t have a lot of time for that. If a person doesn’t know how to design his own package or write the copy, then he can get a free-lance consultant or graphic designer to do it. Be sure to get someone who has expertise in consumer products. Call ad agencies or graphic designers and interview them. Find out who their clients are. Plus, you have to be an expert in your industry, to know what the consumer wants, and to know what type of copy works. Packaging is more important than the name of your product.
THE ONLINE INVENTOR: What kind of research should you do in order to get to know your industry well?
KELLMANN: Look at all the trade magazines, and you’ll find out what’s selling and at what price points. You’ll get a lot of trade leads that way. Go into the stores quite a bit, watch consumers buy products, and go talk to the manager. They’ll usually talk to you if you go in during the non-busy time of the day.
THE ONLINE INVENTOR: Once you have one product selling in retail stores, when do you start working on developing additional products?
KELLMANN: When I invent, I come up with a lot of different ideas at the same time. You do it when your product has been successful. Your retailers come back to you and ask you if you’ve got any more products. That’s when you start designing more products. I’ve had that happen with the small chains.
THE ONLINE INVENTOR: What mistakes should an inventor try to avoid?
KELLMANN: The mistake is getting a patent before having a production sample made. The problem occurs when you have to change something in your design, and then you have to file again. Another mistake is filing for a patent before becoming an expert in the industry. You may find out that there’s no market for your product, and you’ll have saved yourself a lot of time and money by becoming an expert, which may indicate that it’s not worth patenting. Finally, build as good a prototype as possible, and test it as much as possible, and get as much feedback as possible, keep re-developing and testing it until you get to the stage where you feel comfortable with taking the big financial risk. Test-market it as much as possible.
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Gary Kellmann is a successful inventor with products in major retail stores. His first breakthrough came with his highly successful "Hair Holder Holder," as profiled in the May/June ‘97 issue of Inventors’ Digest. He is currently working on a product called "Soapasaurus." He is also the Co-Chairman of the St. Louis branch of the Licensing Executives Society.
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Article #2. "The First 10 Commandments of Inventing," re-printed with permission from Inventors’ Digest.
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Inventors’ Digest is THE trade pub for inventors. You can check it out at: http://www.inventorsdigest.com or call (800) 838-8808. Subscription price is $27 / year, published 6 times a year, and worth every penny.
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Article #3. "Doing Your Market Research," by Paul Niemann
More specifically, this article is about the danger that can happen when you ask your friends and relatives for their opinions about your new invention.
"About 5 years ago, I was working for a company whose president created a new product – it was a financial-related publication. Our distribution channel consisted of 40 banks across the country. Our potential customers consisted primarily of companies which sold financial products -- mutual funds, insurance, other financial publications and so on. The inventor did some market research on his friends, as many of us do. He asked some of his banker friends, insurance agent friends and stockbroker friends whether or not they thought his idea would succeed. They all said that they believed it would succeed, and that he should go for it. He took their advice, and proceeded with marketing his new product.
But taking their advice could easily have turned out to be an expensive mistake. When he asked for their opinions about his product's chances of succeeding, they could have just been telling him what he wanted to hear; after all, people tend to be supportive of their friends, right? And nobody wants to be the bearer of bad news.
What he should have done, and what you should do whenever you’re doing your own market research on your friends, is ask the following question after gaining a positive response from your friends:
"Since you feel that my invention will succeed, will you invest $5,000 in it?"
The reason for this question isn't to help you raise money; however, the answer will give you a good indication of whether your friends really think that you have a potential winner on your hands, or if they're just telling you what you want to hear. (After they respond, be sure to tell them that you weren't serious about having them invest $5,000 of their own money, but that you just wanted to find out how they really felt about your product.)"
This one simple question may help you avoid the mistake of spending your hard-earned money trying to market a product for which there is no demand. Fortunately, this fellow made the right decision and decided to proceed with his product, which became a success.
Paul Niemann learned first-hand how to market new products while working at a St. Louis
marketing consulting firm, launching the highly successful Financial Success Kit.
He is a former marketing instructor, and is regularly asked to be a guest speaker to
inventor organizations.
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Copyright 1998
Market Launchers, Inc.
All Rights Reserved
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