One of the most critical tasks in launching a new product is to determine the most cost-effective method of bringing product and customer together. For a small business with limited funds, the importance of correct decisions takes on even greater significance. However, there are so many marketing methods from which to choose that it can be confusing. Accordingly, a prudent businessperson will apply some common sense market tests to help reduce the risks of making poor choices.
Unfortunately, there are no recipe books about marketing that tell you exactly what to do for any given product. However, selecting marketing methods does not need to be a random shot in the dark. Instead, there are a few rather inexpensive market probes that should be considered before committing large dollars to a particular program.Three commonly used approaches to testing a marketing channel are quite helpful. One is rather obvious while the other two may not be, especially for the businessperson with limited marketing experience. Specifically, these probes include: interviews with potential customers new product releases in magazines, and trade shows.
INTERVIEWS - The old cliche holds true - if you want good information, go right to the source. This is the obvious test. Personal interviews of a cross section of potential customers may give you the answers to that all important question - how and when does the customer make his decision to buy. Your questioning should focus on your customers' buying habits as they relate to: magazines or newspapers, trade shows, direct mail, manufacturers' representatives or distributors, catalogs, television or radio, retail outlets and yellow pages.
Potential customers are generally willing to provide you with valuable marketing information as long as they feel you are not using the interview as a ploy to sell them something. If the interview responses show a consistent pattern, you may be closer to identifying the most promising method to reach your customer.
NEW PRODUCT RELEASES - In most industries, there are several magazines that reach potential customers. And, most magazines contain a "new products" section in which they offer free publicity about new products in the market. The publishers use this section for two primary purposes. First, they want to satisfy their readership which generally wants to stay abreast of the latest products that may impact them. Secondly, it gives prospective advertisers such as yourself a no-charge opportunity to test response rates to a possible future advertising campaign.
In addition to providing valuable sales leads from the free exposure, you often receive inquiries from manufacturers representatives, distributors and companies with related products who may wish to carry your product line to complement their own.
To get your press release published, send the magazine a black and white photograph of your product along with a one to three paragraph description of its benefits and features. Be sure to include your address and telephone number in the description. If you are puzzled about how to write a press release, merely look at those which the magazine has already published, then follow that general format.
As you receive inquiries, ask as many questions of callers as you can without offending him. Their responses about their buying habits may be even more valuable than the current order they are placing.
TRADE SHOWS - Like magazine tests, trade shows can provide a wealth of information about effective marketing methods. Oftentimes, a company with a new product will rent a small booth to exhibit its product, generally at a cost of a few hundred to a few thousand dollars. Selling products at the show is obviously one objective. However, of equal importance is the interest that may be generated from retail merchants, manufacturer representatives, distributors andrelated companies who attend the show and may wish to sell your products. It is also a good opportunity to make contacts with your industry's magazines who generally have an exhibit at the show.
Although you are there to exhibit your own product, make sure you take the time to look at the other exhibitors as well. That walk through as well as conversations with key players within your industry can provide important information.
There are many ways to market a new product. Most require a significant investment of money and time. But inexpensive market tests are available to identify methods that may be the most cost-effective and to reduce the risk of costly mistakes.
James Solomon, CPA, has been involved in ownership and management of several successful business and formerly served in financial management positions with Deseret Farms and Exxon Corp.