I took a few classes in marketing during my time in graduate school getting my MBA degree and I was always intrigued by the Four P’s of marketing. Product, Price, Promotion, and Placement. Placement is really distribution but the 3 P’s and a D doesn’t have the same ring as The Four Peas.
The key to successful new product development is getting all the 4 P’s right, this is referred to as the marketing mix in marketing-speak. Being an engineer, I almost went to the dark side of marketing when I worked at Motorola. I resisted because wanted to keep my technical edge and I really like the creative aspect of design and product development. The consequence was that I was the nail that stuck up and got hammered. My fellow engineers did not know how to relate to an engineer that had some sense of business and marketing. The 4 P’s were lost on them.
The easypeasy P’s are product and price.
Product. You have an idea for the product. You tailor the features and benefits for the target market.
Price. You estimate the retail price. Say you want to retail for $10.00 so the wholesale price is $5.00. Then your cost goal needs to be $2.50. This is a real wake-up call. I was trying to design and market high-tech toys and the cost always got me.
Promotion. Now it starts to get interesting. I’ve heard of stories of people with a garage filled with gizmos and a website no one visits. You have to promote your product and that means advertising. Sure, there is PPC (pay-per-click) where you only pay for an ad if someone clicks on it. I wondered if anyone really does click on these things but apparently Google make billions of dollars on it. PPC is a bit of black magic for me. I would suggest reading Tim Ferriss’ book, The 4 hour Work Week. Don’t buy it, go to the book store and read the chapter on PPC. I also purchased AdWords for Dummies. The book gives you a $5.00 credit to set up a PPC account with Google. It’s a bit technical for a dummies book but it’s a great primer for search engine marketing.
Placement. Now for the biggie. The last P or is that a D? Distribution. How the heck are you going to distribute your product so people can buy it? That is why there are distributors. This is the most difficult part of bringing a new product to market. Unless you have the relationships and the channels established, distribution can de-rail you.
BYW: If you have a product for Petsmart I can put you in touch with the right people.
Oh, you say, “Walmart will love my product and they will sell it”. WRONG. Shelf space is a precious commodity. Often times, it’s too much hassle to set up a single SKU vendor and it’s just not worth their time to get one company with one product.
There are exceptions. “You‘ve got to ask yourself one question: Do I feel exceptional? Well, do ya, punk? …” Getting into a big box retailer is a BIG deal for even a BIG company (nowadays a bit smaller) company like Motorola. We tried like heck to get into RadioShack and we succeeded. Just 50K units for a limited edition product for a Father’s day promotion.
OK, I convinced you that it’s a big deal so you will just ship from your home. Good plan, low overhead, use the kids as slave labor in the garage sweatshop. This can work for a while and there is an exit strategy but first this is what you need to know. I heard a story about a person who was selling out of their home. When they stopped to calculate how much they were earning per hour, it worked out to minimum wage. Hmmm …
Solution? One possibility is “Fulfillment by Amazon”. After you get established and have regular orders coming in because the PPC ad campaign is humming along, you can let Amazon process your orders. Just ship them the inventory. They take the orders, process the payment, and ship the product (at least that is what the site says). You sit back, collect a check minus a nominal fee, and keep on inventing. Remember, there is no such thing as a free lunch.
Give Peas a chance!
Happy inventing and even happier innovating. Like Michael Schrage says, it’s not an innovation until the mass market buys it.
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