Interpersonal Business

Vol. XV

Dear Manager,

All sales driven organizations thrive with the anticipation of continued growth and the rewards that follow. It is the single driving force of all managers and entrepreneurs. When things are going well it is easy to assume that current levels of success and good fortune will sustain themselves, and will increase at a similar or greater rate in the future. We are on a roll in the marketplace. Each decision that is made only seems to enhance our position. In the good times, marketing departments often take more than their share of the credit for the developmental aspect of their presentation. In essence, anyone could sell this line.

In more challenging times, very little is taken for granted. All expenditures are reviewed and must be justified. Each marketing decision is fully analyzed to determine its current value. Management becomes more conservative in their decision making process. The pressures of cost controls become a part of their daily lives. In these instances, it is common for the sales force to be given more than their share of the responsibility. In effect, is anyone working out there?

IMPLICATIONS FOR MANUFACTURERS

For all manufacturers to survive in the market place they must develop a product or concept that creates need or value to the consumer. This initial focus and success is generally what establishes most entrepreneurs, for without it they will not survive. It is very easy for a newly successful manufacturer to not fully understand and appreciate what got them there. A false sense of confidence from one product can lead to a perception of automatic future success. As we are all aware, this is rarely true.

A number of years ago I was working with a manufacturer whose central product was one of the most innovative I had worked with. This company was very creative, and was in on the ground floor of the product’s life cycle. With their early success came complacency, and an expansion into categories that had little or no relationship to their initial success.

Not only had they taken their eye off their initial success, leaving it vulnerable, but they had also devoted critical resources to a series of unproved product categories. New product introductions require substantial attention to detail, while providing very limited initial reward. Within a short period of time they were very nearly out of business.

Management realized the dilemma, and re-focused all their efforts on what had brought them their initial success. They committed to being the very best and most aggressive producer in their category. The organization once again took an innovative and creative posture, bringing genuine excitement to the market place. Do not lose touch with your position of strength in the marketplace.

With this re-focus, the company became not only the leader, but also a formidable opponent in their product area. Due to their creativity, the competition was consistently in a “catch up” position. With time, and as resources and staffing became available, they were able to expand into obvious second-generation product categories. Today, they continue to be a leader in their field.

Manufacturers can ill afford to loose the creative edge that established them in their market. Once your product is established, always consider your options for second-generation development. This can often be done in the process of your first generation planning. Second generation implies its obvious ties or relationship to the original product or service. The risks are substantially reduced in this type of expansion, as it is built upon your currently developed position of strength. Hanging on too long to an established product will only bring disappointment … Dinosaurs are born every day!

There are just as many companies that become stale and fail for lack of creativity, as there are companies that fail for over extending resources and by taking their eyes off the cash cow! Those who seem to succeed have a strong sense of awareness of their current position in the marketplace. They are creative and able to invest in obvious second-generation products that bring an ongoing freshness and vitality to their first generation presentation. Timing and resources are the two key elements to any expansion.

Rarely are marketing departments or sales forces solely responsible for the good times, or the not-so-good times. This relationship is like a marriage; fingers can be pointed, but success is only achieved through harmony.

IMPLICATIONS FOR SALES AGENCIES

The number of manufacturers that many sales agencies ask their sales associates to represent amazes me. In earlier times, it was very common for a sales associate to represent thirty or more manufacturers in a sales region. In all honesty, they may have needed this number in order to survive. Today it’s a very different marketplace, yet I still see this approach to sales. I always ask myself how any single individual can effectively service the needs of this many “masters.” In analyzing this situation, many of these agencies would determine that in excess of 80% of their sales were generated by less than 50% of their manufacturers. In earlier times there was a sense of security in spreading one’s exposure by representing more manufacturers than could possibly be handled. For the professional sales agency, these times no longer exist.

A sales agency can create security through their own value to their manufacturers. Always become more than a sales vehicle to those you represent. Provide them with timely and candid field level information. Make it painful for them to consider a change in representation, in the good times or the more difficult. By providing increased exposure and becoming one of their most successful agencies, your security is assured. Certainly there are rare instances of loosing a manufacturer regardless of one’s success, but there are many more instances of a missed opportunity for lack of available focus, exposure and resources.

Sales associates have limited time and capacity to fulfill their obligations. How many have walked out of a sales call after a very successful appointment only to feel the frustration of having sold only five of their twenty-five manufacturers? How much of their sales time and ability to bring a focus has been spent on line organization, updating, and difficult conversations with a manufacturer over poor sales, and feeling the guilt of only performing for a few? All of this energy has been expended for a group of manufacturers that may represent less than 20% of their sales! Consider the value of these efforts had they been directed toward the associate’s most valuable manufacturers. We only have a limited amount of mind space; it cannot be wasted.

Today’s market conditions require a very realistic approach to one’s capacity. Sales agencies cannot lose sight of their priority manufacturers. They deserve our devoted and uncluttered attention. None of us has the time to waste in needless conversation with manufacturers who provide limited opportunity or future growth potential for our organizations. In addition, we are doing a disservice to these manufacturers due to our inability to bring a reasonable focus to their presentation. If you cannot realistically support them, encourage them to find someone who can.

As manufacturers or sales agencies, we must keep our eye on the ball. Similar to the fish in the sea, some priorities are whales and some are minnows. Remember, every allocation of time is at the expense of time that could be devoted to a higher priority.

Personal Regards,

Keenan

INTERPERSONAL© is published by INTERPERSONALBIZ.COM, Keenan Longcor, Editor, ©2008. Duplication of this publication is permitted for both personal and business use. Excerpts may only be quoted with acknowledgment of INTERPERSONAL/INTERPERSONALBIZ.ORG as the source. For re-publication rights, please contact the editor at KEENAN@INTERPERSONALBIZ.COM

Dear Manager,
In last month’s issue we discussed developing a marketing advantage. An essential step in the development and introduction of any product is in the advantage of a competent marketing individual to insure your products have established their market. It is my belief that the most difficult position to hire in any organization is the individual asked to be your marketing guru.

Do not confuse these dramatically contrasting forms of marketing. Gut approaches business with a sense of awareness, feeling and passion that only a few around him will understand. It’s as if Gut has a sixth sense relating to the objective; they hear a voice that no one else can hear. By contrast, Pants hears no voice. In fact, this individual is convinced there is no voice, and has concluded that good fortune and timing are the makings of successful marketing.

At a recent trade show I had the opportunity to meet with two individuals who best illustrate this marketing dynamic. In my conversation with Pants, he suggested that there was no possible way to figure out the needs and wants of the consumer, let alone the whims of his retailers. “My only success has been to throw it on the wall and hope something sticks. Good fortune is the name of the game with relationship to new product.” As I suggested to him on that day, this is a cop out.

I have had the opportunity to work with a number of organizations who are certainly aware of the role fate can play, yet would never consider relying upon it! These organizations consistently hit the mark relating to what the market is asking for, creating their own success through innovation. These are the organizations where an annual sales growth of 30% to 50% is not uncommon. I have seen this reality occur time and time again, how can anyone suggest it doesn’t exist?

In my conversation with Gut, he told me he had just survived a difficult year in which the market had changed and, in hindsight, some bad decisions were made. He immediately went back into the field, working many shows to regain an accurate pulse on the market. I have to ask, how often do marketing people come to a trade show or work in the field to gain feel for the market? I rarely see them.

Gut has aligned himself with individuals who understand the nuances of product development. He is constantly thinking past the obvious and creating first and second generation ideas relating to his product. With every brainstorm he not only asks but listens. He relies upon his peers to provide him with current information and additional perspective. Once the analysis is complete, and the thought has stuck in his head, rather than on the wall, he goes with it. After a difficult year, Gut is not only back on track, he’s near the top.

Allow me to clarify. Who am I to suggest that Pants has no gut? My only criticism is that Pants denies the existence of a gut. Once again, we cannot fully understand what we have not personally experienced.

THROW OPEN THE GATES
I recently saw a televised interview with Bill Gates who, along with Paul Allen, founded Microsoft. Is there any question that Bill Gates has a great gut? He not only hears a voice, but hears one that is decades and generations ahead of its time. Who has accomplished more in business and industry over the past twenty-five years?

In this interview, Gates referenced the need for business to constantly re-invent itself. He went on to suggest that every business needs to “obsolete itself as quickly as possible!” Obviously, he was suggesting that business not only stay with the times, but to reach ahead of them, re-inventing itself along the way. While the electronics industry is extremely fast paced, particularly in today’s market, has Bill Gates offered up new principals that would only apply to his industry and not to our own? Absolutely not.

If this is true, why are companies reluctant to re-invent themselves? Why do I see companies become more conservative, losing their entrepreneurial spirit and allowing their presentations to become dated? Are they simply waiting around to catch the next wave of good fortune?

It always has, and always will, come down to creativity, design and innovation. If you no longer have it, then find it. I often hear reference to a product as having reached a mature market. I genuinely believe this is a very kind way of suggesting that a product is stale or, in fact, the market would not be mature. The time to re-invent yourself is at the top of the curve rather than waiting for more desperate times. At the top of the curve, excitement is high, cash reserves are strong and you hold a significant role in the marketplace. New introductions will be looked upon with a level of enthusiasm similar to that for your current offering.

At the bottom of the curve, when your product has been perceived as being dated, excitement will be low and cash reserves will have dwindled. Once again, your new introduction will be looked upon with a level of enthusiasm similar to that for your current offering: dated and of little relevance.

With bottoming-out comes a very clear resolution relating to your options: get your eye back on the ball, or kiss your ass good by. It is now time for a transfusion of new ideas providing energy and a spark to the organization. The need to find that marketing guru may become a bit more obvious, and accepted with a greater awareness and understanding than in the past.

Managers may have sold themselves on the conclusion that there are historic factors that inhibit sustained growth. They might even reason that for there to be a bottom, there must also be a top!

With time, challenges mount, expectations grow, and the price for success only multiplies. There may be a time when the price becomes too high. This is certainly acceptable, as long as in the same breath we have not placed responsibility and blame on the influence of outside factors.

There are no true limitations, only those that are self-imposed. Do not confuse limitations in ones own capacity with any inherent limitations of the marketplace or in that of your organization.

In the lifetime of ones business career there is only abundance.

Personal Regards,
Keenan

INTERPERSONAL© is published by INTERPERSONALBIZ.COM, Keenan Longcor, Editor, ©2008. Duplication of this publication is permitted for both personal and business use. Excerpts may only be quoted with acknowledgment of INTERPERSONAL and/or INTERPERSONALBIZ.ORG as the source. For re-publication rights, please contact the editor at KEENAN@INTERPERSONALBIZ.COM

Dear Manager,
As managers, we have observed, asked to be involved with, and participated in an abundance of products and services. As students of the marketplace, we have witnessed quality products that failed under their own weight, while other less promising products flourished and succeeded. How can this happen? This scenario is much more common than we are likely to acknowledge. While some individuals rely on timing and blind luck, there is no question that management can take control and react to these factors with effective marketing.

With this issue, and continuing with the next issue, I will discuss those aspects that ultimately determine a product’s success … or something less. No more excuses! If you are unwilling to properly market your product or service, send the investment to charity and leave your product on the drawing board.

I was at a recent trade show and, with some wonder, found myself uninspired by the majority of the exhibits and the products on display. If one of my objectives was to develop contacts with new manufacturers, why would I be interested in taking their products seriously if they obviously had not? Finding a product and an individual with a creative flair and sense of awareness of presentation was like finding an oasis in the desert.

One of the first tenants of marketing is exceeding your customers’ initial expectations. We all know the value of a first impression; nine times out of ten it will be your last. Without loosing touch with fiscal responsibility, I have always believed in establishing a perception that my product or service was bigger than life, or at least much larger than my competitor’s accountant or banker would be willing to testify.

I do not believe in putting the cart ahead of the horse, or in risking the financial future of your company. I do believe there are ways to direct resources where they will make the greatest impact. You must, first of all, give yourself a realistic opportunity to put your right foot forward or, like many others, you will be left at the gate. Let’s take a brief look at the five P’s that we, as students of marketing, will need to embrace.

PERCEPTION plays a much greater role than we can possibly realize. The perception of your product in the chain of players to the marketplace will need consistent review. Of the five P’s, this is the most difficult aspect to control. It requires some of the greatest input, and is, at some level, impacted by timing and pure dumb luck. Your only hope is to never underestimate its role! Since we will never fully understand its reality, for this reason alone we must always, always, (did I mention always) exceed what we believe to be another’s expectation. Bigger, better, faster, and aesthetics of design will need to play a major part in your initial planning. Anything less, and you are assured to fall short of your potential.

PRODUCT, unlike perception, is totally within your control. Pay close attention to your competition. Gain as much surface and inside knowledge as possible. Determine your competition’s strengths and weaknesses, their victories and their failures. Next, not only determine the features and benefits of your product, but relentlessly improve upon them prior to its launch. No one needs another me too product. The elements of creativity and innovation will drive your product and insure its profitability. Price takes a secondary role to these factors, margins of profit will soar, and competitors will be eating leftovers.

PRESENTATION of your product is critical. Have you analyzed the physical dimensions, colorations and packaging of your product? Are they eye-catching? Will they bring a smile and set you apart not only in some ways, but in as many ways as possible, from your competition? There can be a tendency to sell yourself on the obvious features of your product without fully understanding and appreciating the benefits of another.

Remember, your product will need to be clearly superior to supplant the relationships established by your competitor. Does the product inspire enthusiasm and excitement, not only in your customer, but (and this is equally important) in the individuals being asked to sell them? Can you provide merchandising techniques that will insure multiple unit sales to the consumer or to those retailing your product? If the unit sale is $10.00, why not provide an innovative self-merchandiser containing twelve, providing a single decision for $120.00! Multiply this by variations in size, color and seasonality, and you have begun to create a complete concept.

Do you have a larger and more expensive version to establish as a cadillac or centerpiece, to give a focus to your over all presentation? A number of years ago, I represented a factory who had developed some of the first generation, highly authentic latex Halloween masks. This was at a time when the adult Halloween market was just beginning to expand.

The average retail price for these masks was in the $30.00 to $50.00 range, a substantial commitment in the early 70’s. I would always encourage my retailers to purchase at least one mask that would retail at $100.00 or more. The mask would not only draw attention to the more moderately priced masks, it would create the perception of a ridiculous extravagance for use on a single occasion. Many customers would scoff at $100.00 and feel they had been much more prudent and conservative having spent only $50.00. Bingo! Without the $100.00 mask, the $50.00 mask would have become the cadillac. Invariably, Mr. or Ms. Moneybags would come in and purchase that $100.00 mask.

PROMOTION of your product must make a statement for it to have any chance of success in the marketplace. To accomplish this, develop a package assortment to encourage and reward full participation. Once again, if you are not willing to take your product seriously, then why should anyone else? Consider free displays, freight allowance or extended terms to encourage a full commitment. This is also a great time to promote multiple levels of participation.

Remember our cadillac mask? While you may assume it will have limited participation, always establish an upper tier of partnership. This develops the foundation and acceptability for the mid-range tier that you absolutely believe in. In selling your product always begin with your premier program. I will never forget promoting one of my manufacturer’s top-of-the-line programs to a customer I had never been able to sell. The customer leaned across his desk and said, “I’ll take two.” I nearly lost my breath! It’s a matter of believing in your product, and translating that belief to your customer.

In certain controlled circumstances, you may also wish to provide a guarantee. This will certainly test how much you believe in your product! I recently developed a guarantee program for a product that had proven itself well beyond all expectations. It became time to put its placement into warp speed.

Arming a number of my sales associates with my personal guarantee, they were each asked to open ten new accounts. As the final option in their presentation, they could give the opportunity to provide a full guarantee. In a six week period, we opened over sixty new accounts. Now, months later, I have not had to fulfill a single guarantee. I believe this to be unusual, yet even with a 10% to 20% return, I would have gained eight to nine new accounts for each program accepted in return. In this instance, ten for ten is even better!

PERFORMANCE is the final step. There is absolutely nothing more frustrating than having a product that executes all of the previous elements, only to have a factory drop the ball by not performing with fulfillment. Late or ineffective sales materials, false starts on release dates, and promoting a product months, or even a year, prior to its launch will only compromise both anticipation and enthusiasm in the marketplace.

In the release of a new product, you are effectively selling more “sizzle than steak.” Think about how long your sizzle will last, and coordinate your release based upon it. Be as sure as humanly possible that all aspects of your launch are in order. Think about NASA without enough fuel or a last minute shortage of spare parts! It’s a scrub. If need be, be more conservative with your release calendar. Commit an additional thirty days to your release to insure against contingencies. At all costs, avoid shooting yourself in the foot!

Certainly timing and luck play a role, yet a much larger factor is determined by the marketing advantage developed by the management team. For this reason alone, we see less deserving products flourish and quality products fail.

Personal Regards,
Keenan

INTERPERSONAL© is published by INTERPERSONALBIZ.COM, Keenan Longcor, Editor, ©2008. Duplication of this publication is permitted for both personal and business use. Excerpts may only be quoted with acknowledgment of INTERPERSONAL and/or INTERPERSONALBIZ.ORG as the source. For re-publication rights, please contact the editor at KEENAN@INTERPERSONALBIZ.COM

Dear Managers,
In a recent issue of INTERPERSONAL I discussed risk and the role of consultants in the development of new products. With this month’s issue, I would like to take this topic a bit further by addressing the dynamics and challenges faced in the birth and marketing of a new product.

This month’s issue is dedicated to those hardy souls who, against all odds and the best advice possible, are committed to taking a risk. Be it the individual who mortgages his home to follow his dream, or the seasoned entrepreneur making a “tactical product expansion,” the chances for success are a percentage point or two above slim. Often, the only difference is the depth of ones pockets! With these thoughts in mind, let’s take a run at increasing those odds.

A BLIND EYE
If you or your company are considered to be successful, you have most likely been asked by those seeking success, “What do you think of this?” or “What would you do if you were me?” When an individual asks my advice, I feel the responsibility to be realistic first and enthusiastic second (a few questions early in our conversation to determine their resolve will tell me just how enthusiastic I should be). There seems to be a common thread with these individuals: they have at least one blind eye.

These conversations bring back vivid memories of my own carefree and very naive early years in business. Had I had a conversation with the wrong person, (who may have actually given me very good advice,) I might never have taken the risk of getting started. Certainly, personal drive and natural abilities will promote success in varied endeavors, yet how many times have we heard, “If I only new then what I know now…”

Regardless, I find myself proceeding with guarded optimism for all individuals willing to take the plunge. Who am I to determine if their concept or product is meant to succeed?

HOW BAD DO YOU WANT IT?
With very few exceptions, the common denominator for the success of all new products is the “do-whatever-it-takes” factor. Is this person serious and committed to the project, or is this a hobby? If this is the case, fine. Don’t invest the farm in something to which you have no intention of giving your very best effort. Keep your day job, enjoy the process, minimize your investment and allow your product to develop to its own level. Worst case, you have learned from the process with limited cost, best case it may become more apparent that a greater personal and financial investment is required. The highest priority for any new product is to first determine:

DOES ANYONE CARE?
I have often met with individuals who have rushed head-long into a product’s development prior to determining if there is actually a market or established need for their product. They present their product to me and state, “I have a garage full of these, what do I do now?” Their practical alternatives have now been lost. I believe this to be the ultimate hazard of the blind eye.

TEST ME, TEST ME, TEST ME!
Prior to ordering a garage full, (or on a larger scale a warehouse full) order a minimal run at a higher unit cost to determine a product’s feasibility. As I suggest to these individuals, there are ample resources to market test your products. Yet, I would be willing to guess that less than one in ten has taken advantage of this opportunity. Good-natured friends and family (or fellow managers) have encouraged their spirit, regardless of their market knowledge or its ultimate consumer value.

In general, business people and retailers are more than willing to help you determine the market value of your product. There is a definite energy in participating in the launch of something new, which plays very well in developing an interest and the needed support for your test.

Next, determine a retail price based on your costs of a full production run, adding a very reasonable profit and what your retail/business advisors feel the market will bear. In many cases, your unit cost for the minimum run will only cover the wholesale price. At this stage it makes absolutely no difference.

Your sole objective at this point is to determine your product’s potential in the market and to develop valued advisors and business contacts. Profits in the early stages should be of no consideration. Minimizing and control of potential loss through miscalculation is your sole objective.

Products in their first phase will need at least minor adjustments, and often major changes, prior to going into full production. These changes may include meeting a standardized size established by the market, a reduction or increase in pieces per single price point, packaging, the use of additional color or adjusting the suggested retail price, to name a few. Now is the time to determine the dynamics of your specific market.

Ask to test your products at fifteen to twenty places of business. Be willing to offer your product on a consignment or no cost basis to insure a significant test. In most cases you will want to establish these business relationships personally. Project a very professional and sincere image of yourself and your product. Your personal enthusiasm, and the fact that it is your product, will go a long way toward encouraging their support and assistance in your test.

Determine the specific placement for your product, a time frame for the test, and your plan for follow up. In a much larger test, you may also wish to experiment with two or three price points in various areas to establish the suitable and/or maximum retail pricing. The most critical aspect of your test will come from your professional follow up. If you are unwilling to establish a commitment toward your product and its future, why should anyone else?

The learning curve in this first phase will ultimately determine the success or failure of your product. In your follow up conversations, ask for a candid evaluation of your product from your various test locations. Insist upon their sincere opinions, rather than a favorable spin to feed your ego. Be sure to ask for their perception relating to your product’s rate of sale and potential as compared to similar products they are familiar with. Only when you have gained this information can you make the calculated decisions on your product’s future.

After sixty to ninety days you will have collected a substantial amount of data to review, in most cases at a very reasonable cost. You are now in a position to determine the adjustments and improvements that will need to be made, as well as your willingness and ability to bring your product to market.

MILK’S TOO CHEAP TO BUY A COW
This is one of my favorite quotes, as it seems to define so many aspects of business. All too often I see business people purchase machinery, equipment, lease a building or vehicle long before it is absolutely required. If you occasionally need a truck, rent a truck! Devote phase one resources to minimizing expenses and maximizing the investment into product knowledge. Your investment in equipment will never determine the fate of your project’s future, the investment in your product absolutely will.

With each conversation of this type, I find myself much closer to using these basics in decisions for my own company. As managers, we must determine our own resolve and implement the fundamental strategies that will increase our odds of success. The marketplace does unusual things to one’s thought process, let alone one’s memory. We have only our own experience to thank for an insightful perspective on the blind eye of the entrepreneur.

Personal Regards,
Keenan

INTERPERSONAL© is published by INTERPERSONALBIZ.COM, Keenan Longcor, Editor, ©2008. Duplication of this publication is permitted for both personal and business use. Excerpts may only be quoted with acknowledgment of INTERPERSONAL and/or INTERPERSONALBIZ.ORG as the source. For re-publication rights, please contact the editor at KEENAN@INTERPERSONALBIZ.COM