Product Global

Selling Through Big Box Retail? Your Product Should Sell in Three Seconds, From Three Feet. Or You're...

"If you can't get your message across in three seconds to someone standing three feet away in an aisle, your product is not going to work in a store like Walmart." -Tom Welch, Walmart

"What's game changing about my product for it's specific market?" - Chad Bell, Best Buy

The TiE event on Tuesday, What is the Right Channel to Take Consumer Products to Market, was full of thought-provoking questions and remarks like this that are highly relevant for any company or entrepreneur looking to get their consumer products into the right sales channels.  The speakers included:

-Marti Nyman (moderator), Director, Global Innovation Network, Best Buy

-Chad Bell, Merchant Leader for Digital Descriptions, Best Buy
-Tom Welch, Senior Business Manager, Music, Walmart.com
-Margita Labhard, Sr. Program Manager, Bestbuy.com
-Brent Dusing, Cofounder and CEO, Cellfire

I've put together a short summary, of what I think were the top remarks, concepts, and questions that came out of the hour and a half discussion led by the panel.  While these points should be taken into consideration no matter what channel, market, or product you're working with, for those of you who are working in online and big box retail channels--this is coming straight from the source. 

What are the basic questions one should ask themselves about their product and getting into the right sales channel?

• There are a lot of people out there with good ideas, but there are already things out there like it.  We look for products that are game changers; products that affect how a consumer in their target market goes about their daily life.  -Chad Bell

• As a retailer, we need you to know exactly who you are going after.  This is not limited to the user, but also includes the person with the pocketbook.  What is their pain that you're addressing?  Who is going to use it?  And, who is going to pay for it?  -Tom Welch

When is a good time to approach a retailer?

• You want to start early, but your product is going to change over its lifecycle.  Your first sales will be the educational step for your customer.  If you're product requires education, you'll want to choose a channel that allows you the time and means to educate them and influence their buying decision.  Walmart is great at selling things that people understand.  If you can't get your message across in three seconds to someone standing three feet away in a retail aisle, your product will probably not work in a store like Walmart.  -Tom Welch

• Always think from the point-of-view of your customer and know that your channel marketing/sales will always continue to evolve throughout the lifecycle.  -Margita Labhard

What Types of Sales Channels are Available?

• Traditional big box, higher touch...  Higher touch involves those products that require a longer sales cycle and more involvement with a sales person--high technology and high purchase price products like stereo systems, home theaters, etc.  -Chad Bell

• Walmart will take a bet on a riskier product online to see how it does and test how it's going to be communicated.  Everything will be planned out.  Ask "where am I in the process lifecycle and how will this step iterate to the next?  How does the internet channel translate to a phone call and then to the in-store channel?  -Tom Welch

What are typical new company mistakes?

• I know of some horror stories.  I came across a company that was well financed, had what I thought was a cool product, and they spent all of their time on things that were "sexy", like in-store placement, cool inserts, etc.  When you have things like that, it feels like a win.  But, they spent no time educating sales reps.  So the people most critical to selling their product had little to go on, and it hurt.  The lesson?  You have to win over the hearts of the sales people and you need them to fall in love with your product.  Do you offer training programs?  Accommodation programs?   Driving more traffic to our stores is great, but you need to show us how conversion will take place.  -Chad Bell

• Don't miss out on how your customers experience the sales process?  Try to break down the complexities and work backwards to what is the right channel?  Online doesn't provide for an incredibly complex transactional process.  -Margita Labhard

• Trying to grow to quickly can be problematic because you miss out on the learning process and how that translates into future iterations in the cycle.  If you don't learn anything and take the time to get that customer feedback, it can be a big problem that manifests itself later.  As you get farther through the product's lifecycle, you are going to have less time to educate the customer, so you better understand them already. -Tom Welch

How do you choose the right sales channel?

• First, know that this won't be the only time you make this decision.  Ask yourself questions like "do I want visibility from retail shelves so I can gain legitimacy and sell online?  Do I want to get market feedback for future product iterations?  What do I want out of this channel?  How will it fit in with my entire strategy?"  And know that the answers to these questions will change through the cycle.  -Tom Welch

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TieCon Event: What is the Right Channel to Take Consumer Products to Market

TiE, The Global Network of Entrepreneurs, organization will be hosting an event in the Bay Area this evening on the topic of What is the Right Channel to Take Consumer Products to Market?. For those able to attend, it should be a valuable roundtable discussion with several executives from leading national retailers, including BestBuy, and Walmart.  I will be attending this evening and for those of you who aren't in the area or cannot attend, I will blog on the main points and highlights of the event in the next few days.  Should be interesting.  You can click on this link to register or view the event details below:

Time and Place:

Tuesday, August 21, 6pm-9pm

TiE Conference Center, Suite Number 108

2903 Bunker Hill Lane

Santa Clara, CA 95054

Online registration closes at Noon, or you can register at the event.  Member fees USD 20.00 online; Non-member USD 50.00 online; Member USD 30.00 onsite; Non-member USD 60.00 onsite.

Topics of Discussion:

TiE Consumer Technologies SIG is pleased to announce its next event, focused on "What is the right channel to take consumer products to market? Understand how your target customer (consumer) will learn about the product, and how will they want to buy it? impulse or considered purchase? how long is that consumer sales cycle?

If you are in the business of Consumer products, and would like to know how to choose the right channel for your company this panel cannot be missed.

Some of the questions this group will discuss:

- What are the choices for taking new product to market?
- Common mistakes to avoid? what are some of the most spectacular mistakes you've seen?
- Direct mail campaign with phone support?
- What about infomercials? shopping channels like HSN? how to work with this channel and not waste money in that channel?
- How do I compare the effectiveness of the various channels? how to measure? quantitative vs qualitative components. (where do the impressions go? what's the typical response rate, conversion rates, click-through rates & typical sell-through rates? return rates? etc.)
- What is a hard goods retailer looking for? What should I be prepared to pay for? what should I be ready to support? returns? what are typical terms? how long will a retailer try a new product category? how much inventory is required?
- How to balance channels: what is multi-channel retailing? should I pursue a multi-channel strategy? when is it right for me - why should I care? (because you have limited marketing funds - prioritize and spend funds wisely) - use the right channel for the right audience
- How to think about direct marketing - such as BestBuy's direct mail program? is this something startups should think seriously about?
- Does direct mail still work? if so, when should it be considered?
- Q&A

Product Development at Triumph Motorcycles: Leaked Video

Courtesy of Paul Young's ProductBeautiful blog, this highly sensitive, insider video was created at Triumph Motorcycles and walks us through their product development process.  Triumph is a British manufacturer of cruisers, the style of motorcycle championed in the U.S. by Harley-Davidson.  Their production line is one of a kind and this video may give you just the edge you need to give your product life.  It's also a good start to a Monday morning.

Paul is also now posting some great insights into the The Challenges of Overseas Manufacturing and the role of a product manager in overseas design, development, and production.  This is a cross-post he and I collaborated on and he is building on a number of common themes and issues which I gave my perspective on in this post.  Part I of Paul's points can be read here.  Part II can be read here. 

A Few Good Sources for Ideas; Inspiration; and Lessons on Product Marketing

I recently came across three blogs that I thought were good resources on product marketing.  Marketing is a tricky animal.  One of the biggest challenges in effective marketing is pushing ourselves beyond our own selfish needs and perspectives, to see the needs and perspectives of our customers and align our products with them from the start, get them back on track in the middle, or try again at the end.  It's a process that requires consistent upkeep, continual assessment, and renewal.  Strangely, I think I heard that last line at a friend's wedding somewhere this summer.  Different context, but same idea.

• PragmaticMarketing: Read this post about The New Rules of Marketing.  It's not just another post discussing the impressive marketing job done by Apple with the Iphone.  What I like about this post is that it draws attention to the fact that Apple built a phone that is a product people want to talk about.  Have you noticed that their commercials on TV are simply a hand using the Iphone and showing it's features.  No one yelling in your face "$129 value all for $19.99".  No text flying all over the screen.  And it's not depending on the SuperBowl for national acclaim.  It's already a product that simply speaks to people in a way that makes them want to spend a sizable amount of money on a phone.
• DuctTapeMarketing Blog: This blog on marketing is no secret and has enjoyed quite a bit of popularity.  The author, John Jantsch, gives a lot of great ideas, stories, and lessons to small businesses that need to not only get out the word, but get it out in the right way.  His post entitled, How Long Should it Take For My Marketing to Work?, is a great start.  Simply put, it takes time.
• UserDriven:  The blog's subtitle says it all, "Developing Products and Services from the Outside In".  The blog is written by a product manager at ATG, a software company.  The insights are valid for hard products and software alike.  I found this post, How Many User Tests Should You Run, to be particularly interesting.

Finally, one last quote, which you very well may have heard before, but I enjoy every time I hear it.  A little marketing inspiration, if you will...  This was posted on PragmaticMarketing.com's blog, in Are You a Gazelle or a Lion?:

Every morning in Africa, a gazelle wakes up and knows it must run faster than the fastest lion or it will be killed. Every morning in Africa, a lion wakes up and knows it must outrun the slowest gazelle or it will starve. It doesn't matter whether you are a lion or a gazelle; when the sun comes up, you better start running. --An African proverb

From Chinese to Japanese Quality: China Has a Model, But Will it Follow Suit?

There has been no shortage of blog posts and news stories on the quality issues in Chinese manufacturing in the last few weeks.  The most recent story is Mattel's recall of 1.5 million (967,000 in the US) toy products, which was announced last week.

Mattel has done the right thing and while some may believe their brand has been tarnished in the short term, I believe their acknowledgement of their accountability for what has happened and the actions they're taking will only help reinforce their brand in the long term.  What perspective on this recent event involving Mattel will be more sticky in consumers' minds?  The fact that they produced and sold poor quality product from China?  Or, the fact that they assumed responsibility for their oversight and took action to correct it?  In the long run, my guess is the latter.   

But, like most news stories, the more the press covers it and people hear about it, the more likely people will become ambivalent to the issue.  But for those of us involved with manufacturing in China, Asia, or anywhere for that matter, the subject will continue to be just as important.  So where do we go from here?  Where does China go from here?  What have countries in China's situation done in the past in this situation? 

It will not come as a surprise to many that China is not the only country to experience quality woes.  But it may be surprising to learn that Japan was once in China's place.  Japan, a country widely associated with companies that consistently produce high-quality products, once held China's title of "low-cost/low-quality" producer.  Yup.  Post World War II Japan's "Made in Japan" label was a symbol of low quality product.  Interestingly enough, a few Americans, such as Edwards Demming, whose ideas on statistical quality control processes were turned down by US automakers, were embraced by Japan and helped lay a foundation for Japan's culture of quality.  Realizing quality as a path to growth and market share, Japan took quality very seriously and took several steps to infuse their business culture with the attitude and tools to build quality into their companies and production lines.  And you see it when you walk a Japanese production line in a Chinese factory.  They are consistently impressive and it speaks very well of a factory if they are supplying a Japanese company with product.  Today, while every country has the occasional issue with quality, Japan is widely considered a world leader. 

Whether or not China will follow a similar path as Japan is unknown.   Generally speaking, countries in Asia have slowly moved up the value chain in terms of the benefits they provide.  Low development countries are generally entered into by companies looking for low-costs.  These companies are willing to go through, or find out that they will need to go through, a number of challenges to get an effective supply chain going in these countries.  Just read Gary Erickson's tales of offshoring adventures from a few posts ago to get an idea.  In the 1950's, this was Japan.  But as the value of Japan's abilities grew, so did costs.  Thus, Western companies moved operations to Taiwan, South Korea, Hong Kong, and Singapore.  A few decades later, the same process occurred again, and China became the major low-cost destination that it is today, along with a few other Southeast Asian nations on a much smaller scale. 

Will China follow the same path as other Asian countries and move up the value chain?  They would certainly like to.  Manufacturing commodity products comes with razor thin margins and cutthroat pricing competitions.  There are two basic ways to get out of this business situation:  1) add to the value of the product you offer (ex. higher-quality products) or take on more valuable tasks for which customers will pay a premium (ex. R&D).  2) "Quality Fade".  A very popular article written by Paul Midler and published by KnowledgeWharton explains quality fade very well.  Quality fade is "the deliberate and secretive habit of widening profit margins through a reduction in the quality of materials".  Thus far, many Chinese companies have taken the path of least resistance and employed the "quality fade" approach.  Midler goes on to explain that one of the major reasons behind this is because many Chinese fear the window of opportunity to profit will close (via unpredictable, oppressive government actions), thus they focus on the short term.  Their fears are not unfounded. 

So far, China has responded to the outcry in the US over quality issues by citing the US' own quality issues and holding that 99% of the products coming out of China do not have quality problems.  There may be some truth to this.  But the fact is, if China wants to continue moving towards higher premium products and services, they will have to seriously address their culture of quality.  This will take a great deal of time and effort.  Japan is a case in point.  The next few years will be very telling in terms of their initiatives in this area.  I don't think it will be as easy or straightforward as the case of Japan.  And I think this is just one of the major underlying issues that China will need to face to continue its march onto the world stage.  In the meantime, Western companies now realize what is at stake and will need to act accordingly.   China is still a good place to manufacture product, and now companies know the risks.  Like Mattel, it's time to start taking action.

An Interview with Nick and Laura Udall, Founders of ZUCA: Putting the Fun in Function

Recently, at a seminar at Stanford University, I had the pleasure of listening to a presentation by Nick and Laura Udall about how they developed their product, the ZUCA, and got it to market.  Of course, I couldn't help but approach them afterwards and remark that they have the same last name as I do.  I haven't run into another Udall outside of my family in California.  As it turns out, we're probably connected from many hundreds of years ago in England. 

But to be honest, far more fascinating for me, is their story of how, as a husband and wife team with three kids, they started from scratch with an idea for a product and built it into a company that now produces what is going to become a world class branded product.  The ZUCA.  You've got to see it and experience it to really understand all that the product is and does.   As their first venture into consumer products, Nick and Laura Udall have put in all the hard work, taken the chances, learned from the challenges, and created a product that is truly unique and a company that really stands for something. They graciously sat with me and chatted about it all in their office in Campbell, California.  I've broken up the interview into a few parts.  In this first section, Laura and Nick describe how they came up with the idea for the product, the power behind a meaningful brand, and begin to get into the thinking behind the features of the product. 

AU: ZUCA.  What is it?

ZUCA (Nick):  We're a consumer products manufacturing and distribution company that produces a product that is an all-purpose gear carrier with an integrated seat.  It's hard to talk to because usually when you explain something, you compare it to something else--"it's similar to this".  We could try by saying, "well, it's kind of like an all-purpose carry-on bag, configured so that you can sit on it, and had a protective frame that kept all your things inside it safe...", and pretty soon you are several paragraphs down in the description and people are still shaking their heads.  We've tried all kinds of elevator pitches, but our product is so unique that none of them do it justice.

AU: Right.  So what do you do?

ZUCA (Nick):  So, people just need to see and experience it for themselves to really understand what the concept is.  We take them to tradeshows...in fact I was just at a tradeshow for manufacturers the other day, and someone walked by, saw it and came right over to me to ask me about it.  We went through the dialogue and he says "so, you can sit on this?  I don't think so!"  And he looked like a tool and die maker of some sort.  I said "Well, what do you weigh?"  He replied "240lbs".  I asked him to not just sit down on it, but sit down on it with a lot of force.  He did.  And, he looked around with a look of surprise and satisfaction on his face.  So until people really experience it, they don't know everything that it can really do.

AU:  So it provides a solution for people.

ZUCA (Laura):  Well, my vision started out as "Let's lighten the load of the world one bag at a time".  I originally got the idea when I watched my daughter, Rachel (who is now a fantastic professional Jazz singer), develop some back problems when she was in elementary school because she would carry so many books around in her backpack.  And that's where we started.  We introduced it on the market as a bookbag.  But our customers came back to us and started saying "wait a minute, I can do this with it, or that with it...".  So it has blossomed from there into the most versatile bag out there on the market.  Now we're moving into the luggage and travel space, and other spaces. 

AU:  So the market is leading you down the path of further product development and line extensions?

ZUCA (Laura):  It has.  The market has come to us which is really interesting.  It's great, because there are so many possibilities and so much potential.  But it is also a challenge, because we're a small company, so we need to really hunker down, decide, and focus on which directions present the best opportunities and proactively work to realize them.  The other areas will still come--because our customers have become our best marketers--they are a tremendous asset to us because they tell other people about our product.  In fact, just carrying or rolling ZUCA bags around, people will stop you and ask you "where did you get that?", "what can it do?". 

AU:  I can say for myself, I've never seen anything like the ZUCA until I saw the ZUCA.

ZUCA (Nick):  One of the things we needed to do was build a brand.  In consumer products, you are either cheap or you're branded.  And we didn't want to be in the cheap market and in the big box market.  We wanted to build something that was substantial.  So we made our branding on the products large.  We made it recognizable and easy to remember.  And our customers tote the bag and brand around to help us spread the message. 

AU:  You chose a name that had no previous meaning, and you could give meaning to it.  If my espanol still serves me, Zuca doesn't mean anything in Spanish. 

ZUCA (Laura):  We say that it stands for "Z Ultimate Carry-All".  Our core design principles all stem from functionality in the product.  We build something that starts with meeting needs of function, and from that comes design and fashion.  Because of this, we need to give extreme attention to detail and quality. We put the fun in function.  It's always interesting to see people experience our product.  They become passionate about it.  They've helped us protect our brand and our name.  For example, a few weeks ago, we experienced our first incidence of someone violating our patent.

AU:  Wow.  Congratulations.  It's as if you have graduated to the level of admiration through intellectual property theft!  (I'm joking of course)

ZUCA (Laura):  Interestingly, the violator was a woman from Utah who promotes a very wholesome image of her company.  They contacted me and wanted to do a custom insert based on their product with us. But basically, she just took our product and created a cheap knock-off.  So we're putting an end to it.  But it was one of our customers who tipped us off and called us and told us that "someone is ripping you off at Costco".  The customer who called us was from Seattle, and she was so helpful.  She said, "I got ZUCA's for everyone in my family.  My son has two and uses them for different functions.  I bought one for my Mom and she uses it for travel and her teaching job to haul all her supplies.  My sister, me...  We love your product and appreciate it's quality and I was so angry when I saw the knock-off in Costco". 

AU:  So tell me about some of the features that make people such ardent supporters and users.  

ZUCA (Laura):  Take this for example, it's a great product for anyone who has health issues or is health compromised conscious, because it's so easy to roll.  It doesn't take a lot of strength to pull it even if it's filled with heavy items.  They can sit on it when they get tired.  We're working with a group that runs a camp for kids with cancer.  And not only will it be a fun bag for them, but they can store their stuff in it and sit down on it when their tired, etc.  

AU:  Right.  In developing a product, it can be difficult sometimes to identify those latent needs that users may have--needs that they didn't know they had, but when alerted to them, they are very happy to see a solution.  So for instance, the second set of wheels just up on the back of the bag, which allows for easy traveling up stairs.  On other bags, the bottom wheels become useless in this scenario and you have to lug your bag up the stairs.  You guys saw that, and designed in the extra wheels so the bag just glides up the stairs. 

ZUCA (Laura):  Right!  The engineering types see that and get it right away.  But many people ask us "why do you have another set of wheels like that?"  And then you tell them or they try it and we get "Ohhh, that's great"!

More to come...