Profile of three start-up companies and their experiences in marketing new products.
Profile of three start-up companies and their experiences in marketing new products.
Three companies are learning the hard way that a good idea is not enough
Memo to everyone thinking about creating a new business: Stop thinking about "Star Trek," and start pondering the swine-flu vaccine.
As every Trekkie knows, the original "Star Trek" always began with the captain of the starship Enterprise proclaiming that he's about "to boldly go where no one has gone before."
And when we talk to entrepreneurs, we often hear the same thing. They have a brand-new idea, and they're going to launch it boldly into the business galaxy, certain that riches will follow.
The problem is that marketers of unprecedented products rarely ask themselves why nobody else has undertaken their mission before. If they did ask, they might discover that they -- like the folks who brought you the swine-flu vaccine -- have come up with a solution for which there is no known problem.
The point here is simple. Good ideas are not enough. You need somebody to pay you for that idea. Which means you need to have a way to market it. And if you ever needed proof of how hard that can be, ask yourself whether you could:
Convince the world to eat tuna hot dogs.
(Tough, you say, but not impossible.)
Persuade women to change the way they urinate.
(Well . . .)
Market a chain of clinics that can tell customers -- in painful detail -- whether they really are coming down with Alzheimer's disease.
Did we hear someone cry uncle?
These are challenges faced by real companies with real products, and it's interesting to spend some time with each -- if for no other reason than to show that no matter how difficult you think your marketing problems are, they're not that bad.
But there's a more important lesson here, too. These three companies show how crucial it is to think about how you are going to market your creation -- and to think about it long before you ever set up shop (see "Marketing 101," page 3). No matter how technologically perfect your idea is -- and at each of our companies, the technology works just fine -- if you can't figure out a way to retail what you've invented, you're better off never ordering business cards.
Let's start with the easiest of our examples: tuna hot dogs.
The premise behind Texas-based Bounty of the Sea Inc. is simple. Almost everyone likes hot dogs. And almost everyone knows that fish is better for you than the stuff found in most frankfurters. So why not create a hot dog made out of tuna fish?
Jerry Grisaffi, a former car salesman, started Bounty of the Sea two years ago after learning of a Costa Rican invention that can take fish meat and shape it into forms traditionally reserved for other meats: bologna, breakfast sausages, and yes, hot dogs. The beauty of the process -- from Grisaffi's point of view -- is that it removes the fishy smell and leaves you with a healthy white meat that can take the place of fatty, calorie-riddled beef or pork. Not only would tuna-based foods be perfect for people on restricted diets, thought Grisaffi, but it was a natural for a health-conscious America.
"When you think about what we have here, it blows your mind," says Grisaffi, 41, from his office in Sugar Land, just outside of Houston. "We have the makings of a great new industry. I can see this being a $300-million company within five years."
Maybe, but at the moment, Bounty of the Sea is still $300 million short. Although Grisaffi has raised $1.2 million, it has taken him almost two years to line up distribution (it will be test-marketed in Houston), perfect the shaping process (for the longest time the company had problems eliminating the fish smell), and perhaps most important, get people to take it seriously.
"If you go up to a woman in a bar and tell her what you do for a living, you get a lot of strange looks," says John Dudley Mosele, Bounty of the Sea's marketing man.
And that quizzical reaction is a hurdle that may be impossible to overcome. Although Mosele and Grisaffi talk with pride of taste tests that showed 84% of the people who sampled the fish dogs liked them, there's a big gap between getting someone to say nice things about something they got for free and getting them to purchase it.
"Their problem, quite simply, is the name," says Stew Leonard, chairman of Stew Leonard's, in Norwalk, Conn., probably the country's most successful supermarket. Leonard boasts that he sells more Perdue chickens than anyone, yet he doesn't carry Perdue's chicken franks or its turkey franks. "Most people are put off when you tell them a hot dog has chicken or turkey in it," he explains.
And if they don't like hot dogs based on chicken and turkey -- foods that sell far better than tuna fish -- what chance do tuna dogs have?
While the odds are off-putting, at least Bounty of the Sea will have the opportunity to increase them through advertising.
So far Lore Harp, the inventor of Le Funelle, hasn't had that option. Harp, 44, came up with the idea of a funnel through which women can urinate while standing -- so they do not have to come in contact with a toilet seat -- while she was running a California computer company. As founder and chairman of Vector Graphic, Harp had to travel a lot, and when she did she often found the cleanliness of bathrooms left a lot to be desired.
Harp created a product to circumvent the problem, figuring she had a winner. As the number of women professionals increased, Harp thought, so would the market. And so Le Funelle was born. Almost nobody noticed.
"We did a very inoffensive radio spot for it," says L. Neal Amidei, the head of the San Francisco public-relations firm that bears his name. "The gist was: remember how your mother always said make sure the bathroom is clean before you use it? Well, you should buy Le Funelle, because -- and this was the tag line -- `Your mother can't always be with you.'
"We couldn't find a radio station to accept the ad," Amidei adds. "They said it violated their program standards."
The ad's rejection -- coupled with the unusual product -- attracted a lot of attention. "Everyone from Business Week to Omni wrote about it," says Amidei. "We got a lot of press."
But few sales. "I thought it was going to be easy to move into the market," says Harp, with a sigh. "This is a product that is needed, but it's been like pulling teeth to get ads placed in magazines. A lot of them, like the airline magazines, refuse to take them." She sighs again. "A lot of people are not forward thinking."
That apparently includes drugstores and mass merchants. Harp has been unable to get them to carry the product. "The buyers are embarrassed when we talk to them, and they say things like they don't want to stock it because they are afraid of offending someone. It's going to take people with an open mind to sell it."
For now, Harp is offering Le Funelle by mail. She expects to sell 3 million funnels -- a 20-pack goes for $9.96 -- this year, which will put her company, Aplex Corp., in San Mateo, Calif., close to breaking even. Still, Harp had expected national distribution by now, with Le Funelle being as ubiquitous as sanitary napkins.
"Sometimes," she says, "my frustration meter reads very high."
Ironically, of our three entrepreneurs, the one you might expect to be most frustrated -- the man who planned a nationwide chain of clinics that would test for memory loss and the onset of Alzheimer's -- is probably the closest to having a commercial success. "Despite all my efforts," says Thomas Crook with a laugh, "it looks as if we will make money."
Crook, a Ph.D. in psychology, spent 14 years at the National Institutes of Health and left with a simple idea. He would take his expertise in evaluating the effectiveness of drugs designed to improve memory and set up centers to test those drugs for pharmaceutical companies. His Memory Assessment Clinics, based in Bethesda, Md., created a battery of tests to measure memory, and Crook was under way. He eventually had 26 test sites -- everywhere from UCLA to the University of Florence in Italy, and he was making more money than most civil servants could ever imagine. Revenues will hit $2.5 million this year, says Crook, who has the traditional scientist's attitude when it comes to talking about money: he is uncomfortable.
Somewhere along the way, success got Crook to wondering if there might be a mass-market application for his work. After all, he believes his memory tests -- which determine how well people remember such things as faces, phone numbers, directions, and where they put the car keys -- are unique. And with the nation's growing concern with Alzheimer's, surely there was a way for him to put his knowledge to work.
However well intentioned (knowing your memory is still just fine would be a great relief to someone who locked the house key in the house for the sixth time), the idea is, well, macabre. And the number of people who would pay $375 every year to take a memory-monitoring test is probably quite small.
But then Crook was introduced to aging yuppies.
Part of the value of Crook's tests is that they compare your memory with that of people your age. To establish the norm, Crook looked for volunteers over 55 years old to take the tests. Older people responded, but so did youngsters. "They were professionals -- usually in their thirties and forties -- who were under a lot of pressure. Some complained they couldn't remember things as well as they liked. Others were looking for a way to gain an edge." All asked if there were courses they could take, or tapes they could watch, or books they could read to improve their memories.
Suddenly, Crook understood. While he is now testing his idea of marketing memory clinics, he is also developing memory aids. Says the once-reluctant capitalist: "We now have a video that could be described as the Jane Fonda Workout tape for memory."
Stranger things have happened.
And if Crook's idea works, it will be for the most simple reason of all. Somebody wanted his (modified) product.
Before you make it, figure out whether it can be sold
Ideas themselves are worthless. Unless someone is willing to pay you for what you have, you're going to go broke real quick.
Here are four basic marketing questions to ask before you even think of trying to develop your great idea.
* Is it unique? If so, you're in trouble. The problem with truly original inventions -- the Polaroid camera, Tofutti (tofu-based "ice cream"), Le Funelle -- lies in the very fact that what you are trying to sell has never before existed. You'll have to spend a lot of time and money explaining what you have. If you sell premium ice cream, people instantly know what you have. Explaining Le Funelle takes a lot longer.
* Will Mikey like it? If you have ever tried to get a six-year-old to eat kelp -- or carrots, for that matter -- you understand the problem. People have certain expectations, and you are better off not trying to change them. If it looks funny, they are probably not going to eat it. If it's made up of funny components (like tuna in hot dogs), they are going to have their doubts.
* Why should anybody care? In the early days of the personal computer, marketers had a problem. They couldn't figure why anybody would want this new gadget. So they tried to sell it as a fancy way to balance your checkbook and file recipes. Since people were perfectly happy balancing their checkbooks with calculators and keeping recipes on index cards, they stayed away. If people are happy with what they have, they are not going to switch. Witness Coca-Cola's difficulties in winning converts to "new" Coke.
* Does the market want me to change? If the market says change . . . then do it. If people want to buy military all-terrain vehicles, you take off the camouflage and sell them a jeep. If you're selling Alzheimer's testing centers, and people are looking for memory tricks, give them memory tricks.