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 Anatomy
of a New Product Launch Imagine for a moment that you've invented a brand new product, or you've joined the team that'll take that new product to market. If it's successful, you stand a very good chance of rolling away a whole wheelbarrow full of money. If it fails, you might be out of a job... or possibly face bankruptcy. Exciting and scary at the same time. Nobody said being an entrepreneur was easy; but of all an entrepreneur's challenges, bringing a brand new product to market is probably the hardest. If you can do that, you can do just about anything else in the business world. Even if you don't consider yourself an entrepreneur or even if you're service-oriented rather than product-oriented, there are great lessons to be learned from a front-row seat at a product launch. So here's a little case study for you. Imagine your company has just developed a special kind of light bulb that eliminates bad odors in a room. That's right. It's an energy-efficient light bulb that screws into a regular light socket and "magically" freshens the air whenever it's turned on, without releasing any chemicals or scents of its own. How would you go about marketing a product like that? Clearly, you've got a lot of missionary work to do. You'll first need to let people know that such a device even exists, then teach them how it works, then convince them it's a good solution to their odor problems, and finally get them to purchase it from you. Much work to be done… This is not a made-up example. The product exists. It's called the "Fresh2 Bulb." The company is Technical Consumer Products (TCP), from Aurora, Ohio. [Please remember, I have no business relationship with any of the companies mentioned in the Urbach Letter and receive no compensation for featuring them in my letter. These companies have interesting stories and that's the only reason I talk about them]. TCP is a lighting designer and developer, mainly supplying bulk bulbs to hotel chains and lighting manufacturers. They also supply "private label" bulbs to large retailers like Home Depot. Fresh2 is their first product marketed directly to consumers. The Fresh2 bulb is a compact (ice cream cone style) fluorescent tube that's dipped in titanium dioxide. Titanium dioxide (TiO2) is a non-toxic chemical with some amazing properties. On the Fresh2, it forms a thin, transparent, odorless coating on the bulb that lasts for at least three years. When the bulb is switched on, the fluorescent light passes through the TiO2 coating and a "photocatalytic" reaction begins to break down and dissipate odors.
OK. So you've come up with the new and better way to solve a problem that almost everybody has (i.e.: at least one smelly room in the house). How are you going to sell the darn things? The market is huge but therefore so is the cost of reaching that market. Missionary work is extremely expensive, but without end-user awareness, few large retailers and distributors will take on a new product. You don't have a well-known brand to leverage, and your launch budget is limited. What ARE you going to do? How about trying direct response marketing? Instead of paying to "raise brand awareness" across the nation, or relying on others to carry the message, why not start with a small test market and go directly to consumers via direct response TV ads and radio spots? Let those outbound marketing messages drive people to a consumer-friendly web site and/or toll-free call center where they can learn more and hopefully place an order. Toledo, Ohio was selected as the first test market because of its broad demographic base and successful track record in gauging how products will sell nationally. TCP selected an Ohio advertising agency with expertise in direct response, The Communications Factory, to develop the DRTV and radio spots. Communications Factory developed three different 60-second TV ads. The first half of each ad featured a different common household odor scenario: cigar smoke, kitchen smells, or pet odors. The second half of each spot served to explain how the Fresh2 bulb works and stated the "call to action" (an essential element lacking in most branding-oriented campaigns). These TV spots directed viewers to both the Fresh2 web site and a toll-free number. The bulbs were advertised at $19.99 for a package of two plus $5.00 shipping and handling per package. If the viewer had enough information and was ready to buy, he or she would usually go right to the phone. If not, the web site provided all the information anyone would need to make a purchase decision. Side note: even if you're not personally in the market for an odor-eliminating light bulb, it's well worth your time to visit and see what an effective multipurpose (awareness, education, e-commerce) web site design actually looks like This month's Video Magazine is a narrated tour and critique of the Fresh2 site. In Toledo, the TV commercials ran from mid January to mid May of this year, rotating through the three different versions every three weeks. At the same time, these TV spots were backed by direct response radio. This is an excellent application of radio: to reinforce other media. The radio spots had a similar message to the TV ads, but the call to action was exclusively to the web site. Why? Two reasons. First, it's harder for most people to remember a number than a name. A perfect "all alpha" 800 number (like 1-800-FLOWERS) is the best, but seven-digit alphas corresponding to an exact company or product name are hard to come by. Anything other than full alpha is a huge step down in recallability. There's no sense in 1-800-BULB478; you're still asking someone to remember a three-digit number, usually while driving. Likewise "800-alternatives" such as 877 or 866 are yet another step down. The best you can hope is that somebody'll immediately punch the digits into their cell. However, most folks have trouble decoding the alpha digits while driving. I know I do. The other reason for giving only the web address for a product like Fresh2 is the missionary component. Radio is great for reinforcing other media, but by itself, it's narrow-bandwidth. There's only so much information you can transmit in thirty seconds of audio. Most people need more convincing before buying a product like Fresh2, and therefore, they're directed to the information-rich web site.
So, what happened with the Toledo test? Was it successful? Yes it was. Based on the Toledo test market, TCP decided to roll out the Fresh2 nationally. A successful test is the biggest confidence-booster and best door-opener there is. You're no longer relying upon internal research, focus groups, educated guesses, etc. People have actually stepped up and voted with their hard-earned dollars. Now you have the confidence to "go big." If you need funding, you can present real-world results to your investors. If you need to commit to a supplier, or increase manufacturing capacity, you can accurately estimate potential sales. If you want to try other media or explore alternative sales channels, you have a good solid baseline. In the "other media" category, web site banner ads are still alive and kicking. Even though a lot of people block banners and popups, many more people don't. They understand that these ads pay for the sites they're visiting and don't resent on-target advertising, particularly in a niche. After seeing that banners did well in local Toledo-oriented sites, TCP took good advantage of niche marketing, by placing banners on national online publications like Dog Fancy and Cigar Aficionado. They also did outbound email blasts (to opt-in lists), testing special offers like no-charge shipping and a five dollar discount off the purchase of two or more twin-packs. The average open rate for the blasts was around 40%, which is quite good, and 13% of those converted to actual sales. A relatively small number of people offered up the email addresses of others who might be interested in buying Fresh2 bulbs. Another important aspect of doing a local-market test is the ability to garner real-world market information. For example, TCP found the majority of buyers were females. Two-thirds of all Fresh2 orders came in through the e-commerce web site. As I said before, the Fresh2 web site is well worth studying and emulating. I invite you now to join me for a "live" narrated tour of the Fresh2 site on this month's Urbach Letter Video Magazine. I'll show you what works well, and how you can apply similar features to your own site.
Did you think this month's issue was interesting and educational? I hope so. If you have any comments or suggestions for future letter topics, please share them with me. |
