BRINGING PRODUCTS TO MARKET MADE SIMPLE

10 Steps For A New Product Launch

2012-01-31T10:59:00.000-08:00

The 10 Steps outlined below are what it takes to launch a new product successfully.
1) Consumer Strategy
2) Target Customer
3) Trade Channel Considerations
4) Organizational Priorities
5) Prodcut Development
6) Consumer/Operational Testing
7) Regulatory/Labeling
8) Packaging Design
9) Marketing Plan
10) Assessment
Over the next posting I will discuss each step in detail.

Forecasting-Ways to Test Reasonableness and Success For New Products

2012-01-30T17:41:00.000-08:00

I have worked with clients and we reviewed new product forecasts with their major accounts. In the process of this review I was testing for reasonableness of the weekly forecast based upon the intial roll out quantity and the annuallized weekly forecast. Typically a ratio of between 4 and 8 should be the answer received. If the answer is below four than the answer needs to be checked against other items being sold to this retailer to see what their turnover rates are, if they are all above four than the new item forecast shousl be questioned as to why and will there be a potential loser in this product. If the answer is over eight then the same test should be performed and depending on the answer the forecast should be reviewed. If for some reason the answer is over 20 turns as it was with one item we reviewed then other questions must be asked. They must be asked because turns in excess of 20 will mean a great many empty shelves and lost sales at the retail level unless there are multiple facings of the product and therefore the forecast maybe accurate but the number of turns needs to be reduced.
As a double check of the forecast and assuming your comapny can receive P-O-S data there should be a correlation between the retail sales after a few weeks and the "final" level reached for the product. Determining this correlation and quickly being able to determine the "final" sales figures will help in ordering more product sooner or the cancellation or delay of product already ordered. Having these models will go along way to having better inventory turns and less closeouts.

Are you sure they will come

2012-01-29T13:15:00.000-08:00

One of the major mistakes that an extrepreneur and company can make is to over price a product or price a product against the wrong competition. The selling price to consumers should be based upon research of the marketplace you want to sell into. If you do your research at Neimann-Marcus for expample then don't go to Walmart to sell your product at the price points found. This point can best be seen from the experience I had with a company that had an organization product that was priced compared against the high end of the marketplace and then began selling into the mass market arena. Obviously the high end or specialty retailer's price points and volume vary greatly from the mass merchants and the end result was what you would have thought-little acceptance by buyers and less acceptance by the consuming public. Therefore, if you want to have a chance at success you must research the marketplace that you will sell into and be competitive with the products that are already there and your uniqueness will then have a chance to succeed. If you would like help in getting products to market properly contact us at www.bhrglobal.com

Basic Mistakes of Inventors

2012-01-27T10:43:00.001-08:00

There are a number of mistakes typically made by inventors of "new" products. Today I would like to explore some of these mistakes and some ways to he;p avoid them. First there are unrealistic goals or expectations that come from one's invention or idea. It may be a great idea but without hard work and many hours it will not make you a millionaire or based upon the sales expectations it cannot. The second mistake reveolves around not researching the marketplace. I have mentioned in previous writings about a pet product that someone :invented" that a trip to a major pet retailer would have shown the person the product was already there and unless his idea could improve the products function at a more advantageous retail price, he could have stopped his concept at that point. The third major mistake is the assumption that everyone will want to buy your product or idea. Here you must assess the size of the potential marketplace you are going after and then after doing reasonable research into that marketplace determine if the proiduct is salable. Research does not include asking friends and family about your product, you must get a reasonable amount of independent input from your expected target market. Remember for each year of your target market in the USA there are about 3.5 to 4.0 million people up to the age of 50. Depending on your product and target marketplace you can determine the gross number of potential customers and then begin to do your homework and figure out the sales units and then dollar possibilities. All of this assumes the right price point and the ability to attract retailers to the product will be in your future. These are just three of the major mistakes that are made future postings will cover others and there are more trust me. If you want to learn more about getting your product into the retaikl arena and help in all phases of the product development cycle from finalization to sourcing to sales contact me at BHR Global Associates, Inc (Bruce Rubin) at bhrglobal@aol.com or call me at 267-664-5165.

Best Time To Review and Cut Costs

2012-01-09T10:08:00.000-08:00

Time to review and cut costs ALWAYS

In these troubled times when most companies panic and look to cut costs inways that should be encouraged and used now and when times are good.
It is time to partner with vendors to review what costs can be cut in both operations that can be passed on in cost decreases to the customer and more profits for the vendor.
It is time to question lead times and order quantities. It is time to discuss payment terms and live up to them.
It is time to review the costs with all vendors BUT on a systematic ABC analysis approach to the problem.
It is time to weigh the cost of the product versus the cost of carrying the inventory if imported.
It is time to question everything that is not nailed down and not take NO or CAN'T for an answer.
Those companies that have or will implement not only a cut cost now policy BUT a long term working relationship with vendor partners that keep costs in line ALL the time.
Remember when times get better the cost savings and committments that are implemented NOW will pay extra dividends then.
Bruce Rubin

Why Us?

2011-12-19T10:43:00.000-08:00

This post is reflsctive of a meeting I had this morning with someone trying to launch a product line into Major Bricks and Mortar Retail.
They are a distibutor of products that has many competitors and is mostly generic, commodity products.
The President of the comapny which is stuck at $22 Million in sales wants instant success without doing much. He feels he knows everything there is to know and it is the sales people's fault for not selling "The Big Guys".
What he does not realize is "The Big Guys" don't need him or hos product line.
What I suggested to the person I was meeting with is to come up with "differentiators" that make his company special.
These would and could include:
1) Smaller packaging which is a sustainability plus
2) Color coded consumer friendly packaging so what is being looked for is easily found and choices easily made
3) Licensing and unique exclusive designs where that is appilcable within the product line.
4) Smaller pack sizes to maximize inventory turns as well as exposure when product changes are required.
The product line is evoling on a daily/weekly/monthly basis so inventory exposure for all concerned is of major import.
5) Regionalize the assortments to take advantage of taste and fashion differences that exist in New York versus California versus Kansas.
All of this will allow you and the retailer to make more money on "The Fashion" products and be more than competitive on the commodity portion of the line.
The point is when developing a product line that is commodity based you need to "de-commoditze" the line where you can and that should get you an audience with "The Big Guys".

Consumption-based Forecasting

2011-11-06T15:40:00.000-08:00

Forecasts are better off based on end-user consumption, rather than retailer orders. Suppliers need to stop asking what will the retailer order from us and start asking what should the retailer order from us, in order to meet actual end-consumer demand.

Consumption-based Forecasting

In retail, the supplier often takes most of the demand risk. The retailer wants accurate forecasts to reduce inventory carrying costs and improve yields, but they don't have the same level of skin in the game that suppliers do, if demand doesn't materialize. The supplier usually is the one who has to pay for markdowns, spoilage, returns, and junking. Suppliers can successfully fill every customer order and still “lose their shirt.” Predicting demand based on orders from the retailer is challenging, because the order stream is filled with noise: forward buy distortions, buyers tinkering, order-type errors (marked as a promotion when it’s really a reorder), one-time shipments, etc. In addition, the order rates are sporadic, not a continuous flow.

So suppliers need to stop asking what will our customer order and start asking what should our customer order to meet end consumer demand. They should change their goal from high fill rates only, to having high fill rates, high store-level in-stocks, and high sell-through. Most current systems and approaches struggle to meet these goals. They rely too heavily on retailers’ forecasts, because they don’t have a structured approach to intelligently incorporate POS data or the true impact of recent orders.

Table 1 – Data Sources, Issues, Approaches

Dirty POS Data

POS data suffers from problems such as the "times key" issue (12 items of different flavors get entered as 12 of the first flavor scanned), missing registers, duplicate SKUs, and manual data entry errors when bar codes won’t scan. Fixing these problems is not easy for the supplier. It requires continual ongoing dialog, showing their retailers the benefits of implementing data discipline.

POS Forecasting

There is less noise at the POS data level, though data cleanliness is still an issue (see sidebar “Dirty POS Data”). One planner at a consumer products supplier said: "POS data is beautiful. It's pure statistical data. Demand planning algorithms eat it up and the resulting forecasts are much more accurate [than order-based forecasts]."

POS forecasting requires a system that can model the supply chain, and multiple steps to work backwards from POS demand to create a ship plan for the factory (see Figure 1). It must be able to model and adjust for A) lead times and B) inventory levels at each step of the chain, C) merchandising input (promotions, planned changes to product mix, pricing), and D) changes to market assumptions (competitors actions, such as new product introduction and price changes).

Figure 1 – Adjustments from POS Data to Ship Plan

Anything associated with a change in mix at retail level should be factored in as soon as it is known, usually months in advance. The retailers' POS forecasts (when available) should be compared by the supplier against their own POS forecast.

Order-based Forecasting

CPGs’ typical monthly forecasting cycle is largely dysfunctional.1 The lag between receiving information and incorporating it into the plan prevents rapid responses to significant events, such as forward buys. Account level forecasting has not delivered promised benefits because most demand planning tools are designed to predict aggregate demand across many accounts where there is a continuous stream of orders or sales. At the account level, each shipment is interpreted as a recurring “seasonal” demand spike. In reality, if the account just bought something, they’re probably not going to buy it again soon. Completely different algorithms are needed. In addition, sales has very little solid information at the item/account level beyond the next few weeks, but is regularly asked for 3-4 months of promotions, many of which don’t happen, or happen, but with different items. There is typically a lag of several weeks between getting the information from sales and publishing it to manufacturing.

The best companies are now updating the forecast daily based on meaningful events, and everyone executes to the most current, accurate numbers, not to something agreed to a month before. This requires new planning system algorithms that take into account not just seasonal trends from last year, but orders received yesterday. These algorithms understand that a forward buy does not indicate a surge in demand. By rapidly adjusting forecasts based on orders and POS data, companies significantly increase the accuracy of near-term (c. 4 week) forecasts, stabilize production schedules, and deploy inventory much more accurately to where there is actual demand.

Synthesis Tools

The technology to support n-tier collaboration has to be more than just spreadsheets for sharing data. Especially in industries like CPG, there are too many items and customers. We are seeing the emergence of tools from best-of-breed vendors that can synthesize large volumes of POS, shipment, and order data in meaningful ways to come up with a single more accurate forecast.

Putting It All Together

Synthesizing all of the data—POS data, orders, market trends and events, supply constraints, promotions—involves a combination of process disciplines (e.g. getting your sales people to actually enter important data), use of statistical tools (e.g. finding the right algorithm), and judgment (e.g. learning to assess the impact of events and trends). The results will be much more accurate forecasts with all the ensuing benefits of lower inventory levels, higher services levels, and reduced out-of-stock and markdowns.

Thanks to Bill McBeath for his contribution to this posting

Do you need helping finalizing your product?

2011-11-04T07:58:00.000-07:00

Do you have an idea for a product that will be a "NEW" "EXCITING" INNOVATIVE" addition to the consumer product landscape and you are stuck in neutral then you need to find an product development partner that can lead you through the process and get your product ready to be produced and then hopefully sold.
The process and the costs that go with it must be laid out for you by the people you are hiring.
Insure that you have worked out what is expected of you and them before you sgn on the dotted line.
The issues that will come up and if not resolved up front will lead to more multiple iterations of the product, this will happen anyway, than you expected and everyone of these will cost you money and time.
So talk through the design with the company and "your friends and family" as much as possible and insure that at all times the company you are working with are developing a product that can be produced and produced economically.
I recently met with someone who has gone throught the process but at the end of the process had a product that was not consumer friendly or produceable economically.
If you realize you don't know about what it takes find someone who does before you engage a product designer.

Six Red Flags to Help Avoid a Bad Outsourcing Relationship from Ever Starting

2011-08-14T14:30:00.000-07:00

When you begin evaluating service providers the basic requirements are straightforward. You want a provider with expertise in your industry, a deep understanding of your processes and a proven track record of superior delivery. The provider should be responsive, communicate clearly and demonstrate that it wants your business. However, because these are table stakes in the provider game, the selection process often comes down to “soft characteristics.”

Determining which of the qualified providers will work best with you requires a close eye during the sales process. I’ve identified six important soft characteristic red flags that can lead to a potentially dysfunctional and damaging relationship. Keeping an eye out for these signs can help you spot a problem before it is too late.
1.Selling rather than solving. Is the provider listening to you and offering what you need to solve your problem? While challenges may be fairly similar from company to company, no two organizations are identical. There will always be nuances in the sourcing context and the organizational culture that calls for more than a cookie-cutter solution. A streamlined, outsourced process may be institutionalized, but how it is applied will be different in each client organization. The provider should be paying close attention to the particulars of how your company operates, not just selling you something that worked for another organization.
2.Telling rather than listening. During the sales process, does the provider want to do all the talking and follow its 80-slide presentation obsessively, squeezing out every last particle of its sales message before letting you get a word in edgewise? A provider’s listening skills and abilities are critical. A strong indicator that it won’t be an innovative provider is if it sells by presenting to you, rather than engaging with you. This could also indicate an inability to listen to your issues during the actual engagement, resulting in a strained, one-way relationship. Whatever the likely cause – immaturity or lack of skills are two likely possibilities – this behavior indicates fissures in any subsequent relationship.
3.Homogeneous rather than diversified. Homogeneity has its advantages (system interoperability, for one), but it is not what you want in a service provider, especially if your company is global. You want a provider with sufficient diversity to understand your cultural nuances. You want the provider’s diversity to mirror yours, with people from around the world of different ages, at different stages in their careers, and with different experiences and skill sets. Fundamentally, people develop the strongest business relationships with those who are like them. So a provider’s diversity – rather than geographic and cultural homogeneity – is important for the long-term growth of a relationship.
4.Complicating rather than simplifying. Does the provider seem to be making the sales process unnecessarily complex? Simplicity is a good thing, and the provider should be able to define its solution in very simple terms. If a provider overcomplicates, it strongly suggests it doesn’t understand your problem. The attempt to add “bells and whistles” and complicate the solution may indicate the provider is trying to exhibit superior insight and intelligence. It is simplicity that demonstrates a clear view, a true understanding of the right path. For example, if you have a simple order-to-cash process and the provider is trying to tack on more features and attachments, with more technology than required, the provider is overselling through a misunderstanding of your needs or because of a desire to broaden the engagement scope. And it’s critical to remember that a complicated solution is less transparent, which in turn creates more governance challenges.
5.Near rather than far. You want a provider with a geographic footprint such that relationships and decision-making are as close to you as possible. Be very wary if the relationship will require all decisions be made offshore. You need someone near you, onshore, with the authority to make decisions, because the farther away decision-making moves from you, the more it loses context and speed. You don’t want to have to wait until the middle of the night for a conversation with someone several time zones distant; you want a solution at the time you need it.
6.Arrogant rather than supplicant. The sales process offers excellent insight into the mindset of a potential provider. If the provider’s sales team overpowers you with arrogance – if it bosses you around, boasting it has solved problems like yours hundreds of times – you have a problem. Yes, on a certain level, the provider will be your partner, but its purpose is to serve you and its behavior should reflect that fact. Remember, the term is “service provider.” It is there to serve you, and that is how the provider should approach the relationship.

By paying close attention to these six potential red flags, you can make sure that a bad relationship never has the chance to get started. Even though a particular provider’s capabilities and expertise may appear to be your best choice, it still must be compatible with your culture, accessible, and interested in listening and serving you with straightforward solutions. Otherwise, you’re certain to pay a painful price over time.

Risk in New-Product Launches Made Greater When All Parties, Including Supply Chain, Aren't on Board

2011-08-12T13:00:00.001-07:00

New products are inherently risky in meeting quality objectives, whether the defects are real or simply perceived by the customer. J.D. Power and Associates released the results of its automotive quality survey in June, highlighting this challenge for some companies that topped the list last year. In the survey, Ford ranked 23rd, compared to fifth place one year earlier, and Hyundai dropped from seventh to 11th place. The Wall Street Journal identified new product designs as a factor that led to this poor performance. Ford had negative feedback on its new touchscreen entertainment and phone system, while Hyundai struggled with new designs of the Sonata and Elantra vehicles. Both of these companies will no doubt rebound to top the list again. Yet, this demonstrates the challenge all companies face in meeting customer demand for quality amid increasing complexity. This wreaks havoc on supply chain professionals, as they adjust demand plans and inventory that require design changes, resulting in rework or scrap.

A recent Gartner study on new-product introduction found that fewer than 50 percent of new-product launches successfully meet original business goals. Nearly one-third of respondents identified quality as the top reason for failure, ranking it among the top five reasons new product launches fail. A lot has been done to embed quality into products since the days of Juran and Deming, yet perfection still eludes even the top companies. The reality is that pressure continues for organizations to reduce new-product time to market, even as the products become more complex, and both design and manufacturing become more global.

Quality Starts With Developing Products and Services for the Total Customer Experience

Quality starts with the customer, but this is not always understood. Leading companies develop products and services that deliver value across the total customer experience. Even the coolest features can flop if there are other barriers preventing the customer from being delighted. The Swiffer from P&G is a well-known example, born when design teams observed homeowners' poor experience using a conventional cleaning mop. Toyota did this with the Tundra pickup truck, observing how drivers used their vehicles as a remote office as much as for hauling payloads. Even Pfizer did this in life sciences by creating the Getquit online website to offer additional patient support when it discovered it was a critical service to ensure success of the Chantix smoking cessation drug.

By observing behavior, companies can better serve a customer's total needs by combining product design and supporting services. To do this best requires the entire value chain team to understand the customer beyond simply marketing's interpretation of those needs. If product development, supply chain and customer support understand the customer well enough, they are in a better position to add value and eliminate waste. Once development starts, it is then necessary to observe the customers using the new product or service to ensure it meets their needs. The more iterations of this process that are completed, the more likely it is to meet customer expectations.

Ensure Business Processes Support New-Product Quality Goals

Even when customer needs are understood, there is plenty of opportunity for the new-product development and launch (NPDL) process to break down. The reasons are many, ranging from poor cross-functional communication to simple inertia in the process that slows cycle time.

A few areas to consider for improving new-product quality include:

• Product portfolios should categorize quality risks — brand-new products carry higher risk than minor extensions and should be segmented and managed accordingly.

• Validate that customer requirements are addressed — scope creep often happens during design cycles, so take extra care to approve any variation prior to commercialization.

• Verify a robust product design and manufacturing readiness — fundamental in design for Six Sigma use simulation and in design of experiments to optimize functionality and manufacturing capability.

• Use a metrics hierarchy that defines total product launch success — measure performance against strategic business value and operational goals for a complete view.

• Post-launch feedback and corrective action — capture customer feedback from various sources, including directly, through channel partners and via social media, and take immediate action.

Organizational alignment can be a barrier to success. Gartner's Simon Jacobson has written extensively on the topic and suggests it's time to take an end-to-end view of quality across the entire value network. Yet, Jacobson's research finds that quality still resides in silos and that supply chain organizations' ownership of quality is in its early stages, with most supply chain organizations claiming responsibility for quality management only 47 percent of the time (see "Best Practices for Taking Quality Beyond Manufacturing and Into a Business Capability Supporting the Value Chain").

Technology plays a role supporting the business processes that lead to these new-product quality goals. Whole hosts of technology providers specialize in quality management that extends beyond new-product launch into manufacturing and corrective action. Specific to the process of NPDL, product life cycle management (PLM) applications lay a strong foundation, but must connect to an end-to-end business process. PLM core capabilities include managing customer needs, product portfolio management, direct material sourcing, collaborative product-process design and product data management. Simulation and virtual reality help enhance new product quality, along with various capabilities to ensure manufacturing readiness and to support installed customer product. This extends to industry-specific process support such as validating that complex system customer-design requirements are met.

Of course, total quality must extend further than what PLM or any one application can provide alone. Several manufacturing execution system (MES) vendors have quality functions, and are expanding their touchpoints into PLM. ERP vendors also support PLM, while integrating it into broader business processes, including demand and supply planning, scheduling, and inventory management, among others. Before investing in any of these technology solutions, manufacturers and retailers should identify the root cause of new product quality failure and define the appropriate business process that will address their need. Technology providers also specialize by industry requirements, such as those that specifically target apparel, food and cosmetics, among others.

New product quality will always be a challenge as long as time-to-market cycle times are squeezed. However, improvement can be achieved with a holistic view of quality that starts with the customer and is viewed as an end-to-end business process.

Thanks to Gartner for their input on this posting.

Know Where Your Components Come From

2011-08-12T13:00:00.000-07:00

Its is important if you use any of the materials discussed below that you do not get into trouble with the US government due to non-compliance.
New companies especially are probably not familiar with Dodd-Frank and its provisions.
If you are not sure about the issues mentioned below do your research and homework with your suppliers.

As a compliance manager at TriQuint Semiconductor, John Sharp has spent much of the past year focused on one little-known compliance rule before it goes into effect. To satisfy it, he must query hundreds of suppliers to figure out the origin of some 450 materials used in his company's products. It's an unusual burden, he says, because "we've never had to go back through our supply chain to determine the source of something."

Until now. A provision in the Dodd-Frank financial reform law requires publicly traded companies to scour their supply chains for so-called conflict minerals mined in the Democratic Republic of Congo and surrounding countries. If a company finds that minerals used in its products or components come from the area, it will need to dig even deeper to determine whether its purchases indirectly help fund ongoing violence in the region. The final version of this rule will likely require that companies publish their findings every year and explain their due-diligence process.

Thanks to CFO magazine for its assistance with this post.

Making Products in China

2011-06-14T18:34:00.000-07:00

Chinese manufacturers
The end of cheap goods?
Some are predicting the end of the cheap “China price”; others are more sanguine
..
“IT IS the end of cheap goods,” says Bruce Rockowitz. He is the chief executive of Li & Fung, a company that sources more clothes and common household products from Asia than perhaps any other. In the low-tech areas in which Li & Fung specialises, the firm handles an estimated 4% of China’s exports to America and a sizeable chunk of its exports to Europe, too. It has operations in several East Asian countries, where it diligently searches for cheap, reliable suppliers of everything from handbags to bar stools. So when Mr Rockowitz says the era of low-cost Asian production is drawing to a close, people listen.

He argues that Asian manufacturing has gone through a number of phases, each lasting about 30 years. When China was isolated under Mao Zedong, companies in Hong Kong, Taiwan and South Korea grew expert at making things. When China reopened in the late 1970s, after Mao’s death, these experienced Asian operators converged on southern China. With almost free access to land and labour, plus an efficient port and logistics hub in nearby Hong Kong, they started to make things ever more cheaply and sell them to the whole world.

For the next 30 years manufacturers in China helped to keep global inflation in check. But that era is now over, says Mr Rockowitz. Chinese wages are rising fast. A wave of new demand, especially from China itself, is feeding a surge in commodity prices. Manufacturers can find some relief by moving production to new areas, such as western China, Vietnam, Bangladesh, Malaysia, India and Indonesia. But none of these new places will curb inflation the way southern China once did, he predicts. All rely on the same increasingly expensive pool of commodities. Many have rising wages or poor logistics. None can provide the scale and efficiency that was created when manufacturers converged on southern China.

Related topics
Taiwan
Hong Kong
Industries
Manufacturing
Asia

Nothing can replace the Chinese miracle. “There is no next,” says Mr Rockowitz. Prices will now start to rise by 5% or more each year, with no end in sight. And that may be optimistic. So far this year, Mr Rockowitz says, Li & Fung’s sourcing operation has seen price increases of 15% on average. Other sourcers of Asian toys, clothes and basic household products tell similarly ominous tales.

Yet manufacturers in some other fields see things differently. On May 31st, the day Mr Rockowitz spoke in Hong Kong, the annual Computex fair opened an hour’s flight away in Taipei. Hotels were packed, even at inflated prices. The world’s hottest technology companies, such as Apple and even Taiwan’s HTC, were absent. But nearly 2,000 vendors showed up to hawk cheap and innovative gizmos.

Mainland Chinese firms arrived in force: more than 500 hired booths, up from 200 last year. Many are from the same parts of China that were once noted for cheap textiles and toys. With government encouragement, the belt that stretches from Shenzhen to Guangzhou has been shifting to more sophisticated products, such as electronics.

Some of the more striking offerings at the fair were ultra-cheap versions of global hits. A company named BananaU advertised tablet computers with Google’s Android operating system for $100. Another pushed Windows-based thin computers looking much like MacBooks for under $250. E-Readers were everywhere and available for a song.

Whether these products can be produced or sold in developed markets is unclear. The quality may be “B” for Banana rather than “A” for Apple. The intellectual property embedded in some devices may not, ahem, have been paid for. But still, the booths were packed. Buyers goggled and haggled over motherboards, memory chips, solid-state drives, servers, graphics cards, non-tangling cables, connectors, monitors and so on.

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In 2009 the prices of these electronic goods jumped suddenly, as buyers emerged from the financial crisis and started ordering more equipment from manufacturers which had slashed capacity. But data collected in Taiwan suggest that prices are now falling sharply again (see chart). If the vendors at Computex had a common slogan, it would be “more for less”.

Among the products that generated the most heat were those that saved energy. These included alternating-and direct-current converters, and sensors that could moderate the power consumption of streetlamps, fridges and air conditioners. Such devices were initially marketed for their “green potential”, but what buyers liked was their ability to enhance productivity. Japanese firms, which have had to make do with less power since the earthquake, were particularly eager.

Chinese firms were curious about any product that lowered costs or made it easier to automate. When labour was cheap, Chinese firms used it inefficiently. Now they are learning how to get more from fewer hands. Li & Fung may be sounding the closing bell on one era of production, but the Taipei computer fair suggests that another is emerging.

Thanks to The Economist for this post.

Funding Options

2011-05-28T07:12:00.000-07:00

You have your idea, you have spent savings getting it finalized, you may have spent money on a prototype, and you have generated interest in the product.
Now what do you do to get funding to make tooling, produce samples, set-up marketing materials, producing a website, etc?
You typically go to friends and family and raise money that way.
Then you prepare a business plan and try to raise money from Angel and Venture Capital networks and groups.
If your story is compelling, well done, well presented, and shows there is a huge pot of gold at the end of the rainbow you might get the funding you need.
It is not winning the lottery but the chances are almost as long unless you are perceived to have the "next big thing".
What you think is not important and your sales projections may be reduced by as much as 75% by potential investors and then if all works they will invest in you.
There are options available to this path that will require you to put up collateral however based upon your asset base and you conviction in your product companies will provide the needed funding and set-up processes to add funding as success happens.
This option also allows you NOT to have to give up any ownership percentage and the need to have a "boss" or someone watching over your shoulder for every move.
Do your homework and assure yourself that if the project fails you will be able to pay back the funding source.
The point is explore all funding options and be comfortable and open minded.

Don;t Be Taken

2011-04-28T18:23:00.000-07:00

Today I talked with an inventor who paid a "marketing company" his life savings to market his Patented Invention. What he received is NOTHING for his money.
He is now broke and looking for funding and no way to make his product successful.
The company he contracted with wanted an exclusive and the contract kept him from exploring other avenues to success.
My advise to everyone who has a product is DO NOT under any circumstances pay anyone the right to market your product exclusively and then pay them a fee.
What they do is mail brochures and literature to a mailing list of potential customers who react as I have and throw these submissions in the trash almost as soon as they are received.
Typically the presentations are less than first rate and overly exagerate the products potential sales volume and profitability.
No one can guarantee sales and anyone who does is misleading their clients.
I am not saying getting a product to market is a free exercise BUT there are legitimate consultants who will work with inventors and small businesses to make their products successful.
Unfortunately too many times when they get to me or others like me there aren't any funds to move the process forward to sales.
I guess the moral of the story is if it sounds too good to be true it isn't.

Basic Mistakes of Inventors

2011-04-15T13:27:00.000-07:00

There are a number of mistakes typically made by inventors of "new" products. Today I would like to explore some of these mistakes and some ways to he;p avoid them. First there are unrealistic goals or expectations that come from one's invention or idea.
It may be a great idea but without hard work and many hours it will not make you a millionaire or based upon the sales expectations it cannot. The second mistake revolves around not researching the marketplace. I mentioned in previous writings about a pet product that someone "invented" that a trip to a major pet retailer would have shown the person the product was already there and unless his idea could improve the products function at a more advantageous retail price, he could have stopped his concept at that point.
The third major mistake is the assumption that everyone will want to buy your product or idea. Here you must assess the size of the potential marketplace and then after doing reasonable research into that marketplace determine if the product is salable. Research does not include asking friends and family about your product, you must get a reasonable amount of independent input from your expected target market. Remember for each year of your target market in the USA there are about 3.5 to 4.0 million people up to the age of 50. Depending on your product and target marketplace you can determine the gross number of potential customers and then begin to do your homework and figure out the sales units and then dollar possibilities. All of this assumes the right price point and the ability to attract retailers to the product. These are just three of the major mistakes that are made future postings will cover others and there are more trust me. If you want to learn more about getting your product into the retail arena and help in all phases of the product development cycle from finalization to sourcing to sales contact me at BHR Global Associates, Inc (Bruce Rubin) at bruce@bhrglobal.com or call me at 267-664-5165.

Bringing Products To Market

2011-04-04T14:06:00.000-07:00

The introduction of new products is both a gamble and a challenge even for the most successful companies. This statement is borne out in the facts that 86% of new product ideas never get to market and 50%-70% of those that do fail. The products fail in my opinion because the people, and companies bringing them to market do not have a plan, a structured process, or an understanding of what they are getting into. Since there are no guarantees the twelve-step program laid out in article will assist in this process and help especially new companies, and entrepreneurs in improving the rate of success and entry into the marketplace. Even though my background is in the retail arena and though this steps here are aimed at consumer products they can be applied to most companies selling a product or service.

The steps are:
1) Understand the overall U.S. marketplace.
Use this step to do high level research to see if your product already exists in the marketplace or as a patented product. You can accomplish this in various steps from doing keyword searches, going to the US Patent Office website at
www.uspto.gov , going shopping both on the world wide web as well as to bricks and mortar retailers. Do not leave out a marketplace because you think your product does not fit you never know who might think it was a good idea. As an example of this I was recently shown a product sample that was developed for cats and the person who developed it only needed to go to the local pet store to find it. So remember do your research before you spend time and money on a product idea.
2) Understand your market segment.
Once you have the broad overview of the marketplace and the various retailers the next step is to identify the area of the retail store your product would be displayed and the methods in which it is displayed. Also in this process you will look for competitors and potential partners for your product. In many cases the product maybe salable but a retailer will not take it on because it is a ONE PRODUCT LINE. I even had that highlighted recently when a call for ideas was sent out by a university and appointments were going to made with a major retailer, however, there was a disclaimer saying if you only had a one product line DO NOT APPLY. Also I have worked with an inventor of a product who figured this out and came to the company I was working for at the time to be his partner, we accepted and the product had a home in Wal-Mart and Lowe’s.
3) Identify the latest in design and color trends.
Almost all products sold at the retail level have a need to be in line with the latest looks in both fashion and color. Organizations such as Pantone can help in understanding what are and will be the latest trends. There are fashion websites as well to show you the latest trends in fashion and other industries for your product idea.

4) Identifying the target consumer
Based upon your research completed in steps one and two you now you need to decide which consumer you will attempt to reach and thereby which type of retail outlet you will be selling. As part of this step you can develop packaging ideas and concepts that will work with the product and the store you are looking to sell into. You will also need to understand the retail price point that makes sense for your product based upon where it fits in the retail environment. I recently met a gentlemen who developed two board games that were somewhat unique and different and potentially salable. However he decided on price points for his product that were twice the “acceptable” pricing for similar products also the packaging he developed was not in line with the retail price he was looking for and therefore the products did not sell.
5) Develop your marketing story.
The next step requires the development of the strategy that will be used to the sell the product, and the story behind your branding process. The product can be marketed as the lowest priced, best quality, most features, etc. You need to develop a brand strategy that sets you apart from the competitors and will make a compelling story to the retail buyer. Remember the only FOCUS GROUP you have to please is the retail buyers doing a lot of market research and spending a lot of money with individuals and groups will only go so far. You would be better served to find sales professionals who serve the marketplace you want to be in and get their opinions on the product. Remember these people have seen the good, the bad, and the ugly of products over the years and will give you an honest answer and help your story where they can.
6) Tradeshows as a method of becoming known.
As a new entry into the marketplace a method of gaining exposure and building credibility for a new product or company is to participate in trade show either regionally or nationally. This is also a great place to develop a sales force. I recently worked a trade show for a company looking to go into the retail arena after years in a specialty market. Even though there were not a great many retailers present there were a great many manufacturers sales organizations and representatives present and they ended up with a national sales team that could take the product to various retail channels. They also gained a large number of international contacts for the product.
7) Develop the specifications to having the product produced.
In order to have your product produced, and produced properly there must be complete specifications and drawings made available to potential vendors. This will include methods of packaging. Also when you get to this step you can decide to get the product patented and I would advise you find an excellent Patent Attorney to develop the patent. The process could be costly and unless at the end of the day you are willing to defend the patent rights you may want to consider moving ahead without a patent. You can as I understand take some initial steps to protect yourself through the Patent Office without a great deal of expense while you are proceeding with the sourcing process. Also insure that you have a NON-DISCLOSURE AGREEMENT developed to protect yourself. This agreement should be signed by anyone who you discuss the idea with who potentially could take the idea and bring it to market by themselves. People who are in the Capital markets most likely will not sign this agreement however they are not looking to take products and run with them either.
8) Find the source for your product.
Sourcing of your product either internationally or domestically or both must be accomplished carefully, and with the understanding of what you are seeking as a final cost for the product. If your product is patented or not, have a non-disclosure form available for potential vendors to sign.
9) Understand the importing and purchasing of products.
There are a number of issues and costs that come with the importation of products into the US. There are ocean freight costs, duties, customs brokers fee, domestic freight costs, and others that will add to the total cost. Payment terms and alternatives must be understood as well.

10) Determine your method(s) of distribution and setting them up.
Once you have determined where you are going to purchase your product then you have to determine the method of distributing the product. Established companies will use their present methods, however, new companies should look at third party logistics providers as an alternative to doing it themselves.
11) Required information to make a sale.
In order to sell product to retail there are certain basics that a company and the products must have. These basics include establishing a UPC (uniform product code) vendor number for the company and an individual UPC number for each product the company wishes to sell.
Other specific details pertaining to the product will be needed as well.
12) Make the sales presentation and the sale.
Now that you have established your marketing and selling story with the benefits of your product over the competitors, the method of how to produce and package your product, and the resources to produce and ship your product to the customers and the selling prices for the product. Then you are ready to put these pieces together and make presentations to potential customers.

Sell Or Patent

2011-03-21T19:05:00.000-07:00

I know that I have wriiten about this before but it is worth repeating.
The most important thing is to get your product to market NOT getting it patented.
The money spent on the Patent search and the Patent process is better spent on finalizing the design and getting prototypes and finding a reliable source.
If you are lucky enough to sell the product then you can go through the Patent process. Having a Patent does not guarantee anything except the fact you will spend money and you might have a Patent at the end of the day.
Here is some information on costing and timing for a Patent.

The complexity of the technology is the big variable with regard to patent searching and filing costs. Patent searches usually run between about $500 to $1500, with electrical, biotech, and business methods on the high end and simple mechanical inventions on the low end. Nonprovisional applications run between about $5000 to $8000, broken down the same as with the searches, e.g., mechanical costing less and electrical, etc, being more.

Provisional applications usually run about $1000 to $1500 depending in large part on the adequacy of the inventor's disclosure. Very complete disclosures may cost as little as $500.

The time can be anywhere from 1 year to 3+ years. Biotech and business methods are more backed up than other technology areas and may be 4+ years.

Sourcing Your Product

2011-02-26T10:27:00.000-08:00

If you want to source your product outside the US then you must make the committment to do the following.
1) Find a reliable agent who is located in country or has contacts on the ground in country.
2) Plan on going there you need to build trust
3) Plan on going there you need to see where your product is being made
4) PLAN ON GOING THERE you need to cut the time to get what you really want shortened
5) Insure your specifications leave nothing to the imagination.
6) Supply prototype made to the specifications
7) Get a domestic quote
8) Never-Never-Never say yes to anything but what you want
9) Understand what ALL the costs of getting the product from there to here are
10) Before you write a PO sell something.
11) All communication must be in writing even after phone calls
12) Remember even if they speak English you need to be sure they UNDERSTAND English
Follow these steps and you will stand a better chance of having a product you want and being able to be successful

So you want to be on QVC?

2011-02-14T10:41:00.000-08:00

QVC is a great outlet for new products especially for those people with a one product line.
QVC unlike bricks and mortar retail is in the item business and therefore more prone to choose a one item prodcut line to present on air if they think it will sell.
The challenge for a new or small company is the fact this is a "consignment" sale with no guarantee of success except the fact QVC believed enough in the product to air it.
What will happen is the following.
The product will be presented to a buyer who will like the product.
The buyer will then negotiate a price if the original cost is too high for their projected sell and profiit margin requirements.
Then the product sample will be sent to their quality department for testing and evaluation.
If it passes all the tests including packaging then a purchase order will be issued.
The purchase order will ask for delivery based upon the lead time given for the product by the company and agreed to by the buyer.
Once a purchase order is received then product should begin and then delivery is made at the specified time.
Once the product is received the typical goal is to have it on air within 30 days however the timeframe could be longer and has been where I have been involved as much as six months later.
Once the product is on air QVC will pay for the product sold in about 60-75 days from the on air date. This will allow them to accomodate all the returns on the product and pay for what actually sold.
The balance of the inventory can be returned depending on the amount left over.
If all was successful then a second and potentially additional orders will be placed.

Going Global

2011-02-06T07:53:00.000-08:00

The world is has become a smaller place and more important a more advanced place with more potential consumers of all types of products.
Twenty plus years ago when I first went to China you could see the beginning of what today seems commonplace.
When I returned I told my son to learn Chinese and they are going to be a force in the world.
We in the US and those in Europe helped the Chinese understand the meaning of a quality product and we took advantage of the inexpensive labor.
Now that inexpensive labor has become a little more expensive but a generation of entrepreneurs and workers are looking for products that are produced and developed in the US and elsewhere.
So if you have a product think of the huge potential customer base beyond our borders.
Making the product does not have to be in China, India, or any other emerging market.

Are You Ready To Make A Sale

2011-01-16T16:59:00.000-08:00

This posting has nothing to do with product but with the basic items needed to be given to your sales team.
1) The UPC- the Universal Product Code which is on every product sold at retail. In Europe it is known as the EAN. The vendor and product number is also the basis for all barcodes that are needed when dealing with retail.
2) A source to do EDI- There are a number of options open to small to mid-sized companies but you must be able to have this available. EDI (Electronic Data Interchange) is how retailers communcate their orders to their vendors. The are a number of different types of transactions that are performed. The basics include receiving an order and advanced shipping notice of the order.
3) Item Dimensions-Inner Pack Dimensions-Master Carton Dimensions-Cube and Weights for all of these.
4) Sell Sheets that highlight the features and benefits of the product and the depict the product(s) and how they look when "working".
5) Pricing- The prices that you are looking to sell the product for. There are a number of issues beyond the cost that need to be included in the pricing decision.
These issues include: Disocunts including advertising-warehouse-new store, terms, slotting fees, and other similar ones.
6) How will you do distribution- Will you do it yourself or outsource the process and how to account for these costs. Should they be part of the pricing or the profit structure?

Do Not Make Hard Tooling

2011-01-07T07:18:00.000-08:00

If you have designed a product and want to take it to market DO NOT invest in hard tooling especially if it is an injection molded part.
There are options where prototyping can present a "finished" looking part that can be used for presenting to potential customers.
From these prototypes and the files that create them you can get costs to produce the product and thereby developing a selling price.
Prototyping will also allow you to go to trade shows to show off your product to attract potential customers.
Mock-ups of packaging is also a low cost alternative to showing how the product would look on the retail shelf.
The bottom line here is to avoid spending $100's of thousands of dollars on a product line that potentially no one wants.
I recently met someone who did that and he and his wife are still looking for their first customer.
Do not get yourself into this financial hole.
Also the time to show your product to customers is faster/better/cheaper way to go.

Dealing With Retail, Etc.

2010-12-29T11:43:00.000-08:00

Thanks to Lora Cecere for her input on this post.

Over the past six years, I have studied the use of downstream data, and watched consumer products companies inch along, ever-so-slowly, with pilot projects. While I challenge my readers to take a leap of faith (reference prior blog post http://www.supplychainshaman.com/demanddriven/a-leap-of-faith/), and aggressively use downstream data (E.g. point of sale, warehouse withdrawal, loyalty and retail demographic data), I also want to equip them for the journey. It is not as easy as it sounds. There are pitfalls and landmines, and major obstacles to overcome.

Last week, I was in Chicago working with clients on the use of downstream data and the design of Business Intelligence (BI) strategies to become demand driven. Like many clients, these companies were in the middle of an Enterprise Resource Planning (ERP) upgrade cycle, and wanted to put downstream data into ERP to use the data to be more demand driven. I ruined their day, when I told them that I could not endorse their approach. Which led me to sharing the three things that I have learned about the usage of downstream data with these teams:

-It is not about Integration. This is too simplistic. It is about the synchronization of demand data. To synchronize and use the data, it must be cleaned, harmonized, and enriched based upon a carefully crafted data architecture and road map. Unfortunately, for many companies, they learn too late that ERP is not the de facto enterprise data model.

Data coming in from retailers represents their data model. To use the data (for anything other than sales reporting), the data must be converted to conform to the enterprise data model for product (hierarchies of selling units), customer ship-to locations, and corporate calendars and augmented with shipment and order data from Enterprise Resource Planning. Since most data in ERP is the manufacturing unit—not the selling unit—and represents ship from (what should be made at a manufacturing plant)—not ship to or the retail channel—the ERP data must also be converted to a standardized logical data model. Stuffing downstream data into ERP and ignoring this process is like stuffing a square peg into a round hole.

-Design with the End in Mind. In the organization, there are multiple use cases—sales reporting, category management, trade promotion management, replenishment, demand planning, improved transportation planning, cost to serve and client profitability modeling, inventory reduction and obsolescence reduction, item rationalization, shelf compliance sensing, new product launch success and demand orchestration processes (to translate the demand plan into buying strategies), Each of these use cases requires a different frequency of data –daily data/daily, daily data received weekly, weekly data received weekly, etc—and data enrichment schema. As a result, data must be held at the lowest level of granularity.

The problem on usage happens when companies start with simple use cases in the front office and as they mature, the requirements to use the data change and mature. To enable this process, companies should design a data model with the end in mind, and store the data at the lowest level of granularity to ensure flexibility in aggregation and reuse (note the Coca-Cola data model presented by Data Ventures on 12/17/2010 in figure 2). In doing this design, teams will quickly find that the data model that works is not ERP.

-Cultural issues Abound. Attack them upfront! While companies want to quickly point out the issues on the use of downstream data, the greatest issue lies in retooling the organization to “embrace new concepts, and think about the art of the possible.” To do this, five change management issues need to be addressed up front:

1) A shift in focus from “ship in” to “sell through” in the channel. The traditional approach encourages companies to push product into the channel in a very efficient push-based supply chain. As companies move from push to pull, they realize the need for push-pull decoupling points and the need to sense and use multiple demand points in the channel simultaneously through new forms of predictive analytics.

2) Realization that syndicated data is wrong. A barrier for the team is the traditional paradigm of “why do I need point of sale data, if I have syndicated data?” After many weeks, it becomes clear that the sources of syndicated data are inaccurate and that there is enormous value in seeing channel movement 3-4 weeks earlier than you can see it through syndicated data usage. A barrier is the high dependency of marketing and sales organizations on syndicated data, and the unfaltering belief that it is sufficient.

3) Redefine what good looks like. The traditional definition of the supply chain changes. Organizational incentives reward vertical silos. Sales incentives are to sell volume, marketing’s are to improve market share, and supply chain is rewarded to reduce costs. As companies use downstream data to build horizontal processes—a shift from north south to east west processes—the definition of supply chain excellence changes. Companies realize that supply chain extends over go-to-market activities of sales and marketing, and can be used to improve revenue management, channel sensing, and new product launch. However, companies can only get there if they give themselves the permission to change focus from inside-out processes to outside-in processes.

4) Right stuff. The organization needs to reward inspiration, perspiration and innovation. These initiatives are being driven at the director and manager levels not from the top down. These three characteristics are prevalent in companies that have leap-frogged the competition. In these organizations, there is a line of business leader with a clear vision, and the power to influence and persuade to get funding. There is also investment in back office analysts to look at the data differently—to let the data answer the questions that we do not know to ask—so that companies can reap maximum value.

5) New concepts. Companies are not used to thinking about demand latency and inventory velocity. Enterprise applications focus on data integration not the rate of change. It is a different focus and requires a different mindset.

It is hard work. It is cross-functional. It is a new way of thinking. At the core, it challenges traditional paradigms. However, if you can cross these boundaries, companies find that the use of downstream data pays for itself in less than six weeks every six weeks, and companies that were good at the use of downstream data and sensing channel demand aligned and transformed their supply chains 5X faster than competition. Procter and Gamble attributes their work with Terra Technology and the use of downstream data to a 2.5 billion dollar reduction in inventory. Jim Temme, previously of Anheuser Busch attributes the use of downstream data to a 20 million dollar improvement in trade promotion spending. Three companies have given recent testimonials at industry conferences on the use of downstream data to improve shelf sensing prevent voids and no-scan with a return in days. And, if this is not enough, consider the changes coming in 2011:

-Wal-Mart is upping the ante for many manufacturers on penalities on trucks that are not delivered on time and in-full up to 3% of the value of the truck.

-Kroger and Safeway data programs are launching increasing the ability for grocery manufacturers to get signficiant channel concentration of data to manage the demand signal from the outside-in. The increase in point of sale data in the channel is a great opportunity to improve the supply chain response.

-The need to tie digital and social programs to brick and mortar programs. Retailers are asking companies to shape demand in the store through social programs. Demand elasciticy for social couponing programs is 100X the response of store circulars necessitating a responsive supply chain. But, how can you be responsive if you cannot sense?

With that, have a great holiday season and a good new year. Maybe, just maybe, the serious use of downstream data will be on organizations’ New Year resolution for 2011. In the words of The Night before Christmas, “now dash away, dash away, dash away all.”

To Patent or Not To Patent

2010-12-19T13:09:00.000-08:00

Getting a Patent isn’t Always the First Step.
When starting out the first things to consider would be the marketability of the product, cost of the manufacture and the technical considerations. If you need help in those areas there’s more information on this site that may help you with those concerns.
Having said that, let’s look at what happens to a typical US patent application, and at what cost and time are involved. Some US applicants will not follow the same course as outlined here. While in Countries outside of the US may have a completely different process.
The First Step in the Patent process: Do a Search (Costs approximately $300-1500; Amount of Time Spent 1-3 Weeks)
The first step to take in the patent process would be the “novelty search”. The search will give you a better idea of what kinds of protections are available. Both the cost and time to conduct the search will vary depending on the invention. The cost of the search should be around 10% of the total cost of patenting the invention. If you know your market well and you believe your competitor may beat you to the patent office maybe it would be best to skip the search. But for the most part this is a very important step.
The Second Step in the Patent Process: Preparing and Filing the Application (Costs Approximately $3000-8000; Amount of Time Spent 1-3 Months)
The second step in the patent process would be preparing the patent application. The time and cost are going to vary and will depend on the invention and if your disclosure materials are up to par. depend on the complexity of the invention and on the quality of the disclosure materials that you’ve put together. When completing your application you should do so carefully to avoid mistakes. Make sure to read over your first draft and make corrections as necessary. Most instances you will go through a few applications before you have a perfected application. Expect to draw pictures of your invention. Adding informal drawings will speed up the application process.
The Third Step in the Patent Process: Plan on a Long Wait (Approximant Time 14-24 Months)
When filing for a patent in the US, plan on waiting 14-24 months for most inventions. Rarely an application will be reviewed within 4 months of filing. The more popular the technology is expecting a longer wait. This really isn’t all that bad, considering if the PTO takes longer than 14 months to send the examiner report, your patent can be extended a day for everyday in which there is a delay.
The Forth Step in the Patent Process: The Examination and Possible Appeal (Costs $400-$1000; Time Table 1-3 Months)
After your long wait a patent examiner will read your application and compare it to what he or she thinks would be the closest prior references. In the US, 95% of these initial examination efforts lead to objections to formal features of the application. This is when you and your attorney or agent will have to come up with a fix to the problem. You will than need to appeal the decision by proving that the examinee came to the wrong conclusion.
This appeal to the examiner will be handled much more quickly than your first application. This part of the process will normally take about 2 months.
The Fifth Step in the Patent Process: Approval (Costs $700-$2000, Time Table 1-3 Months)
At this point 70% of US applications will be allowed. The communication that you will receive from the examiner will either be an acceptance letter or a rejection letter. The good thing at this step is that most applications will be accepted at this time.
What Could Happen During the Fifth Step: Publication
In most cases the patent application will be published within 18 months. If the application was only filed in the US, there may be an exception and be kept secret until the actual patent is issued.
The Final Costs and Time
After the process is completed expect to have spent a total of $5000-$10,000 within a three year period. These are US. Prices, if this were done in another country it may cost much more.

To Patent or Not To Patent

2010-12-05T08:30:00.000-08:00

The answer is simple depending on what you plan to do with your idea.
If you want to bring it to the retail market then I would suggest you spend your money on product development and NOT on a patent. The protection you will get from a patent will do you no good if no one wants to buy the product and the time and money spent waiting for the patent to be approved will be better spent making prototypes and getting costs for the product.
If you are looking to LICENSE your prodcut and not go into business for yourself then you definitely need to get a patent to protect yourself once the product is ready to discuss with potential partners.
Typically you will receive between 3-5% of the wholesale price of the product as a licensor from the licensee.
Another alternativ eis to be a vendor to a licensee and make product for them and potentially make more money than a direct licensor only.
In either case insure that any contract between you and the licensee has a performance gusrantee and an out for you if the licensee is not hoolding up their end of the bargain.
In going ahead with your product do your research on if it exists and then layout a plan on how you want to go to market.
Be wise on how you spend your money because you can go broke otherwise.

Are you a one-hit wonder inventor

2010-11-27T09:32:00.000-08:00

If you are the developer of a ONE ITEM CONSUMER PRODUCT LINE you have more of an uphill battle to get your product sold than someone with a whole product line.
There are avenues you can use to become successful and make money with your product.
First there are the TV shopping networks where they are always looking for items especially those that solve household problems creatively.
Second there is the process of getting your product licensed to a company already selling your target customers. You can find these companies at trade shows as well as "shopping" major retail stores.
Third there is the infomercial channel where you need to find a company that does NOT charge you for the infomercial but does it themselves and will then pay you a royalty and potentially take it to retail stores.
In the second and third scenarios I would suggest you have an attorney set you up with the proper protection including a reasonable NDA and starting the Patent process. Alnost all companies that will License your product will demand that you have a Patent to protect themselves from themselves because the tendency is to steal the idea and worry about the legal issues later.
In all cases make sure you do you due diligence and research concerning your product and the people you want to work with.

Time to review and cut costs forever

2008-12-26T10:20:00.001-08:00

In these troubled times when most companies panic and look to cut costs inways that should be encouraged and used now and when times are good.
It is time to partner with vendors to review what costs can be cut in both operations that can be passed on in cost decreases to the customer and more profits for the vendor.
It is time to question lead times and order quantities. It is time to discuss payment terms and live up to them.
It is time to review the costs with all vendors BUT on a systematic ABC analysis approach to the problem.
It is time to weigh the cost of the product versus the cost of carrying the inventory if imported.
It is time to question everything that is not nailed down and not take NO or CAN'T for an answer.
Those companies that have or will implement not only a cut cost now policy BUT a long term working relationship with vendor partners that keep costs in line ALL the time.
Remember when times get better the cost savings and committments that are implemented NOW will pay extra dividends then.
Bruce Rubin

Time to review and cut costs forever

2008-12-26T10:20:00.000-08:00

In these troubled times companies will look for ways to cut costs.

What ls New Needs to Be Proven

2008-11-24T10:44:00.000-08:00

If you have an idea for a product or service you need to prove to yourself first that it is unique and provides a value for the cost.
Too many product ideas never see the light of day and never make it to market because the intended marketplace is too small and NOT truly needed.
Therefore if you have a product idea, do market research and determine the size of the market in both UNITS and more important dollars.
You also have to figure that your percentage of the total market will NOT be 100%, therefore if you determine that there are 10 million customers for the product and over time if you can sell 10% of the market then the project sales will most likely be in the 150K-200K range per year once up to speed.
Well even though that could be a large UNIT volume you then need to see what the DOLLARS will be as well as how many customers, assuming a retail product, you need to sell.
Unless wnhat I described above relates to product that sells for $30 or more this is NOT a viable product and will not sell.
Do the research and you will see what I am saying is correct

Forecasting-Ways to Test Reasonableness and Success For New Products

2007-02-19T08:30:00.000-08:00

I was working with a client last week and we were reviewing new product forecasts with their major accounts. In the process of this review I was testing for reasonableness of the weekly forecast based upon the intial roll out quantity and the annuallized weekly forecast. Typically a ratio of between 4 and 8 should be the answer received. If the answer is below four than the answer needs to be checked against other items being sold to this retailer to see what their turnover rates are, if they are all above four than the new item forecast shousl be questioned as to why and will there be a potential loser in this product. If the answer is over eight then the same test should be performed and depending on the answer the forecast should be reviewed. If for some reason the answer is over 20 turns as it was with one item we reviewed then other questions must be asked. They must be asked because turns in excess of 20 will mean a great many empty shelves and lost sales at the retail level unless there are multiple facings of the product and therefore the forecast maybe accurate but the number of turns needs to be reduced.
As a double check of the forecast and assuming your comapny can receive P-O-S data there should be a correlation between the retail sales after a few weeks and the "final" level reached for the product. Determining this correlation and quickly being able to determine the "final" sales figures will help in ordering more product sooner or the cancellation or delay of product already ordered. Having these models will go along way to having better inventory turns and less closeouts.

75 tips to starting a business-numbers 1-10

2006-12-17T07:56:00.000-08:00

75 Startup Secrets Here are the tips, tricks and inside info you need when starting a business.
Many people who have always wanted to start their own business never do, simply because they're overwhelmed by the process and unsure of what specifically is involved. With a to-do list that includes everything from writing a business plan to coming up with a name to hiring employees, startup can seem daunting. But don't worry--we've simplified the process by going straight to the experts to find out their top 75 tops for startup succss, so you can master the process step by step. Your first step: Start reading.

Got a (Business) Plan?A solid plan can help you start off strong and stay that way.
Writing a business plan is one of the first steps you should take toward startup, well before you launch your business. "A lot of businesses fail to write a business plan at all until they get in a jam," says Linda Pinson, author of Anatomy of a Business Plan: A Step-by-Step Guide to Building a Business and Securing Your Company's Future. "They need money or a strategic partner: They come across a requirement for [which they need] business planning, and all of a sudden they're panicked."
A business plan will serve as your guide to decision making during the life of your business, starting with the question of whether to start in the first place. The second use of a plan is to satisfy lenders and investors, virtually all of whom will require a written business plan before approving a loan or making an equity investment. Plans also serve as a means of communicating with potential partners, allies, vendors, employees and even customers.
1. Before putting pen to paper, research resources and tools that can help. In addition to books, software programs can automate the task. You can get live help from your local SBA office or Small Business Development Center, college and university classes, and private courses or conferences. You probably shouldn't plan to farm the entire job out to a consultant, however: "Good consultants run anywhere from $300 an hour down, and generally the quality of the services is commensurate with the fee," says Pinson, adding that having a consultant craft a good plan will run you $5,000 to $10,000.
2. Back up your concepts with numbers. Keep in mind, a business plan is both qualitative and quantitative. "A business plan is not just writing about what your vision of your business is," Pinson says. "It's interpreting it in financial terms that you can measure." That means you'll need some numbers--as precise and accurate as possible--in addition to verbal descriptions of your plans.
Start by writing the conceptual part, then move to the financial part. "Interpret those concepts in terms of dollars," says Pinson. For instance, starting with an idea of how frequently you'll advertise, how large the ad will be and where it will run, you can find out how much it costs. This will give you a number to plug in for advertising costs. Says Pinson, "The conceptual or text part of your plan has no validity without the financial part."
3. Be realistic when making projections. "One of the most frequent errors made when writing a business plan is over-estimating revenue and under-estimating expenses," Pinson says. Improve revenue estimates by narrowing your target market down to a realistic niche, then interpret revenue and expenses in terms of that market, Pinson advises. Start by identifying potential customers, then slice off those who aren't ready to buy, can't be marketed to effectively, can't afford your solution or don't consider it a need.
4. At minimum, include monthly cash-flow projections for the first year. "Cash flow is the critical issue," Pinson says. Also prepare an overall projection of profit and loss for three years, as well as a projected balance sheet. Calculate the break-even point at which sales will cover costs. Research financial ratios specific to your industry, and look at published industry-specific ratios to make sure your assumptions are realistic. Says Pinson, "If grocers make a one-half-percent profit and you're [projecting your] grocery store [will have] a 28 percent profit, you'd probably better rethink your projections."
5. Pay special attention to marketing. First, develop goals. Second, do a market analysis, including identifying target markets, researching competition and assessing market trends. Then prepare a marketing strategy, including your approaches to sales, promotions, advertising, PR, networking, community building, customer service and other marketing channels and tools. Develop a plan to implement that marketing strategy, and include benchmarks to see if what you planned actually happened.
Continue learning: Visit our Business Plan center for an in-depth guide on writing your business plan, calculators that'll help you determine your business numbers, and more than 50 sample business plans to download.

Right on TargetChoose your target customer, then take aim in the right direction.
Open the doors to your business, and it's easy to think of the whole world as your oyster. Why focus on a target market and exclude all those other market segments with which you could be conducting business, right?
"A big problem for many small businesses is that they are so desperate and so grateful for anyone who buys from them, they don't go the next step and ask who they should be doing business with," says Lisa Fortini-Campbell, adjunct professor of management at Northwestern University's Kellogg School of Management in Chicago and founder of market research and consulting firm The Fortini-Campbell Company.
Targeting the right prospects can mean the difference between success and failure. Before taking a scattershot approach to building a customer base, consider these tips:
6. Don't assume. Fortini-Campbell, who is also the author of Hitting the Sweet Spot: How Consumer Insights Can Inspire Better Marketing and Advertising, says that too often, small-business owners assume they know what their customers will want before doing their homework. "If you want to launch a catering company and think it's only about serving good food, but your customers really want all the trappings that come along with having someone serve them--such as the dishes and the table décor--you're going to lose business if you're not prepared to deliver that experience," says Fortini-Campbell.
She says that since your future customers are currently buying from other places, you should use your competitors as a research tool. Make note of not only what your competitors are selling, but how they are marketing and selling their products and services. "All your future customers are out there buying from someone else now," says Fortini-Campbell. "What are they buying? Who are they buying from? What can you learn about what others are doing?"
7. Find the perfect match. "The most important thing a small-business owner can do is figure out what kind of customers will help them get to the goal. Who are the most strategically valuable people to them?" says Fortini-Campbell. "Do you need a lot of people who buy a lot, or people who buy across an entire service line?" Is your ideal customer a business or an individual? Affluent or middle-income? Is he or she local, or does geography not matter? Identify as many traits as possible so you can organize your business to keep those customers coming back.
8. Identify different segments. After you've outlined whom your best customers will be, recognize that you may have more than one profile, says Fortini-Campbell. For instance, the catering business we mentioned may find lucrative market segments in cooking and presenting elaborate holiday meals for affluent families, as well as providing simple, daily heat-and-serve meals for busy working parents.
9. Use free market-research tools. "The internet is a wealth of information," says Fortini-Campbell. "Search on any topic and you will find websites, blogs and discussion rooms on everything imaginable." In addition to the great number of books available on market research and targeting customers (including her own), she recommends checking out the free market-research resources available in your state, county or municipal economic development offices to see which market segments are growing in your area.
10. Service, service, service. "More small businesses lose customers [due to] poor service than bad products," says Fortini-Campbell. Your business's most important marketing tool is the way you conduct sales and service customers. Every time you do work for a client, you are marketing yourself, she says. When you do that well, customers pay you back with loyalty and referrals.
Continue learning: Got your target market figured out? Then go the extra mile and complete your marketing plan.

Have an idea of where you are headed

2006-11-01T06:06:00.000-08:00

I was invited to participate as a judge at a local university's entrepreneurial idea contest and what was generally missing from most of the entries was the research to understand the size and scope of the potential marketplace as well as the research to see if the idea or product was already there and if the idea or project was technically feasible or viable. Therefore when you have a product idea DO THE RESEARCH, the amount of available information at your finger tips is enormous and use it. Use search engines, wikipedia, and similar computer based data. You should also use reference information available at you local library where both hard copies as well as computer based information is available and most times with someone who can help you narrow and define your search for information. Once you pass this stage and no matter what the proiduct is do some leg work in the potential marketplace either with retail visits to sthe appropriate stores or calls and other contacts to industrial or business customers. I cannot apeak to internet based ideas and website based business concepts but I am sure if your idea is out there you will find it and if unique enough someone will help you make it happen. If you need help in bringing your ideas to market and would like to discuss them contact me at BHR GLOBAL ASSOCIATES email: bhrglobal@aol.com or at 267-664-5165. The introductory session is always free.

Are you sure they will come

2006-08-26T07:20:00.000-07:00

Sourcing Issues

2006-08-25T06:41:00.000-07:00

Once you have your product and you are ready to have it produced, be careful. Being careful not only where you source the product BUT mpore important who you source the product with. The finding of a source must include a number of parameters. First they must meet your cost criteria. Second they must meet your quality criteria. Third they must have the ability to meet and exceed your production expectations. Fourth they must be reliable and easy to work with. Fifthe they must be able to meet your delivery dates. If you find vendors who can meet these criteria then use them BUT before you choose insure you have quotes from a number of sources and you have visited the finalist in all cases. Making a decision on a source strictly from verbal or written communication could be a grave msitake. This is true regardless of the location of the vendor. The location be it in your country or overseas is not to be selected without a visit. If you are dealing in a foreign country you should also have a contact outside the company and an agent who could watch out for your well being when you are not there. If there are any concerns on your part I would suggest that you are present when production begons on your product and visit for a number of days thereafter to isnure that the quality you saw was not just a show piece for your inital reaction. If the product is being run on more than one shift I would recommend you visit all the shifts to insure consistancy. You do not want to hear, "oh, that happened on the third shift." Follow these simple rules and your product will look and act like you wanted it too, do not and you get what you deserve-trouble and problems that could ruin your business. Remember it is not only about the lowest price, it is about the best total cost.

Basic Mistakes of Inventors

2006-07-23T07:51:00.000-07:00

Understand the Marketplace

2006-07-14T12:04:00.000-07:00

The product you are developing must fit into a marketplace and be saleable within it. I can relate two stories of how companies did not understand the marketplace failed with their products until they did. The first relates to the automobile manufacturers in the US who complain for many years that the could not make inroads into the Japanese market as the Japanese companies had done in the US. I am sure there were some quality issues that were part of the problem BUT the major issue had to do with the products basic design. As you amy or may not be aware the Japanese drive the way the British do and there fore require the steering wheel to be on the right side of the car. The US automaker did not do this when trying to enter the Japanese market and therefore there was no interest. Once the automakers changed this philosophy they miraculously started to make inroads into the Janpanese market place. So even the largest of companies do not do the basics when it somes to understanding a new and different culture. The secomd story deals with a major retailer who was entering a new markeplace, namely South America, and send container loads of mens underwear to the markets from the US. The only problem they were all WHITE which of course is the predominant color in the US. However, from what was related to me, it is not the color of choice in South America and especially the countries that the retailer was going to open stores in. Therefore the inventory sat and did not move until it was replaced by colored underwear in the approproate color ranges. Again no mattewr how small or large your comapny is you must understand the marketplace you are going to sell into and the colors and other issues that will hamper your maiximizing of potential sales. Do not get caught in the thought that if I build it they will come. ------AND NOW FOR THE COMMERCIAL---if you need help with these and other issues with your product contact BHR GLOBAL ASSOCIATES, INC> at bhrglobal@aol.com or at 267-664-5165

DO YOUR HOMEWORK COMPLETELY

2006-07-12T06:01:00.000-07:00

The following two stories will point out that the first steps in getting a product to market is to do your homework and do it completely. The first one concerns a friend of a friend who is a college professor who "invented" a new pet product. It was amat to be used by cats after they used the litter box and was aimed at capturing the excess litter caught in their paws while in the litter box. We were brought a sample and after doing some instant marketing research with friends and neighbors it was determined that the product could be viable even at a retail of $19.99. We then went to the next step and visited the major retailer in this arena Petco and Petsmart and what we found was that our initial research was correct people would buy this porduct because someone had invented the exact same product at least six years previously and it and another similar product were already being sold at these outlets. The person who spent a lot of hours, time, and money would have saved himself all of that if he had done his homework once he came up with this "unique" and "new" idea. The second story relates to a product where the people who invented the item did the initial homework and did marketing surveys and took bold steps to see if there was a marketplace for their product. What they did not do is truly determine if the pricepont they were aiming at would actually turn into retail sales to the consumer. The product was a hydraulic addition to a toilet seat that allow the ring to be lowered by itself to the down position if the man of the house left it up after using the toilet. The premise was good and the door-to-door selling to retailer as well as the personal research the comapny did by exhibiting the product and getting pubilicity ended up in sales to retailers and a manufacturer what was not done was price research that would have told both the manufacturer and his customer that taking the retail price of a basic toilet and raising it by a multiple of four would not work at the retail level. This is especially true when you consider that that the average retail price of a toilet seat at the time was $10.00 and making the price around $40.00 was unacceptable as well as the fact that most homes have 2-3 bathrooms and spending anywhere from $80-$120 to solve an issue that may exist between partners would not work. Even buying one unit was a stretch for the average consumer. If the product would have at maximum double the retail price then the product would have had a chance to procue the desired results which was to gain 10-15% of the retail unit volume of 100 million units per year. This would have generated sales of $25-$30 million dollars for the company and made everyone very happy especially the investors who backed the project. NOW FOR THE COMMERCIAL----------------If you have a product idea or product line that you would like to get into retail and need help with finalizing it, sourcing, supply chain management, marketing research, and/or finding a national sales force CALL or WRITE BHR GLOBAL ASSOCIATES. Our phone number is 267-664-5165 our email is: bhrglobal@aol.com. We provide a free half day consultation to get to know you and product and if we decide to work together will tailor a plan that fits your needs.

2006-07-10T05:02:00.000-07:00

Bringing New Products to Market

The introduction of new products is both a gamble and a challenge even for the most successful companies. This statement is borne out in the facts that 86% of new product ideas never get to market and 50%-70% of those that do fail. The products fail in my opinion because the people, and companies bringing them to market do not have a plan, a structured process, or an understanding of what they are getting into. Since there are no guarantees the twelve-step program laid out in article will assist in this process and help especially new companies, and entrepreneurs in improving the rate of success and entry into the marketplace. Even though my background is in the retail arena and though this steps here are aimed at consumer products they can be applied to most companies selling a product or service.

The steps are:
1) Understand the overall U.S. marketplace.
The retailers involved with your product line, the competition for your product, the typical price points, the required quality levels, the places where the product is usually produced, the type of profit margins the retailers require, and the costs of entry into the market place. You must do this research because you may in the end partner with someone in the marketplace already.
There is a difficult road for a one product company in today’s retail environment and unless your product is totally unique and patented you are at an even greater chance of failure.
2) Understand your market segment.
Once you have the broad overview of the marketplace and the various retailers the next step is to identify the area of the retail store your product would be displayed and the methods in which it is displayed.
3) Identify the latest in design and color trends.
Almost all products sold at the retail level have a need to be in line with the latest looks in both fashion and color. Organizations such as Pantone can help in understanding what are and will be the latest trends.
4) Identifying the target consumer
Based upon your research completed in steps one and two you now you need to decide which consumer you will attempt to reach and thereby which type of retail outlet you will be selling.
5) Develop your marketing story.
The next step requires the development of the strategy that will be used to the sell the product, and the story behind your branding process. The product can be marketed as the lowest priced, best quality, most features, etc.
6) Tradeshows as a method of becoming known.
As a new entry into the marketplace a method of gaining exposure and building credibility for a new product or company is to participate in trade show either regionally or nationally.
7) Develop the specifications to having the product produced.
In order to have your product produced, and produced properly there must be complete specifications and drawings made available to potential vendors. This will include methods of packaging.
8) Find the source for your product.
Sourcing of your product either internationally or domestically or both must be accomplished carefully, and with the understanding of what you are seeking as a final cost for the product. If your product is patented or not, have a non-disclosure form available for potential vendors to sign.
9) Understand the importing and purchasing of products.
There are a number of issues and costs that come with the importation of products into the US. There are ocean freight costs, duties, customs brokers fee, domestic freight costs, and others that will add to the total cost. Payment terms and alternatives must be understood as well.

10) Determine your method(s) of distribution and setting them up.
Once you have determined where you are going to purchase your product then you have to determine the method of distributing the product. Established companies will use their present methods, however, new companies should look at third party logistics providers as an alternative to doing it themselves.
11) Required information to make a sale.
In order to sell product to retail there are certain basics that a company and the products must have. These basics include establishing a UPC (uniform product code) vendor number for the company and an individual UPC number for each product the company wishes to sell.
Other specific details pertaining to the product will be needed as well.
12) Make the sales presentation and the sale.
Now that you have established your marketing and selling story with the benefits of your product over the competitors, the method of how to produce and package your product, and the resources to produce and ship your product to the customers and the selling prices for the product. Then you are ready to put these pieces together and make presentations to potential customers.

Bruce Rubin
BHR Global Associates
Email: bhrglobal@aol.com
Phone: 267-664-5165