Like Greene, you can succeed with a product in a small market,
but you face a major obstacle right off the bat: You won't be
able to afford aggressive product promotion. That means you need
certain customer and market conditions in place to succeed. Here
are five thing to start with:
Meet a need that customers are
passionate about.
When you serve a small market, your product won't be sold in
most stores, so customers have to be willing to search for it. You
also have to rely on word-of-mouth, something you won't get
unless customers have passion for your product.
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Early on, Greene sought out people who like to swim 30 to 60
minutes at a time to keep in shape. "Everyone I showed it to
wanted to buy one," she says. In support of word-of-mouth
advertising, Greene says: "My best advertising occurs when
someone buys a set of SwimCords at a pool and spa center. They
almost always end up recommending my product to at least two or
three friends."
Attract new customers by selling to
influential people in your market.
Because Greene's customers are passionate about their
interests, they keep track of what the top people in the industry
are doing. "[After pitching the SwimCords to them], my first
customer was the UCLA swim team. They told me about a trade show
hosted by the American Swim Coaches Association where I was able to
sell to many other swim teams. After several years of effort, I was
able to sell to Clay Evans, a two-time Olympic silver medalist and
founder of the Southern California Aquatics Club."
Those weren't enormous sales in themselves, as clubs might
buy only five to 10 sets of SwimCords every three to five years,
but they set the stage for the rest of the market. Greene
didn't get direct endorsements from her high-profile users, but
word got out that her product was a training aid for top
competitive swimmers.
Design a product with a small
upfront cost.
You can't afford to pay a lot for tooling, fixtures or
inventory if you sell to a small market. "For the first four
years, I made the product myself at night after working all
day," Greene says. "Two years ago, I [came] across a
manufacturer, who now makes the product, so I have more time to
sell." Timing is everything—you may never recover large
upfront manufacturing expenses if you're targeting a small
market.
| INVENTOR-FRIENDLY SITES | |
| Mensa, the
organization for people who score in the top 2 percent on
intelligence tests, is ready to help inventors turn ideas into
finished products. Mensa Intellectual Capital Ventures Ltd.
(MICV) provides e-mail project teams and online "think
tanks"—coordinating specialists from 40
countries—to focus their skills on a particular problem.
Mensa will evaluate and help you develop even the most complex
mechanical idea. For more information, visit the MICV Web site at
www.mensaiqcapital.com. Another site inventors might want to
investigate is www.nmoa.com/contest, which has details on the
National Mail Order Association's contest to find the best
products made in the United States. Winners will be featured in the
association's newsletter and Web site and will receive a
certificate of recognition and a winner's publicity kit.
Entries must be submitted no later than December 31, 2001; winners
will be announced in early 2002. |
Get access to the right
distribution network.
Greene saw sporting goods stores as her best long-term market,
but they were unwilling to stock a product that didn't serve
any proven demand. What she needed was a small distribution network
that would attract her target customers. Greene found that spa and
pool stores that carry pool toys, such as floats, tubes, chairs and
other accessories, were ideal.
In her first few years in business, Greene kept her full-time
retail job and depended on National Spa and Pool Institute trade
shows across the country to acquire customers. "The shows cost
me about $5,000 each to attend, but they helped me line up an
initial customer base," she says.
In late 1999, Greene quit her job to work on her product full
time. Her first focus was calling on spa and pool stores. "I
made displays stocked with about 20 SwimCords and went around the
Southwest and California in my van. I'd stop at stores and set
up the displays. Then I'd tell the owner the fully stocked
display cost $300 and ask if they wanted to buy it. Seven out of 10
times, the answer was yes."
Make sure there's a larger
market to penetrate.
Once you get established in a niche market, you want to be able
to expand into at least one larger market so you can make a
comfortable living. "I was able to get into a few Oshman's
[sporting goods] stores in 1996, and now, after five years, I'm
in 25 of their stores," Greene says. "I'm also in
Sports Chalet this year, and I'm still hoping to get into
Sportmart."
Greene isn't depending on the sporting goods stores for
survival—she has the spa and pool stores for that—but
she keeps working them, understanding that they could provide the
sales boost she needs to make a more substantial income.
| THE EDI ROADBLOCK | |
| One of the major sporting
goods stores Kelly Greene looked at as a market for her SwimCords
is The Sports Authority. Yet she hasn't been able to
land it, because The Sports Authority requires vendors to have
Electronic Data Interchange (EDI) capabilities. Greene
doesn't, because she can't afford the $10,000 to $30,000 to
implement it. Most large retailers use EDI to cut costs.
It lets them send orders, requests for quotes or computer updates
electronically rather than relying on fax, mail or phone orders.
Small manufacturers can't get the business unless they use EDI,
but buying EDI technology is no guarantee they'll get the
business. The good news: Firms in most areas
will do EDI translation for small manufacturers. Look for them in
the Yellow Pages under "Computer Software and Services."
Web sites of companies providing EDI conversion service include
www.edi-service.com, www.sdgi.com, www.eamerica.com and www.edipower.net. |
Originally published in the June 2001 issue of Entrepreneur Magazine
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