1. 4
Bob Caspe
The International Entrepreneurship Center
Entrepreneurial Action

2. Would you like one?

3. Building a New Category
Pre Existing
Pre Existing
Category
Category
Innovation
Innovation Level
New
Category

4. Product Introduction Cycle
40
20
0
1
-20
2
3
4
5
6
7
8
9
10 11 12 13 14 15 16 17 18
Marketing Cost
Net Profit
Accumulated Profit
-40
-60
-80

5. P&G Swiffer Mop
String Mop
Sponge Mop
?

6. Launch Alternatives

Problem – How does one sustain the early large
losses associated with product marketing when
introducing LARGE incremental value
Use only small incremental Value
Raise capital
Introduce the product as a new category with direct
marketing where each transaction pays for the media
cost immediately.
4. Limit the targeted demographic so that the cost starts
within budget and then increase the demographic as
accumulated profit allows additional media to be
purchased.
1.
2.
3.

7. Direct Marketing Product
Introduction
 Goals:
 Teach the Customer the value
system
 Establish the Category
 Once
the Category is Established
then introduction through normal
channels is possible

8. B2B New Category Launch
The Main Problem is one of Education
 Proper use of PR

 Write a Testimonial Use Article for one of
your customers
 Place it in a trade journal
Trade Shows
 Conventional Outbound Direct
Marketing

 Email, Telephone,…

9. Typical Direct Marketing Ad
Define the
Pain
 Offer the
Solution
 Provide
Testimonial
 Define the
Transaction
 Call to action


10. Media Efficiency
Number of Likely
Prospects / Total
Audience
The Media Efficiency is the
MOST important factor
in determining whether a
Campaign will be cost
effective.

11. FDA Consulting
FDA Testing Data Analysis
 FDA process extends over years
 Tried Advertising in trade magazine

Not in the business
All
Of making an FDA
Not Looking Readers of the Magazine
Product
At this time
For help

12. 
Better Strategy
 How to find potential customers at the
unique moment when they are considering a
selection process?
○ Ad-words
○ Trade show
○ Reference
 How to decide?

13. New Category Marketing Costs
 The
Media Cost is Expensive
because the information content is
high
 Typical ratios of
 [7 : 1] for [Selling Price : COGS]
 If it’s not really a new category then
you can’t compete on price!

14. Designing an Ad

First define your Goal
 For example: Drive sale to retail
 Or, Generate a lead by telephone…
 Don’t try to do accomplish much!

Define your call-to-action (CTA)
 Applies to package design too

Define your Value Message
 Use a Testimonial if it’s a new category
Define your Tracking Mechanism
 Create an appealing design


15. Call to Action (CTA)

Why the customer should move at this
moment
 Price reduction
 Free shipping
 Free extra item

Most manufacturers build in the CTA
cost into their standard cost model
 Dell Example

16. Tracking Mechanisms

Goal – Measure the Campaign
Effectiveness
 Unique Telephone Number
 Unique URL
 Coupon
 Discount Code
 Observe a “bump” in sales

17. Analysis

For each campaign
 Assemble the Media Costs
 Assemble the Selling Costs
 Assemble the Product Costs
 Calculate the Contributed Margin
○ Cost per Lead (media effectiveness)
○ Closing ratio (sales effectiveness)

18. Direct Marketing Examples
 Liberty
Medical Supply
 Diabetic Supplies for Seniors
who are on Medicare
 Grew from 10M to 450M in just
a few years.

19. Liberty Medical Supplies

20. Example Mailer

Very low Cost – Postage paid by Fast
Lane
Fast Lane Statement

21. Example Bose Mailer

22. Bose back

23. Finding Success
 Successful
campaigns are not
created instantaneously, they need to
be tuned over many experiments.
 It takes patience to create a working
campaign.
 Tuning a campaign never stops.
 15% of the media budget is used for tests

24. New Category Examples
BOWFLEX
 IPOD
 TV-Picshare


25. IPOD
Preexisting or new
category?
 Ad 2001


27. IPOD 2003 Ad Campaign

28. Let’s take a break