Tim Ferriss (Author; The 4-Hour Chef)
“The most powerful narcotic in the world is the promise of belonging.”
Kalle Lasn (Co-founder; Adbusters magazine)
“Given the chance, people will buy from people who care.”
Paco Underhill (Author; Why We Buy)
No need, no success.
The most important lesson in business and entrepreneurship is this: no need, no success. If people don’t need your product and you launch anyway, you’re doomed (and you’re kind of a narcissist). Too many people, myself included, have made the mistake of thinking, “This product is super cool, everyone is going to want one of these!” So, we carefully plan a product launch, promote the product like crazy with everything from online advertisements to ridiculous launch parties, and sit back waiting to become millionaires.
For a few weeks (or maybe even a few months) sales are great. But then, out of nowhere, sales plummet. The enthusiasm of the launch dies down completely, friends and family members run out of generosity and, eventually, everything stops. Understand that market need is more important than how cool your product is or how passionate you are about it. Not everyone is like you. Not everyone likes what you like. If you haven’t tested your market, or, if there’s no market to test, you’re setting yourself up for failure. Need comes first. Only after answering the question of need can you ask questions about branding, cashflow, margins, deliverability, and scalability. Before you do anything, you have to identify a need. And the best place to find a need is in a saturated market.
Saturation Means Success
Few markets are as saturated as the supplement industry. This is a good thing. It means a lot of people are buying supplements. In fact, the global market for nutraceutical supplements is estimated to reach $176 billion by the end of this year. One of my own personal goals has always been to launch a successful health supplement. But, with all the competition in the industry, I never thought it was a good idea. Then I started talking to my good friends Pat Leinert, Jr. and Shannon Leinert (a brother and sister small business duo) at ZAMboost. (Full disclosure: I am not an investor in ZAMboost and do not benefit financially in any way from the company’s success).
ZAMboost is an immunity support supplement that grew out of a small town in Missouri and is now being stocked in major retail outlets like Walgreens, Complete Nutrition, and Medicine Shoppe. For those of you who don’t know, being stocked by Walgreens is a big deal. From conception to shipping, ZAMboost was able make it onto Walgreen shelves in 18 months. ZAMboost did this despite facing big competition in a massively growing market. How was ZAMboost able to carve out a niche in the absolutely saturated supplement industry? To answer this question, I asked Pat, a serial entrepreneur and serial Tough Mudder competitor, to take me through the entire process, from conception to completion, of building, branding, and launching a successful supplement company.
Enter Pat, Jr.
My sister, Shannon, an Olympic track and field hopeful, was tired of getting sick before big races. So, Shannon and I, with some help from our Mom, started searching for an effective supplement to keep Shannon’s immune system in top shape. Shannon had tried Airborne and Emergen-C but she was still feeling run down before competitions. Then, one day, Shannon asked me, “Why don’t we just create a pill that does everything I need?” So, we asked our Dad, Pat, Sr., who is a biologist, how we could turn our idea into a product that would sell. The first question my Dad asked was, “Is this something other people need too?” We had no idea. But, after doing some research, we found out that, according to Frost & Sullivan, the market for nutritional supplements in immune health alone earned $650 million dollars in 2009 and is estimated to reach 1.1 billion in 2016. Yes, there was a need.
Where there’s a saturated market, there’s a need. And where there’s a need, there’s an opportunity for success. Once we knew there was a need, we started digging deeper into the market. The first question we wanted to answer was, “Where is the need EXACTLY?” In other words, how could we position ourselves in this saturated market? The only way to do this long-term would be to create a formulation that offered either better or different immune support than anything being offered currently, and then back it up with a unique brand that would get people’s attention. After months of research, we discovered that an iron-binding supplement called Lactoferrin and a complex carbohydrate called Beta Glucan, together, were able to boost a person’s immune system. Most importantly, these ingredients weren’t being offered together in many other immunity supplements. There were a few other supplements that offered a “dusting”, or very small amount, of Lactoferrin and Beta Glucan, but just enough to legally add the ingredients to the label. Providing these ingredients, together, at full, optimal dosages, would be a way for the us to differentiate ourselves.
Always Be Differentiating
Next, we wanted to find a unique energy blend to complement our immune-boosting ingredients. So, we collected data on extracts, proteins, and vitamins until we discovered an adaptogenic herb called Rhodiola. This herb is found in the Artic and in the high altitude regions of Europe and Asia. Numerous studies have shown that small doses of Rhodiola help patients focus during times of stress. We decided to combine Rhodiola with Taurine, which is an amino acid and antioxidant found in the brain, heart, and blood platelets. Taurine has been shown to sustain energy levels and support neurological development. Several other supplements and energy drinks, like Red Bull, also offer Taurine. So, to differentiate our product, we made the decision to offer both Rhodiola and Taurine at their clinically studied dosages. This meant we would have higher manufacturing costs, but, we figured we could recoup most of these costs by selling our supplement at a slightly higher price point.
One thing that Shannon really hated was having to stir powered supplement mixes into large cups of water before her races. She also hated carrying around large boxes of powered packets, and she wasn’t a fan of chalky tablets either. So, she suggested that we put our supplement in capsules. At the time, most immunity supplements were being offered as powders or tablets, even though these delivery methods offer no specific benefits. Offering a unique delivery method would further differentiate our product.
Brand For Attention
A unique formulation is nothing without attention. You can have the best product in the world but if nobody notices it, nobody buys it. Our next step was to create a name and build a brand that would stand out in the saturated supplement market. So, we started aggressively researching the best ways to attract consumer interest. After studying the product launches of similar supplements we found that most of the competition focused too much on online sales and had less of a footprint in retail stores. This information encouraged the decision to get our supplement placed in Walgreens and other brick-and-mortar sites as soon as possible. But first, we needed a brand.
Don’t get caught up in your own enthusiasm. Focus groups, not marketers, create successful brands. The process of trying out different brands with your potential customers is critical launching a product that actually sells. Focus group testing is often overlooked by start-up companies that are too eager to introduce their new merchandise to the market. For Shannon and I, focus groups were crucial to steering the naming and messaging of our product. Before testing, we decided on the name, “Immunity ONE.” To our surprise, the focus groups quickly dismissed this name in favor of the more punchy name, “ZAMboost”. This just shows that you never quite know what the public will like, that is, until you test it. ZAMboost was actually used as a control, but the focus groups responded so positively to the name that we decided to keep it. Trust me, when it comes to the messaging of your product, your best idea might be your worst idea and your worst idea might be your best. Without testing, there’s no way to know.
ZAMboost was its name. The focus groups settled on the name ZAMboost, mostly because there were no positive or negative connotations with the name. But ZAMboost was also unique. The focus groups reported that the name conjured up images of old Batman TV episodes where the sound effects of Batman’s battles were visualized with word bursts like “POW” and “WHAM”. Feedback from the focus group also influenced our logo, which pays homage to these Batman word bursts. The font has a comic book-type feel with a slight halftone effect added to drive the concept home. We used spectrometer software to help us choose the purple and orange color combination of the logo.
Once we designed the logo, we started to design the packaging, display case, and shipping carton. We worked with our partner company, AmPurity Nutraceuticals, to design a package that met regulatory safety standards. Consideration of safety standards is another step that many start-ups forget to include in their business plans. No matter what you’re launching, make sure you cover yourself by thoroughly researching this topic. For example, we decided to include a plastic seal around the top of the ZAMboost bottle, as well as a child-proof lid. Cotton was added to the inside of the bottle to prevent the capsules from being damaged or crushed during shipping and handling. We also included small paper packets of a nontoxic silica gel, which act as drying agents and can hold 40% of their weight in water. The point is that there are a lot of small details and costs, especially in terms of safety regulations, that you should consider. Fortunately, AmPurity helped us reduce our delivery and marketing overhead by creating a shipping carton that could also be converted to a display case.
Create A Community Or Sell Nothing
Teaching is the new advertising. Community is the new customer base. With the packaging, product, and an initial marketing strategy in place, Shannon and I prepared to launch. First, we reached out to retail stores that fit our demographic and brand. We reached out with cold calls, emails, networking, and basically did everything we could while seizing opportunities as they presented themselves. It’s tough to get people to buy into a product with little history so we had to be really aggressive. We were able to get ZAMboost onto Walgreens shelves by working hard to educate their regional managers. We showed them the scientific advantages of ZAMboost, and, most importantly, we showed them that we were willing to do our part to expand and grow the brand. A lot of people make the mistake of thinking that it’s the retailer’s responsibility to sell your product. It’s not. It’s your responsibility alone. And, in fact, most retailers will only work with you if you can prove to them that you will be able to sell your product once it’s in their stores.
Second, we started to build an offline community around our product and we gave our community a name: ZAMboost nation. We attended public events that fit ZAMboost’ target audience, including 5K charity races, golfing tournaments, music festivals, and health fairs. We also sponsored local events and coordinated these sponsorships with the official launch of ZAMboost. For example, ZAMboost served as the main sponsor to St. Louis Uncorked: Wine and Music Festival, which was attended by more than 10,000 people. It wasn’t a coincidence that the event was held on the same day that the product was placed on Walgreens shelves. So far, we’ve sponsored over 20 events since our launch and we plan to increase this number during the fall and winter months.
Third, Shannon and I, with the help of hired hands and friends, built an online community through social media networking and other digital marketing efforts. We created a Facebook page and used it to engage with “fans” and offer them product discounts. We created a Twitter account and used it to share content and to covert “followers” into happy customers. We also created Instagram and Pintrest accounts, using them primarily to entertain and inspire our customers. Last but not least, we designed and launched a website that was simple and flashy, but also told a good story. The simplicity of the site helps us convert visitors into sales and the colorful design helps us grab people’s attention. But it’s Shannon’s story and our focus on community that keeps people coming back to the site.
Fourth, we bought ad space on local radio stations, including KMOX 1120-AM and 97.1-FM. We scheduled our advertisements during certain shows like “Total Information A.M.” with Tom Ackerman, because this was the number one show during the 6:00 A.M. – 8:30 A.M. time slot, a time when a lot of people are running or exercising at the gym before going to work. We also played ads on “The Dana Show” with Dana Loesch because Dana’s audience is made up of mostly working professionals and business owners who are always looking for an energy boost. Also, Dana’s listeners are health conscious and very loyal to her health recommendations.
Six Key Takeaways
1. Do your homework. Ask yourself tough questions. From conception to completion, continue to research the market, what you’re doing, and what you could be doing differently. Gain a deep understanding of your competitors in your space. Do not ignore the strengths and weaknesses of competing brands. Work to identify exactly where your product or service can fit into the market.
2. See yourself from your customer’s point of view. Interview potential buyers before branding your product. What are their lifestyles like? What patterns or commonalities emerge? For ZAMboost, the audience varies from professional athletes to parents to senior citizens seeking preventative supplements. Each segment of ZAMboost’s audience tends to be health conscious, energetic, and very active.
3. Measure everything. Early sales data showed low levels of product interest within inner city areas, but sales in more affluent areas climbed higher and higher. Data analysis showed that potential customers with limited incomes couldn’t afford to take a chance on an unknown brand while customers in more affluent areas could. These measurements helped us further target our advertisements.
4. Nurture your identity. As you start to build a community around your product, work to gain a clear understanding of your community members’ beliefs, communication styles, and general attitudes towards life. This will help you connect with them. It may even help you bring your competitor’s customers into your community. Your goal is to identify with them and to help them identify with you. Creating and giving away swag bombs is a great way to do this. The key is to give people branded items that they will actually use, like the product itself.
5. Stay flexible. You may discover a different segment of the market has quickly jumped on your product’s bandwagon or that your initial budget is no longer able to support an increase in demand. When things like this happen, you need to be able to quickly change up your strategy with minimal cost and effort. The best way to do this is to develop a flexible business and marketing plan with a built in cost buffer.
6. Capitalize on viral events. When a particular marketing idea or community event goes viral, you should have a second great idea or event ready so you can capitalize on the momentum of the first. When we submitted a ZAMboost coupon to a giveaway site, more than 200 other websites picked up the coupon as soon as it was published. This resulted in more than 25,000 hits to our website, more than 11,000 product request and almost 2,000 “likes” on Facebook within two days. We immediately sent everyone that responded a thank you note with a discount coupon towards a future purchase. Our social media marketing team also designed a photo contest to give fans yet another opportunity to interact with the brand.
Which of these takeaways makes the most sense to you? Which of them makes the least sense? Type your answers in a comment below.