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Archive for April 26th, 2012

Sourcing and Defining Volume Pricing Is an Absolute Must for Aspiring Consumer Product Entrepreneurs

Thursday, April 26th, 2012

by: Geoff Ficke

Sourcing and Defining Volume Pricing Is an Absolute Must for Aspiring Consumer Product Entrepreneurs

I have been mentoring a young female entrepreneur for several months. She is not a client of my Consumer Product Branding and Marketing Consulting firm. This earnest lady has a very interesting concept in the Infant and Juvenile product space. Like so many aspiring first time business owners she is confused about how to best organize her enterprise and move from a hobby project to a fully commercial model.

As we discuss her projects status she states that her cost of goods is too high. This is because she is producing in very low volumes and utilizing domestic manufacturing sources. The test marketing and focus groups she has conducted are thus flawed. In order to gain proper due diligence from which to construct an accurate Sales Model, entrepreneurs must be able to ascertain an absolutely tight Cost of Goods.

Short run, hobby business-like volumes represent a distortion of the Sales Model. Unless the entrepreneur wishes to operate a low volume artisanal business it is vitally important to find the best sources of supply and manufacturing and to develop the accurate cost of mass production in hand with the chosen supplier.

We ask our sources of supply for dead-net Cost of Goods pricing for production runs that would approximate mass market distribution models. Dead-net Cost of Goods includes the total amount charged to fully assemble and package an item, plus international freight, customs, duties (if any) and local freight to a Fulfillment center.

The young lady I am mentoring has made the very common mistake of utilizing the much higher Cost of Goods she is currently absorbing based on low volume production and trying to force her Infant travel accessory items to market at a price point that is not viable. Test markets are only useful if the data received is based on solid Marketing fundamentals. Most test markets are not conducted with a goal of making profit. They are laboratories to learn about consumer acceptance, pricing objections, Branding effectiveness, etc. Test marketing saves time, money and mistakes when a product is finally launched after alterations to Marketing Strategies are made.

Take a simple component such as a 12 ounce plastic food bottle. The purchase of a stock Boston Round bottle in quantities of one hundred for testing might be $.25. In purchase volumes of 25,000 the price may drop to $.15 per unit. This type of differential, when applied to every component listed on a Consumer Product’s Bill of Materials will reflect a huge pricing differential. This has a massive effect on the ultimate optimal retail price that consumers will pay for the product.

One of the reasons usually stated for not obtaining a mass production Cost of Goods is a lack of knowledge. The entrepreneur does not know of specific factories or sources of supplies. The internet, social media and business directories today make this work so much easier than when I started my first business 36 years ago. The information and networks exist that actually make this process straightforward today.

Unless pricing for a full channel of distribution is not gleaned none of the assumptions that are used to create a business model will hold up. Sales projections, Business Plan elements, procuring investment from Venture capital sources,  Marketing Strategies and many more enterprise building blocks will crumble. Take the time and expend the energy to diligently uncover the most accurate Cost of Goods for your products.

Duquesa Marketing Announces Free Project Review And Funding Viability Analysis for Beauty Products

Thursday, April 26th, 2012

Duquesa Marketing

www.duquesamarketing.com

Press Release

For Immediate Release

Contact: Geoff Ficke

859-567-1609

gficke@msn.com

Duquesa Marketing Announces Free Project Review And Funding Viability Analysis for Beauty Products

Award Winning Branding and Consumer Product Development Firm Offers Clients Over 40 Years Experience as Project Managers

Florence, KY  Geoff Ficke, President of award winning international Branding and Consumer Product Development firm Duquesa Marketing announced today a new Funding
Viability
and Project Review Analysis for innovators seeking experienced guidance before entering the Cosmetic, Fragrance and Beauty product industry with new concepts.

“We have launched many of our own Beauty products over the last 40 years, and many more for clients in the American and international markets”, said Mr. Ficke. “The opportunity for us to save entrepreneurs time, money and mistakes by offering a simple review and analysis proves very beneficial to first time Cosmetic industry marketers”.

“A free 20 question quiz that can be downloaded from our web-site www.DuquesaMarketing.com and a phone consultation provides anyone interested in entering the Cosmetic world with a basket full of answers and options”, said Alexis Bruning, V.P. of New Product Development for Duquesa Marketing. “It is gratifying to us to be able to offer product development, marketing and funding guidance based on our long industry experience”.

“Duquesa Marketing has made it our mission to mentor young innovators in the Cosmetic industry space”, said Nancy Ficke, General Manager for Duquesa Marketing. “The menu of services we offer is a one-stop, turn-key project development service and it often starts with the Free Project Review and Funding Analysis consultation”.

Brand Extension Can Be a Key to Growing and Evolving a Consumer Product Line or Service

Thursday, April 26th, 2012

by: Geoff Ficke

Brand Extension Can Be a Key to Growing and Evolving a Consumer Product Line or Service

Switzerland is the couture watch capital of the world. A visit to Geneva and its surrounding cantons exposes the traveler to the hundreds of exotic watch brands made in this famous horology center. Eponymous watch stores, displays, advertisements and billboards and jewelry stores are ubiquitous. Each brand prides itself on the customization, detail, amazing complications and old world craftsmanship that is present in each artisanal timepiece produced.

Rolex, Frank Muller, Constantine Vacheron, Piaget, Chopard, and scores of other producers offer pieces that retail for thousands, to hundreds of thousands of dollars. Exclusivity of distribution is practiced with military-like diligence. Into this clubby world, in the late 20th century an outlier sprang forth. The amazing Swatch watch line was born.

Swatch is everything that Audemars Piguet and Breitling are not. Mass produced, simple mechanical movements, plastic bands, unlimited and gaudy color combinations and very low retail price points mark Swatch as a watch for everyone. No exclusivity here.

Swatch became an international hit almost immediately. Consumers loved the quirky, whimsical look of the time pieces. And then Swatch did something that seemed counter-intuitive: the Company teamed up with Mercedes Benz to create the Swatch automobile lineup.

Mercedes Benz and Swatch seem like strange business bed partners. And yet, this has become an international example of a successful Brand Extension that is ripe with benefits for both Companies.

Mercedes Benz has been able to keep production flourishing, develop small car manufacturing technologies that could never be perfected on their high end, exclusive luxury models, profit handsomely and still keep their Mercedes Benz Brand name and heritage pristine. The car they produce is known by consumers as a Swatch car, not a Mercedes Benz Swatch.

Swatch, having no capability to produce such complex machines as automobiles, gained the luster and panache of having a Mercedes Benz produced vehicle to sell. The Branding of the cars, the fun, hip color combinations of the interiors and exteriors of Swatch cars stand out in a sea of look alike, dull, even ugly mini-car offerings. It is fun to own and drive a Swatch,
practical too as a miserly fuel sipper and an easy vehicle to maneuver in crowded cities.

The Swatch car has further extended the fame and Branding of the Swatch watch business. The very word Swatch creates instantaneous thoughts of bright, cool and fun products with great design cues. Swatch is by far the largest selling watch Brand in the world.

Rossignol is a famous producer of skis. Many Olympic champions, professional and serious skiers prefer Rossignol skis to any other Brand. This is one of the most famous sporting good brand names in the world.

Some years ago Rossignol, having conquered the ski slopes, decided to enter another arena. They began to produce Tennis rackets. Rossignol tennis rackets are now ubiquitous on the men’s and women’s international professional tennis tours. This is another obvious example of utilizing the concept of Brand Extensions to grow a mature firms business in another space.

Branding Extension can be hurtful to a business franchise. A famous example of this is demonstrated in the history of the venerable Pierre Cardin fashion business. Cardin was one of the earliest proponents of licensing his name. In the 1970’s, at its zenith, Pierre Cardin was generating over $400 million dollars annually in sales turnover of his couture men’s and ladies Clothing and Fragrance lines. Then the pursuit of licensing began.

Over a period of about 20 years, the fashion franchise that Pierre Cardin had arduously built began to crumble. The extension of his brand became an industry joke. The formerly famous Pierre Cardin logo began to appear on a slew of wholly unrelated, unfashionable, cheaply made products. Sport bags, running shoes, cheap Asian ties, mass market plastic tableware, bath towels and hundreds of other products began to flood discount stores with low end goods carrying the iconic PC logo. Department stores and luxury boutiques took notice and discontinued the Pierre Cardin lines they had carried proudly for years.

Mercedes Benz has enhanced their business by extending to partner with the Swatch. Pierre Cardin did not police his brand and his extension into rubber flip flop-type products meant death to his fashion house.

Brand Extension is a technique that we have practiced on our products and for client Consumer Product brands for many years. It is a wonderful way to grow a mature business. But remember, the Brand Extension must make sense to your most important asset, your customers and clients. Do no harm!