While these may seem very simple to determine, there are a number of issues to keep in mind. Obviously the first is profit against the COGS (cost-of-goods-sold) number. The COGS number is the total cost – including packaging – to produce the product. It should also include the estimated DR cost-per-sale amount (call center and media). Then add the cost of the credit card processing, fulfillment, and lastly, estimated product returns. Anything the consumer pays above that is the profit. This detailed process is where some are surprised about the cost of a direct response campaign and many often get into trouble if they have not completed a proper analysis.

Also, on the positive cash flow side are the shipping and handling fees. Often in the Direct Response industry, shipping and handling (S&H) fees are significant profit centers for the advertiser. However, viewers often believe those fees are “a given”, and only see “Plus S&H”. They usually don’t add that to the price of the product when making a decision to buy. Obviously the “actual” average shipping costs nationally must be estimated prior to establishing the “published” Shipping and Handling fees to be charged. These costs are subtracted from the gross S&H fees, resulting in an additional profit
Important things to consider in crafting the offer (or offers) are what product elements are included. This typically is the “but wait, there’s more” part of the CTA (call-to-action – we’ll cover this in our discussion on the critical Presentation elements). The more, the better, is the rule in terms of offers and don’t forget, those can also include a special payment plan.

While many production companies believe they have a “gut feel” for the best price and offer, we believe that is merely a good starting point. The best plan is to test multiple prices and offers. The viewing audience/customer will determine, by their purchases, what the correct price and offer is. Also, the call center (or centers) can be an invaluable resource in helping to determine what the optimal price/offer combination may be.

Once the campaign is on the air, careful testing of several price points and offers and ongoing analysis is required to determine (and track) what the optimal price point and offer combination is, in order to maximize sales. And remember . . . those will probably change as the campaign matures.
In our next discussion we will cover how to maximize the revenue in a direct response campaign by proper product Positioning.

Later . . .

How can that happen? Well, often it boils down to emotion and/or lack of objective and accurate research. Inventors ask friends and family their opinions, and since the friends don’t want to disappoint the inventor, they usually tell the inventor what they think the inventor wants to hear – “ . . . oh, it’s great! I want to buy one.” and etc. This “friends and family” focus group research often leads to false conclusions.

We have had many new products come our way over the years that we have advised against spending the time and effort to market. Because we see so many, we developed our proprietary Comprehensive Product Analysis (CPE)© to help take some of the guesswork out of introducing a new product, and also to help define preliminary marketing directions for products that should move forward.

The primary elements for a successful product include quality manufacturing, attention-getting packaging, and mass (or very strong niche) marketability. The marketability of a product leads to several additional questions: What problem (or problems) does it solve? Are the problems obvious to the target market? What are the primary and secondary target markets? And . . . can the ability to solve the problems be effectively demonstrated?

Even with all of these elements in place, a great product can still struggle with generating enough sales volume to justify an ongoing direct response television campaign. In such cases, more often than not, the problem is with the pricing, which we will cover in our next discussion – Pricing and The Offer.

We are often asked if infomercials can be any different lengths than those mentioned above. The short answer is not really – because there generally has not been enough odd-timed commercial inventory available, either from networks or local broadcast stations, to build a successful national television campaign.

Looking towards building a national campaign is important, because with today’s media costs, and business environment, it is a very long-shot to introduce a new product just locally and very difficult to sustain a long term positive cash flow with just television. So, in most cases, the objectives should be to build a national brand, and launch national retail distribution. That is why careful consideration should be given to the production length in order to be able to ramp-up the media airtime and generate national exposure.

But length of the production is just one of dozens of elements involved in properly launching a new product – any one of which, if not done correctly, can derail an otherwise successful campaign. In this series we will explore each of those elements in detail, and how to implement them correctly.

The first and foremost of these is Product. In our next discussion, we’ll explain why the product is always the STAR, how to determine if your product may be a winner, and some ideas on ways to increase “the odds” of having a winner.

So, as the saying goes: Stay Tuned.

Located just an hour and a half flight from Los Angeles/Hollywood, many high-profile feature films, most recently Mission: Impossible 2, the High School Musical franchise, American Pastime, Daddy Day Camp, Forever Strong and several scenes in Pirates of the Caribbean: At Worlds End- plus many television shows- are filmed in and around the Salt Lake City area.

As a Right-To-Work state, and one with extremely diverse geography, feature films and commercials made in Utah are often more cost-efficient than those produced on either coast. However, since Utah has become known as “Hollywood’s Back Lot,” production qualities are very high; consequently, Utah has hosted the production of many award-winning and record-breaking infomercials such as Total Gym, Little Giant Ladders, Bowflex, and countless others.

The Barry Marketing Group has been involved in commercial and infomercial production since 1986.

“We are especially excited about this year’s awards, because our production team has been honored for the overall production values (scripting and shooting) and our editing has also received this prestigious award,” commented Bill Kittel, president. “But the best award is that the piece, produced for an E-mail campaign, also set a sales record for Little Giant Ladders.”

“We’ve had a great relationship with Little Giant since 2003”, continued Kittel. “They are, by far, the most innovative ladder company in the country. But the new Select Step – with seven patents pending – has set a new standard for comfort, safely and innovation in the ladder industry.”

About The Barry Marketing Group
The Barry Marketing Group is a network of advertising, marketing and public relations professionals specializing in results oriented advertising and marketing campaigns. Group members have a vast amount of experience with many of today’s largest and most successful companies. Group services include television production, radio and print production and national media buying in addition to call center management, public relations, Internet marketing and brand extension development. For more information visit: http://www.barrymarketing.com.