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Gold/Mining/Energy : Direct Focus Inc. (DFXI)
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To: Clement who wrote (240)4/20/1998 6:51:00 PM
From: Gordo  Read Replies (1) of 768
 
Clement,

I'm no direct marketing expert, but here's what I know based on what I've read, and also from my last conversation with Rod Rice. In terms of developing a direct marketing product from scratch you need to:

1. Develop a product concept
2. Test the concept with consumers through surveys and focus groups.
3. Developing a workable prototype
4. Refine / rework / test the prototype (both from an engineering and consumer perspective)
5. Develop finalized versions and tool up for production
6. Shoot, edit & produce infomercial
7. Test infomercial with consumer groups
8. Refine infomercial
9. Buy airtime on select networks in one or two markets and rollout infomercial.
10. Based on response, either expand, revise or discontinue infomercial.

Typically you will get good feedback on market response to an infomercial within the first month or two of launch. This will be the basis for future decision making.

In the case of Bowflex's new product, their total cost according to Rod Rice was $0.5 million. For a company with over $13 million in cash, this is not a large expenditure, and even if they had to write off every penny it would only amount to about a $.05 one time EPS hit.

I am a full fledged member of the 10 bagger club. I really have no idea when sales of the Bowflex machine will run out of steam - I actually expect it to peak out some time ago given that the infomercial has been on the air since last summer.

Like everyone else, there's a big grin pasted on my face today. :-)

gord
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