Estimated reading time: 2 mins
Recently we discussed ways to identify a market gap. Today, our focus shifts from finding an unmet need to determining if the market will sustain your product. The story of the Cell Zone, a product launched by Salemi Industries in 2006, helpfully illustrates the potential consequences of misreading market viability.
Ten years ago, when cell phone use was skyrocketing, Anthony Ferranti saw a need for cell users to be able to have private conversations in public places. To meet that need, he developed the Cell Zone, a phone-booth-like pod that allowed people to use their cell phones at places like restaurants and libraries without having to hunt for privacy.
The Cell Zone received national attention, including an appearance on the Today Show and a USA today front-page story. Yet, despite a promising launch, the company ended up losing $650,000 and selling only 300 units. Where did Ferranti go wrong? And, more importantly, how can you avoid his mistakes?
The biggest reason that the Cell Zone failed is that Ferranti and his team misread market viability, particularly in terms of market research. Initially, the research seemed to be encouraging. According to Joan Schneider and Julie Hall, authors of the Harvard Business Review article Why Most Product Launches Fail and the marketing consultants hired to promote the Cell Zone, restaurateurs and nightclub owners in particular liked the idea of offering patrons a place to have private phone calls. “The calls just came in and people were just so excited about the Cell Zone and wanted to buy it,” says Hall.
Yet, while it generated a lot of buzz, the Cell Zone was pricey ($3,500 a pop) and took up valuable square footage. Perhaps the biggest issue, though, was the fact that the company failed to take into account the potential popularity of texting, which hadn’t quite become mainstream yet. Instead of considering wider trends, the Cell Zone team focused exclusively on their target clientele. Schneider notes, “If they had been looking at the kids, they would realize that no teenager ever picks up the phone. So the audience that was coming up, they were really into texting. So it’s always important to stay close to what’s happening in the market. You can’t just look at your market, you have to look at everything that’s going on.”
To his credit, Ferranti did an admirable job trying to salvage his product’s profitability by attempting to sell advertising space on the pods; his effort there failed too. The silver lining of this story, according to Hall, is that the Cell Zone did find a very small niche market in college libraries and government agencies where phone calls trump text messaging.
However, the Cell Zone saga is, overall, one of a failure to gauge market viability and the losses incurred as a result.
Are you about to launch the next Cell Zone? If you need help determining the market viability of a product or service for the pharmaceutical industry, Pharma Acumen can help. We have successfully launched dozens of products for businesses who sell to pharmaceutical companies and have solutions in place to help you analyze the market and respond accordingly.
In addition, we are launching a new feedback tool to allow companies to gain insights into the pharmaceutical industry landscape from the experts themselves, your potential customers. If you’d like more information about working with us, contact Brian Bamberger today.