Find a market for product before marketing product, experts say

By Erika D. Smith
Knight Ridder News Service

AKRON, Ohio — Jim Ratliff got a glimpse of his market niche when his nephew came to visit a few years ago.

The boy had always been antisocial, but that year, something was different. He was ... nice. Ratliff was intrigued.

He found out the boy had completed a cognitive-skills training class in Columbus, Ohio. No one offered such a class in Northeast Ohio or other states, so Ratliff seized the business opportunity.

Ratliff and three others started a multistate franchise for teaching cognitive skills. They called it LearningRx (www.learningrx.com).

"I wasn't looking for this," the Hudson, Ohio, man said. "I stumbled onto it like everything else I've found."

Most market niches aren't that obvious, but every entrepreneur needs to find one anyway, said Robert Hisrich, author of "Small Business Solutions: How to Fix & Prevent the 13 Biggest Problems that Derail Business."

Having a product idea isn't good enough if there's no market. Entrepreneurs, he said, need to examine the measurability, accessibility, profitability and stability of a potential market before going into business.

"Once a target market has been correctly defined, it is much easier to develop a marketing strategy and the appropriate combination of product, distribution, promotion and price to reach that market," wrote Hisrich, a professor of entrepreneurial studies at Case Western Reserve University in Cleveland.

His recommendations are based on surveys he conducted in various countries and his own experience running the international business-consulting firm H&B Associates.

Robert Algera, director of the Small Business Development Center in Akron, Ohio, said he tells clients the same thing.

"We recommend they spend a considerable amount time doing market research," he said. "We tell them to try to find a market that's underserved."

LearningRx, he said, is a good example.

The Twinsburg, Ohio, company is targeted to students with learning disabilities, but Ratliff said he also plans to pitch to adults. That makes for a combined market of millions of people.

LearningRx doesn't do tutoring as much as it teaches people how to improve their memory, visual and auditory skills, and comprehend information quickly.

"When you're getting older and you're not as sharp as you used to be, where do you go to get mental training?" asked Ratliff. "We have to educate the world, first what cognitive skills are and second, what LearningRx is."

Once a niche has been identified and a business established, Hisrich said entrepreneurs must make sure their customers are satisfied. Focusing on developing new products and offering superior service are the best ways to do that.

"The company should be centered on creating customer satisfaction," he advised.

Among Hisrich's other suggestions on marketing and finance issues is to manage growth, instead of letting growth manage you or not growing at all.

Hisrich recommends planning your entrepreneurial strategies and tailoring them to the typical life cycle of a venture.

It's also important to continuously monitor a company's cash flow, profits, costs and inventory, according to "Small Business Solutions."

The best way to avoid that is to set up a cash-flow statement to track where cash comes from and how it is spent.