Cashing in on...

Cashing in on the new baby boom

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Cashing in on the new baby boom
JON COOK, The Globe and Mail
March 31, 2008 at 11:44 AM EDT

http://www.theglobeandmail.com/report-on-business/article676333.ece

THE COMPANY: Liandrea Productions. The challenge: Find a way to
tap into the multibillion-dollar baby business. The plan: Change
business model to more specialized baby niche. The payoff: Brand
awareness that will lead to more revenue streams

These days, babies are the new black. Popular culture is obsessed with
them: from Angelina’s exotic adoptions and Britney’s bizarre custody
battles to Hollywood blockbusters Knocked Up and Juno. Birth rates are
rising along with the mercury, spawning a multibillion-dollar industry
selling high-end baby goods to googlie-eyed parents at an unprecedented
rate.

Since starting Liandrea Productions – a Toronto-based business that
produces educational DVDs for new and expectant parents – Lianne
Castelino and Andrea Howick have struggled to tap the parent pipeline.
Their first foray – Bringing Baby Home – sprang from Ms. Castelino’s
frustration at watching the cheesy ’80s-era instructional video in her
Montreal prenatal class, when she was pregnant with her first child in
1996. “To me it was just inexcusable,” recalls Ms. Castelino of the
grainy VHS tape, replete with mullets and American accents. “A lot of
the information wasn’t even pertinent any more, but those were the only
videos they had at their disposal.”

The experience convinced Ms. Castelino, a television reporter at the
time, that she could do better. In 2003 she teamed up with Ms. Howick – a
fellow broadcaster and mother – and the pair made their first video,
for $100,000. Their venture gained a valuable ally when Dr. Denis Leduc,
former president of the Canadian Pediatric Society, agreed to star in
the video.

Armed with those references, they landed in more than 300 Wal-Marts
nationwide. “People always say ‘You’re in Wal-Mart, you must be rich!’ “
exclaims Ms. Castelino, instead acknowledging that it’s a daily
struggle just to make sure the product is properly displayed so
customers can see it.

Undaunted, the erstwhile moms released another DVD in 2006 on newborn nutrition, entitled Yummy in My Tummy.
This time they enlisted the help of a public relations consultant to
overhaul their website, Liandrea.com, and promote the release.

Last year they were given their own radio show in Montreal, Parent Talk
Radio, as a cross-promotional tool for their DVDs and website.

Despite these successes, the DVDs are still not flying off the shelves.

“We just don’t have enough hours in the day,” Ms. Castelino says. “It’s
so hard to get the attention of potential sponsors these days; you’re
one among a sea of voices.”

What the experts say

As a mother herself, Mat Wilcox empathizes with these mompreneurs, but takes a tough stance when it comes to their business.

“It’s a nice-to have, not a have-to have,” says the CEO of Wilcox Group,
a national Canadian public relations and crisis management consulting
firm. “There are tons of people with really sweet ideas, and you go ‘Oh,
that’s so adorable,’ but they’re not going to make money. So what’s the
business model to make money?”

Ms. Wilcox suggests the women start selling themselves instead of their
DVDs. To do that, she says they have to use their radio show to comment
on hot-button or more mainstream issues, such as celebrity parents and
trans-fat-free diets for kids.

“It’s mom stuff, and there’s a real limited readership for mom stuff,
unless it’s parenting magazines. What do people really care about? They
care about celebrities. Celebrities and babies right now are the No. 1
thing”

To bang the drum, she advises doing a media tour of Los Angeles or New
York, as it would generate more website hits than all of Canada
combined. In addition, Ms. Wilcox says they should stream their radio
show live on their website, and flip the business model to offer free
clips from the DVDs, bringing in money through advertising and sponsors.
“They should look at a different business model of advertising and
become the free baby resource.”

Stewart Thornhill wonders if Ms. Castelino and Ms. Howick did enough
market research to determine whether their perception of a need for
parenting videos actually meshed with reality. “You see a lot of these,
where somebody says ‘Well, gee, there should be a Greek restaurant in
this town,’ without ever going around and asking, ‘Does anybody here
like Greek food?’ ” says Prof. Thornhill, associate professor of
entrepreneurship at the University of Western Ontario’s Ivey School of
Business.

Prof. Thornhill says they need to target their customer with a
laser-like focus, and then sell in those stores where they are more
likely to shop. “They just really need to define who benefits most from
their product, and then how to educate that person that they’d be better
off with your product in their hand than they would the $10 in their
wallet.” He suggests Wal-Mart and Costco offer too much of a scatter-gun
approach to selling, and that they may have more luck in stores such as
Shopper’s Drug Mart or prenatal clinics. “If you can get the product to
where the expectant mothers are, well, now maybe you at least have a
shot of selling to them.”

Despite the cachet of being in Wal-Mart, Mark Wardell agrees it’s likely
not helping the bottom line. As the president of Wardell Professional
Development, Mr. Wardell suggests the Liandrea owners become more
specialized, restricting their areas of expertise to organic baby food
or more green applications, such as reusable diapers.

“When they’re headed down a path like that, then we can start to look
for other opportunities for growing this thing, like looking for
alliances, which will be much easier to find once they’re clear on what
kind of company they want to build.” Mr. Wardell believes they could
partner with baby food firms. A good example would be “buy a bottle of
Heinz baby food and get $5 off a baby video.”

By positioning themselves as experts, through their radio show, DVDs and
website, they become the product, and that can springboard them into
more lucrative relationships with companies already in the baby
industry. For Mr. Wardell, selling DVDs is not the best business model,
as people watch them once or twice and put them aside; there are no
repeat sales. “What’s really cool about the target market is that there
will forever be mothers, but the way it’s structured, there’s nothing to
do with repeat sales or expansion. They’re going to be building some
kind of credibility here among these new mothers. So while they’ve put
the video to one side, it doesn’t mean they’ve put Liandrea to one side.
They still occupy some mind-share with these new mothers, and that’s
where there’s opportunity.”

In a nutshell

Research your idea: Find out if your perceived need of the product really exists.

Don’t be afraid to change: If your product isn’t selling, modify the revenue model.

Brand awareness: Just because you have an awesome product, people won’t necessarily care about it.

Wal-Mart is not

always the answer: Major retailers can actually hurt a small business,
as your product can get lost and your profit margins reduced.

© The Globe and Mail 2008

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Published by:Jon Cook