FROM ERIC
From: Eric Lehner <eric@winningbrands.ca>
Date: Wednesday, May 12, 2010 10:19 PM
To: Paul Knopick <pknopick@eandecommunications.com>
Cc: 'Marc Hill' <marc@mhconnect.com>
Subject: WNBD: DRTV Update
Size: 114 KB
Hello Moderator Team,
We are coming down to the finishing line for the launch of the DRTV. This initiative has been the subject of much discussion between shareholders and the company because it is such a significant event. I am therefore providing a highly detailed update and reminding us all about the objectives of this campaign. In a business relationship that has so much goodwill and openness regarding details as the one between Winning Brands and its stakeholders, there will always be certain specifics that strike one person or another as contrary to their own way of doing things, or personal assumptions about what is best. Amongst a group as large as our shareholders, there is no consensus possible. There may always be disagreement as to merits of some specific details. However, there is also such a thing as broad general agreement about principles and policies. These are more important because they describe general strategy and direction. One can disagree about specific steps of a journey without it undermining general agreement regarding broader objectives. This means that nothing that I say or do will satisfy everyone. The more important test is whether what I say and do is sound in principle and coherent vis a vis the stated goals. I feel there is a broad agreement that the DRTV can have a powerful impact on our growth, if handled properly.
Firstly, as background, there have been questions and remarks made by observers from time to time that imply that the DRTV is merely a TV commercial, and that implementing it requires little more than pointing a camera at a few stains and going to air. In fact, the implementation of a Direct Response Television Campaign is the equivalent of designing and operating a 24-hour store doing business simultaneously in 50 states. There is a great deal involved, operationally and legally. There are also issues in marketing, training and procedures of various kinds. It may seem that there are many DRTV commercials on air, yet in reality, compared to the total number of consumer products in America, the number of DRTV commercials is miniscule. The reason is that DRTV requires a combination of “qualification elements” in order to be viable. Most companies would love the opportunity of selling through this powerful medium but just don’t have that option – they don’t qualify. This memo does not lend itself to the exhaustive theories which set out the characteristics of product, price, positioning, premise, etc that must all be present for DRTV to be a viable option. There are good books available on the subject for those who would like to go into it further – and it is interesting reading. And even amongst candidate products that have the qualifying characteristics, not all are equally well suited to adjust their offer in terms of product, price and positioning to perform the fine tuning that can turn a mediocre result into top performance. This is why many who start out cannot thrive. However, there are sufficient examples of spectacular successes to leave DRTV as a highly prized business opportunity for those who can pull it together. DRTV can be a multi-million dollar venue for the right products. The value to the brand of this experience goes beyond the on-air sales to include the recognition value of the product on retailer shelves over time. Retailers know and appreciate this benefit.
Of bottom line interest to WNBD shareholders is the fact that Winning Colours Stain Remover is the PERFECT candidate for this medium. The willingness of one of America’s most sophisticated DRTV organizations to work with the product is by itself an affirmation that should not be underestimated. There is a “lost-opportunity cost” for any successful business or person to be engaged in any time consuming activity. The intense cooperation between Winning Brands and Hawthorne Direct represents an expenditure of time for both, not only money. Hawthorne has no time to waste.
The fact that Winning Colours is so well suited to this medium does not mean that the first version of the commercial, broadcast on the first station, is going to be a rip-roaring success right out of the starting gates. We all know that “fine tuning” is a process of refinement that can turn noise into music coming out of a musical instrument, and turn backfire into a healthy roar from the engine of a sports car. Winning Brands has committed to the medium of DRTV for Winning Colours because it is in principle so ideally suited by criteria that have become well understood in a sophisticated industry. The first day’s results are not the “be all and end all”. Everything will be monitored, analyzed and adjusted as required to optimize all the factors. The on-screen pictures shown, the narrative that accompany those, the tone of voice, the graphics on the screen, the price, the “offering bundle” (ie what is presented and how), and more factors are all variables for continuous improvement to connect with viewers. There are millions of stains and mishaps happening regularly. We are not confined by a narrow window of opportunity.
On the subject of the profitability of the DRTV, Winning Brands enjoys the position of being the manufacturer. Therefore, we have greater latitude to deal with cost cutting and offering adjustments than inventors who deal with unrelated manufacturers off-shore, or distributors, etc. The minimum objective is to achieve a response efficiency ratio such that costs are covered. This by itself allows the DRTV to remain on-air for a long time, building awareness of the brand. Sophisticated retailers know the power of DRTV. Old theories about the reputation of such products as being cheap or gimmicky are just that – old theories. Consumer tastes evolve; the infotainment nature of DRTV has become fully accepted into mainstream merchandising. You will find this medium increasing, not decreasing – subject only to the limitation that is inherent in the viability of a product’s innate characteristics.
The points below show just some of the specific steps that Winning Brands has been going through with its operating associates to prepare for this event. You will see that even this brief summary illustrates how carefully things need to be integrated into a final finished system. As of today, May 12th at 10pm – the operating target launch is June 7th. The Memorial Day weekend had been the operating target until yesterday, however the team felt that some of the operating elements needed a bit more testing before going live. The difference of a week or so has no impact whatsoever on the outcome. I do not regard this as a delay, but rather an extra measure of preparation for the sake of quality.
Already Accomplished (Basic Overview)
· Telemarketing Request for Proposal (RFP) designed and submitted to selected companies
· Fulfillment RFP designed and submitted to selected companies
· Merchant Credit Card Processing accounts RFP designed and submitted to selected companies
· Development of DRTV-specific Web Site, DRTV Commercial with studio filming and all associated tasks including script, talent, etc
· Telemarketer RFP responses reviewed
· Fulfillment RFP responses reviewed
· Merchant account RFP responses reviewed
· Selection of telemarketer
· Selection of fulfillment company.
· Selection of merchant account company
· Telemarketing credit approval process, contract review and signature
· Fulfillment credit approval process, contract review and signature
· Merchant account credit approval process, contract review and signature
· Preparation and remittance of applicable deposits to telemarketer
· Preparation and remittance of applicable deposits to fulfillment company and Merchant Credit Card Processor
· For fulfillment purposes, liaison for product information, final weights, measures, descriptions, SKU number assignments of product
· Determination of backend reporting requirements, writing draft telemarketing scripts and revisions
· Determination of pricing, delivery methods, shipping/handling charge, payment methods, up-sells, etc.
· Review and revision of call operator protocols
· Arrangements for assembly of product iterations at fulfilment premises to constitute finished offering “kit”
· Confirmation of final offer between Winning Brands and its operating associates & Website Team – including new special website URLs
· Final script to telemarketer for system programming (required 10-business days after final scripts are approved) and design of product training for up to 500 operators
· Conceptualization, design and implementation of appropriate labels, letters, and informational packages
· Manufacturing of opening inventory
· Advanced shipment notification to fulfillment partners confirming product inventory opening inventory is enroute
· Winning Colours data to fulfillment company on merchant account set-up and determination of criteria for multiple shipments, “check holding”, Post Office Box requirements and Money order needs
· Design of fulfillment reporting requirements
· Transmission set-up between fulfillment company/telemarketer
Still to be Done
· Final version DRTV commercial editing and narration
· Creation of Infomercial master in-house and Tape Specifications with master (i.e. Script for Voice Over, Edit List for 800# placement) – estimated May 26th
· Distribution of completed DRTV to operational partners to familiarize them with the product and offer
· Testing telemarketing transmission and sample reports, verifying transmission accuracy
· Winning Brands completing fulfillment partner customer services training and verification of report accuracy; all operators to be provided with Winning Colours for first hand experiences
· Distribution of station dubs for arrival at stations by Monday, May 31st – required at stations one week before on air-date
· Performance of scripting test calls
· Reviewing and ensuring adequate operator staffing
· First on-air date of Monday, June 7th
It is possible that the air-date will be adjusted as the final elements come together. Everything is operating smoothly and professionally. The commercial will be on-air and begin to generate results in the 2nd QTR. It is impossible that an undertaking of this significance will leave no positive trace on Winning Brands. Concrete and sensible steps taken by hardworking companies are “leading indicators” of survival, success and thriving investors in due course. Winning Brands has been a work in progress toward clearly stated goals. I appreciate and applaud our early investors. You have had the self-confidence to participate during the formative period of a young company’s life. You have show special goodwill toward Winning Brands - and received goodwill and accountability from management of your company. We can all be proud of this next step.
Best regards,
Eric Lehner
CEO
Winning Brands Corporation
