From Idea to Financially Viable Business Venture

At this point, the entrepreneurs realized that they had the basis of a great new product, but that they lacked the resources for obtaining a patent on the idea and for moving the venture through the production and distribution phases. They recognized that they needed help if their idea was ever to become a reality.

In 1999 they linked up with Gum Tech, a company that was in the business-of manufacturing and selling functional gum products. For example, Gum Tech marketed a line of gum that contained a variety of vitamins. The company had gum to help people stop smoking, and it even had a zinc gum. Gum Tech also had two other important capabilities. The company held a lot of patents and knew how to obtain a patent for Zicam. It also was selling its gum products in retail stores and knew how to get retail distribution for Zicam. The entrepreneurs formed a joint venture with Gum Tech. The venture was called Gel Tech.

Gel Tech launched Zicam in 1999 by obtaining distribution in one large supermarket chain and one large drugstore chain. There was no marketing plan, no advertising, and no promotion. The company simply had a product that worked, and it used its retail connections and guaranteed sale terms to obtain shelf placement. However, while Zicam had achieved distribution, it was going nowhere. Sales off the shelves were very slow, and the chains were about to discontinue distribution and send the product back.

Gel Tech management realized that consumers were not going to buy Zicam unless it was publicized. One of the principals of the company, therefore, informed the media of the results of the clinical research that showed about a 75 percent reduction in the severity of a cold. USA Today picked up the news release and made it a front-page story. Because of the USA Today article, store sales of Zicam took off and new retailers started calling up asking for the product. Distribution quickly went from only two retail chains to national distribution.