How Dominick Martinetti used Open Innovation to launch Slappa into market leadership
Contributed by Anand Chhatpar, CEO of BrainReactions, Chief Editor of BrainWaves E-magazine for Innovation and Idea Generation and founder of the Most Creative People network on Facebook.
I had the chance to interview Dominick Martinetti, CEO of Slappa Distribution, a small but rapidly growing company that is making a great name for itself among DJs and music junkies as an innovative product company. Dominick is an inspiring young man, and I have shared in this article, excerpts from our conversation that reveal his thinking and journey into market leadership.
Slappa has been in business for four years now, and it started with an initial product range consisting of CD cases. It was not a particularly “sexy” business to get into. CD cases had been around for 15 years, and the CD business was not growing aggressively any more. DVDs, computer software and video games still used CD cases, but the margins had been declining for most companies in this space. Also, brands before Slappa had commoditized the product — there was no real choice available to the consumers. Most of the people using these disc cases were forced to not have choices… outside of cosmetic colors, no one was building quality and variety into the cases. Therein lay a problem with CD cases from the consumer’s perspective, which Dominick was able to spot.
To conduct his market research and with an Open Innovation mindset, Dominick went to online bulletin boards and chat rooms for audio professionals like Audiophile, Audio Asylum and Audioreview.com. He sought advice on what these target consumers needed from the ultimate CD case.
He heard back two major things from them:
- More Protection: A majority of CD cases available in the market were not providing any real level of protection for a person’s disc collection. People wanted to protect discs even while moving formats towards MP3. They wanted to protect their investment. An individual’s music collection alone can amount to anywhere between $3,000 and $10,000 over 15 years depending on whether one is a general consumer or a DJ.
- People wanted to keep their discs and covers together: People did not like jewel cases because they cracked and then one could not keep their CD artwork (cover) together with the disc.
Dominick created a series of prototypes and sent them to influential journalists who write product reviews for well read magazines and blogs and asked for their feedback and advice on the design. He kept iterating and improving the design based on feedback from these reviewers. After 2 years of prototype iteration, Dominick finally heard “Its perfect!” from several reviewers and he knew he had a winning product in his hand. Dominick had designed the D2 patented pocket system which has a rear pocket for the disc and a front pocket for the cover along with a 5-7 mm opening. The shell for the D2 was made out of X-EVA, a fire resistant, water resistant material.
Launching the product now became much easier for Dominick. He put up a website at slappa.com and told all his friends and the product reviewers he was in contact with that his product was now available for purchase. The reviewers wrote rave reviews of his $49.95 CD-case next to reviews of top of the line $2,000 music systems. Slappa’s products achieved very quick acceptance among the “Pro Audio” market, and Dominick has expanded into distribution via retail, mail order, catalogs and other media where people can pay attention to details of the product.
Dominick’s inspiration is the Fossil Watch Company that made people think they were getting a better deal with a $79 designer watch from Fossil in a tin can than with a $20 watch from Walmart. He already has plans to expand his product line into backpacks, high end bags, and other products, while also expanding distribution globally.
When asked about why Slappa’s customers become huge fans of the company, Dominick says, “We’ve made ourselves a customer focused company. Each customer is our most important customer. You CAN please everyone, in a million ways. You just have to find a different way for every person.”
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Edward Halim said
am December 31 2007 @ 8:53 am
Thank you for that detailed information. I’m going to try to apply what I learn here to my start up.
Thanks!
-Ed
Thomas said
am January 2 2008 @ 6:10 am
Anand, thanks for the overview of Slappa’s process. I think it’s a good model for folks to follow.
What’s interesting to me is that I didn’t see his process as Open Innovation. I understood it to be Design Thinking. I’d love to know what others think.
Given Design Thinking’s reliance on user research and testing, it’s no surprise that there’s plenty of overlap between the two. That said, I see major differences in the ways which an Open Innovation model will engage users. In Design Thinking, we seek to understand users needs through ethnographic interviews, product testing and feedback. While a user may suggest a feature or product, the goal of this phase is to understand their needs. (which to me is what Dominick was doing with Slappa). In Design Thinking, the needs inspire the solution, but the responsibility of developing the solution falls to the designer.
To my understanding, Open Innovation is about creating a system which makes it easy for users (or outsiders) to generate solutions.
Philippe De Ridder said
am January 2 2008 @ 12:22 pm
I agree Thomas, if you consider the level of user participation. Slappa’s innovation process looks like a process of user-centered design to me, which you could see as low-level open innovation: users/reviewers are involved in the process on the level of product testing, focus groups, ethnographic interviews, and feedback (but still considered as passive users). A next level would be the level of customization, allowing users to decide themselves on a range of options according to their preferences. On the third level, (lead) users are enabled to actively participate in the product development process (e.g. the Lego Factory). This is the level of co-creation. I will write a post shortly on “the four levels of participation”.
On the other hand, Slappa quite intelligently involved professional journalists in the process (not only users, but experts in the domain). By doing so, they brought external expertise into the product development process, which is a key element of open innovation. In addition, in the stage of commercialisation, this provided them with strategic partners in sales and marketing.
jen_chan, writer SureFireWealth.com said
am January 4 2008 @ 6:44 pm
Well, he certainly has a very refreshing attitude when it comes to pleasing customers. They say that you can’t please everybody. But this guy doesn’t plan to use one method for everybody and he sure as hell would try his best.
Dominick Martinetti said
am February 15 2008 @ 3:44 am
Guys, based on what we covered in the interview you are correct in that this shows how we used design based thinking, but one of the things that has enabled us to scale is something Philippe points out “On the third level, (lead) users are enabled to actively participate in the product development process (e.g. the Lego Factory). This is the level of co-creation”. One of our largest markets is the DJ market. when I started the company (from the design, branding and market targeting) I didn’t even know there was such a thing as a DJ market. It now accounts for about 70% of our business. The reason it has grown to be so large for us is, in a large part, because one reseller (Guitar Center) took a shot with our products when we first launched. We sold well, and then were told by the buyer and a few of the store managers, “you guys need to add a large DJ cd case, and a case with a trolley, and a shoulder bag that can hold specific DJ gear”. While this sounds like it is in the design thinking space, these products were actually developed by the buyer, specifically for his market. I have to say that 2 of of top selling products were developed by this small group of specialists.
One other note…Jen, I will do whatever I can to please everyone because I think once someone buys your product it should be easy to please/satisfy them….it’s a matter of how much you have “planned ahead” to please them. In other words, we work very hard on building top quality products. While most of the brands/products in our segment focus on price, we focus on quality because I believe strongly that people care about quality. I also believe (based on my personal experiences as a customer) that all customers want to be treated like they are “the one and only customer”, so if we are set up (trained and prepared to think of the customer on the other end “is me”) then it’s easy to please them even in the event there is a problem.
Nice discussion..