Posted on November 30, 2019
Patent A Product..
When inventors contact my company about Due Diligence I like to explain the reasoning with a simple example. Think about it this way, if a manufacturer is getting ready to make the decision to develop, manufacture, and market a new product that could potentially cost $50,000 to $150,000 to produce plus inventory costs, they would definitely take their time to ensure that they are making a good business decision in moving forward using the product (i.e.: have they done their homework on the product). Therefore, you can sum up “research” as the entire process of gathering all the information necessary to make a good business decision before you make the large financial expenditure. It can generally be assumed that the additional time, effort and money (i.e.: “risk”) that a company must spend to develop New Product Ideas, the more they will evaluate the potential license. Keep in mind that even if a product seems to be basic and low cost, the process of developing and manufacturing is rarely basic and inexpensive. Companies will evaluate such criteria as customer comments, retail price points, unit cost to manufacture, competitive landscape, manufacturing feasibility, market opportunity, etc.
Inventors often wonder if they should perform Homework on their own invention. As discussed, this may depend on the option you might have elected to take your products or services to market.
Option 1 – Manufacturing by yourself – If you are planning on manufacturing and marketing the invention by yourself, then yes you will have to perform homework. Essentially, you are the producer from the product and as a result you need to perform research on your own invention just like other manufacturers would. The problem i have found is the fact that many inventors who elect to manufacture their own inventions do little, if any marketing due diligence, that is a big mistake.
Option 2 – Licensing for Royalties – if you are intending on licensing for royalties, i then believe you can minimize your due diligence efforts, because before any company licensing your invention, they are going to perform their very own due diligence. Should you be working with a company including Invention Home, the costs to promote your invention to companies can be minimal – therefore it could set you back more to actually perform due diligence than it might to just market the Inventhelp Patent Information to companies (which, is ultimately your best form of research anyway). Remember, you should have taken time to do your basic market research along with a patent search earlier along the way to be assured that your product or service will be worth pursuing in the first place (i.e.: the product will not be already on the market and there is a demand).
Let me summarize. If you are intending on investing a lot of cash on your invention, then it is recommended to analyze the chance first to ensure it’s worth pursuing; however, should you can actively promote your invention to companies with minimal cost, you can be assured that an interested company will work their particular due diligence (not count on yours). Note: it will always be helpful to have marketing homework information available as you discuss your invention opportunity with prospective companies; however, it is really not easy to get this info so you need to balance the effort and expense of gathering the information with all the real need of having it.
Furthermore, i will provide you with some research tips.As discussed, the concept of marketing homework is to gather as much information as you can to create a well-informed decision on purchasing any invention. In a perfect world, we might have all the appropriate info on sales projections, retail pricing, marketing costs, manufacturing setup and unit costs, competitive analysis, market demand, etc. However, this info may not be easy to come across.
If you are not in a position to pay a specialist firm to perform your marketing evaluation, it is easy to carry out the research on your own; however, you must understand that research needs to be interpreted and utilized for decision-making and alone, it provides no value. It is actually what you do with the information that matters. Note: I would recommend that you just do NOT PURCHASE “market research” from an Invention Promotion company. Often sold as being a “first step” (they’ll usually approach you again with the expensive “marketing” package), the information is largely useless because it is not specific research on the invention. Rather, it is actually off-the-shelf “canned” industry statistics, which will not always help you make a knowledgeable decision.
Before we reach the “tips”, let me clarify that “due diligence” can come under various names, but essentially all of them mean exactly the same thing. Some of the terms that I have witnessed to explain the diligence process are:
· Due Diligence
· Marketing Evaluation
· Commercial Potential
· Invention Salability
· Profitably Marketable
· Consumer Research
· Invention Assessment
All these terms is basically talking about the investigation to assess the chance of your invention’s salability and profitability. The question of whether your invention will sell can not be known with certainty, but you can perform some steps to help you better understand the probability of success.
Again, if you are planning on manufacturing your invention by yourself, you should look at performing marketing homework on your own product. If you are intending on licensing your invention for royalties the company licensing your invention should perform this research.
A few recommendations for marketing research are the following.
1. Ask and answer some basic questions
– Can be your invention original or has somebody else already develop the invention? Hopefully, you have already answered this inquiry within your basic research. Otherwise, check trade directories or perhaps the Internet.
– Can be your invention a solution to some problem? Or even, why do you think it will sell?
– Does your invention really solve the problem?
– Can be your invention already on the market? If so, exactly what does your invention offer over the others?
– The number of competing products and competitors can you locate on the market?
– Exactly what is the range of cost of these items? Can your product fall into this range? Don’t forget to element in profit and possibly wholesale pricing and royalty fee, if any.
– Can you position your invention as a better product?
2. List the pros and cons which will impact the way your invention sells and objectively evaluate your list
– Demand – can there be a current demand for your invention?
– Market – does a market are available for your invention, and when so, what exactly is the size of the current market?
– Production Capabilities – could it be easy or difficult to produce your invention?
– Production Costs – can you get accurate manufacturing costs (both per unit and setup/tooling)?
– Distribution Capabilities – could it be easy or difficult to distribute or sell your invention?
– Advanced features – does your invention offer significant improvements over other similar products (speed, size, weight, simplicity of use)?
– List Price – do you have a price point advantage or disadvantage?
– Life – will your invention last over other products?
– Performance – does your invention perform better than other products (including better, faster output, less noise, better smell, taste, look or feel)?
– Market Barriers – is it difficult or easy to enter your market?
– Regulations and Laws – does your invention require specific regulatory requirements or are there special laws that really must be followed (i.e.: FDA approval)
3. Seek advice or input from others (consider confidentiality)
– Target professionals / experts inside the field.
– Request objective feedback and advice.
– Speak to marketing professionals.
– Ask sales representatives within the field.
– Ask people you know in the field.
– Speak with close friends and family members who you trust.
– Demand input on the invention like features, benefits, price, and if they could purchase it.
Through the diligence stage, existing manufactures have an advantage because they have the ability to talk with their customers (retail buyers, wholesalers, etc.). Within my experience, probably the most crucial elements that a company will consider is whether or not their existing customers would purchase the product. Should I took Inventhelp Technology to your company to go over licensing (assuming they might produce it in the right price point), there exists a very high likelihood they would license the merchandise if an individual with their top customers agreed to sell it off.
Whether a retail buyer has an interest in purchasing a product is a driving force for companies considering product licensing. I’ve seen many scenarios where a company had interest inside an invention but they ultimately atgjlh to pass on the idea because their customer (the retailer) failed to show any interest within the product. Conversely, I’ve seen companies with mild interest in an idea who jump at a new product whenever a retailer expresses interest in it.