When inventors contact my company about Due Diligence I like to explain the idea with a simple example. Think of it this way, if a manufacturer is getting ready to make the decision to develop, manufacture, and market a new item that could potentially cost $50,000 to $150,000 to produce plus inventory costs, they would most certainly take their time to ensure that they are making a good business decision in moving forward with the product (i.e.: they have done their homework on the product). Therefore, you can summarize “research” as the whole process of gathering all the information necessary to make a good business decision before making the large financial expenditure. It can generally be assumed that the more time, effort and cash (i.e.: “risk”) that a company must spend to develop Getting A Patent, the more they are going to evaluate the potential license. Stay in mind that even if a product seems to be simple and inexpensive, the process of developing and manufacturing is rarely simple and affordable. Companies will evaluate such criteria as customer opinions, retail price points, unit cost to manufacture, competitive landscape, manufacturing feasibility, market opportunity, etc.
Inventors often wonder if they need to perform Research on their own invention. As discussed, this can depend on the option you might have elected to take your product to advertise.
Option 1 – Manufacturing all on your own – If you are planning on manufacturing and marketing the invention on your own, then yes you need to perform research. Essentially, you feel the producer of the product and for that reason you need to perform the research on your invention just like other manufacturers would. The situation i have found is the fact that many inventors who opt to manufacture their own inventions do little, if any marketing research, which is actually a big mistake.
Option 2 – Licensing for Royalties – if you are planning on licensing for royalties, i believe you can minimize your homework efforts, because prior to any company licensing your invention, they will perform their own research. Should you be employing a company including Invention Home, the expense to market your invention to companies can be minimal – therefore it could cost more to actually carry out the research than it would to just market the Inventhelp Locations to companies (which, is ultimately the best form of research anyway). Remember, you ought to have taken enough time to perform your basic researching the market along with a patent search earlier in the process to be assured that your product or service will be worth pursuing to start with (i.e.: the merchandise is not really already on the market and there exists a demand).
Let me summarize. If you are intending on investing a large amount of cash on your invention, then it is best to analyze an opportunity first to make sure it’s worth pursuing; however, if you can actively advertise your invention to companies with minimal cost, you can be assured that an interested company will do their particular research (not rely on yours). Note: it is usually useful to have marketing homework information available when you discuss your invention opportunity with prospective companies; however, it is not easy to acquire this info so you have to balance the time and effort and expense of gathering the details using the real need of having it.
Furthermore, i will provide you with some homework tips.As discussed, the thought of marketing due diligence is always to gather as much information as is possible to produce a well-informed decision on investing in any invention. In a perfect world, we might have got all the appropriate information on sales projections, retail pricing, marketing costs, manufacturing setup and unit costs, competitive analysis, market demand, etc. However, these details is not always easy to come by.
In case you are not in a position to pay a specialist firm to accomplish your marketing evaluation, it is actually possible to carry out the research on your own; however, you need to understand that research needs to be interpreted and employed for decision-making and by itself, it provides no value. It is whatever you use the information that matters. Note: I might recommend that you simply do NOT PURCHASE “consumer research” from an Invention Promotion company. Often sold as a “initial step” (they’ll usually approach you again with the expensive “marketing” package), the details are largely useless since it is not specific research on your invention. Rather, it is actually off-the-shelf “canned” industry statistics, that can not always help you make a knowledgeable decision.
Before we reach the “tips”, let me clarify that “research” can come under various names, but essentially each of them mean exactly the same thing. A few of the terms i have seen to explain the diligence process are:
· Marketing Evaluation
· Commercial Potential
· Invention Salability
· Profitably Marketable
· Market Research
· Invention Assessment
Each one of these terms is actually referring to the investigation to assess the chance of your invention’s salability and profitability. The question of whether your invention will sell can never be known with certainty, however, you can perform some steps to help you better understand the likelihood of success.
Again, if you are intending on manufacturing your invention on your own, you should think about performing marketing due diligence on your 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 highlighted below.
1. Ask and answer some fundamental questions
– Can be your invention original or has someone else already come up with the invention? Hopefully, you have already answered this question in your basic research. Or even, check trade directories or perhaps the Internet.
– Is the invention a solution to some problem? If not, why do you reckon it will sell?
– Does your invention really solve the issue?
– Is your invention already on the market? If so, exactly what does your invention offer within the others?
– How many competing products and competitors can you locate on the market?
– What is the range of price of the products? Can your product or service 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 advantages and disadvantages that will impact the way your invention sells and objectively evaluate your list
– Demand – can there be an existing interest in your invention?
– Market – does a market exists for your invention, and when so, what exactly is the scale of the market?
– Production Capabilities – might 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 – might it be easy or hard to distribute or sell your invention?
– Advanced features – does your invention offer significant improvements over other similar products (speed, size, weight, convenience)?
– Retail Price – have you got a price point advantage or disadvantage?
– Life – will your invention last over other products?
– Performance – does your invention perform a lot better than other products (including better, faster output, less noise, better smell, taste, look or feel)?
– Market Barriers – could it be difficult or easy to enter your market?
– Regulations and Laws – does your invention require specific regulatory requirements or are available special laws that must definitely be followed (i.e.: FDA approval)
3. Seek advice or input from others (consider confidentiality)
– Target professionals / experts in the field.
– Request objective feedback and advice.
– Talk to marketing professionals.
– Ask sales representatives within the field.
– Ask people you know in the field.
– Speak with close relatives and buddies who you trust.
– Ask for input on the invention such as features, benefits, price, and when they might buy it.
Throughout the diligence stage, existing manufactures come with an advantage because they have the ability to chat with their customers (retail buyers, wholesalers, etc.). In my experience, probably the most important factors that the company will consider is whether their existing customers would get the product. Should I took Technology to your company to go over licensing (assuming they could produce it in the right price point), there is a high likelihood which they would license the merchandise if one with their top customers decided to sell it.
Whether a retail buyer has an interest in buying a product is a driving force for companies considering product licensing. I’ve seen many scenarios where a company had interest inside an invention however they ultimately atgjlh to move on the idea as their customer (the retailer) did not show any interest in the product. Conversely, I’ve seen companies with mild interest in an idea who jump in a new product each time a retailer expresses interest within it.