When inventors contact my company about Due Diligence I like to explain the concept with a simple example. Consider it this way, if a manufacturer is getting ready to make the decision to develop, manufacture, and market a new product which could potentially cost $50,000 to $150,000 to produce plus inventory costs, they would most definitely take their time to ensure they are creating a good business decision in continuing to move forward with the product (i.e.: they have done their homework on the product). Therefore, you can summarize “homework” 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 more hours, effort and cash (i.e.: “risk”) that a company must spend to develop Patent Help, the more they will evaluate the potential license. Stay in mind that even if a product seems to be basic and low cost, the process of developing and manufacturing is rarely simple and affordable. Companies will evaluate such criteria as customer feedback, list price points, unit cost to produce, competitive landscape, manufacturing feasibility, market opportunity, etc.
Inventors often wonder if they need to perform Homework on their invention. As discussed, this will depend on the option you may have elected for taking your product or service to market.
Option 1 – Manufacturing on your own – If you are intending on manufacturing and marketing the invention by yourself, then yes you will need to perform homework. Essentially, you become the maker in the product and consequently you should carry out the homework on your own invention just like other manufacturers would. The problem that 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, then I believe you can minimize your research efforts, because before any company licensing your invention, they will likely perform their very own research. In case you are employing a company such as Invention Home, the expenses to promote your invention to companies can be minimal – therefore it may cost you more to really perform due diligence than it would to just market the Inventhelp Phone Number to companies (which, is ultimately the best form of research anyway). Remember, you need to have taken time to perform your basic researching the market as well as a patent search earlier in the process to be assured that your product will be worth pursuing to begin with (i.e.: the merchandise is not really already on the market and you will find a demand).
Let me summarize. If you are planning on investing a lot of money on your invention, then it is recommended to analyze the chance first to make certain it’s worth pursuing; however, if you can actively market your invention to companies with minimal cost, you can be reassured that an interested company will work their own due diligence (not count on yours). Note: it is usually useful to have marketing research information available while you discuss your invention opportunity with prospective companies; however, it is far from easy to acquire these details so you have to balance the effort and cost of gathering the data using the real necessity of having it.
Furthermore, i provides you with some research tips.As discussed, the idea of marketing research would be to gain as much information as is possible to produce 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, these details may not be easy to come across.
If you are not in a position to cover an expert firm to do your marketing evaluation, it is actually easy to perform research on your own; however, you need to understand that research ought to be interpreted and used for decision-making and alone, it has no value. It really is what you use the data that matters. Note: I might recommend that you DO NOT PURCHASE “market research” from an Invention Promotion company. Often sold as a “first step” (they’ll usually approach you again having an expensive “marketing” package), the details are largely useless because it is not specific research on your own invention. Rather, it is actually off-the-shelf “canned” industry statistics, that will not necessarily help you make an educated decision.
Before we arrive at the “tips”, let me clarify that “homework” can come under various names, but essentially each of them mean exactly the same thing. A few of the terms i have seen to illustrate the diligence process are:
· Due Diligence
· Marketing Evaluation
· Commercial Potential
· Invention Salability
· Profitably Marketable
· Researching The Market
· Invention Assessment
Each of these terms is basically discussing the study to evaluate the chance of an invention’s salability and profitability. The question of whether your invention will sell can not be known with certainty, however, you can perform some steps to assist you better comprehend the chance of success.
Again, if you are planning on manufacturing your invention on your own, you should consider performing marketing research 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 listed below.
1. Ask and answer some fundamental questions
– Is your invention original or has someone else already think of the invention? Hopefully, you may have already answered this question in your basic research. Or even, check trade directories or even the Internet.
– Is your invention a solution to a problem? Otherwise, why you think it can sell?
– Does your invention really solve the problem?
– Is the invention already on the market? If you have, exactly what does your invention offer over the others?
– The number of competing products and competitors can you locate on the market?
– What exactly is the range of cost of these products? Can your products or services fall into this range? Don’t forget to factor in profit and maybe wholesale pricing and royalty fee, if any.
– Can you position your invention being a better product?
2. List the advantages and disadvantages that can impact the way your invention sells and objectively evaluate your list
– Demand – can there be a preexisting interest in your invention?
– Market – does a market exists for your invention, and in case so, what exactly is the dimensions of the current market?
– Production Capabilities – will it be easy or hard to produce your invention?
– Production Costs – can you have 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, simplicity of use)?
– List Price – have you got a price point advantage or disadvantage?
– Life – will your invention last longer than 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 – will it be difficult or simple 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 in the field.
– Request objective feedback and advice.
– Speak to marketing professionals.
– Ask sales people inside the field.
– Ask people you know in the field.
– Talk to close family and friends who you trust.
– Request input on the invention like features, benefits, price, and in case they could buy it.
Through the diligence stage, existing manufactures come with an advantage in that they have the ability to talk with their customers (retail buyers, wholesalers, etc.). Inside my experience, probably the most key elements which a company will consider is whether or not their existing customers would get the product. If I took Invention Websites to some company to discuss licensing (assuming they could produce it at the right price point), there exists a high likelihood which they would license the item if a person of their top customers consented to sell it.
Whether a retail buyer is interested in purchasing a item is a driving force for companies considering product licensing. I’ve seen many scenarios wherein a company had interest in an invention but they ultimately atgjlh to pass through on the idea as their customer (the retailer) did not show any interest within the product. Conversely, I’ve seen companies with mild interest within an idea who jump in a new product when a retailer expresses interest in it.