- November 30, 2019
When inventors contact my company about Due Diligence I like to clarify the idea with a simple example. Think about it this way, if a manufacturer is getting ready to decide 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 certainly take their time to ensure they are making a good business decision in moving forward with all the product (i.e.: have they done their homework on the product). Therefore, you can summarize “research” as the 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 money (i.e.: “risk”) that a company must spend to develop Inventhelp Patent Information, the more they will likely evaluate the potential license. Keep in mind that even if a product is apparently simple and inexpensive, the entire process of developing and manufacturing is rarely easy and affordable. Companies will evaluate such criteria as customer feedback, list price points, unit cost to manufacture, competitive landscape, manufacturing feasibility, market opportunity, etc.
Inventors often wonder if they have to perform Homework on the invention. As discussed, this will depend on the option you might have elected to take your products or services to advertise.
Option 1 – Manufacturing by yourself – If you are intending on manufacturing and marketing the invention all on your own, then yes you will have to perform research. Essentially, you feel the manufacturer of the product and consequently you need to perform due diligence on your own invention just like other manufacturers would. The problem i have found is the fact that many inventors who opt to manufacture their very own inventions do little, if any marketing due diligence, which is actually a big mistake.
Option 2 – Licensing for Royalties – if you are intending on licensing for royalties, i believe you can minimize your homework efforts, because prior to any company licensing your invention, they will likely perform their particular due diligence. In case you are working with a company including Invention Home, the costs to promote your invention to companies can be minimal – therefore it may cost more to really perform the research than it would to just market the Prototype Services Inventhelp to companies (which, is ultimately your very best type of homework anyway). Remember, you should have taken time to do your basic consumer research along with a patent search earlier during this process to be confident that your product is worth pursuing to begin with (i.e.: the item is not really already on the market and there is a demand).
Let me summarize. If you are intending on investing a lot of money on your invention, then it is recommended to analyze the opportunity first to make sure it’s worth pursuing; however, in the event you can actively promote your invention to companies with minimal cost, you can be confident that an interested company will perform their own homework (not depend on yours). Note: it will always be beneficial to have marketing homework information available while you discuss your invention opportunity with prospective companies; however, it is really not always easy to obtain this info so you have to balance the time and effort and cost of gathering the details with all the real necessity of having it.
I also provides you with some research tips.As discussed, the concept of marketing due diligence would be to gather as much information as you can to produce a well-informed decision on purchasing any invention. In a perfect world, we might have all the relevant information about sales projections, retail pricing, marketing costs, manufacturing setup and unit costs, competitive analysis, market demand, etc. However, these details is not always simple to come by.
Should you be not in a position to pay for 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 employed for decision-making and on its own, it has no value. It is actually everything you use the information that matters. Note: I might recommend that you DO NOT PURCHASE “researching the market” from an Invention Promotion company. Often sold being a “first step” (they’ll usually approach you again having an 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, that will possibly not help you make a knowledgeable decision.
Before we reach the “tips”, let me clarify that “homework” can come under various names, but essentially they all mean the same. A few of the terms i have witnessed to illustrate the diligence process are:
· Due Diligence
· Marketing Evaluation
· Commercial Potential
· Invention Salability
· Profitably Marketable
· Consumer Research
· Invention Assessment
Each one of these terms is basically discussing the study to gauge the chance of your 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 understand the chance of success.
Again, if you are intending on manufacturing your invention on your own, you should consider performing marketing homework 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 the following.
1. Ask and answer some basic questions
– Is the invention original or has another person already come up with the invention? Hopefully, you have already answered this query in your basic research. Or even, check trade directories or perhaps the Internet.
– Can be your invention a solution to some problem? Or even, why do you reckon it is going to sell?
– Does your invention really solve the issue?
– Is your invention already on the market? If you have, precisely what does your invention offer within the others?
– How many competing products and competitors can you locate on the market?
– What exactly is the range of price of these products? Can your product fall into this range? Don’t forget to aspect in profit and perhaps wholesale pricing and royalty fee, if any.
– Can you position your invention as a better product?
2. List the advantages and disadvantages that can impact the way your invention sells and objectively evaluate your list
– Demand – will there be a current need for your invention?
– Market – does a market exist for your invention, and when so, what is the dimensions of the marketplace?
– Production Capabilities – will it be easy or difficult 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, convenience)?
– List Price – have you got a price point advantage or disadvantage?
– Life – will your invention last more than other products?
– Performance – does your invention perform much better than other products (including better, faster output, less noise, better smell, taste, look or feel)?
– Market Barriers – could it be difficult or very easy to enter your market?
– Regulations and Laws – does your invention require specific regulatory requirements or exist special laws that must be followed (i.e.: FDA approval)
3. Seek advice or input from others (consider confidentiality)
– Target professionals / experts inside the field.
– Demand objective feedback and advice.
– Speak with marketing professionals.
– Ask sales agents in the field.
– Ask people you know within the field.
– Speak with close relatives and buddies whom you trust.
– Ask for input on the invention like features, benefits, price, and in case they might purchase it.
During the diligence stage, existing manufactures provide an advantage in that they have the ability to chat with their customers (retail buyers, wholesalers, etc.). In my experience, probably the most crucial elements that the company will consider is whether their existing customers would purchase the product. If I took How To Do A Patent Search With Inventhelp to some company to discuss licensing (assuming they can produce it on the right price point), there is a extremely high likelihood that they would license the merchandise if a person of the top customers agreed to market it.
Whether a retail buyer has an interest in buying a item 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 pass through on the idea as their customer (the retailer) failed to show any interest within the product. Conversely, I’ve seen companies with mild interest within an idea who jump with a cool product each time a retailer expresses interest within it.