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 item that could potentially cost $50,000 to $150,000 to produce plus inventory costs, they would most certainly take their time to ensure they are creating a good business decision in advancing with all the product (i.e.: have they 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 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 How To Patent An Idea With Inventhelp, the more they will evaluate the potential license. Keep in mind that even if a product appears to be easy and low cost, the entire process of developing and manufacturing is rarely simple and inexpensive. 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 need to perform Due Diligence on their invention. As discussed, this can depend on the option you may have elected when planning on taking your product or service to advertise.
Option 1 – Manufacturing all on your own – If you are intending on manufacturing and marketing the invention by yourself, then yes you will need to perform research. Essentially, you feel the manufacturer in the product and for that reason you need to perform homework on the invention just like other manufacturers would. The situation that I have found is the fact that many inventors who elect to manufacture their very own inventions do little, if any marketing research, 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 just before any company licensing your invention, they are going to perform their very own research. If you are working with a company such as Invention Home, the costs to advertise your invention to companies can be minimal – therefore it may set you back more to really perform the research than it would to just market the How Do I Patent An Idea to companies (which, is ultimately your best form of research anyway). Remember, you should have taken time to accomplish your basic market research as well as a patent search earlier during this process to be reassured that your product or service is worth pursuing in the first place (i.e.: the item will not be already on the market and there exists a demand).
Let me summarize. If you are planning on investing a large amount of funds on your invention, then you should always analyze the chance first to make certain it’s worth pursuing; however, if you can actively advertise 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 research information available when you discuss your invention opportunity with prospective companies; however, it is really not easy to get this info so you should balance the time and effort and cost of gathering the information using the real need for having it.
Furthermore, i offers you some research tips.As discussed, the thought of marketing due diligence is always to gain as much information as possible to make a well-informed decision on making an investment in any invention. In a perfect world, we might have got all the relevant info on sales projections, retail pricing, marketing costs, manufacturing setup and unit costs, competitive analysis, market demand, etc. However, this information is not always very easy to come across.
Should you be not in a position to pay for a specialist firm to do your marketing evaluation, it is easy to perform the research all on your own; however, you must know that research ought to be interpreted and used for decision-making and alone, it offers no value. It really is everything you use the details that matters. Note: I might recommend that you just do NOT PURCHASE “consumer research” from an Invention Promotion company. Often sold as a “starting point” (they’ll usually approach you again with an expensive “marketing” package), the information is largely useless since it is not specific research on your own invention. Rather, it is actually off-the-shelf “canned” industry statistics, that can possibly not assist you in making a knowledgeable decision.
Before we arrive at the “tips”, let me clarify that “research” can come under various names, but essentially each of them mean the same. A few of the terms which 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 essentially discussing the research to evaluate 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 comprehend the chance of success.
Again, if you are planning on manufacturing your invention all on your own, you should think about performing marketing homework on the product. If you are planning on licensing your invention for royalties the company licensing your invention should perform this research.
A few recommendations for marketing homework are listed below.
1. Ask and answer some basic questions
– Is your invention original or has another person already come up with the invention? Hopefully, you might have already answered this question inside your basic research. If not, check trade directories or the Internet.
– Is the invention a solution to your problem? If not, why do you think it will sell?
– Does your invention really solve the situation?
– Can be your invention already on the market? If you have, what does your invention offer over the others?
– How many competing products and competitors can you discover on the market?
– What is the range of cost of these items? Can your product or service 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 as being a better product?
2. List the advantages and disadvantages that will impact how your invention sells and objectively evaluate your list
– Demand – is there an existing interest in your invention?
– Market – does a market exist for your invention, and in case so, what is the size of the current market?
– Production Capabilities – could 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 – could it be easy or challenging 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 much better than other products (including better, faster output, less noise, better smell, taste, look or feel)?
– Market Barriers – will it be difficult or very 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 in the field.
– Demand objective feedback and advice.
– Speak with marketing professionals.
– Ask sales representatives in the field.
– Ask people you know in the field.
– Talk to close friends and family members whom you trust.
– Request input on the invention such as features, benefits, price, and if they might buy it.
During the diligence stage, existing manufactures provide an advantage because they are able to talk with their clients (retail buyers, wholesalers, etc.). In my experience, one of the most key elements which a company will consider is if their existing customers would buy the product. If I took Inventhelp Caveman Commercial to some company to discuss licensing (assuming they might produce it at the right price point), there is a very high likelihood they would license the merchandise if one with their top customers agreed to sell it.
Whether a retail buyer is interested in buying a item is a driving force for companies considering product licensing. I’ve seen many scenarios in which a company had interest inside an invention however they ultimately atgjlh to pass through on the idea as their customer (the retailer) did not show any interest in the product. Conversely, I’ve seen companies with mild interest inside an idea who jump at a cool product each time a retailer expresses interest inside it.