When inventors contact my company about Due Diligence I like to explain the reasoning with a simple example. Think of it this way, if a manufacturer is getting ready to choose to develop, manufacture, and market a new item that could potentially cost $50,000 to $150,000 to produce plus inventory costs, they would definitely take their time to ensure they are building a good business decision in continuing to move forward with 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 prior to 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 Brainstorming Invention Ideas, the more they will evaluate the potential license. Stay in mind that even if a product appears to be simple and low cost, the entire process of developing and manufacturing is rarely simple and inexpensive. Companies will evaluate such criteria as customer feedback, retail price points, unit cost to produce, competitive landscape, manufacturing feasibility, market opportunity, etc.
Inventors often wonder if they should perform Homework on their invention. As discussed, this may depend on the option you may have elected when planning on taking your product or service to promote.
Option 1 – Manufacturing all on your own – If you are intending on manufacturing and marketing the invention by yourself, then yes you will have to perform homework. Essentially, you are the producer of the product and as a result you should carry out the due diligence on your invention just like other manufacturers would. The problem that I have found is 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 believe you can minimize your homework efforts, because just before any company licensing your invention, they are going to perform their particular research. If you are using a company such as Invention Home, the expense to promote your invention to companies can be minimal – therefore it may cost you more to really carry out the homework than it might to just market the Reviews For Inventhelp to companies (which, is ultimately the best form of homework anyway). Remember, you should have taken the time to perform your basic consumer research and a patent search earlier in the process to be confident that your products or services may be worth pursuing to begin with (i.e.: the item is not already on the market and there is a demand).
Let me summarize. If you are planning on investing a lot of funds on your invention, then it is recommended to analyze the opportunity first to ensure it’s worth pursuing; however, should you can actively advertise your invention to companies with minimal cost, you can be assured that an interested company will work their particular homework (not depend on yours). Note: it will always be beneficial to have marketing due diligence information available when you discuss your invention opportunity with prospective companies; however, it is really not always easy to get these details so you have to balance the effort and cost of gathering the details with all the real need of having it.
In addition, i provides you with some research tips.As discussed, the idea of marketing homework is to gain as much information as is possible to create a well-informed decision on purchasing any invention. In a perfect world, we might have all the appropriate information on sales projections, retail pricing, marketing costs, manufacturing setup and unit costs, competitive analysis, market demand, etc. However, this information might not be simple to come across.
If you are not in a position to cover a specialist firm to perform your marketing evaluation, it is easy to carry out the research all on your own; however, you must know that research should be interpreted and used for decision-making and on its own, it has no value. It is actually whatever you use the data that matters. Note: I would personally recommend that you DO NOT PURCHASE “researching the market” from an Invention Promotion company. Often sold as a “initial step” (they’ll usually approach you again having an 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 “due diligence” can come under various names, but essentially all of them mean the same. Some of the terms i have seen to illustrate the diligence process are:
· Marketing Evaluation
· Commercial Potential
· Invention Salability
· Profitably Marketable
· Consumer Research
· Invention Assessment
All these terms is essentially discussing the investigation to evaluate the chance of your invention’s salability and profitability. The question of whether your invention will sell can do not be known with certainty, however, you can perform some steps that will help you better be aware of the likelihood of success.
Again, if you are planning on manufacturing your invention by yourself, you should think about performing marketing due diligence on your 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 elementary questions
– Can be your invention original or has somebody else already develop the invention? Hopefully, you have already answered this inquiry inside your basic research. If not, check trade directories or perhaps the Internet.
– Is your invention a solution to your problem? Or even, why you think it is going to sell?
– Does your invention really solve the problem?
– Is the invention already on the market? In that case, what does your invention offer within the others?
– How many competing products and competitors can you find on the market?
– What exactly is the range of cost of these items? 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 pros and cons which will impact how your invention sells and objectively evaluate your list
– Demand – is there a current interest in your invention?
– Market – does a market exists for your invention, and when so, what is the size of the marketplace?
– Production Capabilities – will it be easy or hard 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, ease of use)?
– List 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 – will 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 really must be followed (i.e.: FDA approval)
3. Seek advice or input from others (consider confidentiality)
– Target professionals / experts within the field.
– Request objective feedback and advice.
– Speak with marketing professionals.
– Ask sales people in the field.
– Ask people you know within the field.
– Speak with close relatives and buddies that you trust.
– Demand input on the invention such as features, benefits, price, and when they would purchase it.
Throughout the diligence stage, existing manufactures come with an advantage in that they have the capacity to talk with their potential customers (retail buyers, wholesalers, etc.). Within my experience, probably the most crucial elements that a company will consider is whether their existing customers would get the product. If I took Invention Prototype to your company to discuss licensing (assuming they could produce it on the right price point), there exists a high likelihood that they would license the merchandise if one of the top customers decided to sell it off.
Whether a retail buyer is interested in purchasing a item is a driving force for companies considering product licensing. I’ve seen many scenarios where a company had interest within an invention however they ultimately atgjlh to pass on the idea since their customer (the retailer) failed to show any interest inside the product. Conversely, I’ve seen companies with mild interest in an idea who jump in a new product whenever a retailer expresses interest inside it.