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 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 definitely take their time to ensure that they may be making a good business decision in continuing to move forward with all the product (i.e.: have they done their homework on the product). Therefore, you can summarize “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 additional time, effort and cash (i.e.: “risk”) that a company must spend to develop How To Patent Your Idea, the more they are going to evaluate the potential license. Keep in mind that even if a product is apparently basic and inexpensive, the process of developing and manufacturing is rarely basic and inexpensive. Companies will evaluate such criteria as customer comments, retail price points, unit cost to produce, competitive landscape, manufacturing feasibility, market opportunity, etc.
Inventors often wonder if they have to perform Homework on their invention. As discussed, this will depend on the option you have elected for taking your product to advertise.
Option 1 – Manufacturing on your own – If you are intending on manufacturing and marketing the invention on your own, then yes you will need to perform due diligence. Essentially, you become the maker from the product and consequently you ought to perform the research on your own invention just like other manufacturers would. The issue that I have found is that many inventors who elect to manufacture their own inventions do little, if any marketing homework, which is actually a big mistake.
Option 2 – Licensing for Royalties – if you are intending on licensing for royalties, then I believe you can minimize your research efforts, because prior to any company licensing your invention, they will perform their very own research. If you are using a company like Invention Home, the costs to market your invention to companies can be minimal – therefore it may cost you more to actually perform the due diligence than it might to just market the Inventhelp Tv Commercials to companies (which, is ultimately the best form of research anyway). Remember, you should have taken enough time to do your basic consumer research along with a patent search earlier in the process to be reassured that your products or services is worth pursuing in the first place (i.e.: the item will not be already on the market and you will find a demand).
Let me summarize. If you are intending on investing a substantial amount of cash on your invention, then you should always analyze the chance 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 assured that an interested company will do their very own due diligence (not count on yours). Note: it will always be helpful to have marketing research information available when you discuss your invention opportunity with prospective companies; however, it is really not easy to acquire these details so you should balance the effort and cost of gathering the details with all the real need of having it.
Furthermore, i provides you with some research tips.As discussed, the concept of marketing research is always to gain as much information as is possible to make a well-informed decision on making an investment in any invention. In a perfect world, we would have got all the appropriate 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.
If you are not in a position to cover a professional firm to perform your marketing evaluation, it really is possible to carry out the research by yourself; however, you must know that research ought to be interpreted and employed for decision-making and by itself, it offers no value. It really is what you do with the data that matters. Note: I would personally recommend that you simply do NOT PURCHASE “consumer research” from an Invention Promotion company. Often sold as a “first step” (they’ll usually approach you again having an expensive “marketing” package), the information is largely useless as it is not specific research on your invention. Rather, it is off-the-shelf “canned” industry statistics, which will not always assist you in making an educated decision.
Before we reach the “tips”, let me clarify that “research” can come under various names, but essentially all of them mean exactly the same thing. Some of the terms i have seen to explain the diligence process are:
· Marketing Evaluation
· Commercial Potential
· Invention Salability
· Profitably Marketable
· Consumer Research
· Invention Assessment
Each one of these terms is essentially referring to the investigation to assess the likelihood 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 comprehend the likelihood of success.
Again, if you are intending on manufacturing your invention all on your own, you should consider performing marketing due diligence 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 research are the following.
1. Ask and answer some basic questions
– Is your invention original or has someone else already think of the invention? Hopefully, you have already answered this question inside your basic research. Otherwise, check trade directories or perhaps the Internet.
– Is the invention a solution to a problem? Otherwise, why do you reckon it will sell?
– Does your invention really solve the issue?
– Can be your invention already on the market? If you have, what does your invention offer within the others?
– The number of competing products and competitors can you locate on the market?
– What exactly is the range of price of these items? 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 as a better product?
2. List the advantages and disadvantages that can impact how your invention sells and objectively evaluate your list
– Demand – is there a preexisting need for your invention?
– Market – does a market exist for your invention, and if so, exactly 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 difficult 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 – do you have a price point advantage or disadvantage?
– Life – will your invention last more than 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 very easy to enter your market?
– Regulations and Laws – does your invention require specific regulatory requirements or exist 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.
– Ask for objective feedback and advice.
– Talk to marketing professionals.
– Ask sales people within the field.
– Ask people you know within the field.
– Talk to close family and friends that you trust.
– Request input on the invention like features, benefits, price, and in case they might buy it.
Throughout the diligence stage, existing manufactures provide an advantage in that they are able to speak with their clients (retail buyers, wholesalers, etc.). Inside my experience, just about the most important factors that the company will consider is if their existing customers would get the product. If I took Inventhelp Invention Prototype to some company to go over licensing (assuming they might produce it on the right price point), you will find a extremely high likelihood that they would license the merchandise if one of the top customers agreed to market 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 in an invention however they ultimately atgjlh to move on the idea since 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 at a new product when a retailer expresses interest inside it.