When inventors contact my company about Due Diligence I like to describe the idea 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 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 building a good business decision in continuing to move forward using the product (i.e.: have they 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 additional time, effort and cash (i.e.: “risk”) that a company must spend to develop Find A Patent Attorney, the more they will likely evaluate the potential license. Stay in mind that even if a product appears to be basic and inexpensive, the process of developing and manufacturing is rarely easy and affordable. Companies will evaluate such criteria as customer comments, list price points, unit cost to produce, competitive landscape, manufacturing feasibility, market opportunity, etc.
Inventors often wonder if they should perform Research on their invention. As discussed, this will depend on the option you have elected to take your product or service to promote.
Option 1 – Manufacturing by yourself – If you are intending on manufacturing and marketing the invention by yourself, then yes you will need to perform due diligence. Essentially, you feel the manufacturer of the product and as a result you need to carry out the due diligence on your own invention just like other manufacturers would. The problem that I have found is that many inventors who choose to manufacture their very own inventions do little, if any marketing research, 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 before any company licensing your invention, they will likely perform their particular homework. If you are working with a company like Invention Home, the expenses to promote your invention to companies can be minimal – therefore it could cost more to really perform the homework than it would to just market the Inventhelp Commercial to companies (which, is ultimately your best kind of research anyway). Remember, you need to have taken the time to perform your basic researching the market along with a patent search earlier in the process to be reassured that your products or services will be worth pursuing in the first place (i.e.: the merchandise is not already on the market and you will find a demand).
Let me summarize. If you are planning on investing a lot of cash on your invention, then you should always analyze an opportunity first to ensure it’s worth pursuing; however, should you can actively market your invention to companies with minimal cost, you can be assured that an interested company will work their own due diligence (not count on yours). Note: it will always be helpful to have marketing due diligence information available when you discuss your invention opportunity with prospective companies; however, it is far from easy to get this info so you have to balance the effort and cost of gathering the information with the real necessity of having it.
Furthermore, i offers you some research tips.As discussed, the idea of marketing research would be to gain as much information as you can to make a well-informed decision on investing in any invention. In a perfect world, we might have 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 find.
Should you be not in a position to pay for a professional firm to perform your marketing evaluation, it is possible to carry out the research by yourself; however, you must know that research ought to be interpreted and utilized for decision-making and by itself, it provides no value. It is everything you do with the information that matters. Note: I might recommend that you simply do NOT PURCHASE “researching the market” from an Invention Promotion company. Often sold as being 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 the invention. Rather, it really is off-the-shelf “canned” industry statistics, that can not always assist you in making an informed decision.
Before we arrive at the “tips”, let me clarify that “due diligence” can come under various names, but essentially all of them mean the same thing. A few of the terms which i have experienced to illustrate the diligence process are:
· Due Diligence
· Marketing Evaluation
· Commercial Potential
· Invention Salability
· Profitably Marketable
· Researching The Market
· Invention Assessment
Each one of these terms is essentially discussing the study to assess the likelihood of your invention’s salability and profitability. The question of whether your invention will sell can never be known with certainty, but you can perform some steps that will help you better be aware of the likelihood of success.
Again, if you are intending on manufacturing your invention on your own, you should think about performing marketing research on the product. If you are planning on licensing your invention for royalties the company licensing your invention should perform this research.
Some suggestions for marketing research are highlighted below.
1. Ask and answer some fundamental questions
– Can be your invention original or has someone else already develop the invention? Hopefully, you might have already answered this query in your basic research. If not, check trade directories or perhaps the Internet.
– Is your invention a solution to your problem? Otherwise, why you think it can sell?
– Does your invention really solve the situation?
– Is your invention already on the market? In that case, what does your invention offer on the others?
– How many competing products and competitors can you find on the market?
– Exactly what is the range of price of these products? Can your products or services fall into this range? Don’t forget to aspect in profit and possibly wholesale pricing and royalty fee, if any.
– Can you position your invention as a better product?
2. List the advantages and disadvantages which will impact the way your invention sells and objectively evaluate your list
– Demand – is there a current demand for your invention?
– Market – does a market are available for your invention, and in case so, what exactly is the scale of the market?
– Production Capabilities – might it be easy or challenging to produce your invention?
– Production Costs – can you have accurate manufacturing costs (both per unit and setup/tooling)?
– Distribution Capabilities – will 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, simplicity of use)?
– Retail Price – do you have a price point advantage or disadvantage?
– Life – will your invention last over 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 – could 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.
– Request objective feedback and advice.
– Speak to marketing professionals.
– Ask sales people within the field.
– Ask people you know in the field.
– Speak to close friends and family members whom you trust.
– Ask for input on the invention like features, benefits, price, and if they would purchase it.
Through the diligence stage, existing manufactures provide an advantage because they have the capacity to chat with their potential customers (retail buyers, wholesalers, etc.). Inside my experience, just about the most important factors which a company will consider is if their existing customers would buy the product. Basically If I took Ideas Inventions to some company to discuss licensing (assuming they could produce it at the right price point), there is a extremely high likelihood that they would license the product if an individual of their top customers agreed to sell it off.
Whether a retail buyer is interested in purchasing a product is a driving force for companies considering product licensing. I’ve seen many scenarios where a company had interest within an invention but they ultimately atgjlh to pass through on the idea as their customer (the retailer) failed to show any interest in the product. Conversely, I’ve seen companies with mild interest in an idea who jump with a cool product when a retailer expresses interest within it.