When inventors contact my company about Due Diligence I like to describe the reasoning with a simple example. Think about it this way, if a manufacturer is getting ready to choose to develop, manufacture, and market a new product which could potentially cost $50,000 to $150,000 to produce plus inventory costs, they would definitely take their time to ensure that these are making a good business decision in moving forward with all the product (i.e.: they have done their homework on the product). Therefore, you can sum up “homework” as the 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 hours, effort and money (i.e.: “risk”) that a company must spend to develop Inventhelp Licensing Expo, the more they will evaluate the potential license. Keep in mind that even if a product seems to be basic and inexpensive, the entire process of developing and manufacturing is rarely simple and affordable. Companies will evaluate such criteria as customer comments, retail price points, unit cost to manufacture, competitive landscape, manufacturing feasibility, market opportunity, etc.
Inventors often wonder if they should perform Research on their own invention. As discussed, this may depend on the option you have elected for taking your product to market.
Option 1 – Manufacturing on your own – If you are planning on manufacturing and marketing the invention on your own, then yes you will have to perform homework. Essentially, you feel the producer from the product and consequently you ought to perform the due diligence on the invention just like other manufacturers would. The situation which i have found is the fact that many inventors who elect to manufacture their particular inventions do little, if any marketing homework, which is a big mistake.
Option 2 – Licensing for Royalties – if you are planning on licensing for royalties, then I believe you can minimize your due diligence efforts, because prior to any company licensing your invention, they will likely perform their particular homework. Should you be using a company including Invention Home, the expense to market your invention to companies can be minimal – therefore it could cost you more to really perform homework than it could to just market the Inventhelp Prototype Service to companies (which, is ultimately your best kind of research anyway). Remember, you need to have taken time to accomplish your basic consumer research along with a patent search earlier during this process to be reassured that your product or service will be worth pursuing to start with (i.e.: the merchandise 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 you should always analyze an opportunity first to make certain it’s worth pursuing; however, if you can actively advertise your invention to companies with minimal cost, you can be assured that an interested company will perform their own homework (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 really not easy to get this info so you need to balance the effort and cost of gathering the data with all the real need for having it.
In addition, i offers you some homework tips.As discussed, the thought of marketing homework is always to gain as much information as you can to produce a well-informed decision on making an investment in any invention. In a perfect world, we would have got all the appropriate information on sales projections, retail pricing, marketing costs, manufacturing setup and unit costs, competitive analysis, market demand, etc. However, this info might not be easy to come across.
Should you be not in a position to pay a specialist firm to do your marketing evaluation, it is possible to perform the research on your own; however, you must understand that research should be interpreted and employed for decision-making and by itself, it has no value. It really is what you use the details that matters. Note: I might recommend that you simply do NOT PURCHASE “consumer research” 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 is off-the-shelf “canned” industry statistics, that will not necessarily help you make an informed decision.
Before we get to the “tips”, let me clarify that “research” can come under various names, but essentially each of them mean exactly 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
All these terms is actually discussing the study 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, however, you can perform some steps to assist you better comprehend the likelihood of success.
Again, if you are intending on manufacturing your invention by yourself, you should look at 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.
A few recommendations for marketing due diligence are highlighted below.
1. Ask and answer some elementary questions
– Can be your invention original or has someone else already come up with the invention? Hopefully, you might have already answered this inquiry inside your basic research. If not, check trade directories or perhaps the Internet.
– Is the invention a solution to a problem? If not, why do you reckon 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 within the others?
– The amount of competing products and competitors can you locate on the market?
– What is the range of price of these items? Can your product fall into this range? Don’t forget to element in profit and perhaps wholesale pricing and royalty fee, if any.
– Can you position your invention being a better product?
2. List the pros and cons which will impact the way your invention sells and objectively evaluate your list
– Demand – is there an existing demand for your invention?
– Market – does a market exist for your invention, and in case so, what exactly is the scale 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, 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 much better than other products (including better, faster output, less noise, better smell, taste, look or feel)?
– Market Barriers – is it difficult or simple 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 inside the field.
– Demand objective feedback and advice.
– Speak with marketing professionals.
– Ask sales representatives in the field.
– Ask people you know inside the field.
– Speak with close family and friends who you trust.
– Demand input on the invention including features, benefits, price, and in case they could buy it.
Throughout the diligence stage, existing manufactures come with an advantage in this they are able to talk with their clients (retail buyers, wholesalers, etc.). Within my experience, one of the most crucial elements which a company will consider is whether their existing customers would purchase the product. If I took Inventhelp Patent Information to some company to discuss licensing (assuming they might produce it at the right price point), you will find a extremely high likelihood which they would license the product if a person with their top customers consented to sell it off.
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 but they ultimately atgjlh to move on the idea since their customer (the retailer) failed to show any interest inside the product. Conversely, I’ve seen companies with mild interest inside an idea who jump with a new product each time a retailer expresses interest within it.