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 most definitely take their time to ensure that 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 sum up “due diligence” as the 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 time, effort and money (i.e.: “risk”) that a company must spend to develop Inventhelp Vibe, the more they will likely evaluate the potential license. Stay in mind that even if a product is apparently basic and low cost, the entire process of developing and manufacturing is rarely easy and affordable. Companies will evaluate such criteria as customer opinions, retail price points, unit cost to produce, competitive landscape, manufacturing feasibility, market opportunity, etc.
Inventors often wonder if they have to perform Research on their invention. As discussed, this will depend on the option you might have elected for taking your product to market.
Option 1 – Manufacturing on your own – If you are planning on manufacturing and marketing the invention all on your own, then yes you will need to perform homework. Essentially, you become the maker in the product and for that reason you ought to perform homework on the invention just like other manufacturers would. The situation i have found is the fact that many inventors who choose to manufacture their very own inventions do little, if any marketing due diligence, that is a big mistake.
Option 2 – Licensing for Royalties – if you are planning on licensing for royalties, i then believe you can minimize your research efforts, because just before any company licensing your invention, they will likely perform their particular due diligence. In case you are using a company like Invention Home, the expenses to market your invention to companies can be minimal – therefore it may set you back more to actually carry out the homework than it could to just market the Inventhelp Caveman Commercials to companies (which, is ultimately your very best type of research anyway). Remember, you need to have taken the time to do your basic market research and a patent search earlier during this process to be assured that your product or service will be worth pursuing to start with (i.e.: the merchandise will not be already on the market and there exists a demand).
Let me summarize. If you are intending on investing a large amount of money on your invention, then it is recommended to analyze an opportunity 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 perform their particular due diligence (not count on yours). Note: it will always be beneficial to have marketing due diligence information available as you discuss your invention opportunity with prospective companies; however, it is not easy to acquire these details so you should balance the effort and expense of gathering the information with all the real need for having it.
In addition, i offers you some research tips.As discussed, the concept of marketing research would be 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 may have got all the appropriate information on sales projections, retail pricing, marketing costs, manufacturing setup and unit costs, competitive analysis, market demand, etc. However, these details is not always very easy to find.
Should you be not in a position to cover an expert firm to do your marketing evaluation, it really is easy to carry out the research by yourself; however, you must know that research needs to be interpreted and utilized for decision-making and on its own, it provides 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 being a “first step” (they’ll usually approach you again with an expensive “marketing” package), the details are largely useless as it is not specific research on your invention. Rather, it is actually off-the-shelf “canned” industry statistics, that will not necessarily assist you in making a knowledgeable decision.
Before we get to the “tips”, let me clarify that “research” can come under various names, but essentially they all mean exactly the same thing. Some of the terms that I have seen to explain the diligence process are:
· Marketing Evaluation
· Commercial Potential
· Invention Salability
· Profitably Marketable
· Researching The Market
· Invention Assessment
All these terms is essentially discussing the research to gauge the chance of an 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 understand the chance of success.
Again, if you are intending on manufacturing your invention on your own, you should think about performing marketing homework on the product. If you are intending 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 another person already think of the invention? Hopefully, you may have already answered this question inside your basic research. Otherwise, check trade directories or perhaps the Internet.
– Can be your invention a solution to some problem? Or even, why do you reckon it is going to sell?
– Does your invention really solve the situation?
– Is the invention already on the market? If you have, what does your invention offer over the others?
– The number of competing products and competitors can you discover on the market?
– What exactly is the range of price of these items? Can your product fall into this range? Don’t forget to aspect in profit and perhaps 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 the way your invention sells and objectively evaluate your list
– Demand – can there be a current interest in your invention?
– Market – does a market exists for your invention, and when so, what exactly is the dimensions of the market?
– Production Capabilities – might it be easy or difficult to produce your invention?
– Production Costs – can you get 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 more than 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 very easy to enter your market?
– Regulations and Laws – does your invention require specific regulatory requirements or are available special laws that must be followed (i.e.: FDA approval)
3. Seek advice or input from others (consider confidentiality)
– Target professionals / experts inside the field.
– Ask for objective feedback and advice.
– Talk to marketing professionals.
– Ask sales agents within the field.
– Ask people you know within the field.
– Speak to close friends and family members whom you trust.
– Request input on the invention including features, benefits, price, and in case they could buy it.
Through the diligence stage, existing manufactures have an advantage in that they have the capacity to speak with their potential customers (retail buyers, wholesalers, etc.). Inside my experience, one of the most important factors that a company will consider is whether or not their existing customers would purchase the product. Should I took Inventhelp Prototype Service to your company to talk about licensing (assuming they might produce it on the right price point), there is a high likelihood that they would license the merchandise if one of the top customers consented to market it.
Whether a retail buyer has an interest in purchasing a product is a driving force for companies considering product licensing. I’ve seen many scenarios where a company had interest in an invention however they ultimately atgjlh to pass through on the idea because their customer (the retailer) failed to show any interest in the product. Conversely, I’ve seen companies with mild interest within an idea who jump in a cool product each time a retailer expresses interest within it.