Wednesday, May 7, 2014

Why Market Research Is Important When Your Business Idea Is An Invention

clip_image002This article was written by John Rau, SCORE Orange County Business Mentor

I recently conducted a Google search using key terms such as “sex”, “inventions” and “invention market research”. I got 122 million hits for the term “sex” and 38.5 million hits for the term “inventions” thus suggesting, as a metric, that perhaps sex was 3 times more important than inventions. (Note: I’m not sure everyone would necessarily agree with my logic relative to sex!) With regard to the term “invention market research”, I got 19.7 million hits. This would then imply, using my logic, that sex was over 6 times more important than invention market research! (Again, no comment about my logic here.). What is noteworthy, however, when we focus on inventions rather than sex, is that I got over 50% as many hits for “invention market research” relative to hits for “ inventions”, thus suggesting the importance of invention market research relative to inventions. In comparison, I also searched on the term “market research” and got 32.4 million hits. What’s interesting here is that over 60% of the “market research” hits were related to “invention market research”, thus suggesting (again trying to create an illustrative metric here) that a major focus of market research activities deals with market research relative to inventions. This is an extremely important point as the term “market research” as an activity in the invention development process occurs in many areas.

If you want to commercialize your invention idea, then you need to understand the market. In this regard, the first step is to study it through market research, which as an activity occurs in many areas such as:

· The determination of “prior art” which includes existing related patents as well as non-patented similar products already in the marketplace.

· Information required in your initial assessment to ascertain if it makes economic sense to move forward with your invention idea.

· The basis for the marketing element in your business plan if you are moving forward and plan to develop and market your invention yourself.

· The basis for your marketing plan and/or invention business plan and promotional materials if you plan to promote your invention idea to investors, potential licensing candidates and companies who might have an interest in buying your invention.

The prior art search should generally be your first step for two basic reasons. First, to determine the patentability of your idea you need to conduct a patent search to determine what similar or like inventions, if any, are already patented. The term “similar” doesn’t necessarily mean “identical”, but claims listed in existing patents may overlap those you intend to make, thus creating the basis for an infringement claim should your invention ever enter the marketplace. Another subtle, but important point, is that some similar (or like) products you identify in your market research efforts that are already in the marketplace may never have been patented for a variety of reasons. Don’t assume that all existing and potentially competing products in the marketplace have been patented. If there is enough similarity with your product claims, then your invention idea would not be regarded as “new” and, as a result, not patentable. If it is determined that your invention idea is not patentable, then that doesn’t necessarily mean you should stop and not move forward with trying to commercialize your idea. It just means that you won’t be able to receive patent protection in the sense of keeping others from using your idea without your permission. In this situation, you are most likely in the Red Ocean and you will have to decide if you can successfully compete against existing competitive products.

If you decide to move forward to develop and market your invention idea yourself by setting up a business, then you should have a business plan. Many templates for such a plan are available on the Web and preparation assistance can be obtained from the Small Business Administration and the Service Corps of Retired Executives (SCORE) relative to which there are over 340 chapters across the country. A key chapter (or element) of your business plan is your marketing plan which defines your marketing strategy and how you plan to market your new product. Your market research results form the basis for this section of your business plan. Here is where you define who your competition is, what are the competing products and how do they compare with yours, what are the sales trends and demand for products like yours, who are the potential consumers, how big is the market, how do you plan to capture market share, etc.

If you plan to promote your invention idea to prospective investors, licensing candidates and potential buyers of your new product idea, then you need to recognize that trying to sell your invention idea without patent protection will limit its marketability. In any case, you can expect that most companies who may consider licensing or purchasing your invention will inquire about your patent search results, thus be prepared to share these results along with those of your market research activities.

If you decide not to prepare a business plan and want to promote your invention idea such as to potential licensing candidates and/or companies that might have an interest in purchasing your invention idea, then you will need to prepare promotional materials such as brochures and summary presentations as to what your invention is all about. In addition to a description of your invention in terms of what it does, what needs it meets, how it is better than and/or an improvement over existing potential competing products, you will need to address its “marketability” in terms of how it fits in the marketplace. You should identify its unique features and describe how these would make it appealing to customers. Having sales projections based on an analysis of similar or related products would be useful along with any market trend information to show compatibility with your new product would also be useful. Here’s where you will need the results of your market research.

In summary, without having conducted adequate market research, your chances of commercialization success are “slim to none”!