“There are around 1.5 million patents in effect and in force in this country, and of those, maybe 3,000 are commercially viable.” – Richard Maulsby, director of the Office of Public Affairs for the U.S. Patent & Trademark Office
Inventors tend to exhibit excessive optimism when it comes to the market viability of their inventions. This is because most people are biased; we usually believe that our own ideas are the best ones. Human beings are also prone to “confirmation bias,” which refers to our tendency to ignore or dismiss evidence that contradicts our conclusions. Making the problem worse, many inventors may ask friends and family members for feedback on their ideas—and a friend may say, “I’d buy one in a heartbeat.” Unfortunately, this type of advice is usually not truthful. Some friends may fear hurting the inventor’s feelings, and unless the friend happens to be a product marketing expert, their advice is probably not backed by any kind of critical analysis like third-party market research.
Benefits of Independent Third-Party Market Research
An independent market research company should be one of the members of your Master Manufacturing Team! Engaging a third-party marketing group to conduct independent research and perform due diligence on each new product helps inventors to validate their own findings. Entrepreneurs should conduct their own research prior to working with an outside firm. An inventor should strive to become an expert in the markets where the product will be sold. A third-party firm can provide an independent analysis and closely examine the cost of manufacturing, the competition and the key features and benefits that make a product sellable.
Pricing and Manufacturing Costs
The real question of marketability boils down to four factors:
- The number of people who need for the product,
- The price they will pay for it,
- The cost of manufacturing the product, and
- The pricing and availability of competing products.
A product idea might be a great one, but not if only ten people will buy it. A friend might say, “I’d buy your product in a heartbeat,” but how much would that friend pay for it? No matter how attractive or useful a product may be, it is necessary to keep costs below a critical threshold; otherwise, the product will be “priced out of the market.” Retailers will not put a product on store shelves unless they are confident that it will sell at a price that will net them an acceptable margin. The economics of an invention essentially hinge on the cost of manufacturing the product. Independent analysis by a third-party market research firm is important for this reason; an expert can project the retail price and work the numbers backward to figure out the maximum production cost.
Key Features and Benefits
It was once said that “if you can build a better mousetrap, the world will beat a path to your door.” The real world is not that simple. Whether you are introducing a brand-new product category to the world or making an improvement to an existing type of product, it must alleviate a pain that people are feeling. Otherwise, few will pay any attention to the bells and whistles, no matter how nifty its inventor may think they are. An analysis by a third-party market research firm can help to determine what unmet needs exist in the marketplace and whether these needs are strong enough to justify a purchase.
Competing Products and Substitutes
Entrepreneurs often miss the mark when it comes to competitive analysis and market research. When we feel that we have invented something great, we may be prone to believing that no one else has ever done anything like it. Even if this is true (which it often is not), more questions remain. Did someone else attempt to build a similar product before and fail? If so, why? Do other products already on the market adequately relieve the end user’s pain? If so, in what specific way does the new product add more value? A third-party marketing research firm can take a thorough inventory of the products and solutions currently available and compare the new product’s benefits against the competition.
Remaining objective about the value of one’s own product or invention is difficult, because it goes against human nature. Most inventors are not marketing experts—which is why it is easy to overlook critical factors that can influence whether a given product idea is a “go” or a “no go.” It is unfortunate but common for inventors to sink considerable sums of money into new products, only to find that no one wants to buy the fruits of their hard work.
Marketing experts are trained to look at businesses with an objective eye and assess how a potential customer is likely to view them. We recommend utilizing the service of an independent third-party market research firm, and doing so sooner rather than later. Understanding your product’s potential market share and marketability are keys to partnering with Alotech!