Below follows a brief outline of the firm’s presentation for the U.S. Dept. of Commerce National Innovation Workshop (N.I.W.) series. Big Three Questions:
- Are the Product and Market Viable?
- Can we Do It?
- Will the Payoff Be Worthwhile?
(This section based on excerpts from “Marketing In Emerging Companies,” by R. T. Davis and F. G. Smith)
All efforts have the single purpose to satisfy customer requirements at a profit!
Three Stereotyped Markets
One result of market compartmentalization is that we have developed stereotypes of each, some flattering, some not, depending upon our particular leaning. For example, industrial marketing is rational, technical, complex, sales-oriented, service-dependent, reliable, respectable, and honest. Consumer marketing is emotional, flaky, based on image and advertising, concerned with perceptions, distribution-oriented biased toward merchandising and ambiance, and dominated by product management. Service marketing, in its turn is fuzzy, personal, ethereal, in need of rationalization, low in productivity, hard to get your hands on, devoid of good distribution channels, one-on-one, and people-dependent.
Valuing an Idea or Concept
How do you value an idea or concept, before you bring it to market? These five steps can help you determine the value of your idea:
- Patent search by patent attorney
- Is the technological advancement, broad or very limited?
- Broad or narrow claim protection?
- Patent enforcement capabilities
- Marketing resources
Unique market capture
The first one to enter the market usually earns the highest rewards.
How long do you have a market to yourself before competition copies or improves upon your product?
How strong is your initial distribution network?
Estimating the Value of What and To Whom?
A. Nature of Idea
- Business approach
- Improvement type invention
- Pioneering inventions
B. Protectability – Effect on Market Considerations
- Patent Issues
- Breadth of Protection – Claims
- Copyright Issues
- Trade Secret Issues
- Absence of Exclusivity – Reliance on Market Coverage
C. Reasons for estimating value – the timing factor – evolution from naked idea to marketable product. (Accumulation of data bearing on potential value)
D. Value – Ownership Considerations
- Value to Inventor
- Value to Licensee
- Value to Organization – Fully Funded (i.e. Venture Capital Support)
E. Approaches to Determining Value
- Education (Seminars, Books, Government Assistance)
- Use of Professional Help and Their Roles ie patent lawyer, marketing pro, prototypes
- Danger Areas
- Invention Brokers
- Friends and Relatives Feeding Egos
- Analogies to Successes of Others, Particularly Large Companies
- A Single Magic Formula
- Superficial Studies Based on Supposition
- Sales Minus Costs Equal Profit
- Contingencies and Alternatives Suggest Numerous Plans
- A million sales at 1% royalty versus a thousand sales at a 10% profit
F. The Difference Between Value and Price
The fundamental purpose of a business is to create value where there was none. Value consists of such things as unique features and options, improved quality, faster service, improved warranties – value is basically a package of benefit. These benefits meet the needs of the buyers. Once the package of benefits is designed, the price must be determined.