Almost everyone experiences that moment of enlightenment at one time or another. After years of thinking and tinkering, you’ve finally hit upon the idea that’s going to make you a bundle.
But now what? If you’re like most people, coming up with the idea for a new product or service was easy, but when it comes to getting your idea off the paper and into the stores, it’s a whole different ball game.
For your idea to be more than a pipe dream, you need to develop a detailed, systematic, step-by-step strategy designed to bridge the gulf between you and your customers. Here are the key steps.
Conducting Market Research
The first step in bringing any product or service to the market is determining if there is a market. There’s no point in spending a lot of time and money to create something nobody wants. The answer to the following questions will tell you whether or not if your product or service is viable.
1. Does the product or service fill a need? There’s a big difference between a great idea and a great idea that people will buy. If there’s no existing need or demand for your product or service, you’ll be doomed to failure.
2. Are the merits of the product or service easily recognized or will it need a great deal of promotion? A product or service that “sell itself” is a lot cheaper to bring to market than one that needs a lot of advertising and promotion.
3. Is the market for the product or service sizable enough to warrant the investment in development and marketing? You must have a large enough customer base to generate ongoing sales and revenues.
4. Is the market easy to reach? Markets are determined by geography, demographics, socioeconomic conditions, and a variety of other factors. An analysis of the costs of reaching your market will need to take all these factors into consideration.
5. Are development costs low enough that the product or service can be sold at a reasonable profit? You won’t make money if they’re not.
CREATING A MARKETING, ADVERTISING, AND PROMOTIONAL PLAN
Your market research will serve as the foundation of a marketing plan. This will involve advertising, packaging, logos, promotions, public relations, and any other technique to spread the word about your product or service.
Your plan will also include a strategy to reach your customers and clients. You may choose to buy mailing lists from other businesses or target mailings to certain zip codes that include your target socioeconomic groups. You may select different advertising venues, including radio and television if you have a sufficient budget. I also suggest having someone design a Web site so that you can provide consumers with information about your product or service on the Internet. Down the road you might begin using it to conduct e-commerce.
Finally, make sure you decide what sets your product or service apart from the competition. That becomes your selling point. Those special qualities should be articulated and communicated in very bit of advertising and every promotional activity you carry out.
LET SOMEONE ELSE DO IT
Although manufacturing and marketing a product yourself is potentially very lucrative, it can also be extremely expensive and very risky. Most business founded on a single good idea or product fail after three of four years unless they can come up with additional products.
Many individuals make money by coming up with an idea and rather than trying to market it themselves, sell it or license it to others. To sell a product or an idea, you should find a company that’s interested, negotiate the best price you can, an take the money and run. It’s the safest strategy, but obviously it can be the least profitable. If the product takes off, you’re left with just a fraction of the profit you could have earned.
Another approach is to license a company to manufacture and market your product in return for an initial fee and an ongoing percentage of sales. It’s a bit more risky than selling your idea: if the product falters, you’ll earn little more your fee. But if it does well, you’ll enjoy monthly royalty checks the entire time the product is on the market. Most licensing agreements pay the creator of a product anywhere from 5 to 10 percent of slaes.
PROTECTING YOUR IDEA
An important consideration in selling new products or services is legal protection of the idea. Otherwise, your idea if fair game. If you can protect your concept with a patent, you’ll have gone a long way toward locking in your market, at least temporarily. Just as important, it also provides you with added leverage in selling or licensing your product.
There are several types of patents. Utility patents provide the best protection. But obtaining one is time-consuming and, because it requires the services of a patent lawyer, expensive. If you have a novelty product with a limited market life, it probably doesn’t need a utility patent. If it’s a more substantial product with years of lucrative sales potential, a utility patent is probably worth the cost. Design patents protect the appearance of a product, but not its function. Trademarks are the name, logo, design, slogan, or any other identifier you use to destinguish your product from others on the market. Copyrights are issued by the Library of Congress and protect creative works like books, films, plays, and paintings.