Tip 5 – Everyone’s going to buy my invention!
Blog by IP Marketing Team
Most people with an invention want to patent their idea and be paid royalties. Many of these inventors will pursue a licensing agreement. This means a manufacturer or other company will produce the product, make it available for purchase and pay the inventor a royalty. In our recent tips we’ve discussed important points regarding inventing and pursuing a licensing agreement. Target market is an aspect that should be considered and one that can be used as an enticement to potential licensing companies.
In the simplest of terms, a target market is a group of consumers who can potentially purchase your invention.
A sizeable and identifiable target market is very important to invention success. There’s many reasons for this. One reason is a licensing company will make a large investment in your invention as they’ll have to manufacturer it, package it, ship it, pay you a royalty, and much more. To not only recoup this investment but to make a profit, they need customers and a lot of them. It doesn’t matter if you have a great idea, if only 8 people can use it, companies are going to pass.
The statement “everyone’s going to buy my invention” might be true, unfortunately it’s not realistic to believe your product will capture 100% of the market or even 50%. There’s several reasons for this such as consumers have choices, product penetration, and pricing. The point is even if only a small percentage of a large target market actually buys a product, massive sales can still be achieved. For instance, a product with a target market consisting of 50 million people only needs 2% of those consumers to purchase the product to achieve 1,000,000 sales.
A great example of a large and desirable target market is smartphone owners. In the United States approximately 150 million people own a smartphone, and 48% of them regularly purchase accessories for their devices. The point, especially when keeping independent inventors in mind, is not to create smartphones but possibly an accessory for use with smartphones.
Another great example is pet products. Pet ownership in the U.S. is at an all-time high, and has increased 24 percent over the last 20 years. Specifically, when it comes to cats, almost 40 percent of all U.S. households have a feline; that’s over 45.2 million households with 94.9 million cats. If you wonder why you see so many pet products on the shelves, that’s why.
The larger a product’s target market the better. It ensures plenty of customers and that fact can be used to help convince a manufacturer to license your invention.
We can help you with this research. Visit the examples of marketing reports on our website. We hope you enjoyed Tip #5. Please consider sharing this information as it may benefit an inventor you know. Check back next week for Tip #6.
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