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Growing Business: From Idea To Success (4/1/2011)
By Leslie Stevens, Eclipse Marketing
Individuals often think of something they need or want, which would also solve problems for others or enhance their lifestyles. It may seem simple to bring a product idea to market, however, a great idea is only the beginning of a long enduring process if you hope to sell it to others.
Bringing an idea to market takes tremendous time, money and dedication. This article assumes that the R&D (Research & Development) and production process have been accomplished successfully, and will focus on getting the product to market. There are a several ways to do this, but for now, we're going to review two different options.
1. Licensing your product to another established manufacturer
As mentioned, producing, marketing and selling a product takes a lot of time, money and dedication. If any one of those ingredients is missing, your product idea will fail. Since getting money these days is tough, or perhaps you don't know much about marketing, but would still like to financially benefit from your idea, the best option might be to find a manufacturer who will add it to their existing product line.
Be cautious when presenting your ideas to other companies. You will need an iron-clad NDA (Non-Disclosure Agreement). This can be tricky because companies often don't want to sign one for the reason that they are already working on your idea and don't want to end up in court because you said they stole your idea. Once you get past that, which is possible, if they like your idea, together you can determine licensing terms. Before you get to this point however, make sure you have a patent or a patent pending.
The benefits of licensing a product to another manufacturer is that they might have the ability to bring it to market effectively, whereas you might not be able to do it on your own. In addition, you won't have to risk losing your own money. On the other hand, the disadvantage of licensing your product is that if the product is a huge success, you will only receive a small percentage of the profits.
One item to consider when in negotiation with the licensor is a commitment for a minimum sales volume. For example, you may require the licensor to sell a minimum amount within a specific time period. If the licensor fails to meet that minimum commitment, the contract dissolves. This will enable you to earn a minimum amount of money or get your product back. Make sure you have legal representation before entering into any written agreements. Never enter into a verbal agreement.
2. Bringing your product to market yourself
Bringing a product to market is not an easy process and requires a lot of perseverance.
At this point you should have a patent or patent pending. Now you will need to secure money, which you can get from your existing bank account, family, friends, bank loan or investors. If the money is self-funded or provided by loved ones, you should have a business plan, which will help keep you on track. If you're getting money on loan from a bank or funds from an investor, you MUST have a business plan. You are unlikely to get money without it.
A business plan includes many elements, such as manufacturing issues, human resources, financial forecasts, marketing strategies, etc. Writing a good business plan takes expertise. You can either hire a consultant or purchase software.
One important component of the business plan is your marketing strategy, which should consist of at least the following components:
* Target markets - this clearly identifies who your target customers are and the reasons why they should be your customers. In addition, it includes how and where you will find them.
* Marketing budget - this budget is specifically earmarked for marketing and promotional expenses only. You will need to decide what goes into it, which can be subjective. For example, you will need to determine if something such as business cards is a marketing expense or supply expense.
* Marketing campaigns - this clarifies what specific marketing activities you are going to launch, such as an advertising campaign, public relations campaign, direct mail, etc. This section might also include sales tools, such as brochures that the sales force can give to potential customers.
* Activity calendars - once you decide what marketing activities you are going to do, you need to determine when you are going to execute each event. Without deadlines, things can slip and nothing gets done.
* Return on investment (ROI) - it is important to determine which marketing activity is bringing in the highest ROI. However, it is sometimes hard to determine the exact ROI for each marketing activity, although there are some approaches you can take, such as including a unique phone number on your advertisements, which will help you track where the call originated from.
Bringing a product to market is challenging. Determine your resources and desired long-term goals. Once you've made that decision, decide on the best route to take. Talk to people who have experience developing products before you make that final decision, and once you decide which option is best for you, pursue it with a vengeance. Seeing your product on the shelf or receiving a fat cheque in the mail is very rewarding, but remember that good or even great ideas don?t sell themselves. Marketing must be a key part of your plan.
Leslie Stevens is President of Eclipse Marketing, a full-service marketing and public relations firm servicing the residential and commercial audio/video and security industry. Eclipse Marketing provides electronic system contractors, manufactures and distributors with professionally designed and affordable marketing material. Eclipse Marketing is partners with HiddenWires, CEDIA, TechHome, PARA and InfoComm International.
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