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Right Target Markets For Inventions

Identifying the right target market can often be the difference between success and failure for new products. The right market will be more willing to accept, and ready to pay more for, the right product, and the wrong market will be slower to accept your product and will require more marketing efforts, cutting down on your profits. So choose your target market carefully. There are many factors that determine the right target market, and this newsletter will cover three important factors: market size, pricing and your ability to meet the right contacts.

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Markets that are the right size for inventors

While many inventors want to enter a big market with lots of customers, this is most often a mistake. Your marketing efforts (unless you have a huge marketing budget) will probably be more like a drop in a bucket than a big splash and it is unlikely that consumers will notice.
You want to choose a market small enough that you can make that market notice your marketing efforts. As your budget grows, your market can expand, but you need to consider what funds and time you have now for marketing your product.

Your market maybe be local, or include specialty shops or boutiques. You may sell just through one retail outlet or through catalogs to begin with.

Pricing is aligned with inventor’s costs

Most inventors don’t realize all the hidden costs in selling a product. For instance, selling to retailers through distributors means both the distributor takes a percentage of the wholesale price (sometimes more than 30%) and then retailer often takes 50% of the retail price (double the wholesale price). So if you decide to sell products this way, which many inventors do, you need to make sure that your target customers are willing to pay a high enough price so that you can produce your product and still make a profit on only 70% of the wholesale price, or 35% of the retail price.

You need to do market research to determine what price consumers are willing to pay and if they aren’t willing to pay a price that allows you to make a profit, you either need to choose different target customers who are willing to pay more, find a different distribution channel, or rework your product so it is cheaper to make, but still valued by your target customers

Meeting the right contacts

Every market and industry has people who are knowledgeable and very helpful. The best way to meet potential contacts is either to meet them at trade shows or trade associations or to simply request product information. When you read trade magazines, you’ll notice that they have extensive new product sections, or in the case of service businesses, new services that companies want to promote or sell. Request information for any product or service that is listed in the new product/service section. You are not necessarily interested in the information about the product or service but in the name of the company contact that will typically come on a letter that will arrive with the literature. You can then call up that contact and ask questions such as how their product or service is sold, who are the most important companies in the market, what the new market trends are, and which companies have had the most successful new introductions. You might also ask a contact that is especially helpful if you can contact him or her again in the future. Before you start spending too much money on an idea, make sure you can locate at least one or two contacts in your industry that can help you push forward.

Many industries or markets also have trade associations which are groups of people, including retailers, distributors, marketers, and purchasing agents. Trade associations work for the betterment of companies in the industry. They have volunteer committees of members who do most of the work of the association. You can learn about an industry by joining an association and volunteering to be on committees. Marketing committees can be especially helpful for a new entrepreneur since they typically have volunteers that are in marketing for their own companies. You can find trade associations in Gale’s Book of Associations, which can be found at most large libraries. Make sure in your initial analysis to see if the market is right for you that you look for trade associations and try to attend a meeting. Local trade associations are a big plus.

Another group to consider for finding contacts is your local Chamber of Commerce. Local Chambers of Commerce have monthly meetings and you should try attending at least one meeting in your town as there may be contacts that can help you. Chambers of Commerce frequently have people who like to help new businesses and some Chambers have active mentoring programs that can give you a sounding board for your project.