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 article will cover two important factors: market size and pricing.

When you determine your market you need to answer these questions:

1. Who are your customers? (income level, gender, hobbies, etc.)
2. Where do they live? (city, state, region, or country)
3. How will they find you? (they belong to an online community, read a certain newspaper, go to certain stores, etc.)

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.

Keep Marketing Expenses Below 10% of Sales

Once you choose your target market, marketing can be very expensive. You need to be careful of how you spend the limited dollars you have allotted to marketing. These are some tactics to use to make your marketing dollars go further.

Low Cost, Even Free Marketing Tactics

In store demonstrations allow you to build sales by investing only your time. You can also see if bloggers or websites will review your product and post their review online if you send them a sample.

Publicity

Publicity is a great way to get a lot of attention. One of the great things is that publicity can be free. If you can interest news sources in your product, you, or in the story behind you and the product, there is a good chance they will do a story about you and your product.

You can also do contests, trials, and other events to promote your product and invite news people to the event. For instance, do you have a new bike product? You can organize a bike event, even for a favorite charity if you’d like, and have people try out your product.

Select Small Markets with Easy Communication

By choosing smaller markets, your marketing expenses will be much lower. Smaller markets have fewer publications and websites, so you will need to place fewer ads and the ads are also inexpensive. Ideally, you want a market with publications and websites that have good readership, so you can be sure that your ads are reaching potential customers. Also, you can offer to write articles for these media outlets and list your web address and that you invented such and such a product in your bio info.

Related posts:

1. Selling to Wal-Mart and Target

We also can create a custom list of potential sales reps (up to 300 of them) just for your product and for any market for just $240. For more information on this service, contact us at info@onestopinventionshop.net.

Kitchen Sales Rep and Kitchen Catalog List for $24.99

Related posts:

1. Sales Reps for Baby and Children’s Products Market
2. How to Approach Sales Reps
3. Buy a list of Sales Reps for Mass Merchants and Drug Stores

Hardware stores can be a great opportunity for inventors. Not only is the hardware industry open to inventors, carries a wide range of products and has stores in every part of the country, but also an inventor can build sales, first selling through independent stores, taking on sales reps, then getting into small chains and then eventually selling through distributors or the big retailers. In this is a three part series on selling to hardware stores, I will cover: how an inventor can develop a business selling to hardware stores (Part 1), how to set up a joint venture or partnership arrangement to help sell to hardware stores (Part 2), and how to license a product to the hardware industry (Part 3).

Types of Partnerships

For inventors, a joint venture is an agreement by two parties to work together to design, promote or manufacture a new product . The parties split the work and the profits. Inventors can form a wide variety of partnerships, including:

• A partnership with a manufacturer who will help design the new product, build prototypes and eventually produce the product. The inventor is responsible for all sales and marketing activities and may also pay for the patent and other tooling expenses.
• A contract with a sales and marketing group that agrees to market the product.
• An agreement with an expert in the field–such as a remodeling expert or a well-known repair person–to present the product to consumers.
• An alliance with an engineer or industrial designer who will finalize the product design.
• A joint venture with another marketing company to exploit a market other than the one originally targeted.
• An agreement with an overseas manufacturer to make your product for a reduced price and extended terms in exchange for overseas marketing rights.

Inventors form alliances because either they need a partner to help foot the bill, or they need to offer an extra incentive to get help from key people in the market. For instance, an inventor who wants to penetrate the hardware-store market may team up with a top manufacturers’ sales representatives ‘ agency. Agencies might not be interested in taking on a product for a standard 10 percent commission. But they might be willing to take on the product–and pay for promotion–if they form an alliance and receive 50 percent of the profits.

Reasons for Forming a Joint Venture

When forming joint ventures and alliances, you might be hoping to do any of the following:

• Introduce and penetrate the market as quickly as possible.
• Receive sufficient funding and support for a project that is beyond your resources and experience.
• Have more involvement in the ongoing success of the product than you would get in a licensing arrangement.
• Develop the product further before it can be licensed. An alliance can be a precursor to an eventual licensing agreement.
• Generate additional market information and distribution-channel contacts that can be used for subsequent inventions.
• Obtain management, administrative and manufacturing support for a new product. A company with experienced personnel can do these tasks far better than most inventors.

Finding Potential Partners

Most inventors don’t have the time or experience to market their product, so they hope to find a marketing firm to take over sales. How do you find a firm that will work for you?

Marketing partners

The best approach is to attend one or two key trade shows in your target industry. You can find shows at www.tsnn.com or www.tradegroup.com . When you get to the show, you’ll find booths selling products from many companies. They are either distributors or marketing agents, and you can talk to them about carrying your product. Meeting people in person at shows is by far the best way to land a partner.

If you can’t attend, call the show’s promoter, and request a directory that lists the exhibitors. Contact the firms with “marketing” or “distribution” in their names, and also call those that carry products sold to the kind of retailers or distributors that might carry your product.

Steps to follow

• Before you contact companies produce a sales flyer. If you don’t have a product or prototype to take a picture of, use a drawing of your product
• In a separate report identify the competition and explain why your product is better.
• In another document, list all the items you can that show the product will be a success. Include testimonials, market research, any sales results and any other encouraging results that show your product will sell.
• Attend a trade show if at all possible.
• If you can’t attend, first request literature from a company. It will normally come signed by a person in the sales department. Contact that person and tell them you have a great product and wondered if the target company would be interested in looking at your information. Normally the person will request your information. In a follow up contact, find out who in the company you should present the idea to. If the person likes your idea, in many cases they will present it for you and make a case. Other times they will just give you the name of the person, but then you can still state that you were referred to the person in charge by your original contact.
• If the company likes your product and is willing to market it for you, offer 20% to 25% of the sales revenue for handling the marketing and sales work.

For more information on using joint ventures, check out Don’s book, The Risk-Free Entrepreneur.

Manufacturing Partners

Typically you want a manufacturing partner when you can’t afford the tooling or initial production run costs. You might have to call on several manufacturers to find one willing to be a partner. Look for companies currently running at 50 to 60% capacity. That is enough volume to ensure the company will keep operating, but enough below capacity to make the manufacture hungry for some new business.

Steps to follow

• Before you contact companies produce a sales flyer. If you don’t have a product or prototype to take a picture of, use a drawing of your product
• In a separate report identify the competition and explain why your product is better.
• In another document, list all the items you can that show the product will be a success. Include testimonials, market research, any sales results and any other encouraging results that show your product will sell.
• Use you State’s Manufacturing Directory, available at most local libraries or the Thomas Registry, available at larger libraries or online at www.thomasnet.com to find local manufactures that could make your product.
• Do a sales projection on what the product will sell based on what industry people, or your potential marketing partners have told you.
• Approach the manufacturers, tell them you have a great product and have had strong industry support with real market opportunities but you don’t have enough money to introduce your product on your own. Tell them you would like to see if there is a way you can work together to both profit from the opportunity.

What Partners Want

Alliance or joint-venture partners look for a significant business benefit when they decide to team up with an inventor. Typically, they are only interested in your product if it can increase their sales 15 to 25%, or if it provides them with a market advantage over their competitors. The perfect product, from their perspective, is one that has considerable market impact.

From the inventor’s point of view, perfect products for a joint venture are ones that the inventor doesn’t have the resources to produce, or the marketing network or credibility to launch. A joint venture allows inventors to move their products to market quickly with much less financial risk. The key to success is finding the right size companies to approach. If your product can sell $1 million to $2 million per year, a $100 million corporation won’t be interested–but a $5 million corporation might be.

Other Considerations

Here are some other factors to consider as you investigate joint ventures:

• Money matters: Typically, the main advantage of a joint-venture strategy is that you get funding from your potential partner. For example, you may have identified a big market opportunity, but lack the money to create prototypes. You approach a potential partner company and discuss a possible alliance if the product is successfully developed. You can then ask for money or engineering support to finish the prototype. One strategy is to ask for support only for this first step; once the prototype is finished, the two parties can decide if they want to proceed. This step-by-step process is usually much easier to sell to a company than a licensing agreement.
• Protection: You don’t really need a patent to strike a joint-venture agreement, but it does improve your negotiating position and helps ensure that the product’s intellectual property rights belong to you. You could apply for a provisional or design patent, but this can be dangerous. The provisional patent gives you only one year to apply for a utility patent. That year could easily run out before you finalize your agreement and finish the product design. You’re better off applying for a very broad patent, knowing your initial application will be contested by the patent office. Then you can keep going back and forth with the patent office for several years. This tactic can keep your patent rights open for three to five years.
• Prototypes: Many inventors choose a joint venture because they don’t have the experience or the money to finalize a “looks like, works like” prototype. But a drawing often isn’t enough to get a positive response from a potential partner. Having a prototype is important. Don’t spend too much money creating a prototype; just take it far enough so the partner can see your product’s sales potential.
• Research: You won’t have any trouble finding a partner if you uncover a product that satisfies the needs of a large market. But it’s up to you to prove the market is there. Your research should show that customers need and want your product, and that they’re willing to pay a reasonable price for it.
• Manufacturing: Most inventors create a joint venture with a manufacturer that can make the product. Most sales and marketing partners won’t form a joint venture with you unless you have a manufacturing source.

Dos and Don’ts

• Don’t ask for too much of the profits. Other companies are not going to work hard to make you rich. You won’t get a deal if you ask for more than 50 percent.
• Do bring something to the table–either engineering know-how to create the final product or numerous contacts in the distribution network to expedite sales.
• Don’t approach a potential partner without several pieces of market research from target customers. Your position is more favorable if you have survey results from at least 15 to 20 potential users, and even stronger if you have results from 15 to 20 people in your potential distribution channel.
• Do have a professional in charge of every phase of your operation. If you plan to handle sales and marketing and don’t have marketing experience, you need advisors who do. Ditto for manufacturing.
• Don’t be a pain. Companies won’t proceed with a joint venture, no matter how profitable, if you appear difficult to work with. Don’t call constantly with questions, revisions or suggestions. Limit your contacts to one or two per week where you mention major concerns.

Steps to Success

You are trying to convince a potential partner that together you can dominate the market. What will really get your potential partner excited are your relationships with key people in the market. Having an advisory board of key end users and distributors is a common tactic to show that you’re connected to the market. Here are steps for finding those key people:

• Meet as many people in the target market as you can, and start identifying “early adopters”–people who buy products before anyone else.
• Meet as many people in the distribution channel as you can, and get their input.
• Read trade magazines, and identify the key players in the market.
• Go to your target customer’s local association meetings to find new contacts and to get a better understanding of what people want.

Use your key contacts to help you find the right potential partners to approach. Your best bet for a good joint-venture partner is a company that has strong manufacturing skills but weak marketing capabilities.

Next, develop a relationship with a regional manager or marketing person at a company you have targeted as a potential partner. To succeed, you need someone on the inside of the potential partner company pushing for an agreement.

As you search for a joint-venture partner, here’s what to expect:

• Potential partners will not be easily convinced that you have a unique, profitable opportunity.
• You will have trouble getting an appointment if you don’t find a company contact who will recommend that the company look at your offer.
• You will have to push for a formal agreement to establish your rights in the relationship. (The partner will try to keep the agreement on a more informal basis.)
• You will have to persuade the partner that you can do your part in the promotion.
• The company will want to proceed slowly to ensure your idea has potential and they can count on you.
• You will be responsible for keeping the momentum going.
• You will have to take charge of finalizing the product design, even if the partner does most of the work.
• Sales for most joint-venture partners take three to four months to ramp up. Don’t be alarmed if it takes six months for the product to show true sales potential.

Realistically, most inventors who use a joint-venture strategy would not have been able to launch their products otherwise. A joint venture can place you in big, powerful markets where there is a lot of interest from investors. It also lets you maintain some ownership of the product and make contacts with distributors, end users and key industry people. If you manage it well, a joint venture or alliance can be a steppingstone on the road to launching a full-fledged company of your own someday.

Is a Joint Venture Right for You?

Pros:

• Allows you to introduce new products that are beyond your reach in terms of either resources or experience
• Helps you gain production experience that you can use in the future
• Speeds up the introduction and market penetration of a new product
• Offers you greater control of the product and its subsequent development than a licensing agreement
• Is a much easier sell than a licensing agreement
• Allows you to introduce new products when you can’t afford to produce a “looks like, works like” prototype

Cons:

• Doesn’t give you total control of the product
• Depends on another party to do their jobs effectively for the product to succeed
• You can’t withdraw the product to start a company on your own
• May not establish you as a market force capable of launching your own company

Related Services:

1. Market Introduction Plans
2. Invention Evaluations
3. 20 Action Items to Launch Your Product

Related posts:

1. Selling to Hardware Stores — Part 1
2. Selling to Hardware Stores – Part 3
3. Hardware Reps and Selling into the Hardware Market

Before I go further, I should first mention stock layout websites that offer pre-designed brochures where you can plug your information into. They look decent and have consistent designs among different formats where the brochure has a matching newsletter, postcard, etc. The problem is these do nothing for your brand and can end up looking half done. They’re not exclusive, so other people will be using your same look. Unless you’re a very low budget beginner looking to settle for less, then work with a designer to build something individual.

Step 1: Research

This should be the first step for all advertising and design. Look at a variety of brochures of all types to see what works best. The Internet is a great place to find examples. Also research design styles, concepts and themes that could tie your branding in with your information. This is how your brochures will take on a more unique personality.

Step 2: Decide the Brochure’s Goal

Will you be sending them out to buyers to persuade them to purchase your products? Will you be a tradeshow vendor introducing your new product? Are you advertising directly to the consumer? You’ll need to utilize a couple different types of brochures throughout your career. Your first brochure is generally used to introduce your product or company with key points to generate interest. For further information, you’ll also need the “Reader’s Digest” version filled with a lot more copy and possibly more pages—it’s everything that needs to be known about the product. If you only have one product or one product type, you should keep your materials completely product centered since unnecessary company information could confuse or bore readers. Multiple products may benefit from a company brochure that teaches the mission, ideals and then displays the products that complement them. The purpose of your brochure will determine everything that goes into it from headlines and copy to the images and overall design.

Step 3: Organize Imagery

A brochure’s main focus should be photos, illustration and/ or graphs, charts, etc.—they tell more in a shorter amount of time. If your product is still in the works, have it professionally illustrated. If you have a prototype or manufactured piece, high quality product photography is a must. It’s usually a good idea to show the product in its natural setting or in use. A cooking product should be photographed in a kitchen or being used by a cook. These images need to do the best possible job representing and demonstrating your product. Use a professional whenever possible. Photos taken yourself aren’t usually the best option unless you really know a lot about lighting and photography. Even then, the photos usually benefit from digital color correction and enhancement.

Supporting images are also a bonus. If your product category is law enforcement, then a photo or graphic of a police officer quickly and efficiently communicates this to the reader. Royalty-free stock photo/ illustration websites offer inexpensive imagery for purchase while most designers subscribe to them. Stock can be generic, but 100s of millions of images are available. They could even be manipulated and used more creatively. Avoid images that look too much like amateur clipart. Stay consistent with one style because mixing too many conflicting illustration types or photos will junk up the look.

Step 4: Write Headlines

They’re important because they break up and categorize body copy for easier reading. Writing them first helps outline the brochure. If you want to portray a more unique personality, then get creative with headlines and copy. With an extreme sports product, instead of “Product Benefits”, consider “Crazy Sweet Because…” It may be a great way to stand out by conveying this branding.

Step 5: Write the Body Copy

Writing for your brochure should come naturally. Stay clear of jargon, writing from the reader’s point of view. Take this article for example. The audience is mostly inventors, so I’ve written it from your point of view. Consider all questions your audience may have and answer them clearly. Stay brief without compromising any important information. Bulleted lists are nice when appropriate. Convey product benefits more so than features. Make it well known why anybody would want to purchase your product.

Step 6: Choose a Printer

The list of printers is extensive. Printing on your home printer will look too unprofessional, so check around for pricing and options. Many online shops provide inexpensive printing as long as you stick with their stock papers, templates and quantities. Otherwise a local shop lets you print just a few at a time without shipping costs plus you’ll have more freedom with paper options. Ask your designer for recommendations. You’ll want to consider the use of bleeds—they cost just a little more because the edges are cut off to make color and photos appear printed all the way to the edge for a more professionally finished look. Otherwise you’ll need a white margin around the entire page.

Step 7: Choose Paper

Paper choices are extensive too, so don’t automatically go for the glossy brochure paper. Glossy papers look higher quality and do a better job with photos, but a different option could look more unique. Consider textured papers, colored papers, thicker papers or lighter papers. A textured linen paper may provide a level of class to complement your product or a bright yellow paper may add some deserved zest.

Step 8: Design the Cover

It’s best to design the cover first since it’ll determine the look of the rest of the pages. There should be no or very little copy besides a title or headline. It should be dominant with strong imagery and graphics whether it’s the product itself or something that makes its category obvious. Two-sided flyers could utilize one side as the cover while one-sided flyers should have one large, prevalent image and title or headline before the body copy.

Step 9: Design the Inside Pages

Based on the cover’s look, there should be a consistency in fonts, graphics and colors that flow throughout the brochure in a way that makes sense and makes it easy to read. Everything should be there for a reason, supporting your product and brand.

Step 10: PDF Brochures

You should always have them for emailing or posting on websites for people to download. It’s not always as easy as converting your existing brochure into a PDF file, so some adjustment to the layout, etc. may be needed to optimize it for on-screen viewing. People read brochures in order of how they unfold it, so consider that with your PDFs.

Some optional ways to help your brochures stand out (if you have the budget) are unordinary shapes and folds besides the traditional bi-fold or tri-fold brochures. An environmentally friendly product could be in the shape of a leaf, for instance. A printer with access to die-cutting could do this. You could also cut them yourself, but that becomes time consuming. Other specialty techniques such as gold/ silver foils, embossing, stamping, letterpress printing or spot varnishing can produce beautiful work, but there’s always the added cost.

One thing to never forget is to proof read your work and triple check everything. Mistakes can be costly. If you want your brochure to direct sales, then use your branding and do the necessary planning to figure out how to advertise your products as cutting edge and meaningful. The best products out there would fail if they weren’t introduced and explained well enough. You’ve worked hard on your products, so don’t sell yourself short with clumsy advertising.

Related posts:

1. Recognizing Winning Ideas

The Basic Points for the Sales Pitch

You are selling only two points when going for sales on commission. The first is that you have an order or commitment from a significant customer. The second is that the manufacturer has available capacity and will only need to make minimal changes to its manufacturing process. A bonus for the sale is if you can also show that there is an easy-to-penetrate distribution channel to sell to customers other than the one who will give you a commitment.

You won’t always know which manufacturers have the right equipment in place and need to add production to fill up your plants. As a result you may need to call on quite a few manufacturers before you find one that has the right equipment and the available capacity for your product.

Key Benefits

Key Move

The key to lining up a selling-on-commission agreement is to know who the key players in the distribution network are, and preferably to have their support for your product idea before you approach a manufacturer. That’s the only way the manufacturer will be convinced that you can actually sell your product. Use trade magazines and attend trade shows to find the distributors and manufacturers representatives in your area. (Click here to read about how to find distributors.) Then talk to those contacts to see if they believe your idea will sell. You should be able to get a selling-on-commission agreement if you get these contacts to endorse your product idea, or better yet, if they let you know they will buy the product if and when it becomes available.

Pros and Cons

Pros

Cons

Items to Watch

Success Tips

Related posts:

1. Selling to Hardware Stores – Part 2
2. Selling to Hardware Stores – Part 3
3. Selling Promotional Products / Ad Specialties

• Description of various organizations typically found in an inventor’s distribution channel.
• Explanation of how to find a distribution channel for your product.

Many inventors have small novelty products where they want their products sold to convenience stores. This has been a difficult market for inventors because the distributors are typically rack jobbers who actually own the merchandise and buy at 40 to 45% of retail. The distributors can be hard to find as they don’t have a Standard Industrial Classification (SIC) dedicated to them, and most operate on the office supplies distributor SIC code. (For more information on SIC codes go to http://www.siccode.com/about.php.)

Recently on a project though, I can across a great source, Mr. Checkout, http://www.mrcheckout.net . According to the website description “Mr. Checkout is a national organization of (DSD) Direct Store Delivery Wagon-Jobbers, Distributors, Retail Merchandisers and Wholesale-to-Distributor Warehouses servicing Convenience and Grocery Stores in the US since 1989. Our DSD / Full-Service Merchandising Distributor Members call on c-stores weekly.” The site has a large of services including a Walgreens merchandising program and a product placement blitz service. Everyone should check this site out if you have a product for drug stores, convenience stores or grocery stores. I can’t vouch for the association but I did find the site had a great deal of helpful information.

Over the years I have found that inventors are unfamiliar with distribution, which is the channel that a product follows to take to market. Often products are handled by your own direct sales efforts, reps (also called manufacturers’ sales agents), brokers, specialty distributors, wholesale distributors, other manufactures with complementary lines, and rack jobbers all who may play a role in selling a product. The path your product follows to market is called a distribution channel. For example you may sell a product through a rep to a rack jobber distributor who sells to convenience stores who then sells to the consumer.

Description of terms often used when discussing in the distribution channel:

Direct sales: Indicates that sales are handled by the selling company’s own sales force.

Reps (manufacturers’ sales agents): Independent contractors that promote a Company’s line, but have very limited authority to commit a company to any but its standard sales terms. In effect a salesperson that represents a variety of companies with non competing product lines. They typically call on a specific industry, and carry product lines where the sales volume isn’t large enough to justify a direct salesperson. Reps don’t take title on a product and work commonly on a 5% to 20% commission.

Brokers: Brokers are similar in some respects to a rep, they are independent from the companies they serve and receive a commission but they are more oriented towards the buyer than the seller. A rep will not carry competing lines and will have a wide range of products. A broker has a narrow range of products and many of them compete. An insurance broker, for example, carries lines of insurance from many companies, and will chose the company that is best for his customer. An insurance agent carries only one company’s products, and tries to steer everyone to buy those products. A clock broker, for example, might have three stores as customers, and have access to many lines of clocks. He would then offer clock lines to his customers so they would have a constantly changing variety of clocks. Reps are far more common than brokers.

Private label: This is a practice where a company makes a product that it sells to another company that markets the product under their brand name. For example, a toy company might make a toy that is sold under the Toys R Us label. Or it might make a toy that is sold to Play School and then Play School would sell it under its label. Private labels sellers own the rights to the product and develop and produce the product to their specifications. Toys R Us might also develop toys that they have produced by a manufacturer. That manufacturer would be a contract manufacturer, rather than a private label manufacturer, because it didn’t create the product and it doesn’t own rights to the product.

Specialty retail distributors: Distributors serving small markets, for example baby stores or bike shops. These distributors take title to the product and promote the product and typically carry many products from one product inventor oriented companies. They are a key component in most inventor companies’ distribution plans. They typical mark up (raise their price by) 35 to 40% before selling to retailers.

Industrial distributors: These companies typically sell directly to industrial companies, versus selling to a retail store. Graingers and Fastenall are examples of industrial distributors that sell a wide range of products to companies. You also have specialized industrial distributors. Some examples would be a pump and compressor distributors, a distributor that sell products for high temperature furnaces, or a company that supplies safety equipment. These companies typically have a high level of technical support to help chose the right products and then get the products to work effectively for them.

Trade distributors: These are distributors that deal with tradesmen versus industrial or consumer oriented accounts. Plumbing distributors, wood products distributors that sell to contractors, auto parts distributors that serve car repair shops are just a few of the types of distributors that sell to various trades.

Wholesalers: Wholesalers are also a distribution point between manufactures and their customers. While distributors provide promotion and service, wholesalers typically don’t. They also rarely carry products from inventors as they purchase very large stocks of products and serve markets like grocery stores. Like distributors they take ownership of the product, but typically only mark the product up 15 to 20%.

Rack jobbers: Rack jobbers are a specialty type of distribution. Most distributors take title to the product and then sell it to a store or industrial company that takes title. Rack jobbers instead rent portions of a store, which might just be a section of a rack, or endcap positions at the end of the store aisles by the cash registers. Durable hair care products (brushes, combs and other product related hair care products) at drug stores are a typical rack jobber item. The rack jobber owns the merchandise in the store, replaces it and is only paid for the merchandise when it is sold by the store. Typically rack jobbers raise their purchase price 50 to 75% and then the stores mark the product up an additional 50%.

Selling through other manufacturers: One of the reasons companies use reps is that they don’t have enough sales volume on their own to justify a direct salesperson. Those companies are often willing to pick up a line from another company if it puts them in a position to have their own direct sales force.

How to find agents and distributors.

One of the services offered at the onestopinventionshop.net is creating a list of distributors or manufacturers representatives. Finding the names of reps and distributors can be time consuming but it is something most inventors should be able to do on their own.

Step 1: Start by looking for trade associations, trade magazines and trade shows. You can find associations and trade magazines with Google searches if you are lucky, or by going to one of your larger libraries, where you can look for The Encyclopedia of Associations by Gale Research, and also Gale Research’s Directory of Magazines and Broadcast Media. Both of these directories have a wide range of groups for even the smallest trade associations and trade magazines.

Once you find a list of associations and trade magazines you should go to their site and look for a list of manufacturers’ representatives or distributors. For example I went to look for products for the baby industry in Gale’s Encyclopedia of Associations. I found the association Juvenile Products Manufacturers Association. When I went to the web site, www.jpma.org, I found they had a list of manufacturers sales agents. Often the web sites will also have a list of distributors, similar to the Mr. Checkout web site (www.mrcheckout.net). Also you can try  www.cstoredistributors.com for convenience store distribution.

Step 2: Develop a list of manufacturers in the industry. You can find lists of manufacturers in the trade association and the trade magazines web sites. Trade magazines will also have a list of trade shows. If you go to the web sites for those trade shows you can usually get a list of exhibitors. You can make the list more complete by using your library again. Most bigger libraries have a service called Reference USA in their online services. You can also use the service at home once you have the library password. Go to the site www.referenceusa.com before going to the library to see what information you will need. Then look up the SIC codes for a few companies on the site. SIC stands for Standard Industrial Codes, and typically most companies in the industry will have the same code. Once you have the SIC Codes you can do a search based on SIC codes and get a list of many of the companies in the industry.

Step 3: Go the web sites of companies in the industries. Some of the companies will list distributors, and others will list manufactures representatives. Other companies will be looking for representatives or distributors. Often it pays off to call those companies and see if they would like to partner with you in marketing your products. This is a tactic to consider because often manufacturers reps and distributors don’t want to carry a line that is too small. You and your partner company might have enough volume together to entice distributors or manufacturing reps to carry your product.

You can also find representatives at the manaonline.org, which is the site of the manufacturers’ agents’ national association web site.

Success Tip

If you are a minority or women-owned business you might want to check out the site http://supplierregistration.target.com/Supplier/supplier_registration.aspx to get idea of the information you need to know to become a supplier for a leading store.

Related posts:

1. Convenience Store Reps
2. Selling to Hardware Stores – Part 2
3. Selling to Hardware Stores — Part 1

Risk-free entrepreneur. That sounds very much like an oxymoron, right? Risk and entrepreneurship go hand in hand, that’s why Don Debelak‘s book, “The Risk-free Entrepreneur,” intrigued me enough yesterday into buying the volume I’m reading now.

Read the full article here:  http://www.investmentbankeronlife.com/2009/03/this-oxymoron-could-be-your-parachute.html

Related posts:

1. Upside from a Down Economy

I’ve found the easiest way to do a preliminary patent search is to do a Google Patent search.  You can put in a simple search term and then work from its database to get a good idea if your product idea has already been patented.  This search won’t necessarily reveal every other patent but it is a good start.  Another good aspect of the Google patent search site is that it lists the patents pending that are published by the patent office but haven’t yet been issued.

To get the most out of a Google search you can’t just put in the name of your idea and then do a Google search.  That will leave out far too many patents where the patent application uses different terms than yours. You need to look instead at all the citations listed in the patents to find out more.

To give you a better idea of how to get the maximum benefit, I’ve listed all the steps and procedures for an inventor who came up with the idea of having an electric plug where a child could not pull the plug out of a socket.

Step 1: General Search Term

I entered in Google search box the term Safe Electric Plug.  Then I connected to the patents that were listed till I found one that was most like the product idea.  The patent that seemed closest was  Safety socket and plug arrangement US Pat. 5702259 – Filed Aug 12, 1996. I clicked on that patent and though the idea wasn’t the same it had the same general purpose so I could use it as a starting point.

Step 2: Check for “Citations” and “Referenced By” Sections on the Google site

While you are looking at a patent, stroll down just a little ways and you will see on the left side of the screen sections called “Citations” and “Referenced By”.

“Citations” are patents that the patent you looking at references as prior art.  “Referenced By” are patents that cite the patent you are looking at as prior art. In this particular example, the patent we are looking at was issued in 1996, but the “Referenced By” section list patents that were listed all the way to 2008.  So you are able by using this technique to see many if not most of the recent patent application that are similar to your product idea.

Patent applications need to list possible competing patents and then explain how the new patent application does not infringe on the other existing patents.  Typically patent applications reference many patents that are in many cases only marginally similar to the product idea detailed in the application.  Which means if you can just get close to you idea you can usually zero in on patents that are closest to your idea.

Step 3: Click on the “Citations” and “Referenced By” Patents to Find the Patent that is Closest to Your Idea

In the case of our plug that a child couldn’t easily remove from the socket, the closest idea listed was Patent number: 6988903, Filing date: Mar 31, 2005, Issue date: Jan 24, 2006, Inventor: Jen-Jen Cheng, Assignees: Edac Power Electronics Co., Ltd.

Step 4: Click on the “Citations” and “Referenced By” Patents Listed in the Patent Closest to Your Idea to Find More Patents that Have Been Issued that Might be Very Close to Your Idea

In this particular case, when checking the “Citations” and “Referenced By” patents in the patent listed above, I found a patent very close to the product idea was Patent number: 6893275, Filing date: Feb 26, 2003, Issue date: May 17, 2005, Inventors: Kenneth Ng, Edmund Ng, Assignee: Koncept Technologies Inc.

What to Do with the Information

Just because you see a patent similar to yours doesn’t mean you can’t apply and obtain a patent; that is a decision that can be better made by a patent attorney.  But the search does give you information that better allows you to move forward.  If their has been heavy patent activity related to your idea, the odds are you will only be able to obtain a patent with narrow, specific claims that might not prevent competition.  If you do see a lot of activity you still may be willing to proceed with your idea, but you should realize that it is difficult to license an idea with a narrow claim and you will have the risk of someone changing your concept slightly and then quickly competing with you.  So you would want to limit your investment as the probability of success would be lower.

Narrow vs Broad Claims

In the previous paragraph I mentioned the concept of narrow claims.  When discussing patents you will often hear the term narrow and broad patent claims.  Most of the industry feels narrow claims have limited value while broad claims can be very valuable.  But in reality many narrow patents are broad enough to offer protection and even a very narrow patent has value if only limited number of design choices can implement the inventor’s idea.

A broad claim is abstract and vague and covers a lot ground.  The gist of Samuel Morse’s original patent claim for example was for the “use of electromagnetism for making or printing intelligible characters at any distance.” That is a very broad claim with tremendous value.  (The patent office didn’t accept this claim and Morse was forced to narrow it down).

A narrow patent has many specifics, and to infringe on a narrow patent the infringing product must infringe on each element of the claim. An example of a narrow claim for a shower caddy Patent number: 5014860, Filing date: Aug 1, 1989, Issue date: May 14, 1991

A caddy device for installation on a non-porous wall comprising:

How to Proceed

Remember searching Google is just a preliminary search, and it just gives you an idea of the prior art patent activity related to your product.  It lets you know if you have a truly unique idea that no one else has ever thought of.  If there is activity that is not identical with your idea, take the patents you have to a patent attorney (click here to contact our patent associate) and get a professional opinion from a patent attorney on whether or not you can get a patent that will minimize direct competition.

Related posts:

1. Patent Strategy – Part One
2. Patent Backlog: How Inventors Can Deal with the Patent Backlog
3. Is a Design Patent Right For You?