Once inventors have a product ready to sell, they need to decide how to market the product. They might choose to sell the product themselves, which generates the most profit per sale, but sales might get off to a slow start or never get started at all. Another option is to land a marketing partner–another company already selling into the target market—which has the potential for very fast sales growth, but the main drawback is inventors will need to give 30 to 50 % of their sales revenue to the marketing partner to cover sales and marketing costs and commission fees. At first glance the 30 to 50% seems high, but in reality most consumer products companies spend approximately 25% to 30% to cover sales and marketing costs. Selling through a marketing partner may not be viable if you have small margins, but it is often the best course for fast sales growth for inventors with high margin products, where the product’s wholesale sales price is at least three times the product’s manufacturing costs.
There are several principles to follow when selecting a partner. The partner needs to be selling to the right market and they also need to be able to generate significant revenue per year with your concept. But the critical point is to work with companies where the inventor can find someone inside the company who is willing to push management to carry your product. Ideally this person is a regional manager or a marketing person with enough clout to move the project forward.
Potential Marketing Partners
Companies with Branded Offerings
Products and services are branded when they are sold under a name the company promotes. The Geek Squad sells branded computer repair services and the Crank Brothers sell branded bike repair products to bike shops. Companies with branded products typically sell through established distribution channels, compete with many other companies, and have a somewhat steady stream of business. These companies will be interested in marketing inventor products when those deals improve their competitive situation.
Distributors
Distributors often look for exclusive deals on “hot” products or services that have strong customer demand since it boosts all of their products’ sales.
Companies that Market Others’ Products
Many markets have one or two companies that market products from overseas manufacturers or small US companies. They also make strong marketing partners.
Finding Potential Partners
Finding partners starts with the target customer. Anyone who is active with your target customer is a potential partner. The best way to find these companies is by using trade magazines typically have directories where you can often get a list of manufacturers, manufacturers’ representatives and distributors. As an example, I learned rock salt lamps are popular in Pakistan. To look into potential partners I did an internet search for lighting retailer trade magazines and at the top of the list was the site for Home Lighting and Accessories, the trade magazine for lighting retailers. The site contained a directory for manufacturers, manufacturing representatives, and some distributors.
When Marketers are Receptive to a Deal
Marketing partners take on product from an inventor when it helps enhance their overall market presence. Inventors should research the target marketer to understand what sales approach will work best. I’ve listed a variety of reasons that might make the marketing partner be receptive to your offer.
New Market Trends
For inventors new trends open up opportunities because companies participating in the market don’t know for sure what the fast changing market wants, and may use an inventor’s product to better explore the market.
Product Line Gaps
Marketers can’t afford a hole in their product line because many customers avoid having multiple sources of supply, which is expensive and complicated. Having an incomplete product line causes companies to dump one marketer in favor of another marketer with a complete line to keep hassles and expenses down. A potential marketer will be receptive from a proposal from an inventor who fills in a product line. Filling a product gaps causes the marketer to get all of his products or services into more outlets, thereby increasing sales across the board.
Offsetting Fixed Marketing Costs
Certain functions are critical for a marketer to continue, such as newsletters, service support, or sponsorships of events, to keep connected to their customers. But often those activities barely break even in profitability for their companies, and the marketer is looking for ways to create new revenue streams to help cover all of their fixed marketing costs. Small companies, who have trouble creating enough revenue to afford an effective marketing program, might add an inventor’s product to build up their revenue stream to help offset these fixed marketing costs.
Change in Top Personnel
New management is always looking to make an impact on their employees and the market. They will go out of their way to look at new ideas and concepts from inventor/entrepreneurs in the hope that they might have an idea that will sell. This situation is especially advantageous for inventors because they can often get right to the top management people in the company.