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THE ONLINE INVENTOR

(c) 2003 Market Launchers, Inc.

http://www.marketlaunchers.com/customer-testimonials.html

Editor: Paul Niemann

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EDITOR’S NOTES:

We'll be giving a FREE WEB PAGE next week. Details will be sent to you in 4 days!

This issue has 3 more great articles -- enjoy!

Best Regards,

Paul Niemann
http://www.marketlaunchers.com/customer-testimonials.html

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FAMOUS / INFAMOUS Quotes …

"Courage is fear after saying your prayers," – sign at a church in Quincy, IL

"We can stand here like the French, or we can do something about it," – Marge Simpson

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Article # 1:    "Tricks of the Trade," by Ron Docie, excerpted from "The Inventor’s Bible"

Article # 2:    "Revamping, Redesigning, Recycling, or Otherwise Making an Existing Product Better," by Randy Moyse, excerpted from "The Inventors Pocket Guide"

Article # 3:    "The 7 Major Types of Media," by Paul Niemann of MarketLaunchers.com, as first printed in Inventors’ Digest

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EDITOR’S NOTE:    In this issue we welcome 2 talented and knowledgeable columnists to THE ONLINE INVENTOR: Mr. Ron Docie, author of "The Inventor’s Bible: How to Market and License Your Brilliant Ideas" and Randy Moyce, author of "The Inventors Pocket Guide."

There are three key elements that affect the commercial success of your inventions: manufacturing cost, sales price, and projected volume. Trying to estimate these figures is a chicken and egg situation; you often can’t figure out one without knowing the other. Although it appears that this could possibly stalemate your communications with a potential licensee, you can make the confusion work for you if you’re careful.

If you are in discussion with a marketing person who has little engineering or production experience, they may be able to calculate the potential sales price, but not how much it will cost to produce your product. They may ask you to provide this information to be able to evaluate whether or not to license with you. Unfortunately this is the person you are trying to get information from, and they’re asking you for figures!

Since you need a rough sales projection to determine the manufacturing cost, this is an opportunity to learn something. Tell your marketing contact that you first need to know the potential sales volume. Such a projection can be based on whatever price the market will probably bear. Then you can ask your sources to establish a ballpark manufacturing cost and see if the cost will support the sales price with room for profit. Another option is to suggest that the potential licensee have its production department source the product. This saves you time, and it will probably get lower and more reliable cost figures in-house anyway. Also, companies like the idea of using sources they are familiar with.

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One of the activities that I get the most satisfaction from (other than introducing a new item and having it manufactured and ultimately bought and used) is redesigning existing products. Oh, the companies hate it too; nothing bugs them worse than to have someone outside their office come up with a way to improve something they already have been making and selling.

You have to be very careful how you present the idea. Use a very well-defined nondisclosure agreement to protect yourself from the possibility of the company's rejecting the idea because of the feeling that it's theirs already and making the changes anyway.

Step number one:    Contact the person responsible for accepting new ideas at the company and present the change clearly. This will not be the catalog or marketing source but the actual company that manufactures the product. Let the appropriate person know that you have seen their product and have realized that with a minimum of expense their existing idea can be redesigned in such a way that it can be more useful and create an increased revenue-building source. Be very clear that in exchange for the idea you require a royalty compensation on the redesigned product.

Step number two:    Being sure to avoid giving away which product that is or what the changes would include, say only that it will be relatively simple and inexpensive to make the alteration and increase the sales potential. If the company realizes how simple the changes are without your first getting an agreement that you will be compensated for the idea, then you will be dead in the water.

Step number three:   Secure a royalty agreement (http://www.inventorshq.com/royalty.htm) that will allow you to be compensated for the newly redesigned product. Do not balk at a mildly lower royalty rate, of a split royalty amount. Remember, this is not your exclusive new idea but your redesign of their product. So be sensible in securing a royalty agreement.

Step number four:    After you have secured an agreement (and not before), then you can release the idea to the company. What generally happens is they are not too excited about paying for it once they realize what a simple idea it is. That is why you must have your agreement in place before declaring your idea.

I have been successful with this concept twice, and both times the companies were decidedly reluctant to pay for the idea. But since the agreement was set in place beforehand, they had no alternative but to pay for the concept. That is, of course, if they agree to go forward with the change. Another reason you need to have your agreement in place is that should they decide to drag their feet, you would have the option of taking the idea elsewhere.

For instance, if they do not want your new idea for redesigning their existing product, then you have the freedom to take it to another company that produces similar products as a new idea. The reason you go to them first is because of the cost factor. It will be less expensive for them to change their existing product then to start new somewhere else. Besides, they already have a client base set up to purchase the existing product off of which your sales will (we hope) springboard.

If you have your agreement set up correctly (see my sample royalty agreement http://www.inventorshq.com/royalty.htm) and you have given them the ultimatum of the thirty-days-to-accept/reject clause, then even if they turn you down, you have a binding agreement that releases you to take it elsewhere. The competition is always the best place to start. It seems they are always a bit more interested if they know the other company has made the product already and demonstrated a positive sales yield.

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Randy Moyce is owner and Founder of Inventors HQ & Inventors Mentoring Services.
http://www.InventorsHQ.com
Author of The Inventors Pocket Guide: http://www.inventorshq.com/thebook.htm

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If you are having own invention produced and sold as individual units for retail sale (as opposed to licensing it to an existing company), then you have to advertise in order to ring up big sales. This article gives you a primer on the basics of the different types of media in which to advertise. If you’re trying to license your invention instead manufacturing it and selling it at retail, the information in this article will still apply to you, but think in terms of trade publications rather than the mass media that we discuss here.

It’s important to decide where you’ll run your ads before you create your them. For example, an ad that you create for a newspaper or magazine will be totally different than an ad that’s made for television or radio. The major types of media are:

• Newspaper
• Magazine
• Radio
• TV
• Direct Mail
• Internet (web sites, e-mail)
• Outdoor (includes billboards and transit advertising such as bus and subway advertising). Since most new inventions are not advertised on billboards or transit advertising, we’re going to concentrate on the other types of media.

The term used to compare the cost of advertising is CPM. This stands for Cost Per Thousand and each unit represents reaching 1,000 people. For example, if a magazine ad sells for $5,000 and reaches 100,000 readers, then the Cost Per Thousand is $50 (the cost of the ad is divided by the number of thousands of readers: $5,000 / 100 = $50). The CPM allows an "apples-to-apples" comparison of different types of advertising media, and the CPM varies dramatically depending on the media.

 

• Newspapers offer a way to get your message out quickly, in a variety of ad sizes. Newspaper advertising is one of the least expensive ways to advertise. When your target audience (which is a marketing term for potential customers) sees your ad, they can cut it out or save it for later use. Newspapers have a very low CPM, as low as $2.
  
• Magazines are a more targeted way to reach your potential customers. For example, if you have a golf product, advertising in Golf Digest rather than in People magazine would be a better use of your advertising dollars. Magazines also offer the added benefit of high-quality graphics and color, something which newspapers are not known for, and they have a longer shelf life than newspapers.
  
• Probably the most effective way to sell a product is through a demonstration, and this is the greatest advantage that a TV ad offers. TV lets the viewer see your product in action. The downside to TV advertising is cost; the ads are usually expensive to produce and the airtime (called a "media buy") can be expensive, though airtime bought on local and cable channels is relatively inexpensive.
  
• Radio advertising, like newspaper advertising, has a low CPM. Producing radio ads costs much less than producing TV ads, and airtime is less expensive than TV as well. With radio, you can easily and quickly change your message to fit different markets. You can make radio buys with little advance notice, which is also true for advertising in newspapers, whereas magazines often have a "lead time" of one month or more since they are usually published on a monthly basis. One of the disadvantages of both radio and TV is that the ads cannot be "cut out" and saved like newspaper and magazine ads can be.
  
• It’s important that you measure the results of any advertising effort, and Direct Mail is the easiest form of media to measure. Direct Mail is the most effective way to reach customers, but it’s also the most expensive. A successful Direct Mail campaign begins with a good mailing list. If done properly, with solid ads that are repeated at least two or three times, you can expect a response rate of 1.5 percent or better. While this may seem low, it is higher than the usual response rates of newspapers, magazines, radio or TV. If you have a sample or a 3-D mailer that you want to send, you can do it with Direct Mail. (NOTE: For inventors who are pitching an invention to a licensee, Direct Mail followed by a telephone call is usually the best choice and, since you’ll have a limited number of prospective licensees, it would not be very expensive.
  
• Internet advertising is the only form of major media that is truly interactive. Like TV, Internet advertising can let the viewer see your product in action. It also can bring immediate results. Internet advertising can be in the form of a web site or e-mail, although we’re not recommending the use of spam or junk e-mail. Internet advertising also has a very low CPM – as low as $1 or $2 – and can easily be forwarded to others or saved for later consideration.

 

One final thought: Always include your web address in your ads, brochures, business cards and letterhead. Some potential customers will need more information than you can provide in an ad, such as a detailed description and pictures.

Test your knowledge of the different types of media by taking the following quiz:

1. What does CPM stand for? Why is CPM important as a way to measure the cost of advertising?
   
2. Which type of media is the most expensive in terms of CPM?
   
3. List the various types of media in terms of lead times to get an ad placed, from shortest to longest lead time.
   
4. Which type of media is the best choice for demonstrating a product?
   
5. Which type of media produces the best results (measured as a percent)?
   

ANSWERS:

 

1.    CPM stands for Cost Per Thousand. It’s important because it gives you a way to compare different types of advertising on an apples-to-apples basis.

 

2.    Direct Mail has the most expensive CPM, although the overall cost of a Direct Mail campaign can be small if you're targeting a small number of prospects or potential licensees.

 

3.    Radio, newspapers, Internet, TV, magazines.

 

4.    TV and Internet advertising are the best choices for demonstrating a product because they involve sight and sound.

5.    Direct Mail produces the best results, and it’s also the most measurable. In addition, Direct Mail is often the most effective way to target businesses.

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Paul Niemann's specialty is creating web page advertising for inventors and small businesses. For help in designing your ads, or to get a web site built, contact Paul at (800) 337-5758 or visit his web site: www.MarketLaunchers.com. Inventors who have a web page on his site have their inventions seen by companies looking for new products.

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Until next month, Successful Inventing To You!

Best Regards,

Paul Niemann -- http://www.marketlaunchers.com/customer-testimonials.html
(800) 337-5758 (within the U.S. and Canada)
(217) 224-7735 (outside the U.S.)

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