*****************************************************************
*****************************************************************
THE ONLINE INVENTOR -- November 1999
(c) 1999 Market Launchers, Inc.
http://www.marketlaunchers.com
Publisher: Paul Niemann
*****************************************************************
*****************************************************************
PUBLISHER'S NOTES:
We're up to 350 subscribers to "The Online Inventor." Thank you for spreading
the word as we continue in our quest for 1,000 readers. I'd like to ask a favor of you: If
you'll tell just 2 of your inventor friends about our newsletter, then we can surpass
1,000 subscribers by the beginning of the next century !!
Of the following 2 articles, the first one tells why it's important for a company to
bring additional new products to market after they've launched their first successful new
product rather than expecting that first big product to sustain them.
We saved the best for last with our final article. This just came in from Michael Neustel
and Ed Zimmer. Mr. Neustel is the patent attorney who we refer inventors to when they call
here after they've been ripped off by a scam marketing company. If you're on their mailing
list, then you've received this article in an e-mail from them, too. It may be redundant,
but some things are worth repeating.
As it is our policy here at Market Launchers to practice what we preach, our sister
company, Political Games, Inc., is currently launching a follow-up product to last year's
successful "IMPEACHMENT" Card Game. If you like cartoons, or if you like humor
that pokes fun at politicians, or both, then you'll love this game. You can preview it at www.PoliticalGames.com. (Sorry for the shameless
plug of my new product but, as the saying goes, people can't buy what they can't see.)
That's all for now.
-- Paul Niemann
"Anything that won't sell, I don't want to invent." -- Thomas Edison
"Man's mind stretched by a new idea never goes back to its original dimension." -- Oliver Wendell Holmes
************************************************************
Article # 1: Company Spotlight: "Grove Products"
Article # 2: "The Importance of New Products to a Company's Long-Term Success," by Paul Niemann
Article # 3: Article #3: "The Neustel - Zimmer approach to Successful Inventing," by Michael Neustel and Ed Zimmer.
************************************************************
Article # 1: Company Spotlight: "Grove Products"
In last month's issue, I gave you the names and contact information for 3 companies who
are looking for products suitable for the Direct Response TV industry.
We've recently been hired by one of these companies to work on their behalf, locating new
products for them. We're helping them find products that could sell well on TV. Direct
Response TV products are then later moved to retail stores, where they usually sell 7 - 10
times as many units as they did on TV.
The company is called Grove Products, and you can find out more about them on their web
site, www.GroveProducts.com. Here's a list of
the types of products they are looking for (the list is in no particular order):
* housewares, especially food processors
* exercise equipment
* sporting goods (especially golf and fishing products)
* cleaning and repair products
* weight loss products
* beauty & cosmetics products.
The President, Jerry Grove, is very open-minded to new inventions. If you've already
submitted a product for Think Tek's new product search, then you don't need to submit the
same product to us for Grove Products, because we've already forwarded it on to them.
Jerry prefers that you send the products to
us here at Market Launchers, because he doesn't have time to personally respond to each
one that they reject. But if you'd rather submit a product directly to his company, here's
his address:
Mr. Jerry Grove
Grove Products, Inc.
10979 Reed Hartman Highway
Cincinnati, OH 45242
E-mail: [email protected]
The company's flagship product is the SockMaster sock matching system, which can be seen
at www.SockMaster.com.
How many unit sales does the average successful Direct Response Television Marketing
campaign generate per month? According to industry reports, and based on a selling price
point of $19.95, there are four levels of success:
1) A "RUNAWAY HIT" -- 200,000 to 250,000 units per month / $4 to $5 million in
sales volume per month.
2) ABOVE AVERAGE -- 100,000 to 150,000 units per month / $2 to $3 million in sales volume
per month.
3) MODERATE TO AVERAGE -- 60,000 to 100,000 units per month / $1 to $2 million in sales
volume per month.
4) MILD TO MODERATE -- 20,000 to 60,000 units per month / $400,000 to $1 million in sales
volume per month.
90 percent of all TV stations and 100 percent of commercial cable channels now accept
infomercials. In 1988, direct response marketing sales reached $350,000. By 1992, sales
had reached $750 million. By 1995, the number exceeded $6.5 billion, with projections for
the year 2000 at $20 billion.
The chances of any product actually being selected for an infomercial is slim, but if you
believe in your product, then it's worth submitting it for review. Here are some recent
success stories for some of the better-known direct-response TV (infomercial) products:
Product:
Price: Sales figures:
Year released:
Absculpter
$79.95 $100 million
1995
Hook 'n Hang
$19.95 $40 million
1998
Hairdini
$19.95 $20 million
1995
Banjo Fishing Lure $29.95
$100 million
1996
Eurosealer
$19.95 $50 million
1997
Source: Response Magazine, September, 1999
Here is a brief overview of what Grove Products does in a Direct Response TV advertising
campaign:
They will create either a short-form (2 minute) Direct Response commercial, a long-form
(30 minute) Direct Response commercial, or both.
A short form infomercial is an extension of Direct Response television advertising. The
basic definition of the short form infomercial is: a longer form of commercial that is
informative, educational, newsworthy, persuasive and entertaining, targeted to a specific
audience. Its primary purpose is to sell, sell, sell, via a direct call to action using an
800 or 900 number. The short form infomercial is usually 2 minutes in length.
A long form uses 30 minutes to entertain, educate, and hold the audience's attention for
longer periods. This method is highly effective for higher price points and products that
require extensive demonstration.
Key Selling Messages:
From a selling point of view, the Direct Response Television Commercial is a well thought
out, in-depth, one-to-one sales presentation that consistently delivers the same vital key
selling messages every time it airs:
A. It repeatedly identifies the wonderful benefits of the product, its Unique
Selling Proposition (USP), always relating to the primary Target Consumer whose needs are
being fulfilled.
B. It consistently overcomes skepticism, doubt and objections like credibility,
price and quality while instilling confidence in the buyer.
C. It constantly asks for the order, using proven sales-closing techniques. This
represents what is often called the "Nodding Effect."
D. It repeatedly adds value to the product and provides bonuses or Free Gifts for
ordering now.
E. It defines a common problem the prospect has and offers the product as the
solution to that problem.
F. It motivates the viewer to act, creating emotion by using the two primary
motivators: Fear or Greed (Desire), sometimes guilt or shame.
G. It offers the risk - free opportunity to try the product without obligation
because of the money-back guarantee.
H. It instills a sense of urgency in its call to action. This could be represented
by a limited time offer or limited product availability.
I. Its professional quality presentations establishes credibility for the company
and product, as well as helping to create name brand awareness for future retail
merchandising ("As Seen on TV").
www.GroveProducts.com contains an abundance of
useful information on the Direct Response TV industry.
************************************************************
Article # 2: "The Importance of New Products to a Company's Long-Term Success," by Paul Niemann
Every so often, I receive a call or an e-mail from a company asking for help in
locating new products. One that came in a few weeks ago, though, really made me think
about the importance of new products to a company's success, because it seemed to have an
urgent tone to it. The e-mail read:
"My company is a one-product manufacturer and marketer. We are looking to rapidly
develop our product line. We are interested in how you can help us. Look up our website at
www. --- .com. Please call or send information at your earliest convenience."
When a new company hits the big time with a hot new product, they often spend so much time
managing the sales of the hot new product that they don't find time to develop new
products or search for other new products to license in. Whether a company stays in
business after their first big product success or whether they go out of business is often
determined by their ability to bring additional new products onto the market.
Here's what usually happens when a new company is started around a single, hot new
product: During the first year, sales of the star product soar, and the company makes a
lot of money. During the second year, competitors start to make their own imitation of the
star product, often designing around the patent and, in some cases, manufacturing it
cheaper than the first company does. Finally, during the third year, the demand for the
product and its imitations starts to decline and, without additional products coming up
through their pipeline, the company sees its sales wither away and it will probably go out
of business soon.
There are plenty of "one-hit wonders" out there or, as Paul Simon calls them,
"one-trick ponies." We've all heard the story of the Pet Rock phenomenom (and as
inventors, we're all tired of hearing about the Pet Rock when we tell people that we
invent new products), but how many new products did the inventor develop after that? None,
zero, zip, nada. Maybe his intention wasn't to develop more products, and that's fine,
because he did pretty well with his Rock. He wasn't trying to build a long-term business
around it. He wasn't a full-time inventor, but rather just someone who happened to come up
with a great idea and he capitalized on it.
But for companies that want to be around for a while, it's vital for them to launch
additional new products from time to time. In fact, one of the top stock pickers on Wall
Street, Michael Murphy, who specializes in picking technology stocks, reports that one of
his most important stock-picking criteria is the percentage of sales that the company
devotes to Research & Development.
When I submitted my proposal to the President of this company, he liked what I had
recommended. How does this story turn out?
It's too early to tell at this point. When I called to follow up on our proposal, he was
not ready to make a decision yet. He's been busy with a lot of other things at their
office. Since he wasn't able to make a commitment, my feeling is that they'll spend too
much time on the "other things" and eventually lose their focus on the
long-term, which should have as its #1 priority the search for new products. Or else they
may not be around for long.
The point of this story is that as inventors we sometimes feel that we need a company to
license our products from us but that they really don't need us, even though we may have a
product that's perfect for their product line and distribution channels. The truth,
though, is that some companies need independent inventors as much as we need the company
that we're trying to sell our products to.
If there's another point to this story, it would be that you don't always need to have a
big budget in order to succeed beyond your wildest dreams with a new product. The Pet
Rock's inventor didn't need to spend much on advertising and promoting his pet rock,
because he managed to get it onto the desk of a network TV newscaster. Sales took off
after that, and he reached his goal of earning a million dollars from it. He sold a little
over 1 million rocks, and profitted roughly $1 from each one.
One final point: While you do your market research, you should be wary of letting the
"experts" discourage you from proceeding with a worthwhile idea. If anyone would
have presented a business plan for a Pet Rock, they would have been laughed out of every
banker's office in the country. Sometimes you
have to believe pretty strongly in what you're doing. That's why it's important to build a
prototype, or at least to have a picture or a drawing of your product to show to members
of your target audience. Let them be the "experts" rather than a banker or
attorney who may know little (or nothing) about marketing.
************************************************************
Article #3: "The Neustel -- Zimmer approach to Successful Inventing,"
by Michael Neustel and Ed Zimmer.
THE NEUSTEL -- ZIMMER APPROACH TO SUCCESSFUL INVENTING:
The Neustel-Zimmer Approach should only be utilized by inventors that intend to
"license" or "sell" their invention to an existing company. This
Approach is not designed for inventors that desire to manufacture their inventions.
Michael S. Neustel, a Registered Patent Attorney, and Edward Zimmer, a marketing expert,
developed the Approach. You can visit their respective web sites at www.patent-ideas.com and www.tenonline.org.
The Neustel-Zimmer Approach attempts to maximize potential returns to an inventor
intending to license their invention while minimizing the potential risks. While this
Approach does not guarantee success for all inventors, if followed properly it can
significantly reduce the financial risks most inventors incur. Remember . . . less than 2%
of inventions ever make money. Make sure your invention will likely be one of those 2%
before spending thousands of dollars on patents, prototypes, and other services.
STEP #1: PRELIMINARY INVENTION EVALUATION
The first step in the Neustel-Zimmer Approach is to make an "objective"
assessment of your invention. If you are honest with yourself and your invention at this
step, you can possibly avoid spending money on over 50% of your inventions that have
limited value. It is assumed that you have been maintaining detailed records of your
invention as you develop it. You should conduct two types of research during this step:
(1) market research, and (2) patent research. After conducting your research, you should
take an objective "marketability test" to determine if you should proceed to
Step #2.
A. Market Research:
Market research comprises searching for similar products that are currently on the market
or that have been attempted to be marketed. You should conduct your market research in (i)
catalogs, (ii) the Internet, (iii) stores, and (iv) magazines. You should also research
companies that make products similar to your invention to determine if they manufacture
products that would directly compete with your invention or if they have a better product
than your invention. Make sure to check everything since a good percentage
of inventions can be eliminated simply by doing some solid market research.
B. Patent Research:
Patent research comprises searching for patents that are issued for inventions similar to
yours. You can search for issued patents on the Internet or at your local U.S. Patent
Depository. There are several free
search engines on the Internet, but we suggest utilizing the IBM Patent Server at www.patents.ibm.com which you can utilize for free.
You should enter various keywords for your invention and print out all relevant patents.
Another excellent location to search is your local U.S. Patent Depository which has very
helpful patent librarians to assist you in your patent search. The USPTO has a complete
list of Patent Depositories at www.uspto.gov/web/offices/ac/ido/ptdl/ptdlib.htm
that you can utilize.
C. Marketability Test:
If a very similar product is not located during the market and patent research, you should
then take an objective marketability test for your invention. A good preliminary
marketability test is the Wal-Mart Innovation Network (WIN). For a fee of $175 WIN will
evaluate your invention based upon certain factors. You can contact WIN at (417) 836-5751
or visit their web site at www.wal-mart.com/win/.
After you are finished conducting your market research, patent research and marketability
tests, you have to make a choice: (i) proceed to Step #2, (ii) stop proceeding with the
invention, or (iii) place the invention on "reserve" while you consider other
inventions. Remember, less than 50% of inventions should pass Step #1 if done correctly.
STEP #2: PATENTABILITY SEARCH & OPINION
If your invention survives Step #1, you should have a professional patentability search
conducted at the United States Patent & Trademark Office (USPTO). You should also have
your Patent Attorney give you a patentability opinion based upon the patent search
results. You should expect to spend between $400 to $800 for a good patentability search
and legal opinion.
After you receive the patentability opinion and search results, you have to make a choice:
(i) proceed to Step #3, (ii) stop proceeding with the invention, or (iii) place the
invention on "reserve" while you consider other inventions.
STEP #3: "SELF-DRAFT" A PROVISIONAL PATENT APPLICATION
If your invention survives Step #2, the next step is to draft your own Provisional Patent
Application (a.k.a. "PPA"). The PPA is not a true patent application since it
only lasts for one-year and it is not examined by the USPTO. However, the PPA provides a
suitable format for inventors to draft their own patent application and receive up to
one-year of "patent pending" while they determine if their invention is
potentially licensable. It is highly recommended to utilize reputable commercial materials
that explain how to draft a patent application.
It is recommended that you hire your Patent Attorney to review your self-drafted PPA
before mailing to the USPTO. When drafting your PPA, make sure to describe your invention
in detail regarding structure, functionality and use. Make sure to include as many
detailed hand sketches and pictures (if prototype is made) as possible to clearly describe
the components and operation of the invention.
35 U.S.C. �112, first paragraph states that the PPA "shall contain a written
description of the invention, and of the manner and process of making and using it, in
such full, clear, concise, and exact terms as to enable any person skilled in the art to
which it pertains, or with which it is most nearly connected, to make and use the same,
and shall set forth the best mode contemplated by the inventor of carrying out his
invention." Failure to satisfy 35 U.S.C. �112, first paragraph can possibly result
in lost patent rights. You should consult with your Patent Attorney if you have any
questions about the legal requirements of the PPA.
STEP #4: "LICENSING" RESEARCH
After filing your self-drafted PPA with the USPTO, you should then begin your
"licensing" research. It is recommended that you hire a licensing agent who
specializes with your type of product (toy licensing agents, etc.). If you are unable to
locate a licensing agent who specializes with your type of product, you can either utilize
a general licensing agent or attempt to conduct the research yourself. Your fees for the
licensing agent should be less than $1,000 for all services rendered.
During the licensing research you should first make a list of 5 - 20 companies that
manufacture products similar to your invention and that may be potentially interested in
licensing or buying your patent rights. You should then try to contact these companies by
telephone or mail. Without describing your invention, you should tell the company that you
have an invention which solves a specific problem or does a special function. You should
inform them that you have "patent pending" on this unique product. You should
then ask the company if they would potentially be "interested" in licensing or
purchasing the patent rights to your invention. If they request more information about
your invention, this is a good indication that your invention is potentially licensable.
If the companies state that they already have a product that adequately solves the problem
or that does the special function, this is an indication that your invention is not
potentially licensable.
After the 5 - 20 companies have been contacted, your licensing agent should make an
objective assessment and recommendation as to the potential of licensing or selling your
invention. You then have to make a choice: (i) proceed to Step #5, (ii) stop proceeding
with the invention, or (iii) place the invention on "reserve" while you consider
other inventions.
STEP #5: HIRE A PATENT ATTORNEY TO DRAFT YOUR PATENT APPLICATION
If you feel that your invention is potentially licensable after conducting your licensing
research in Step #4, you should then hire the Patent Attorney to draft a complete patent
application for your invention. Expect to spend between $3,000 to $5,000 for a quality
patent application from your Patent Attorney.
STEP #6: LICENSE THE PATENT RIGHTS
After your Patent Attorney drafts and files the complete patent application for your
invention, you then should have your licensing expert arrange to disclose your invention
to potential licensees. You should attempt to have Confidentiality Agreements signed with
these companies prior to disclosing your invention to them. Don't be surprised if many
companies will not sign your Confidentiality Agreement.
STEP #7: FINAL REVIEW
You should "re-evaluate" your position with regards to your invention every six
months while completing Step #6. As an inventor, you need to objectively determine when
you should terminate all actions in promoting a specific invention. You should base your
decision upon the reactions you receive from the companies when presented with a full
disclosure of your invention. Remember, your time is worth something, so don't spend it
attempting to market an invention that no one wants.
Approximately every six months you should consider either (1) manufacturing the invention,
or (2) terminating all efforts for the invention. If you have not received a positive
reaction from industry regarding your invention, you are strongly encouraged to consider
the latter choice to avoid creating
further hardship for yourself. Do not spend valuable time pursuing a fruitless dream.
FINAL COMMENTS
We hope that you find the Neustel-Zimmer Approach beneficial to you during the invention
process. The road to success with your inventions requires hard work, dedication, and most
significantly "honesty" about your invention. We hope that our Approach allows
you to quickly identify the 98% of inventions that are not licensable. Lastly, we hope
that you are able to choose the 2% of your inventions that are potentially licensable so
that you proceed further with them and become a successful inventor!
Best Wishes,
Michael S. Neustel
Edward Zimmer
www.patent-ideas.com www.tenonline.org
# # # #
Michael S. Neustel runs Neustel Law Offices, which provides quality patent services
to inventors and businesses at affordable rates. Services include: patent searches, patent
opinions, patent applications and patent infringement. Neustel Law Offices LTD works with
mechanical, electrical and process inventions.
Mr. Neustel also started the National Inventor Fraud Center, Inc., which provides
information to inventors about invention promotion companies and how to market their
invention themselves. The NIFC has educated thousands of inventors and is known for
helping inventors make the "right decisions."
Ed Zimmer runs "The Entrepreneur Network." TEN is a non-profit corporation
dedicated to helping Midwest inventors and entrepreneurs through information and
connections.
*****************************************************************
"We must not lose track of the fact that inventors as such, important
inventions, are made by individuals and almost invariably by individuals with very limited
means." -- Philo T. Farnsworth, inventor of the television.
Feel free to forward "The Online Inventor" to your inventor friends and
colleagues. If you change your e-mail address, please subscribe with the new address in
order to continue receiving it each month. To view past issues of the "The Online
Inventor," please go to www.marketlaunchers.com/archives.html.
If you wish to no longer receive "The Online Inventor," just reply with the
word, "unsubscribe" in the subject line.
Have a great Holiday season and, until next time, Successful Inventing To You!
Best Regards,
Paul Niemann
"Humble Proprietor of Market Launchers, Inc. and sometimes inventor of successful new
products, too."
(800) 337-5758
(217) 224-7735 (outside the U.S.)
Copyright 1999
All Rights Reserved
*****************************************************************
Click here to read the October 1999 issue.