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The first step to developing an idea is to do some research to determine its marketability. Marketability refers to the anticipated reception of your invention in the market.The Internet and your local public library are great starting points for finding relevant market information. Likewise, a visit to a health sciences library at a major medical school can provide additional resources to begin researching medical specialties and procedures.
In this section, you will find information adapted from The Inventor's Bible by Ron Docie, Sr. that can help you evaluate and further develop your idea.
Here are some important questions to ask yourself when analyzing marketability:
- Improvement: Is there a gold standard? How is your invention better than what is on the market now? Is it less expensive; does it have more options; is it safer, more efficient, faster, easier to use, longer lasting?
- Distinctiveness: How crowded is the marketplace for items like yours? Is your product sufficiently different?
- Acceptance: How readily will users accept your product? Will it require a radical change or a long learning curve? Will it require special or extensive training?
- Life Cycle: Is this the right window of opportunity? Will your product's life cycle be long enough to justify the effort?
- Pricing: Can your product be produced in an acceptable price range?
- Success of Competitive Products: Are there other known attempts to market similar items that have met with success or failure?
- Appropriate for DePuy Mitek: Does your idea/product address an unmet need in the Sports Medicine markets?
Valuing an Idea
When developing an idea, you need to feel confident that it will provide an adequate return on investment (ROI) for you and the purchasing or licensing company. Understanding how your invention will be valued will help you make crucial decisions about funding and licensing or selling your idea. The value of an idea will be determined by several criteria. You may want to consider the questions listed here to discover if there are any factors that will prohibit producing, licensing, or pursuing a patent for your invention.
Legal and Safety Criteria
Considering the legal restrictions surrounding your idea will help you determine if you will encounter any regulatory hurdles.
- Legality: Are there rules, regulations, or standards that prohibit the development or use of your invention?
- Safety: Are there potentially dangerous hazards or side effects?
Business Risk Criteria
Evaluating the business risk criteria may help you determine if pursuing development is financially possible.
- Functional Feasibility: Will your invention do what it is intended? Is it both safe and effective?
- Production Feasibility: Does the company have the necessary equipment and resources to manufacture and market your invention?
- Stage of Development: Is the base technology new, stable, and readily available?
- Investment Costs: Does your invention require prohibitive amounts of capital for development?
- Payback Period: What is the time frame for payback of investment?
- Profitability: What is the profit margin at which the anticipated revenues will cover costs?
- Marketing Research: How much marketing research is required?
- Research and Development: What R&D is necessary to reach the production-ready stage? Are R&D resources available? What clinical studies will be necessary to complete development of your product?
Answering these questions to assess demand is crucial to valuing the need of your idea in the market.
- Potential Market: What is the potential market for a product of this type?
- Potential Sales: Given alternative or competitive products and the current market environment, what sales can your product expect?
- Product Life Potential: What is the potential for additional products, styles, qualities, and price ranges?
Market Acceptance Criteria
Market acceptance criteria may be good indicators for determining if the market is primed to support and promote your invention.
- Compatibility: How well will your invention fit into accepted protocols?
- Learning: Will your invention require significant training for proper use?
- Need: Is there an obvious void or unmet need in the market that can be filled by your invention? Is the target audience requesting such a product?
- Dependence: To what degree is the use of your invention dependent on other products or systems?
The value of your invention can be significantly affected by competitive products or services. Recognizing where your invention fits into the current marketplace may help you strategize the best way to bring your idea to market.
- Appearance: Is your invention visibly different from related products?
- Function: How is the functionality of your invention different from existing products?
- Durability: How durable is your invention? How will potential buyers perceive durability?
- Price: Where does your invention fit in a pricing structure?
- New Competition: Is there a likelihood of competition from new entrants?
- Protection: Do patents,prior art, or copyrights exist on competitive products? Are these prohibitive to marketing your invention?
- Ergonomics & Human Factors: Will your idea improve product ergonomics or usability?
If you did not uncover significant barriers to developing your idea during this evaluation, you may be ready to move on to formulating your development strategy.
Adapted with permission from Docie, Ron Louis Sr. The Inventor's Bible: How to Market and License Your Brilliant Ideas. Berkeley: Ten Speed Press. 2001.
Licensing Versus Selling an Idea
If you decide against developing your idea alone, you have two options—licensing or assigning. Licensing is in essence leasing an idea. Assigning is the sale of a patented idea. Assigning or selling rights to your invention requires that both parties agree to a projected worth of the product. This is particularly difficult to predict in the rapidly changing healthcare market. When you sell your invention, you assign your rights to a company in exchange for a cash sum, usually paid up front or at agreed upon milestones in the development process.
When you license an invention, you offer a company the right to produce and sell your invention for a designated period of time for an agreed upon compensation.
Advantages to Licensing:
- Improved Odds: In some circumstances, licensing may be better than selling. Companies often prefer to engage in licensing contracts with inventors because licensing reduces the uncertainty and risk of estimating the value of an invention without its worth being quantitatively proven in the marketplace.
- Distribution of Investment: Licensing may also be preferable to the sponsoring company because it can better manage cash flow. A company has to invest capital to research, purchase raw materials, engineer, manufacture, market, and promote your invention. Paying the inventor in full initially is an added drain on resources that could be directed to creating the best product most expediently.