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Patent Filing

December 18, 2009 – 9:24 pm

Guest blog written by John Lindsey, Patent Attorney

Frequently, I am asked when a patent application should be filed . I often start the discussion with questions in two areas:

1. Is the new product or process complete?
2. What is (or will be) happening to demonstrate and monetize the new product or process?

Is the product or process complete?
In asking this question, I am, in part, trying to determine if the inventor can meet disclosure requirements for a patent application. The disclosure needs to be sufficient and precise enough to show what the inventor knew at the time of filing the patent application. Additionally, the disclosure should contain enough information to enable one knowledgeable in the technology at issue to make and use the technology.

In one conversation, I talked to a musician who wanted to alter input sounds and music in a certain manner. At the time, he was not clear whether he wanted to alter the sound mechanically, electronically, or other means. In his case, it was far too early for him to proceed with a patent application. He needed to work further on his idea to define, refine, and possess it. On the other hand, I have met with people who have had the idea for a new product, drawings, and were able to effectively discuss the creation and operation of the new product. In some cases, those individuals had sufficient disclosure to file a patent application, even before a prototype was built.

What has been done and what will be done with the new product or process?
Frequently innovators are trying to monetize the new product or process (no surprise there). This may involve demonstrations, pitching to angels/VCs, sales, offer of sale, distributing information on the product, etc. In the United States and other countries, patents rights are impacted by public disclosure, public use, offers of sale, or sale of material which is the subject of a patent application. Generally all of those actions cause a loss of foreign patent rights. In the United States, a patent must be filed within a year of those actions to avoid a bar to one’s patent rights. However, as a practical matter, even if one expects to only seek patent rights in the United States, the patent application should be filed before any of the mentioned actions. One risk in exposing the idea is that another may file a patent application prior to your patent application. In the U.S., the first person to file usually succeeds in litigation when there is a dispute as to who owns the intellectual property. Thus, one is in a better position by filing a patent application prior to public presentation, public use, sale (or offer) of the new product or process.

John Lindsay is an intellectual property attorney focusing on patent, copyright, trademark, and technology law for startups and small businesses. He can be reached at 214-736-4306 or john at StartupIPServices.com. His website is http://www.StartupIPServices.com.

By admin | Posted in Licensing | Tagged Invention, inventors, new ideas, new products, Patent protection, patent search, Patents, retailers, Trademarks | Comments (0)

The Motivation to Buy: Examining Consumer Spending Behavior

November 22, 2009 – 7:47 pm

This week starts the holiday sales, Retailbound looks at trends in consumer spending, including how consumers are cutting back and what defines value to today’s customer.

Let’s face it — people are struggling in today’s economy.

We’ve all heard how consumers are “trading down”, so we looked to recent research to see what exactly that means and if the same applies across all categories.

According to one of the top marketing research firm’s GfK Roper, thirty-nine percent of U.S. consumers are eating at less expensive restaurants; 36 percent are switching to cheaper brands of groceries; and 31 percent are switching to cheaper brands of household goods … but what about electronics?

Consumer buying behavior is much different for a TV versus shampoo. We had to ask, are consumers “trading down” on their consumer electronics purchases the way they are with consumer goods purchases?

The answer is yes … and no.

Clearly, value is more important than ever.

GfK Roper found 79 percent of American adults agree, “the most important thing about a brand is that it gives good value for the money.”

So we looked at what defines value in today’s economy:

Durability: 88 percent
High quality: 79 percent
Environmentally friendly: 60 percent
Makes my life easier: 59 percent
Good warranty or service plan: 59 percent
Inexpensive: 51 percent
Multiple functions: 48 percent
Personalized to my tastes: 43 percent
Looks good/stylish: 19 percent

While over half say price is important, durability and quality far out-rank price. Environmental friendliness is also climbing the ranks in importance to consumers. This can be seen in many different areas of consumer behavior — take the switch from buying bottled water to reusing a container. The average selling price for bottled water has fallen 30 percent since
2001, according to the Beverage Marketing Corporation.

And an April study conducted by the Consumer Electronics Association found 75 percent of consumers are concerned about rising home energy costs. In the past year, 76 percent have taken action to reduce their home energy usage.

This is an indication of consumers’ willingness to buy products that aren’t as disposable, thereby reducing their energy usage. Consumers are showing a readiness to pay more for quality and sustainability so they can save in the long run.

By admin | Posted in Sales Strategy | Tagged consumers, Day after Thanksgiving sales, economy, new products, recession, retail sales, values | Comments (0)

Top 10 Mistakes Potential Retail Suppliers Make

November 15, 2009 – 8:18 pm

At Retailbound, we get to talk to a lot of entrepreneurs, inventors, and small suppliers. While most of them have good intentions, there are mistakes made before they become our clients. Here is our top ten list of common mistakes that potential retail suppliers make:

10. Getting advice from people who have little or no experience in guiding entrepreneurs into retail

9. Not having the knowledge or experience in one or more areas of product development

8. Not following the proper steps of selling to retailers

7. Spending lots of money on manufacturing hundreds of pieces of their product before a deal with a retailer has been made

6. Not completing a business plan or marketing plan

5. Thinking it’s easy to sell products to retailers

4. Not doing marketing research to validate their product

3. Not having a lawyer perform a patent search on their product

2. Not realizing that it takes many months to even years to develop and market their products

1. Trying to save money by doing everything themselves

By admin | Posted in Retail Supplier Issues | Tagged inventors, inventory, Lawyers, manufacturing, Marketing, mistakes, new products, Production, retailers, sales | Comments (0)

First Steps to Production Consideration

November 8, 2009 – 9:25 pm

Guest Blog written by Carol Rehtmeyer of Rehtmeyer, Inc

Here’s a guide to step you through the various things to consider prior to producing your own product. Use this guide as a general “check-off” list. Don’t let the industry slang and details frighten or deter you. As in any industry, there is always lingo to learn. You can be successful if you have an open mind, “fire in the belly” and the drive to succeed. And remember, should you need guidance or assistance, Rehtmeyer, Inc. is available to assist you with every aspect of self production.

Let’s begin:
1. Have your product reviewed. Have someone who is highly qualified, specifically for your product category, determine that there really is a market and market potential for your product.

2. Determine the specifications (the BOM) to the actual components (type of components, size, number of colors printed on either side, weight of paper, plastic, coatings, collations required, etc.). This takes some time, but is important to know and understand. A manufacturer can not provide you an accurate quote unless you think about all of the components carefully. This will also avoid financial surprises later when you realize that you forgot to include a component, etc. A development company such as Rehtmeyer, Inc. can assist you in determining this required “BOM” (bill of materials or component detail listing; also called your “spec. sheet”).

3. Determine packaging. Is it in a window box, telescopic box, tuck box, blister card, clamshell blister, hang tag, 5 panel box or something else entirely? The type and size of the package will also be important to the retailer. Odd sizes and shapes are traditionally taboo in retailing as packages must fit into a “plan-o-gram” or specific retailing shelf space allocation. Packaging will also greatly effect the cost to ship product. You will find that careful decision making can save tremendous resources later.

4. Get production costs based on these specs. Don’t forget tooling, films, freight and other one-time charges. Know and understand what are your “one time” or upfront costs and what costs would reoccur for a second production run.

5. Determine how you are going to distribute this product. Are you selling to end users, retail store chains, “ma & pa” stores, catalogues, directly to companies or a combination of these? How are you going to reach these markets? Are to going to sell the product your self, or hiring others?.

6. Determine if you are going to use reps and how you will entice them. Sales representatives can open doors and offer a great deal of assistance, but they also require a commission. You will need to obtain sales reps by territory and manage their performance, or hire a sales management team to do this for you.

7. Learn about the industry you are entering. Use this information to your advantage. Get trade journals, etc.

What are some of the most noted inventor licensed products?
Most of the hottest, and best selling products have been initiated by inventors and entrepreneurs. Even “Barbie” was the idea of an inventor/entrepreneur. Other big name products include: “Hungry, Hungry Hippos”, “Twister”, “Toss Across”, “Hippity Hop”, “Chatty Cathy”, “Hair Grow Dolly”, “The Mickey Mouse Telephone”, “Upsie Baby”, “Magna Doodle”, “Etch a Sketch”, “Spin Art”, “Nerf”, “Pretty Pretty Princess”, “Don’t Wake Daddy”, “Trivial Pursuit”, “Micro Machines”, “Furbie”, “Tickle Me Elmo”, “Bop-It”, “Spin Pop”, “Bubble Tape”, “Tech Deck”, “Tech Bike” and hundreds more!

8. Do the Math. Create a spreadsheet to determine your financial return. You may want to create two spreadsheet scenarios-low sales and one with projected sales. Base your projections on realistic expectations, and not “best case scenarios”. You want an accurate assessment of the financial return for the product. You will also need to make various decisions when preparing a spreadsheet. For example, you will need to determine if you are going to amortize your one-time costs into per unit selling costs, or not.

9. Create a business plan– especially if you are looking for “OPM” (other people’s money). A business plan is your road map to success. You need one. If you need help creating your financial information and a industry accurate business plan, Rehtmeyer, Inc. can be hired to assist you.

10. Complete engineering of any components that required further engineering development.

11. Begin graphic design for packaging, sell sheets, etc.

12. Create and produce “sell sheets. You will need handouts that show your product, price-points, etc. These are great to mail, provide to sales reps, use for promotion, or leave behind in a meeting.

13. Create a production-like prototype. Buyers want to touch, see and test the product they are considering to buy.

14. Get PR (Promotion): Consider teaming with a promotion agent or doing this yourself (if your high energy, creative and have the time). Get media exposure-especially the free kind!

15. Determine how you are selling the product– Domestic, LOC, FOB, other (learn the lingo too). Are you going to warehouse the product, drop ship, or store boxes in your basement?

16. Team with someone who will guide you through the steps and production– especially if this is your first time.

17. Get funding as necessary, or have access to additional funds.

18. Get ready! Now you are ready to produce the product!

By admin | Posted in Sales Strategy | Tagged China, Costs, Inventions, Licensing, manufacturing, Marketing, new products, Packaging, Production, retail | Comments (0)

Green is the new Black

October 25, 2009 – 7:51 pm

Green is the new black, or at least it is when it comes to purchasing decisions by consumers.

In the midst of consumers’ heightened attention to eco-conscious purchasing, television manufacturers are also facing tougher Energy Star guidelines from the U.S. Environmental Protection Agency, which is
encouraging lower power consumption in high-definition televisions.

According to a study commissioned by Green Seal and EnviroMedia Social Marketing, 82 percent of consumers are buying green despite the current economic downturn. Unbelievably (to many), consumers have continued the pattern/trend established earlier this decade by buying more organic, eco-friendly and “Green” products. While many predicted a drop-off when the economy tanked, it proved to be a false alarm of sorts. While sales and growth has slowed from the previous torrid pace, the fact that it’s still growing is meaningful. And I have no doubt that it will again accelerate when the economy picks up again. Most economists feel that the recession has bottomed out and we’re starting to see various signs of an improving economy – so hopefully this will happen sooner rather than later.

As a manufacturer, you have a responsibility to make your products that do not produce toxic emissions that would harm the environment and can be recycled later on to make other products. Consumers are starting to ask their favorite retailers if they carry “green” products in their stores. It’s time to jump on the “green” bandwagon.

By admin | Posted in Retail Supplier Issues | Tagged green, manufacturing, Marketing, new products, retail, sales | Comments (0)

Why Retailers Develop Private-Label Products

October 18, 2009 – 7:28 pm

These days, scarcely a day goes by in the retail business without a newspaper headline or TV news segment heralding the recent growth of private-label products. Yes, those items once known as generics – or simply store brands – are creating quite a buzz, thanks to quality improvements, a surge of innovation, and an economy that has increased interest in value-priced offerings.

Why would retailers invest in their own line of private-label products? There are several reasons:

• Develop popular items with wide appeal to expand sales volume
• Control the quality of the product
• Drive down prices on national brands
• Control the packaging
• Achieve pallet efficiencies

While many retailers will be known for name brands like Sony, Rubbermaid, and Goodyear, they will continue to augment their product offerings with their own private-label items.

China and other countries are used constantly by retail buyers as a source of their private-label items, however, you as the potential retail suppler could offer to be the domestic factory for their private-label items. If you can offer a better quality product that rivals the national brands while offering a savings to their customers, you will win the contract from the retail buyer to product their private-label products.

Consumers’ expectations of private-label products have changed and the products have changed as well. Today, store-brand products no longer are cheap imitations of their national brand rivals. They are on a path to equal or surpass the name brands when it comes to innovation.

By admin | Posted in Sales Strategy | Tagged China, generic, inventory, Marketing, Private Label, retail brand, retailers, store brand, suppliers | Comments (0)

Licensing vs. Self Production

September 27, 2009 – 8:01 pm

Another guest blog written by Carol Rehtmeyer of Rehtmeyer, Inc.

Licensing

Licensing Pros:
1. There’s low to no cost or risk to license your idea.
2. Royalty stream can continue for many years.
3. There’s always the opportunity for line extensions and ancillary licensed goods!
4. Companies will pay a portion of the expected royalty in an advance payment.
5. The company that licenses your item will pay for nearly everything including patenting, packaging, engineering, design work, production, sales, promotion and more.

Licensing Cons:
1. Few items get licensed
2. You have little to no control over anything
3. A company may enter a licensing agreement and not actually produce the product
4. A company may produce your product but do a very bad job in production, distribution, etc.
5. Products that have not produced well, but have entered the market place can be very difficult to successfully reenter.
6. Sometimes collecting royalties is a problem
7. If the sales are not strong, you make no or very little money. A small company may not produce enough royalty income to cover your legal expenses.
8. A typical royalty lasts for 3 years
9. Companies always want worldwide distribution, but may not have any ability to sell product in these territories. You could get locked into a deal that may not allow you to sell product in some territories.
10. Most companies require the inventor to participate in markdowns, returns, damaged goods and more.
11. It can be a long day to “pay day” as the actual royalty is not paid until the quarter following the product sales. This can be more than two years out in some cases!
12. Sometimes companies demand a “shared” or reduced royalty if one or more inventor groups have been involved, or if the product has a popular license brand attached to it.
13. A company may attach a license or “brand” to your concept without your say or approval.
14. You will probably need a licensing agent who can open many doors, but will demand anywhere from 25% to 50% of your royalty revenue.

Self Production

Self Production Pros:
1. You have control over all aspect of the product from the look to the quality to the way in which the product is marketed.
2. You “run your own ship”.
3. You can make a lot more money. Instead of a 5% (or less) royalty, based on the wholesale selling price of your item (as with licensing your product concept), you make your own determined margin– maybe as much as 51% from cost of goods. Based on an item that would retail for say $14.99, you would make approximately $0.37 cents per unit sales on a royalty basis, but would gross approximately $2.50 an item if you were to produce and wholesale the item yourself.
4. You can build a brand and brand identity.
5. You can build a company and value to that company.
6. You can always license later– at a higher royalty than average if you have some sales behind your product.
7. The toy industry is a very exciting one.

Self Production Cons:
1. You have all the risk of running your own toy company.
2. Even if you have a great product, you still have to sell it.
3. Retailers can make very unrealistic demands so you take all the risk
4. Manufacturing or other delays can be deadly to a time sensitive product
5. It is very difficult to sell a “onsie” (just a single item– no product line, no line history) to a retailer.
6. Credibility with retailers may be an issue.
7. Sales reps can be most beneficial– if you get the right ones. They charge a commission between 5 % to 15% depending upon the product and market.
8. You may need to promote or advertise your product.
9. You will need to have or raise a fairly substantial amount of capital.
10. The toy industry can be a very demanding one.

For more information on licensing or manufacturing toys, contact Carol Rehtmeyer by phone (630) 906-9304, by email crehtmeyer@rehtmeyer.com or visit www.rehtmeyer.com

By admin | Posted in Licensing | Tagged Design Work, Lawyers, Licencing, Marketing, Packaging, Patents, Promotion, retail, Royalty, sales, self production, Trademarks | Comments (3)

Top 10 List – Tips on preparing for your meeting with the retail buyer

September 15, 2009 – 8:34 pm

Before we started Retailbound, we were retail buyers for large multi-billion dollar retailers. We have seen many vendors do excellent presentations for us. Here is our top 10 list of tips to do BEFORE you meet with the retail buyer.

10. Be on time for your meeting with the retail buyer. Get directions from the receptionist to verify…Mapquest is wrong sometimes.

9. Make sure there are no typos in your PowerPoint presentation. There is no excuse with the abundance of spell check programs out in the marketplace.

8. Have the correct retailer’s name on your PowerPoint deck “True story…I had a former vendor come in to meet with me and had Staples listed on the front page of the PowerPoint deck…I worked at OfficeMax at the time”.

7. Have enough copies of presentation folder to hand out at the meeting.

6. Have retail samples available for testing and evaluation by the retail buyer.

5. Know the corporate dress code for the retailer and dress appropriately for the meeting. Business formal is highly recommended.

4. Have your pricing and back-end program available for review.

3. Make sure that your presentation does not go over the time allotted by the buyer.

2. Know everything you can find out about that particular retailer such as recent merchandising strategies, store count, stock price, etc…you can never be over-prepared.

1. Understand that sell-through is more important than sell-in for a retail buyer. Come with a plan that clearly defines how your company will help the retailer sell-through your product should you be the vendor of choice.

By admin | Posted in Sales Strategy | Tagged Marketing, PowerPoint, pricing, retail, sales, samples, strategy, Top 10 list | Comments (0)

What’s the Difference Between a Retail Coach and a Retail Consultant?

August 30, 2009 – 7:57 pm

At Retailbound, we get asked constantly what the difference is between a retail coach and a retail consultant.

Here’s an analogy that illustrates the difference between a retail coach and a retail consultant:

A retail coach will help you understand how and why you bake a cake, help you to determine what’s holding you back from baking a really good cake, and stand by your side as you bake the cake.

A retail consultant will explain why one cake mix is better than another, explain the best cake baking practices, and if necessary, bake the cake for you.

The one that is best for you depends on your budget, your time and the goals for your business.

Retailbound work in a “hybrid” mode, as a coach-consultant. We are set up to offer you the best of both professions: advice and creative expertise when you need it, accountability and strategy when you’re stuck, and proven tactics to help you systematically build your business.

Contact Retailbound today to get started selling your products to retailers!

By admin | Posted in Sales Strategy | Tagged Marketing, retail coach, retail consultant, retail training, retailbound, Sales Strategy | Comments (0)

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