Companies constantly need new ideas to stay in business and remain competitive. One way they find these ideas is through product licensing. Licensing is giving a company permission to manufacture, distribute and sell a product based on your idea. You are the licensor and the company is the licensee.
So the question is, what are these companies looking for in an idea?
Companies look for a fit with their product line in terms of functionality, target market, design, quality and profitability. Your product might not fit one company, but could be perfect for another. In general, companies want a product with the following:
- Will make a profit– Companies want profitable products in line with their business. For example, a company such as P&G expects products to produce $100 million, while a small company might be happy with $5 million in revenue.
- Is patented or patent pending– Companies want patents to defend against competition. If an invention is not patented and in the public domain, the company does not need you, they can make it themselves.
- Has an advantage over existing products– Your product idea should have a clear advantage over existing products in the market.
- Is developed past the idea stage– Companies do not want just an idea written on a napkin. At a minimum, companies are interested in an invention if it appears feasible based on your virtual or physical prototype.
- Is a fit with their existing products– Companies want a product related to their expertise in manufacturing, marketing, and sales. For example, a company which sells sporting goods is less likely to be interested in licensing power tools.
- Is safe for the end-user – Companies are concerned about product liability lawsuits. Your product must be clearly safe to use. (It also helps if your product is environmentally friendly.)
Knowing what companies are looking for upfront can give you a major advantage when pursuing your ideas. Cover these six areas first, before approaching them, and you will increase your chances that someone may be interested in licensing your idea.
For assistance in getting started with any of your new ideas please visit us at New Product Consulting