Once inventors have a product ready to sell, they need to decide how to market the product. They might choose to sell the product themselves, which generates the most profit per sale, but the main drawback is that sales might get off to a slow start or never get started at all. Another option is to land a marketing partner-another company already selling into the target market-which has the potential for very fast sales growth, but the main drawback is they will need to give 20 to 25% of their sales volume to the marketing partner to cover sales and marketing costs. At first glance the 20 to 25% seems high, but in reality most consumer products companies spend approximately 20% to cover sales and marketing costs. Selling through a marketing partner may not be viable if you have small margins, but it is often the best course for fast sales growth for inventors with high margin products, where the product's wholesale sales price is at least twice the product's manufacturing costs. This article covers how to find a strong marketing partner to sell your product.
There are several principles to follow when selecting a partner. The partner needs to be selling to the right market and they also need to be able to generate significant revenue per year with your concept. The partner should also have a strong reputation and have had strong sales growth. But the critical point is to work with companies where the inventor can find someone inside the company who is willing to push management to carry your product. Ideally this person is a regional manager or marketing person with enough clout to move the project forward. The marketing partner can be chosen from a wide range of businesses: a manufacturing company that makes other products it sells, a distributor who sells to the same target market, a manufacturer's representative firm that plays an important role in a particular market, a large end user of an industrial product, or even a major retailer looking to sign a private label agreement for its stores.
Potential Marketing Partners
Typically when people think of a marketing partner, they are thinking of bigger companies that have large marketing and sales staff. Those companies can be good partners, but they are also partners that can take a long time to sell. What you need from a marketing partner is a commitment to take the product for a period of time, which means a marketing partner is a very broad term for inventors. For example, a retailer is a partner if it agrees to buy a fixed number of units for three years in return for an additional ten percent discount and an exclusive sales agreement.
Companies with Branded Offerings
Products and services are branded when they are sold under a name the company promotes. The Geek Squad sells branded computer repair services and the Crank Brothers sell branded bike repair products to bike shops. Companies with branded products typically sell through established distribution channels, compete with many other companies, and have a somewhat steady stream of business. These companies will be interested in marketing inventor products when those deals improve their competitive situation.
Distributors often look for exclusive deals on "hot" products or services that have strong customer demand since it boosts all of their products' sales.
They already buy lots of private label products, which are typically nonexclusive agreements for a product with the retailers name on it. A private label agreement is one option to an inventor when the retailer makes a three or four year commitment.
Companies that Market Others' Products
Many markets have one or two companies that market products from overseas manufacturers or small US companies. They also make strong marketing partners.
Finding Potential Partners
Finding partners starts with the target customer. Anyone who is active with your target customer is a potential partner. Make a list of all the companies and organizations that interact with your targeted customers. The best way to find these companies is by using directories that are posted on web sites for trade magazines and associations and from exhibitors lists from industry trade shows.
Trade magazines typically have directories where you can often get a list of manufacturers, manufactures' representatives and distributors. As an example, I learned rock salt lamps are popular in Pakistan, both for their soft ambient mood lighting and because the rock salt lamp releases ions when the light is on that have some medicinal value. To look into potential partners I did an internet search for lighting retailer trade magazines and at the top of the list was the site for Home Lighting and Accessories, the trade magazine for lighting retailers. The site contained a directory for manufacturers, manufacturing representatives, and some distributors. I also subscribed to the magazine (most trade magazines are available at no charge) so I could keep up with the industry. You can also find trade magazines in Gale's Source of Publications and Broadcast Media, which is available in larger libraries.
Associations can also be located using the internet in exactly the same way as trade magazines. For the associations related to lighting I found several sources but the best one was the National Home Furnishings Association. The association's directory for products contained a list of many manufacturers and distributors and a list of auxiliary members had the names of manufacturers' representatives. Gale's Book of Associations, also available at libraries, contains the most comprehensive list of associations that I've run across.