By Paul Niemann

 

There are many reasons why it’s in a company’s best interests to add outside products to their product line – products created by independent inventors like you.

When companies do this, they gain several advantages over competitors. They have:

1. More products to choose from

2. Lower development costs

3. Less money spent on new product failure because the inventor pays for the development costs

4. Quicker time to market because the product has already been developed

5. More chances of hitting a home run with a revolutionary “new to the world” product.

And when you consider the average lifespan of existing products is only three years, it makes sense for companies to look outside of their own company for new products.

The Product Life Cycle

Just as humans pass through different stages in life from conception to death, products also pass through a life cycle.

The four stages of the product life cycle or PLC are Introduction, Growth, Maturity and Decline.

  • Introduction stage. Product makes its debut on the market, companies incur high marketing costs for educating customers about the new product or the entire product category and they build retail distribution. At this beginning stage, profits are either low or non-existent, even though there may be few products competing directly with it. Example: MagicJack’s new device that allows you to make free calls from your cell phone in your home with the benefit of reducing cell phone fees.

 

  • Growth stage. Product gains acceptance by customers and sales increase, yet it faces competition from similar new products. Company increases its advertising and the product starts to reap bigger profits. Example: Apple’s iPad, which now faces competition from other tablet computers.

 

  • Maturity stage: The marketplace becomes filled with competing products and it’s harder for the company to find new customers. Profits begin to slow. Example: The cell phone, which has about 90% market penetration in the United States.

 

  • Decline stage: Sales decline, profits drop to near zero and the product is replaced by a newer technology or style. Companies likely will stop promoting the product and phase it out. Example: RC Cola. It is still available at retailers, but there is virtually no advertising to support it.

All products pass through these four stages and the amount of time a product spends at each stage varies. A fad product such as the Pet Rock goes through the entire cycle very quickly. Some products such as milk, orange juice, meat, etc., can stay in the maturity stage for decades or even centuries.

Why is this relevant to manufacturers and what does it mean for you as an inventor?

No product or product category lasts forever, with the exception of food, so every company needs new products from time to time. Some companies introduce new products constantly, while others extend their brands for as long as possible.

All manufacturers need to add new products to their product lines. Ask yourself how many successful one-product companies have been around for a while. The short answer is none, if any. One reason is because companies that were founded with just one product soon face intense competition from copycats that can produce it cheaper or have better distribution. Those one-product companies typically fade away.

Moreover, once a new company has established distribution channels to wholesalers and retailers, they try to grow their companies by adding new products. In this case, those one-product companies grow to become multiple-product companies. That presents an opportunity for you, by offering your new products to them for their product lines.

Same thing with older companies. They have distribution channels in place, and they need new products. No product lasts forever and companies that stop introducing new products to its customers will go out of business.

Think about this the next time you’re hesitant about calling a company to pitch your new product. They need new products.

 

Paul Niemann runs MarketLaunchers.com, where he builds web sites for inventors and coaches them on the marketing of their inventions. He also lists those inventions on his web site’s invention database, where they can be seen by companies that search for new products to license in. Visit www.MarketLaunchers.com or call Paul Niemann at 800.337.5758 for more information.