WHAT ABOUT NEW COMPETITION?
At Some Point, You May Have to Deal With New or Unexpected Competition
By James F. Riordan
You may be marketing your product, and all goes well in the beginning. Then suddenly, you may be faced with competitors you hadn't counted on.
New competition may come from:
1. The development of technology in areas related to your product which produces substitutes or superior products.2. Existing firms which are not presently selling a similar product, but may choose to jump into the market.
3. Firms that have a similar product and decide to modify theirs to compete directly with you.
4. New companies that are formed strictly to take advantage of the marketing opportunity.
Winning products are those that will be difficult for a new competitor to tool up for and are protected by intellectual property rights.
The evaluator can not be expected to predict technological advancements, breakthroughs, etc., since no one that I have ever met has an accurate crystal ball. It is equally hard to predict which large corporations are likely to become your competitors since many of them are diversifying at an astounding rate and it is all but impossible to predict which little company will be independent today and under the wing of a large parent corporation tomorrow.
A danger here is to underestimate the potential for new competition by counting on the fact that all of your present competitors are small firms. Remember that if a large company acquires the small company, it may suddenly be armed with talent, expertise, money, and vast resources not available to you.
If the product has no patent or trademark protection, virtually anyone can come along and jump into the market you have established, and take advantage of the goodwill you have built, the advertising you have done, and any manufacturing companies or suppliers you are using. About the only way you can keep market share in this scenario is to offer better and faster service.
On the other hand, if the product is protected by a patent, or you have the chance to establish a trademark name for the product, you may be able to carve out a niche for yourself that would be too expensive and not profitable enough for a large company to pursue.
One of the nastiest forms of new competition can come from the employees of the companies that you are using to supply parts and components for your product, or companies you have hired to do engineering for you, or develop tooling, or companies that you have contracted with to supply your complete product.
The most bizarre example I can give you was the time one of the new employees of my contract manufacturer in Taiwan stole one of my products from the assembly line on which he worked, took a picture of the product, and placed an ad in the Taiwan Trade Journal, offering the product for sale. The jerk planned on making his own injection molds to produce the product once he got order for them. He figured that if his boss was making hundreds of thousands of them, they must be valuable and in demand everywhere.
The funny part was the product was a subassembly for one of my products that I did the final assembly of in the United States. The thief did not even know what the product did, or what it was called...only that there was a demand for it. After I, by coincidence, saw the ad he placed, I arranged to meet with him to buy some of his "widgets." When he arrived for our meeting, he was met not only by me, but also his boss, and the Taipei police. The moral here is to have any company you will be contracting with to produce your products, have their employees sign non-competition agreements that contain punitive damages for breaching the agreement.
Another form of theft that can lead to new and unfair or unexpected competition is "computer theft," where an employee or outsider, breaking into the company computer, gains information that allows them to compete with you, or even beat you to market. This unauthorized entry into your files can give a competitor instant access to information and data that may have taken months or years to gather. It's therefore important to keep your computer systems protected with the latest in office and Internet security.
The wise product developer and innovator always attends the latest applicable trade shows and subscribes to all applicable trade journals, catalogs and publications that feature market trends, new products, acquisitions, etc. In addition, you should subscribe to the U.S. Patent Gazette to stay on top of any technology that may arise and affect your product, or any technology that may infringe on the innovator's patents, trade secrets, trademarks, etc.
The above article was taken from James F. Riordan's classic book, HOW TO EVALUATE THE POTENTIAL FOR SUCCESS OF A NEW PRODUCT OR TECHNOLOGY. Riordan's highly-acclaimed, 36-point system is a valuable tool for inventors, product evaluators or anyone interested in the invention process. Each section is followed by a comprehensive questionnaire that can be used to evaluate your product.
The highly-recommended book can be ordered through the Dream Merchant, 2309 Torrance Blvd., Suite 104, Torrance, CA 90501. The phone number is (310) 328-1925.
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