*****************************************************************
*****************************************************************

THE ONLINE INVENTOR -- November 1999

(c) 1999 Market Launchers, Inc.

http://www.marketlaunchers.com

Publisher: Paul Niemann

*****************************************************************
*****************************************************************

PUBLISHER'S NOTES:

We're up to 350 subscribers to "The Online Inventor." Thank you for spreading the word as we continue in our quest for 1,000 readers. I'd like to ask a favor of you: If you'll tell just 2 of your inventor friends about our newsletter, then we can surpass 1,000 subscribers by the beginning of the next century !!

Of the following 2 articles, the first one tells why it's important for a company to bring additional new products to market after they've launched their first successful new product rather than expecting that first big product to sustain them.

We saved the best for last with our final article. This just came in from Michael Neustel and Ed Zimmer. Mr. Neustel is the patent attorney who we refer inventors to when they call here after they've been ripped off by a scam marketing company. If you're on their mailing list, then you've received this article in an e-mail from them, too. It may be redundant, but some things are worth repeating.

As it is our policy here at Market Launchers to practice what we preach, our sister company, Political Games, Inc., is currently launching a follow-up product to last year's successful "IMPEACHMENT" Card Game. If you like cartoons, or if you like humor that pokes fun at politicians, or both, then you'll love this game. You can preview it at www.PoliticalGames.com. (Sorry for the shameless plug of my new product but, as the saying goes, people can't buy what they can't see.)

That's all for now.

-- Paul Niemann

"Anything that won't sell, I don't want to invent." -- Thomas Edison

"Man's mind stretched by a new idea never goes back to its original dimension." -- Oliver Wendell Holmes

************************************************************

Article # 1:  Company Spotlight: "Grove Products"

Article # 2:  "The Importance of New Products to a Company's Long-Term Success," by Paul Niemann

Article # 3:  Article #3: "The Neustel - Zimmer approach to Successful Inventing," by Michael Neustel and Ed Zimmer.

************************************************************

Article # 1:  Company Spotlight: "Grove Products"

In last month's issue, I gave you the names and contact information for 3 companies who are looking for products suitable for the Direct Response TV industry.

We've recently been hired by one of these companies to work on their behalf, locating new products for them. We're helping them find products that could sell well on TV. Direct Response TV products are then later moved to retail stores, where they usually sell 7 - 10 times as many units as they did on TV.

The company is called Grove Products, and you can find out more about them on their web site, www.GroveProducts.com. Here's a list of the types of products they are looking for (the list is in no particular order):

*  housewares, especially food processors
*  exercise equipment
*  sporting goods (especially golf and fishing products)
*  cleaning and repair products
*  weight loss products
*  beauty & cosmetics products.

The President, Jerry Grove, is very open-minded to new inventions. If you've already submitted a product for Think Tek's new product search, then you don't need to submit the same product to us for Grove Products, because we've already forwarded it on to them. Jerry prefers that you send the products to
us here at Market Launchers, because he doesn't have time to personally respond to each one that they reject. But if you'd rather submit a product directly to his company, here's his address:

Mr. Jerry Grove
Grove Products, Inc.
10979 Reed Hartman Highway
Cincinnati, OH 45242
E-mail: [email protected]

The company's flagship product is the SockMaster sock matching system, which can be seen at www.SockMaster.com.

How many unit sales does the average successful Direct Response Television Marketing campaign generate per month? According to industry reports, and based on a selling price point of $19.95, there are four levels of success:

1) A "RUNAWAY HIT" -- 200,000 to 250,000 units per month / $4 to $5 million in sales volume per month.
2) ABOVE AVERAGE -- 100,000 to 150,000 units per month / $2 to $3 million in sales volume per month.
3) MODERATE TO AVERAGE -- 60,000 to 100,000 units per month / $1 to $2 million in sales volume per month.
4) MILD TO MODERATE -- 20,000 to 60,000 units per month / $400,000 to $1 million in sales volume per month.

90 percent of all TV stations and 100 percent of commercial cable channels now accept infomercials. In 1988, direct response marketing sales reached $350,000. By 1992, sales had reached $750 million. By 1995, the number exceeded $6.5 billion, with projections for the year 2000 at $20 billion.

The chances of any product actually being selected for an infomercial is slim, but if you believe in your product, then it's worth submitting it for review. Here are some recent success stories for some of the better-known direct-response TV (infomercial) products:

Product:                         Price:            Sales figures:         Year released:

Absculpter                     $79.95          $100 million          1995
Hook 'n Hang                $19.95          $40 million            1998
Hairdini                         $19.95          $20 million            1995
Banjo Fishing Lure      $29.95          $100 million          1996
Eurosealer                     $19.95          $50 million            1997

Source: Response Magazine, September, 1999

Here is a brief overview of what Grove Products does in a Direct Response TV advertising campaign:

They will create either a short-form (2 minute) Direct Response commercial, a long-form (30 minute) Direct Response commercial, or both.

A short form infomercial is an extension of Direct Response television advertising. The basic definition of the short form infomercial is: a longer form of commercial that is informative, educational, newsworthy, persuasive and entertaining, targeted to a specific audience. Its primary purpose is to sell, sell, sell, via a direct call to action using an 800 or 900 number. The short form infomercial is usually 2 minutes in length.

A long form uses 30 minutes to entertain, educate, and hold the audience's attention for longer periods. This method is highly effective for higher price points and products that require extensive demonstration.

Key Selling Messages:

From a selling point of view, the Direct Response Television Commercial is a well thought out, in-depth, one-to-one sales presentation that consistently delivers the same vital key selling messages every time it airs:

A.  It repeatedly identifies the wonderful benefits of the product, its Unique Selling Proposition (USP), always relating to the primary Target Consumer whose needs are being fulfilled.

B.  It consistently overcomes skepticism, doubt and objections like credibility, price and quality while instilling confidence in the buyer.

C.  It constantly asks for the order, using proven sales-closing techniques. This represents what is often called the "Nodding Effect."

D.  It repeatedly adds value to the product and provides bonuses or Free Gifts for ordering now.

E.  It defines a common problem the prospect has and offers the product as the solution to that problem.

F.  It motivates the viewer to act, creating emotion by using the two primary motivators: Fear or Greed (Desire), sometimes guilt or shame.

G.  It offers the risk - free opportunity to try the product without obligation because of the money-back guarantee.

H.  It instills a sense of urgency in its call to action. This could be represented by a limited time offer or limited product availability.

I.  Its professional quality presentations establishes credibility for the company and product, as well as helping to create name brand awareness for future retail merchandising ("As Seen on TV").

www.GroveProducts.com contains an abundance of useful information on the Direct Response TV industry.

************************************************************

Article # 2:  "The Importance of New Products to a Company's Long-Term Success," by Paul Niemann

Every so often, I receive a call or an e-mail from a company asking for help in locating new products. One that came in a few weeks ago, though, really made me think about the importance of new products to a company's success, because it seemed to have an urgent tone to it. The e-mail read:

"My company is a one-product manufacturer and marketer. We are looking to rapidly develop our product line. We are interested in how you can help us. Look up our website at www. --- .com. Please call or send information at your earliest convenience."

When a new company hits the big time with a hot new product, they often spend so much time managing the sales of the hot new product that they don't find time to develop new products or search for other new products to license in. Whether a company stays in business after their first big product success or whether they go out of business is often determined by their ability to bring additional new products onto the market.

Here's what usually happens when a new company is started around a single, hot new product: During the first year, sales of the star product soar, and the company makes a lot of money. During the second year, competitors start to make their own imitation of the star product, often designing around the patent and, in some cases, manufacturing it cheaper than the first company does. Finally, during the third year, the demand for the product and its imitations starts to decline and, without additional products coming up
through their pipeline, the company sees its sales wither away and it will probably go out of business soon.

There are plenty of "one-hit wonders" out there or, as Paul Simon calls them, "one-trick ponies." We've all heard the story of the Pet Rock phenomenom (and as inventors, we're all tired of hearing about the Pet Rock when we tell people that we invent new products), but how many new products did the inventor develop after that? None, zero, zip, nada. Maybe his intention wasn't to develop more products, and that's fine, because he did pretty well with his Rock. He wasn't trying to build a long-term business around it. He wasn't a full-time inventor, but rather just someone who happened to come up with a great idea and he capitalized on it.

But for companies that want to be around for a while, it's vital for them to launch additional new products from time to time. In fact, one of the top stock pickers on Wall Street, Michael Murphy, who specializes in picking technology stocks, reports that one of his most important stock-picking criteria is the percentage of sales that the company devotes to Research & Development.

When I submitted my proposal to the President of this company, he liked what I had recommended. How does this story turn out?

It's too early to tell at this point. When I called to follow up on our proposal, he was not ready to make a decision yet. He's been busy with a lot of other things at their office. Since he wasn't able to make a commitment, my feeling is that they'll spend too much time on the "other things" and eventually lose their focus on the long-term, which should have as its #1 priority the search for new products. Or else they may not be around for long.

The point of this story is that as inventors we sometimes feel that we need a company to license our products from us but that they really don't need us, even though we may have a product that's perfect for their product line and distribution channels. The truth, though, is that some companies need independent inventors as much as we need the company that we're trying to sell our products to.

If there's another point to this story, it would be that you don't always need to have a big budget in order to succeed beyond your wildest dreams with a new product. The Pet Rock's inventor didn't need to spend much on advertising and promoting his pet rock, because he managed to get it onto the desk of a network TV newscaster. Sales took off after that, and he reached his goal of earning a million dollars from it. He sold a little over 1 million rocks, and profitted roughly $1 from each one.

One final point: While you do your market research, you should be wary of letting the "experts" discourage you from proceeding with a worthwhile idea. If anyone would have presented a business plan for a Pet Rock, they would have been laughed out of every banker's office in the country. Sometimes you
have to believe pretty strongly in what you're doing. That's why it's important to build a prototype, or at least to have a picture or a drawing of your product to show to members of your target audience. Let them be the "experts" rather than a banker or attorney who may know little (or nothing) about marketing.

************************************************************

Article #3:  "The Neustel -- Zimmer approach to Successful Inventing," by Michael Neustel and Ed Zimmer.

THE NEUSTEL -- ZIMMER APPROACH TO SUCCESSFUL INVENTING:

The Neustel-Zimmer Approach should only be utilized by inventors that intend to "license" or "sell" their invention to an existing company. This Approach is not designed for inventors that desire to manufacture their inventions. Michael S. Neustel, a Registered Patent Attorney, and Edward Zimmer, a marketing expert, developed the Approach. You can visit their respective web sites at www.patent-ideas.com and www.tenonline.org.

The Neustel-Zimmer Approach attempts to maximize potential returns to an inventor intending to license their invention while minimizing the potential risks. While this Approach does not guarantee success for all inventors, if followed properly it can significantly reduce the financial risks most inventors incur. Remember . . . less than 2% of inventions ever make money. Make sure your invention will likely be one of those 2% before spending thousands of dollars on patents, prototypes, and other services.

STEP #1:  PRELIMINARY INVENTION EVALUATION

The first step in the Neustel-Zimmer Approach is to make an "objective" assessment of your invention. If you are honest with yourself and your invention at this step, you can possibly avoid spending money on over 50% of your inventions that have limited value. It is assumed that you have been maintaining detailed records of your invention as you develop it. You should conduct two types of research during this step: (1) market research, and (2) patent research. After conducting your research, you should take an objective "marketability test" to determine if you should proceed to Step #2.

A.  Market Research:

Market research comprises searching for similar products that are currently on the market or that have been attempted to be marketed. You should conduct your market research in (i) catalogs, (ii) the Internet, (iii) stores, and (iv) magazines. You should also research companies that make products similar to your invention to determine if they manufacture products that would directly compete with your invention or if they have a better product than your invention. Make sure to check everything since a good percentage
of inventions can be eliminated simply by doing some solid market research.

B.  Patent Research:

Patent research comprises searching for patents that are issued for inventions similar to yours. You can search for issued patents on the Internet or at your local U.S. Patent Depository. There are several free
search engines on the Internet, but we suggest utilizing the IBM Patent Server at www.patents.ibm.com which you can utilize for free. You should enter various keywords for your invention and print out all relevant patents. Another excellent location to search is your local U.S. Patent Depository which has very helpful patent librarians to assist you in your patent search. The USPTO has a complete list of Patent Depositories at www.uspto.gov/web/offices/ac/ido/ptdl/ptdlib.htm that you can utilize.

C.  Marketability Test:

If a very similar product is not located during the market and patent research, you should then take an objective marketability test for your invention. A good preliminary marketability test is the Wal-Mart Innovation Network (WIN). For a fee of $175 WIN will evaluate your invention based upon certain factors. You can contact WIN at (417) 836-5751 or visit their web site at www.wal-mart.com/win/.

After you are finished conducting your market research, patent research and marketability tests, you have to make a choice: (i) proceed to Step #2, (ii) stop proceeding with the invention, or (iii) place the invention on "reserve" while you consider other inventions. Remember, less than 50% of inventions should pass Step #1 if done correctly.

STEP #2:  PATENTABILITY SEARCH & OPINION

If your invention survives Step #1, you should have a professional patentability search conducted at the United States Patent & Trademark Office (USPTO). You should also have your Patent Attorney give you a patentability opinion based upon the patent search results. You should expect to spend between $400 to $800 for a good patentability search and legal opinion.

After you receive the patentability opinion and search results, you have to make a choice: (i) proceed to Step #3, (ii) stop proceeding with the invention, or (iii) place the invention on "reserve" while you consider other inventions.

STEP #3:  "SELF-DRAFT" A PROVISIONAL PATENT APPLICATION

If your invention survives Step #2, the next step is to draft your own Provisional Patent Application (a.k.a. "PPA"). The PPA is not a true patent application since it only lasts for one-year and it is not examined by the USPTO. However, the PPA provides a suitable format for inventors to draft their own patent application and receive up to one-year of "patent pending" while they determine if their invention is potentially licensable. It is highly recommended to utilize reputable commercial materials that explain how to draft a patent application.

It is recommended that you hire your Patent Attorney to review your self-drafted PPA before mailing to the USPTO. When drafting your PPA, make sure to describe your invention in detail regarding structure, functionality and use. Make sure to include as many detailed hand sketches and pictures (if prototype is made) as possible to clearly describe the components and operation of the invention.

35 U.S.C. 112, first paragraph states that the PPA "shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor of carrying out his invention." Failure to satisfy 35 U.S.C. 112, first paragraph can possibly result in lost patent rights. You should consult with your Patent Attorney if you have any questions about the legal requirements of the PPA.

STEP #4:  "LICENSING" RESEARCH

After filing your self-drafted PPA with the USPTO, you should then begin your "licensing" research. It is recommended that you hire a licensing agent who specializes with your type of product (toy licensing agents, etc.). If you are unable to locate a licensing agent who specializes with your type of product, you can either utilize a general licensing agent or attempt to conduct the research yourself. Your fees for the licensing agent should be less than $1,000 for all services rendered.

During the licensing research you should first make a list of 5 - 20 companies that manufacture products similar to your invention and that may be potentially interested in licensing or buying your patent rights. You should then try to contact these companies by telephone or mail. Without describing your invention, you should tell the company that you have an invention which solves a specific problem or does a special function. You should inform them that you have "patent pending" on this unique product. You should then ask the company if they would potentially be "interested" in licensing or purchasing the patent rights to your invention. If they request more information about your invention, this is a good indication that your invention is potentially licensable. If the companies state that they already have a product that adequately solves the problem or that does the special function, this is an indication that your invention is not potentially licensable.

After the 5 - 20 companies have been contacted, your licensing agent should make an objective assessment and recommendation as to the potential of licensing or selling your invention. You then have to make a choice: (i) proceed to Step #5, (ii) stop proceeding with the invention, or (iii) place the invention on "reserve" while you consider other inventions.

STEP #5:  HIRE A PATENT ATTORNEY TO DRAFT YOUR PATENT APPLICATION

If you feel that your invention is potentially licensable after conducting your licensing research in Step #4, you should then hire the Patent Attorney to draft a complete patent application for your invention. Expect to spend between $3,000 to $5,000 for a quality patent application from your Patent Attorney.

STEP #6:  LICENSE THE PATENT RIGHTS

After your Patent Attorney drafts and files the complete patent application for your invention, you then should have your licensing expert arrange to disclose your invention to potential licensees. You should attempt to have Confidentiality Agreements signed with these companies prior to disclosing your invention to them. Don't be surprised if many companies will not sign your Confidentiality Agreement.

STEP #7:  FINAL REVIEW

You should "re-evaluate" your position with regards to your invention every six months while completing Step #6. As an inventor, you need to objectively determine when you should terminate all actions in promoting a specific invention. You should base your decision upon the reactions you receive from the companies when presented with a full disclosure of your invention. Remember, your time is worth something, so don't spend it attempting to market an invention that no one wants.

Approximately every six months you should consider either (1) manufacturing the invention, or (2) terminating all efforts for the invention. If you have not received a positive reaction from industry regarding your invention, you are strongly encouraged to consider the latter choice to avoid creating
further hardship for yourself. Do not spend valuable time pursuing a fruitless dream.

FINAL COMMENTS

We hope that you find the Neustel-Zimmer Approach beneficial to you during the invention process. The road to success with your inventions requires hard work, dedication, and most significantly "honesty" about your invention. We hope that our Approach allows you to quickly identify the 98% of inventions that are not licensable. Lastly, we hope that you are able to choose the 2% of your inventions that are potentially licensable so that you proceed further with them and become a successful inventor!

Best Wishes,

Michael S. Neustel              Edward Zimmer
www.patent-ideas.com     www.tenonline.org

# # # #

Michael S. Neustel runs Neustel Law Offices, which provides quality patent services to inventors and businesses at affordable rates. Services include: patent searches, patent opinions, patent applications and patent infringement. Neustel Law Offices LTD works with mechanical, electrical and process inventions.

Mr. Neustel also started the National Inventor Fraud Center, Inc., which provides information to inventors about invention promotion companies and how to market their invention themselves. The NIFC has educated thousands of inventors and is known for helping inventors make the "right decisions."

Ed Zimmer runs "The Entrepreneur Network." TEN is a non-profit corporation dedicated to helping Midwest inventors and entrepreneurs through information and connections.

*****************************************************************

"We must not lose track of the fact that inventors as such, important inventions, are made by individuals and almost invariably by individuals with very limited means." -- Philo T. Farnsworth, inventor of the television.

Feel free to forward "The Online Inventor" to your inventor friends and colleagues. If you change your e-mail address, please subscribe with the new address in order to continue receiving it each month. To view past issues of the "The Online Inventor," please go to www.marketlaunchers.com/archives.html. If you wish to no longer receive "The Online Inventor," just reply with the word, "unsubscribe" in the subject line.

Have a great Holiday season and, until next time, Successful Inventing To You!

Best Regards,

Paul Niemann
"Humble Proprietor of Market Launchers, Inc. and sometimes inventor of successful new products, too."
(800) 337-5758
(217) 224-7735 (outside the U.S.)

Copyright 1999
All Rights Reserved

*****************************************************************

Click here to read the October 1999 issue.