Seacliff Products (Seacliff), has developed a patent-pending fishing rod. Seacliff developed an easy-to-use kit to sell until they found a business partner to license the product. Seacliff forecasts strong sales in year one, and a steady increase in year two.
Seacliff created the Supreme hook, a new, innovative live bait holder. According to tests, there is a noticeable increase in fish catch up. The user will have greater enjoyment fishing if there are more fish hookups.
The Business Model
Seacliff will employ a laser-focused model of business that allows them focus on core competencies and outsource activities that add little value. Seacliff is an industrial design company. They will be focusing on the creation of useful products. They will partner with a strategic company that can take over manufacturing, marketing, as well as distribution. Seacliff will realize significant profits through the outsourcing of non-essential operations. This will free them from the marketing, manufacturing, distribution and other liabilities. Licensing allows a company the right to produce the Supreme hook while Seacliff will realize a steady stream of revenue without the capital costs normally associated with selling a product. Seacliff earns good profits. It has a professional marketing staff and a established distribution and manufacturing system. Seacliff is currently looking for a strategic partner and expects to enter into negotiations in the near future.
The Market
The market for the Supreme Hook is huge. The total market is worth $300 million. Over 39.1 Million anglers are in the U.S.A., who have fished more than 618,000,000 days and made 807 million trips. Even more impressive is the rapid growth of this industry. Between 1955-1996 the number of anglers has increased at over twice the rate of the U.S. population.
Management
The whole foundation of the business model is to concentrate at what you are good at. Seacliff takes this principle to heart, focusing on design. Willamette University JD/MBA is the owner’s education. This dual degree allowed him to gain valuable insights in business development, as well as the useful legal tool of patents and licenses. Following graduate school, he was unsure of what direction his career should take him so headed off to Oregon to be a fly fishing guide. He became passionate about fishing over the course of his 2 year stay. He decided to return to school for a Masters’ in Engineering, so that he could focus on the design and engineering aspects of fishing-related products. It was near the end of his last graduate degree that he developed the Supreme hook. His previous degrees (JD/MBA), made it easy for him to start his own company and locate a manufacturer to license the product.
Seacliff is an exciting company that shuns the typical need for extensive start-up capital for production by licensing a patented product. By licensing the product it frees up Seacliff’s time to concentrate on value added activities such as future designs. Within a month, profitability will be attained.
1.1 Mission
Seacliff has two goals: to maximize the potential profit of the Supreme, its newly patented fishhook invention, via licensing or other means; and to continue developing innovative fishing gear products.
Success Keys 1.2
The following are key factors to maximize profits when licensing a patent:
- To separate the manufacturing and marketing for the Supreme.
- Make sure you find a manufacturer that is capable of making the hook.
- Choose a marketing company with significant fishing gear knowledge who is willing and able to allocate the necessary marketing budget.
- Seacliff and marketer can create a well-thought-out, reasonable licensing agreement to ensure mutually beneficial partnership arrangements.
These are the keys for success when profiting off the patent in make–it-yourself form.
- Recognize there is a wider market for the product.
- Follow the proven price structure formula that provides attractive margins to all levels of the distribution chain (manufacturer’s representative, wholesaler, retailer).
1.3 Objectives
The main objectives are:
- Locate a suitable manufacturer who is willing, on an exclusive basis, to produce the patented Supreme hook at a reasonable price. This would, at the retail level, cause the Supreme to sell for under 150% of a normal hook of similar size.
- Find a medium-sized marketing company that specializes in fishing gear and who is open to the idea of using the patent to mass-merchandise Supreme products both at home and abroad. A three percent royalty will be paid on all purchases made by the exclusive manufacturer under an exclusive license arrangement.
- Successfully introduce the product in kit form. In the first three month, you will reach breakeven (370 kits). The first year saw the sale of 8,333 kits.
- Complete the website design.
- Join the American Sportfishing Association and reserve a booth at this year’s ASA tradeshow in Los Vegas.
No comment yet, add your voice below!