Rev Your Pitch with Licensing Strategies
How can you rev up your pitch for a potential licensee? Present clear and compelling research, wow them with demonstrations and endorsements, and entice them with term options that are mutually lucrative.
Let’s continue our journey From Potential to Pitch and see what this next step looks like for our client’s great idea, the motorcycle bra.
What has Albert learned from my research so far? My step-by-step process has revealed several focus points:
- Owners of sports bikes are the primary target for the protective covering, a motorcycle bra.
- Based on conservative estimates, there are 250,000 potential sports bikes sold each year. If buyers mirror the behavior of new car owners, 90% will purchase after-market accessories.
- Albert’s potential market also includes 880,000 existing sports bike owners in the U.S.
- Not only are there regional opportunities within the U.S., but China is an enormous and promising global market.
- Potential licensees include manufacturers and distributors of motorcycles and accessories. And, perhaps surprisingly, the car bra market may be an open channel for expanding into this new area.
For many good reasons, Albert chose to pursue licensing rather than manufacturing his invention. I recommended some different strategies for Albert to consider when looking for potential licensees. We’ll look at one today and explore the others in future articles.
Platform 1: Original Equipment Manufacturers (OEMs)
OEMs are primarily focused on the manufacture of engines and other bike components. I suggested that Albert approach the OEMs first. If the product is acceptable to an OEM, then licensing is relatively simple as all of the value chain elements—production, marketing, distribution and selling – are controlled and accountable to one entity, the OEM.
End-to-end control of the market by the OEM provides reliability and stability regarding the market, a circumstance that benefits Albert’s revenue planning.
My suggestions included this approach or a combination of actions:
- Direct pitch to OEM Marketing and New Product Development managers. These gatekeepers can be accessed through dealership contacts.
- Customer endorsements: By showing and demonstrating prototypes, Albert can generate interest and buzz about the new product.
- Establish in the mind of the OEM the compelling reasons for licensing: Revenue potential; brand marketing potential; and market statistics showing potential for uptakes (differentiation, customization, protection of investments)
- Test marketing: Allow OEMS an opportunity to test market the motorcycle bra.
Modes and Terms
My ideas for how to proceed will differ for any product, but these are suggestions that I gave Albert.
- Allow an Option Period of no more than 18 months to test market the motorcycle bra.
- Permit non-exclusive licenses or exclusivity for only a short period of time.
- If exclusive licensing is required, then negotiate for guaranteed revenue from committed sub-licensing.
Today’s lesson: If you decide to pursue licensing, focus your approach on target companies and fine tune your pitch before reaching out.
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About the Author
Will Jacques is President of Emanus, a consulting firm that works with entrepreneurs, early-stage, and small-/medium-sized businesses.