You May Have Little or No Existing Competition for Your New Product. But You Must Stay On Your Toes--All That May Change in the Future.

By James F. Riordan

The product developer can't be expected to predict technology advancements and breakthroughs, since no one I have ever met has an accurate crystal ball. It's equally hard to predict your "new" competition and which large corporations are likely to become your competitors. Many of them are diversifying at an astounding rate and it's all but impossible to predict which little company will be independent today and under the wing of a large parent corporation tomorrow.

Your "New" competition may come from:

1. The development of technology in areas related to your product which may produce substitutes or superior items.

2. Existing firms which aren't 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 which will be difficult for a new competitor to tool up for and are protected by intellectual property rights.

A danger here is to underestimate the potential for new competition by counting on the fact that all 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've built, the advertising you've done and any manufacturing companies or suppliers you're 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 nice niche for yourself which 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 you are using to supply parts and components for your product. In addition, you may find competition from companies you've hired to do engineering and develop tooling or companies 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, took a picture of it 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 orders for them. He figured that if his boss was making hundreds of thousands on them, they must be valuable and in demand everywhere.

The funny part was, the product was a subassembly for one of my products which was subject to final assembly in the United States. The thief didn't 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" and 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 require any company you'll be contracting with to have their employees sign noncompetition agreements which contain punitive damages for breaching the agreement.

Another form of theft which can lead to new and unfair or unexpected competition is "computer theft" wherein an employee or outsider, breaking into your company computer, gains information from the computer which allows them to compete with you or even beat you to market. This unauthorized entry into your computer files can give a competitor instant access to information and data which may have taken you months or years to gather.

If you are or will be using computers in your business, I suggest you send for a copy of A SMALL BUSINESS GUIDE TO COMPUTER SECURITY. The guide is available for $1 from:

The Small Business Administration
P.O. Box 30
Denver, CO 80201

The wise innovator always attends the latest applicable trade shows and subscribes to all applicable trade journals, catalogs and publications which feature market trends, new products, acquisitions, etc. You should also subscribe to the U.S. Patent Gazette to stay on top of any technology which may arise and affect your product or infringe on your patents, trade secrets or trademarks.

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 by contacting the James F. Riordan Company, 3110 Camerosa Circle, Cameron Park, CA 95682. The company can be reached by phone at (916) 676-4729. The book may also be ordered through the Dream Merchant, 2309 Torrance Blvd., Suite 104, Torrance, CA 90501. The phone number is (310) 328-1925.