Seacliff Products (Seacliff), a company with innovative ideas, has invented a fishing hook. Seacliff originally developed a do it yourself-kit that they sold while looking for a licensing partner. Seacliff predicts strong sales for year one and an increase of about 10% for year 2.
Seacliff created the Supreme hook, a new, innovative live bait holder. Tests have indicated that there are appreciable increases in fish hook up. Having increased fish hookups allows the user to have greater enjoyment while fishing.
The Model for Business
Seacliff will use a laser-focused business model which allows them to concentrate on their core competencies and outsource the tasks that don’t add significant value. Seacliff is a designer company. Therefore, they will only focus on the design and development of useful products. They will partner with a strategic company that can take over manufacturing, marketing, as well as distribution. Seacliff can realize substantial profits by outsourcing non-essential functions without the associated risks of manufacturing, marketing, distribution, and marketing. Seacliff can license the Supreme hook to a company, which allows it to generate a steady stream revenue. Seacliff won’t have to incur the capital costs associated with selling a product. Seacliff has a good profit margin and the product is supported and managed by a professional marketing department as well as a proven distribution and production system. Seacliff is currently seeking a strategic partner. Negotiations are expected to take place in the near future.
Market
The market for the Supreme Hook is huge. The market for the Supreme hook is worth $300 million. More than 39.1 million anglers live in the United States. They have fished 618 million days and taken 807,000,000 trips. Even more interesting is the industry’s explosive growth. The growth rate of this industry has been more than twice that of the U.S. Population between 1955-1996.
Management
The entire business model relies on focusing on what you’re good at. Seacliff has taken this premise to heart by focusing on design. Willamette University JD/MBA degrees are the background of the owner. He gained valuable insights into business development and the legal tools of patents and licenses. After graduation, he was uncertain of his career direction so he decided to fly fish in Oregon. He fell in love with fishing during this 2-year stint and decided that he wanted the industry to continue. On the assumption that he could design and develop fishing products, he went back to school and obtained a Masters of Engineering. He invented the Supreme hook at the very end of his graduate degree. Based on his previous degrees (JD/MBA) he felt comfortable to form his own company and find a manufacturer to license his soon to be patented product.
Seacliff is an exciting company that shuns the typical need for extensive start-up capital for production by licensing a patented product. Seacliff is able to license the product and spend its time on more value-added activities like future designs by not having to pay for production capital. Profitability will be reached by month one.
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
These are the keys to maximizing profits when licensing this patent.
- To distinguish the manufacturing and the marketing of Supreme.
- Look for a manufacturer who can make the hook. Give them exclusivity.
- Find a marketing agency with extensive fishing gear experience who is willing to invest the marketing budget.
- Seacliff will benefit from a partnership agreement between the marketer and Seacliff that is reasonable and well-thought.
The keys to success in profiting from the patent in make-it-yourself kit form are:
- Recognize that there is a narrower market for the kit.
- 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
These are the main goals
- Locate a suitable manufacturer who is willing, on an exclusive basis, to produce the patented Supreme hook at a reasonable price. This would allow the Supreme to be sold at a lower retail price than a standard hook of comparable size.
- Find a medium-sized fish gear marketing company that recognizes the potential for the patent and is ready to invest the resources necessary to mass-merchandise Supreme both in the United States and internationally. You will receive a three percent royalty on all sales from the exclusive manufacturer if you enter into an exclusive licensing agreement.
- Successfully introduce the product in kit form. Reach break even point (370 kits) within the first three months. 8333 kits sold within the first year.
- Complete the website design.
- Join the American Sportfishing Association (ASA); secure a booth for the ASA trade show in Los Vegas this coming July.