Market Potential Assessment for Patents

When an inventor, entrepreneur, or certain business entity enters the project of advancing an idea into an invention that will generate profits, there’s of course great importance to understanding the existing potential in terms of sales and market share. Such an assessment will enable estimating what return can be extracted from the development and whether it’s worth entering at all, and it also provides a significant data foundation for raising investors.

For investors, who are often required for advancing the invention, there’s sometimes a need to present an accurate, convincing, and realistic business plan. This plan will present, among other things, the business potential inherent in the invention, and additionally will include information about the inventor, the invention, the market as a whole, target audiences, the specific share, financing sources and capital use, business potential and basis to assume economic success, and more.

Important Things to Know About Market Potential Assessment

Market potential assessment indeed includes industry reviews, but it’s important to distinguish between the entire existing market and the share that’s open and relevant for the specific invention. For example, if it’s an invention related to the medical products field, then a broad industry review will include all revenues of all companies in this extensive industry in Israel, or in any other target market. Of course, this is a market of tens and even hundreds of millions of shekels in Israel, but the path is very long from here to the assumption that the product has such great potential.

In fact, alongside the broad review providing a kind of bird’s eye view of the general market, a market potential survey converges to the relevant market, for example of ventilators. And even within the ventilator market that generates many millions every year, there’s very low and even zero probability that the specific invention will become the exclusive product used, and actually a monopoly. Therefore, you must understand well who the competitors are in the specific field, from the largest to the direct ones. For example, it’s possible that geographically and logistically there will be a need to focus on clinics only, hospitals only, the central region only, and so on, and accordingly you must examine who the competitors are in these areas.

The goal is to understand what’s the chance to penetrate with the new product to this specific field, in light of supply, demand, and products that already exist. Now, you take this chance and multiply it by estimated revenues from that product after the patent is developed. Within this, you must refer to the current state of the industry, for example whether demand in it is only rising in recent years and still expected to rise, if there’s decline and what’s the forecast for the foreseeable future. It should be noted that the competitiveness level in the relevant market is very significant, since if it’s for example a field with high competition, then at least at the beginning of the journey there will be a need to enter at low prices and also invest considerable resources in advertising and marketing.

In any case, when performing market potential assessment, there are quite a few forecasts and estimates, which must be performed carefully and calculatedly, with as good and accurate estimation as possible, while using various economic calculation methods. And finally, you must of course also refer to the product itself in terms of its ability to bring profits, since there’s a difference between consumable products that must be bought every week or month, and a product lasting ten years.

For additional details, contact Av Tipus Patents and Inventions Ltd. at 03-9711011.