Know-How Exchange : Strategy

Based on helpful advice and assistance from KHE colleagues, I drafted a promotional message within the following criteria:

1. There needed to be a good financial bonus to invite positive responses from target companies
2. A limit of 3,000 characters in the message was imposed (determined by the business portal site manager) – 2,987 characters were used to take full advantage of the site advertising limits.

The promotional letter was 503 words, which is not excessive.

The promotional message was sent to 20 companies in China, India, Malaysia, Singapore and Thailand.

Not one reply was received. Quite disheartening! Where have I gone wrong?

Any suggestions as to what I can do next would be appreciated. I am tempted to simply send a modified version of this message to a wider target group with no reference to any discount. But if any response comes, then I will suggest an arrangement to the responding company under which the 25% discount will be offered in return for use of that Company’s plant as a working template for future marketing activities – it will provide a working model where other companies can see the technology working. A 25% discount means that the industrial technology will be provided virtually ‘at cost’.

This is the promotional message. It was sent on 26 Sep 05:

Dear (personally addressed to the Company Nominee),

If I can slash your production costs by up to $USD11.80 per tonne, and at the same time increase the quality of your output oil, would you be interested?

If you answered YES, then my company’s Dry Refining Process (DRP) technology is the key. The DRP will increase your profits by

1. REDUCING your production cost by up to $USD11.80 per tonne,

2. IMPROVING the quality of your output oils, permitting you to charge a higher selling price for your oils, &

3. RAISING your existing refinery throughput capacity by up to 25%.

We would like to offer you a NO COST SAVINGS - NO CHARGE opportunity to use the DRP to generate these bottom-line benefits!

We are so confident that our DRP will substantially reduce your production costs, that we will let you pay for the DRP through a modest royalty payment based exclusively on your cost savings.

NO COST SAVINGS: NO ROYALTY PAYMENTS!

Its that simple!

Not only that, but if you contact us before 7 October 2005, and this leads to an agreement between us, we will design, install and commission the DRP in your plant for a 25% discount on our standard fee. In practice, that means that 100% of the funds you commit to the DRP will be invested in your own plant. Some travel costs for the DRP inventor (Mr XX) to visit your plant will of course also be on your account.

Under this offer, the fee for the design, fabrication and installation of the DRP can be expected to be about:

For a plant of 140 tonnes per day capacity: $USD38,500
For a plant of 500 tonnes per day capacity: $USD67,300

These costs may vary depending on the availability of any plant you may already have and the supply of services.

We understand that you will want to discuss the detail of the DRP so you can assess its profitable use within your plant. Accordingly, please feel free to telephone the inventor, Mr XX on 61 XXXX. Please note that XX is in the Australian Eastern Standard Time Zone: GMT minus 10 hours. Alternatively, you may seek further information by e-mail: chiron34@gmail.com.

Yours sincerely,

XX

PS. The DRP. As you know, vegetable oils are usually degummed prior to neutralisation. The DRP reverses the process. That is, the oil is acidified after treatment by the DRP to precipitate the phospholipids while at the same time removing any residual calcium soaps. These phospholipids are then removed conventionally.

The DRP:

- simplifies neutralisation.
- completely eliminates soap splitting costs.
- completely eliminates water and toxic effluent disposal costs as no water or toxic effluents are produced.
- easily complies with the toughest environmental protection regulations.
- significantly reduces input chemical costs.
- substantially reduces energy usage costs.
- increases refinery capacity by a factor of up to 25%.

… end promo letter


Some comments for consideration:

1. Should I have disclosed the quantum of royalty payments expected? We have based the business plan on a minimum royalty payment of 15% of the client company’s COST SAVINGS. Note: not 15% of revenue or turnover.

2. Was my sample too small to be a fair test?


All comments appreciated,

Chiron34