Commercialization Explained

Commercialization or commercialisation is the process of introducing a new product or production method into commerce—making it available on the market. The term often connotes especially entry into the mass market (as opposed to entry into earlier niche markets), but it also includes a move from the laboratory into (even limited) commerce. Many technologies begin in a research and development laboratory or in an inventor's workshop and may not be practical for commercial use in their infancy (as prototypes). The "development" segment of the "research and development" spectrum requires time and money as systems are engineered with a view to making the product or method a paying commercial proposition.

The product launch of a new product is the final stage of new product development – at this point advertising, sales promotion, and other marketing efforts encourage commercial adoption of the product or method. Beyond commercialization (in which technologies enter the business world) can lie consumerization (in which they become consumer goods, as for example when computers went from the laboratory to the enterprise and then to the home, pocket, or body).

Process

Commercialization is often confused with sales, marketing, or business development. The commercialization process has three key aspects:

1. The funnel.^[1] It is essential to look at many ideas to get one or two products or businesses that can be sustained long-term.
2. Commercialization is a stage-wise process, and each stage has its own key goals and milestones.
3. It is vital to involve key stakeholders early, including customers.

Issues

Proposed commercialization of a product can raise the following questions:

1. When to launch: Factors such as potential cannibalization of the sales of a vendor's other products, any requirement for further improvement of the proposed new product, or unfavorable market conditions may operate to delay a product launch.
2. Where to launch: A potential vendor can start marketing in a single location, in one or several regions, or in a national or international market. Existing resources (in terms of capital, and operational capacities) and the degree of managerial confidence may strongly influence the proposed launch-mode. Smaller vendors usually launch in attractive cities or regions, while larger companies may enter a national market at once.
   Global roll-outs generally remain the preserve of multinational conglomerates, since they have the necessary size and make use of international distribution systems (e.g., Unilever, Procter & Gamble). Other multinationals may use a "lead-country" strategy: introducing the new product in one country/region at a time (e.g. Colgate-Palmolive).
3. Whom to target: Research- and test-marketing may identify a primary consumer group. The ideal primary consumer group should consist of innovators, early adopters, heavy users and/or opinion leaders. This will encourage adoption by other buyers in the market during the product-growth period.
4. How to launch: Prospective vendors should decide on an action plan for introducing a proposed product - a plan shaped by addressing the questions above. The vendor has to develop a viable marketing-mix and to structure a corresponding marketing-budget.

References

• Jolly, Vijay K.(1997): Commercializing New Technologies: Getting from Mind to Market; Harvard Business School Press. [Note: a new edition was due in early 2009.]

Further reading

• Clemens, F. et al. (2003): Xelibri: A Siemens Mobile Adventure; case study of WHU School of Management, Vallendar, Germany; distributed by ECCH Collection, England and USA.
• Dibb, S. et al. (2001): Marketing – Concepts and Strategies; Fourth European Edition Houghton Mifflin; Boston.
• Jobber, D. (2001): Principles & Practice of Marketing; Third Edition McGraw-Hill; London.
• Kotler, P. et al. (1996): Principles of Marketing; Fourth European Edition Prentice Hall; Harlow (UK).
• Lancaster, G. and Massingham, L. (1999): Essentials of Marketing; Third Edition McGraw-Hill; London.

See also

• Commodification
  • New product development Technology Transfer

Notes and References

1. Compare: Book: Rafinejad. Dariush. 5: The Product Development Process. Innovation, Product Development and Commercialization: Case Studies and Key Practices for Market Leadership. https://books.google.com/books?id=dSATqILWWhwC. J. Ross Publishing Innovation Series. Fort lauderdale, Florida. J. Ross Publishing. 2007. 160. 9781932159707. 2016-11-24. Wheelwright and Clark, Iansiti, and Christensen have discussed a 'funnel' framework for product development. In the funnel framework [...] the market/competitor analysis, target customer needs, and technology assessment establish the basis for concept development - the first phase of the process. The next phase is the product/process design, which leads to the product launch and commercialization phase..