What Is Commercialization?

Commercialization is the process of bringing new products or services to market. The broader act of commercialization entails production, distribution, marketing, sales, customer support, and other key functions critical to achieving the commercial success of the new product or service.

Understanding Commercialization

Commercialization requires a carefully-developed three-tiered product roll-out and marketing strategy, that encompasses the following major components:

  • The ideation phase
  • The business process stage
  • The stakeholder stage

The Commercialization Process

Many people view the ideation stage as the mouth of a funnel. Although many ideas enter the funnel top, only a fraction ultimately make their ways downward towards implementation. Ideation attempts to generate new products and services that meet unanswered consumer demands, and the most functional designs align with the company's business model, by offering high benefits at low cost.

The ideation stage strives to incorporate a marketing philosophy known as "The Four Ps," which stand for product, price, place, and promotion. Often referred to as the marketing mix, companies use this concept to determine the products to create, the price points at which to sell them, the customer base it wishes to target, and the marketing campaigns it will roll out in an effort to move merchandise off shelves.

For a potential product to be eligible for commercialization, research and development (R&D) efforts must telegraph a degree of public value that could potentially result in increased profitability for the company. And for commercialization to truly succeed, a company must satisfy both its customer and stakeholder needs.

Selling New Products in the Marketplace

Patents, trademark registrations, and other legal measures must be undertaken to protect a product's intellectual rights, before the product may be brought to market. Manufacturing may occur in-house, or it may be subcontracted to third parties factories. Once a product line is complete, promotional efforts then bring awareness to the target market, which is accessed through distribution channels as well as partnerships with retailers.

Although businesses that produce, market, and distribute products in-house tends to reap higher profits because they don't have to share proceeds with intermediaries, they also assume greater liability with respect to production cost overages.