What is 'Commercialization'

Commercialization is the process of introducing new products or services to the general market. It takes into account production, distribution, marketing, sales, and customer support required to achieve the commercial success of the new product or service.

BREAKING DOWN 'Commercialization'

As a strategy, commercialization requires a business develops a marketing plan, determines the supply of the product to the market, and anticipates barriers to success. The funnel or ideation phase, business process stage, and stakeholder stage are the three major segments of the commercialization process.

Commercialization Process

Ideation stage, also known as the mouth of the funnel, is the first and possibly most notable segment. During ideation, many ideas may enter into the funnel's top, but only a fraction will continue downward toward implementation. This section sees the generation of concepts about new products or services to meet unanswered consumer needs. The most functional designs are those who are in alignment with the company's business model and mission and those who offer high benefit and low cost.

The features of the marketing mix, known as the Four P's. are of main interest during the ideation stage. Typical marketing questions include what to create, whom to target, price point of the product, and product placement and marketing. Once the selection of the best concept is complete, the establishment of development stages, goals, and milestones is addressed. These stages include protecting the product as an asset, testing, verification, and introduction.  

For a potential product to be eligible for commercialization, it must have some level of public value that could result in overall profitability for the company. Research and development of these products are within commercial, governmental, educational, or other entities settings. 

Constant consideration of key stakeholders (including customers, the public-at-large, and stockholders) is imperative. For effective commercialization, the new product or service must meet the needs and expectations of all stakeholders. Therefore, the stakeholder stage is an overarching scaffold that spans the entire commercialization process.

Selling New Products in the Marketplace

Patents, trademark registrations, and other legal measures must be undertaken to protect the intellectual rights of a product. Once property rights are secured, the person or entity can proceed with plans to bring the product to market. Manufacturing may be done internally or by third parties. When the product is ready for the open market, promotion efforts, which bring awareness of the product to the target market, begin. The creation of distribution channels as well as partnerships with retailers best equipped to sell the product completes the commercialization process.

A business that produces, markets, and sells its products in-house realizes the most significant profits since it does not need to share with intermediaries. However, it will also assume all liabilities with production and absorb all production costs.

  1. Commercial

    Commercial is a term relating to commerce or business. In the ...
  2. Commercial Account

    A commercial account is any type of financial account, which ...
  3. Commercial Property

    Commercial property is buildings and land that are intended for ...
  4. Commercial Credit

    Commercial credit is a pre-approved amount of money that can ...
  5. Stakeholder

    A stakeholder is a party with an interest in an enterprise or ...
  6. Commercial Paper

    Commercial paper is an unsecured debt instrument issued typically ...
Related Articles
  1. Trading

    Trading With Stage Analysis

    Stage analysis offers market participants a powerful tool to identify current market conditions.
  2. Investing

    The Commercial Property Boom Is Fading

    Investors are selling off commercial real estate assets in a sign that this boom market may be ending.
  3. Investing

    Sector rotation: Knowing the essentials

    Learn how the market signals impending economic cycles and sector performance during each stage. Find out how investors can use sector rotation for profit.
  4. Investing

    Is It Worth Paying For Professional Home Staging?

    Before committing to a purchase, buyers need to visualize a home as their future home. Skilled home staging can help them do just that.
  5. Small Business

    Why Business Owners Need a Succession or Exit Plan

    Most Baby Boomer business owners lack a formal succession plan or exit strategy.
  6. Investing

    How Commercials Impact Stock Prices

    Commercials can entertain or enrage, but can they move a company's stock price?
  7. Investing

    The 4 Stages of the Investor Emotion Cycle

    Investors have an emotional counterpart to each of the four stages of the market cycle.
  8. Investing

    Commercial Real Estate Faces Strong Headwinds

    The good times may be coming to an end for the U.S. commercial real estate market as mortgage defaults rise and interest rates move upward.
  9. Small Business

    When Wholesale Funding Goes Bad

    The wholesale funding process is extremely dependent on the credit markets. Find out why it is not always the best option for a business.
  10. Investing

    Commercial real estate loans

    Obtaining a commercial real estate loan is quite different from borrowing for residential real estate. Here's what to expect and how to get what you need.
  1. What is the difference between a shareholder and a stakeholder?

    Shareholders are always stakeholders in a corporation, but stakeholders are not always shareholders. Read Answer >>
  2. How do investment banks help the economy?

    Learn more about the functions of investment banks in a modern economy and how investment banks have been treated differently ... Read Answer >>
  3. Is savings and loan company different from commercial banks?

    Find out how a savings & loan (S&L) company, sometimes also known as a thrift or savings institution, focuses on different ... Read Answer >>
  4. What are the similarities between product differentiation and product positioning?

    Learn how two marketing strategies, product differentiation and product positioning, are similar and work together to effectively ... Read Answer >>
  5. What are key points to a good corporate social responsibility policy?

    Learn the main components of a good corporate social responsibility policy, including communication with stakeholders, partnerships ... Read Answer >>
Trading Center