What is 'Commercialization'

Commercialization is the process by which a new product or service is introduced into the general market. The process of commercialization is broken into phases, from the initial introduction of the product through its mass production and adoption. It takes into account the production, distribution, marketing, sales and customer support required to achieve commercial success.

BREAKING DOWN 'Commercialization'

As a strategy, commercialization requires that a business develop a marketing plan, determine how the product will be supplied to the market and anticipate barriers to success.

The process of commercialization is like a funnel. At the widest part are the many ideas that a company might have for launching a product. As the funnel narrows, the company weeds out ideas based on logistics and costs, consumer and economic trends, and feasibility. Commercialization is part of a larger feedback loop for a product, as the ultimate introduction of the product into the market may require adjustments to the process.

For a potential product to be eligible for commercialization, it must have a level of public value that could result in overall profitability. These products may be developed within commercial businesses, government agencies, educational institutions or other entities involved in various forms of research and development.

Protection of Intellectual Property

Prior to commercialization, most new products are subject to efforts designed to protect the creator’s rights to the product in question. This can involve the submission of documents to obtain a patent, trademark or copyright. These protections assert the rights of ownership of the product or idea as claimed by the individual or entity representing itself as the original source of the idea.

Marketing, Licensing, and Creation of the Product

Once the property rights have been secured, the person or entity can proceed with plans to bring the product to market. This can include internal production for businesses that have the capacity to produce the item themselves or licensing efforts for those looking to partner with a company for production purposes.

As the product becomes ready for the open market, advertising efforts may begin to bring awareness of the product to consumers in the target market. Distribution channels may be created as well as partnerships with retailers that are best equipped to sell the product.

Business that can produce, market and sell the products in-house maintain a higher level of personal profit, but they are also subject to all of the associated expenses. Those that partner with other business for production or sales needs may maintain a smaller profit margin, but they are likely to experience lower costs to compensate.