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.
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.