Commercialization

Commercializationorcommercialisationis theprocessof introducing a newproductorproduction methodintocommerce—making it available on themarket.The term oftenconnotesespecially entry into themass market(as opposed to entry into earlierniche markets), but it also includes a move from thelaboratoryinto (even limited) commerce. Many technologies begin in aresearch and developmentlaboratory or in an inventor's workshop and may not be practical for commercial use in their infancy (asprototypes). The "development" segment of the "research and development"spectrum requires time and money assystems are engineeredwith a view to making the product or method a payingcommercialproposition.

The product launch of a new product is the final stage ofnew product development– at this pointadvertising,sales promotion,and othermarketingefforts encourage commercialadoptionof the product or method. Beyond commercialization (in which technologies enter the business world) can lieconsumerization(in which they becomeconsumer goods,as for example whencomputerswent from the laboratory to the enterprise and then to the home, pocket, or body).

Process

Commercialization is often confusedwithsales,marketing, orbusiness development.The commercialization process has three key aspects:

1. The funnel.It is essentialto 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 keystakeholdersearly, includingcustomers.

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 unfavorablemarket conditionsmay operate to delay a product launch.
2. Where to launch: A potential vendor can start marketing in a single location, in one or severalregions,or in anationalorinternational 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 largercompaniesmay 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-andtest-marketingmay identify aprimary consumer group.The ideal primary consumer group should consist ofinnovators,early adopters,heavy users and/oropinion leaders.This will encourage adoption by other buyers in the market during theproduct-growthperiod.
4. How to launch: Prospective vendors should decide on anaction planfor introducing a proposed product - a plan shaped by addressing the questions above. The vendor has to develop a viablemarketing-mixand 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