Commercialization

Commercialization is the process or cycle of introducing a new product or production method into the market. The actual launch of a new product is the final stage of new product development, and the one where the most money will have to be spent for advertising, sales promotion, and other marketing efforts. In the case of a new consumer packaged good, costs will be at least $10 million, but can reach up to $200 million.^{[citation needed]}

Commercialization is often confused with sales, marketing or business development. The Commercialization process has three key aspects:

1. The funnel. It is essential to look at many ideas to get one or two products or businesses that can be sustained long-term
2. It is a stage-wise process and each stage has its own key goals and milestones
3. It is vital to involve key stakeholders early, including customers

The Commercialization Process

Commercialization of a product will only take place, if the following three questions can be answered:

1. When the company has to decide on the introduction timing. When facing the danger of cannibalizing the sales of the company’s other products, if the product can be improved further, or if the economy is down, the launch should be delayed.
2. Where the company has to decide where to launch its products. It can be in a single location, one or several regions, a national or the international market. This decision will be strongly influenced by the company’s resources, in terms of capital, managerial confidence and operational capacities. Smaller companies usually launch in attractive cities or regions, while larger companies enter a national market at once.
   Global roll outs are generally only undertaken by multinational conglomerates, since they have the necessary size and make use of international distribution systems (e.g., Unilever, Procter & Gamble). Other multinationals use the “lead-country” strategy: introducing the new product in one country/region at a time (e.g. Colgate-Palmolive).
3. To Whom the primary target consumer group will have been identified earlier by research and test marketing. These primary consumer group should consist of innovators, early adopters, heavy users and/or opinion leaders. This will ensure adoption by other buyers in the market place during the product growth period.

How the company has to decide on an action plan for introducing the product by implementing the above decisions. It has to develop a viable marketing-mix and create a respective marketing budget.

References

• Jolly, Vijay K.(1997) :Commercializing New Technologies: Getting from Mind to Market;Harvard Business School Press-Note a new edition is 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
• Technology Transfer