Commercialization is the thrilling process of bringing new products or services to the market. This broad act includes production, distribution, marketing, sales, customer support, and other critical functions essential for the commercial success of a new venture.
Typically, commercialization becomes significant after a small business has expanded and scaled operations to reach a wider market. For instance, suppose a small bakery, celebrated for its cinnamon rolls, decides to commercialize its offerings. They could achieve this by selling packaged cinnamon rolls to local grocery stores, allowing increase sales exponentially.
Key Takeaways
- Commercialization is the gateway to introducing new products or services to market.
- It requires a carefully developed three-tiered strategy that includes ideation, business process, and stakeholder engagement.
- The extensive process includes production, distribution, marketing, sales, customer support, and more to ensure commercial triumph.
Understanding Commercialization
Commercialization demands a well-structured, three-tiered rollout and marketing strategy that includes the following core elements:
- The ideation phase
- The business process stage
- The stakeholder engagement stage
The Commercialization Process
The ideation stage is often seen as the entry point of a funnel where numerous ideas are input but only a select few transform into tangible products. Intending to generate products and services that resonate with consumer needs, the most effective designs also align with the company’s business model, providing high benefits at minimal cost.
This stage embeds a marketing principle known as “The Four Ps” — product, price, place, and promotion. Frequently referred to as the marketing mix, this notion helps companies decide the products to create, suitable pricing, target customers, and promotional activities.
For a product to qualify for commercialization, R&D must prove a potential for public value leading to profitability. In the business process stage, companies evaluate feasibility, costs, and potential commercialization strategies.
The stakeholder stage involves recognizing the target audiences and key stakeholders who will support the commercialized product or service. Successful commercialization must satisfy both customer and stakeholder expectations.
Selling New Products in the Marketplace
Protecting a product’s intellectual property with patents, trademarks, and other legal actions is vital before market launch. Manufacturing can be done internally or outsourced to third-party factories. After completing the product line, promotional initiatives are set in motion to build awareness within the target market, utilizing distribution channels and retailer partnerships.
While in-house production, marketing, and distribution can yield higher profits due to the absence of intermediaries, it also involves higher liabilities concerning production cost variances.
Related Terms: marketing mix, stakeholder, subcontracting, target market.
