The common academic definitions of commercialization are focused on the process or cycle of introducing a new product or production method into the market.
Experience show that succesful commercialization start with appropriate business qualification of the innovation idea, incubation or R6D project and close ad-hoc market assesment to ensure understanding of fundamental expectations for resource and GTM planning.
Although many technologies begin in the laboratory and are not practical for commercial use in their infancy. The development segment of the research and development spectrum requires time and money as systems are engineered that will make the product or method a paying commercial proposition. The launch of a new product is the final stage of new product development and the one where advertising, sales promotion, and other marketing efforts encourage commercial adoption of the product or method.
Commercialization may often be confused with sales, marketing, or business development. The commercialization process has the purpose of ensuring everything are beeing prepared for operational Sales and Marketing to be engaged and ensurer the operational framework (Finance, Services, Systems, processes, legal regulatory etc.) are in place. It is vital to involve key stakeholders early, including customers.
Proposed commercialization of a product will raise the following basic questions: (Which should be clearly explained in the Commercialization plan)
- 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 unfavorable market conditions may operate to delay a product launch.
- Where to launch. A potential vendor can start marketing in a single location, in one or several regions, or in a national or international 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 larger companies enter a national market at once.
Global roll-outs generally remain the exclusive 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 the “lead-country” strategy: introducing the new product in one country/region at a time (e.g. Colgate-Palmolive).
- Whom to target. Research and test marketing may identify a primary consumer group. The ideal 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 during the product-growth period.
- How to launch. The prospective vendor should decide on an action plan for introducing its proposed product – plan shaped by addressing the questions above. The vendor has to develop a viable marketing-mix and to structure a corresponding marketing-budget.