Commercialisation

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.

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

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 unfavorable market conditions may operate to delay a product launch.
  2. 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).
  3. 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.
  4. 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.

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

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