Commercialization is often confused with sales, marketing, or business development. In the context of innovation, commercialization is the process of introducing a new product or service to the public market. Innovations are defined as new products or services that improve upon their predecessors, and the process of integrating them into the current market is a critical component of successfully bringing them to market. Great innovations are not always brought to market due to a lack of feasibility or poor planning. Long-term planning is crucial in the commercialization process because this is when the most money will be spent—on advertising, sales promotions, and other marketing efforts after the launch of a new product.
Product innovation approach
Innovation involves continuous improvement throughout phases of a development program. Phases can be iterative and recursive (meaning that they do not proceed linearly from one to the next; rather, earlier phases can be returned to for further improvement as needed). Such phases include market analysis and consumer research, which progress to design and prototyping, after which follow naming and packaging design and ultimately retail and production support.
The Commercialization Process
The commercialization process has three key aspects:
- Carefully select, based upon comprehensive market research, which products can be sustained financially in which markets for long-term success.
- Planning for various phases and/or stages in the commercialization process is key. Consider geographic distribution, different demographics, etc.
- Finally, identify and involve key stakeholders early, including consumers.
Key Strategic Questions
When bringing a product to market, a number of key strategic questions need to be answered satisfactorily long before substantial costs are incurred for commercialization. These questions are simple to ask but complex to answer, and business analysts and market researchers will spend a considerable amount of time approaching them via research models and careful financial consideration.
- When: The company has to time introducing the product perfectly. If there is a risk of cannibalizing the sales of the company's other products, if the product could benefit from further development, or if the economy is forecasted to improve in the near future, the product's launch should be delayed. Similarly, many items are seasonal (e.g., fashion) and so should be timed appropriately to maximize revenue.
- Where: The company has to decide where to launch its products. This can be in a single location, in one or several larger regions, or in a national or international market. This decision will be strongly influenced by the company's resources; larger companies can reach broader geographic audiences. It is important to keep in mind where the early adopters will be and where competitive gaps may exist. In the global marketplace, this question is increasingly complex.
- To whom: The primary target consumer group will have been identified earlier through research and test marketing. This primary consumer group will include innovators, early adopters, heavy users, and opinion leaders. Their buy-in will ensure adoption by other consumers in the marketplace during the product growth period.
- How: The company has to decide on an action plan for introducing the product by implementing these decisions. It has to develop a viable marketing mix and create a respective marketing budget.
While these questions are key considerations in the commercialization process, remember that they should have been answered long before the commercialization stage. After all, if the need is not sufficiently widespread or the market not sufficiently developed, there is little reason to have pursued a given innovation in the first place.