Community Forum – Defining Commercial Products

When is a new product considered ‘commercial’?

How do people decide when a new product is “commercial”? I am looking for a short definition that the project team can use to guide their decision. – Eric Wallis, Director of Marketing, Greene, Tweed & Company

Community Responses

Ted Farrington, Senior Director, PepsiCo Advanced Research, Pepsico
I have seen a couple practical definitions:

• First (non-promotional) shipment from manufacturing location.
• First appearance on store shelf.

Phil  Minerich, Vice-President, Research & Development, Hormel Foods Corp.
Our development work migrates from R&D to the production facility under a formal Plant Line Trial process.  This allows our developers the opportunity to produce the product/package in a production facility, using production equipment.  Many times, this results in small changes to the product formulation or process, before we sign off on the project and release it to plant operations for commercial production.  Once the plant line trial process has been validated, the project is then considered an approved commercial product or process.

Ralph R. Sawtell, Technical Director, Metallurgy and Product Science, Alcoa Technology​
I would define a product as commercial when it has been authorized for sale, that is, when we are willing to quote a price and delivery date and take an order.  In some market segments that can be considerably before the first order is actually received (i.e. aerospace).

Director of New Technology and HERA, Global Coatings Manufacturer
We generally measure this by using three metrics:

1. A minimum number of repeat sales.
2. Amount of raw material margin dollars exceeding a minimum.
3. Volume numbers exceeding a certain poundage.

Ray Fryan, Director – Advanced Engineering & Quality – Steel Group, The Timken Company​
The short definition for The Timken Company –  the new product is in the commercial phase of the phase and gate product development process.  There is at least one (and ideally multiple) lead customer(s) buying the product.

David Kashdan, IRI Emeritus Member (Director, Eastman Research Division, Retired)
The best definition I have seen for “commercial” is when a customer pays for a second commercial-sized order.  This means the product works, has value, and is judged commercial by your customer.  Declaring it commercial prior to that event runs the risk of having a product on the books that is not economically feasible, simply does not work, or does not really meet customer’s needs.

Jay Otten, Manager: NA IP, R&D Controlling, Technology & Innovation, BASF
In my old group we would track new and significantly modified (to meet specific customer needs) products when we wrote new or modified Product Definition Sheets.  PDSs are highly detailed descriptions of the process, QC, product chemistry and history.  Such changes required technical, marketing or product management, and production approval.  More recently Product Management is responsible for inputting PDR (product numbers) for all new products.  We have specific definitions that describe what constitutes a new product.

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