What causes a product to become commoditized?

What causes a product to become commoditized?

Commoditization can be defined as the process by which a product or service that was unique or innovative becomes generic and widely available. As a result, its price drops as competition increases. When several companies offer similar goods, consumers tend to choose the lowest price tag.

How do you compete in a commoditized market?

To help managers embark on the path of commoditization, we recommend the following:

  1. Assess the current basis and project the future basis for advantage. Understand the evolving nature of advantage in your market.
  2. Identify winning business models.
  3. Consider resegmenting by business model.

How do you distinguish a commoditized product?

In a commoditized B2B market, there are four additional ways to differentiate your offering from the competition and increase your differentiation: leveraging the brand, innovating your service offering, as well as designing product and packaging in a way that creates an aesthetic beyond the functional.

Is commoditization good or bad?

Commoditization is a process in which goods which have unique features becomes simple commodities and can be interchanged easily with other alternatives available in the market. Commoditization is the biggest challenge for those businesses whose products don’t have unique features.

What’s the best way to sell commodity products?

From now on, your job is not selling a specific commoditized product or service. Instead, it’s about bringing real value to the table for your customers. If you want to know how to sell commodity products at a higher price point, you have to give up on the idea that you can or should be the lowest price provider.

What does it mean when a product is commoditized?

Key Takeaways “Commoditize” refers to a process in which a product is essentially deemed identical to the same class of offering presented by a rival company. Commoditized products allow consumers to make purchasing decisions based solely on the price-tags of the item in question.

How does a company compete to sell commoditized goods?

As companies compete to sell commoditized goods, consumers can enjoy ancillary enticements, such as holiday-themed sales, promotions, free shipping, flexible payment options, and extended warranties .

How are commodity sellers trying to differentiate their products?

Whether it’s coal, chickens, or memory chips, commodity sellers struggling to differentiate their products often resort to price cuts. And that, of course, means savvy buyers can play one seller against another to extract the greatest price concessions.