Atos Consulting Look Out | De-commoditization

Concept

Commoditization is a process that transforms the market for a unique,
branded product into a market based on undifferentiated price
competition. In economic terms, the market changes from one of
monopolistic competition to one of perfect competition. Consumers
usually benefit from commoditization, since perfect competition usually
leads to lower prices.
Branded producers often suffer under commoditization, since the value of
the brand (and ability to command price premiums) can be weakened. This
is why branded producers are keen to de-commoditize their offerings.

Trajectory

Because of ‘chinafication’ (copying), emerging technologies, increasing
global competition, and the increasing expectations of consumers,
more and more products and services today are starting to look like
commodities. Products can be placed on a continuum.
The classification for each stage in the evolution of products is:
- Commodity: charge for undifferentiated materials.
- Goods: charge for distinctive tangible items.
- Services: charge for the activities you perform.
- Experience: charge for the feeling customers have because of engaging you.
- Transformation: charge for the benefit customers (or ‘guests’) receive as a result of spending that time.

GLOBAL CONSUMER MARKETS >>

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