The topic is extremely interesting and it is worth addressing it with an article that could be a starting point for many entrepreneurs. Marketing is based on the very idea of standing out, differentiating oneself from the competition; when the product is substantially undifferentiated from those of competitors, how should one behave? Is a price war the only chance?
Of course not. In fact, the very perception of a product as a commodity is subject to change over time. So let's see what the manufacturing company can do to avoid seeing its product confused among the many.
What is a commodity?
Commodity is, in short, a product perceived indiscriminately by the market. Precisely for this reason, the price is established by the market through classic supply-demand dynamics and then reverberates on all producers.
The classic example is agricultural products such as wheat: those who buy wheat do so at a market price that varies from year to year, applied to all producers, without any quality differentiation having any significant weight.
It is precisely with reference to agricultural products such as wheat, corn, sugar, coffee and many other products, in fact, that the term commodity was born. From there it expanded to raw materials of an extractive nature such as iron or oil, which are subject to the same dynamics. The famous price of a barrel of oil varies from day to day, but applies indifferently to all producers.
A further semantic expansion has then led to the definition of commodities as all those industrial products that are perceived as substantially undifferentiated by customers. The list would be potentially endless: from clothes pegs to reams of paper, our homes are overflowing with products that have been purchased by simply choosing the lowest price, given that we did not perceive substantial or noteworthy differences between one package and another.
Here we are, therefore, at the heart of the problem: industrial products perceived as commodities can generally establish themselves on the market only through price wars with respect to competitors (let's leave aside, for now, the distribution dynamics).
Therefore, companies would have no choice but to work with low margins, cutting costs as much as possible and risking being swept away from the market as soon as a more efficient competitor arrives.
Or are there alternatives that can provide greater stability to the business?
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Fighting commoditization
It is easy to understand that what qualifies a product (or service) as a commodity is, ultimately, the customer's perception. The product is a commodity if the customer does not recognize distinctive characteristics: either because it does not actually have any or because those it does have are not considered relevant by him. It is difficult to sell a full tank of gasoline at a higher price than the average in my territory simply because my customer service is better than my competitor's.
The company that wants to avoid the risk of commoditization, or that wants to get out of this situation, can follow two paths:
Differentiate the product by working on its features.
Work on the brand, thus achieving the result of enhancing all of your products.
The examples can be endless. Let's take, for example, a market that is essentially commoditized like that of hand soap. What strategies can a company use to make its product stand out?
