Commoditization

Commoditization is the process by which goods or services that were once considered unique or differentiated become increasingly indistinguishable from one another; thus leading to them being treated as commodities. This often results in price competition, reduced profit margins, and an emphasis on supply chain efficiency.

Commoditization meaning with examples

• The rise of online retail has led to the Commoditization of many products, making it difficult for brands to maintain their distinct identities in a crowded marketplace. As customers shift their focus to price, companies must find innovative ways to add value.
• In the tech industry, software Commoditization has forced startups to rethink their business models. As tools and applications become widely available and free, differentiation hinges on user experience and customer service rather than unique features.
• The Commoditization of coffee has transformed the market. Once considered a premium product sourced from select regions, it has now become a ubiquitous item available at various price points, leading consumers to seek out specialty brands to regain a sense of uniqueness.
• As education becomes increasingly commoditized through online platforms, traditional universities face challenges to retain students. In this landscape, institutions must emphasize personalized learning experiences and tangible outcomes to stand out amid an abundance of options.