When Your Product Becomes a Commodity

I found this interesting piece of article in Harvard working knowledge. This article appealed to me in the sense it talks about product becoming a commodity.

Commodization occurs as a goods or services market loses differentiation across its supply base, often by the diffusion of the intellectual capital necessary to acquire or produce it efficiently. As such, goods that formerly carried premium margins for market participants have become commodities, such as generic pharmaceuticals and silicon chips.

NOT MATURE PRODUCTS, ITS MATURE MANAGERS

In this intense world of offshoring, outsourcing and globalization, there exist cut throat competition. Hence its important to innovate and re innovate the product else the product will become a commodity.

It is also said that the product never mature, its only the managers who mature and run out of innovation. 

Marketers can do three things to delay the inevitable forces of commoditization.

Innovate

A new product that better meets consumer needs, even an upgrade of an existing product, can one-up competitors and force them to invest in matching or exceeding the new specifications.

Bundle

Selling a commoditized product with differentiated ancillary services (such as after-sales service) can appeal to buyers willing to pay a premium for the convenience.

Segment

Mature markets are large markets that can be divided profitably into multiple segments. Marketers can focus on providing applications expertise for less price-sensitive customer segments for whom the product is still important.