commodities

had this saved on my computer, but moving it here.

commodities

• undifferentiated. you buy based on price.
• characterized by me-too products, overcapacity, price wars
• drucker: “In a commodity market, you can only be as good as your dumbest competitor.”

commodity products

• airline seats
• RAM
• gasoline

danger of commmoditization

• harder to build revenue stream
• harder to invest in innovation
• customer base prone to churn

solutions against commoditization?

• innovate
• bundle
• segment - find customers who are less sensitive to high prices (e.g., lock a multinational into an expensive multi-year contract)

so, if you find yourself building a commodity product it would make sense to step back and revisit some of your assumptions about who your customers are, what their needs are, and why they’ll buy from you as opposed to brand x. (and, no, lower cost doesn’t count unless it’s something obscene like an order of magnitude — but even then, how do you scale your business up?)