Commoditization: Difference between revisions

Revision as of 07:10, 9 July 2023

Latest revision as of 22:45, 27 October 2023

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{{Economic anthropology|Basic}}

In [[business]] literature, '''commoditization''' is defined as the process by which [[good (economics)|goods]] that have [[Value (economics)|economic value]] and are distinguishable in terms of attributes ([[Unique selling proposition|uniqueness]] or [[brand]]) end up becoming simple [[Commodity|commodities]] in the eyes of the market or [[consumer]]s. It is the movement of a market from differentiated to undifferentiated price competition and from [[monopolistic competition]] to [[perfect competition]]. Hence, the key effect of commoditization is that the [[Market power|pricing power]] of the manufacturer or brand owner is weakened: when products become more similar from a buyer's point of view, they will tend to buy the cheapest.

This is not to be confused with [[commodification]], which is the concept of objects or services being assigned an exchange value which they did not previously possess by their being produced and presented for sale, as opposed to personal use. One way to summarize the difference is that commoditization is about proprietary things becoming generic, whereas commodification is about nonsaleable things becoming saleable. In social sciences, particularly [[Cultural Anthropology|anthropology]], the term is used interchangeably with commodification to describe the process of making commodities out of anything that was not available for trade previously.<ref>Appadurai, Arjun, ed. (1986). ''The Social Life of Things: Commodities in a Cultural Perspective''. Cambridge UP, Cambridge.</ref><ref>Greenwood, D.J. (1977). "'Culture by the Pound: An Anthropological Perspective on Tourism as Cultural Commoditization". In ''Hosts and Guests'', ed. V. L. Smith, pp. 129-139. Philadelphia: University of Pennsylvania Press.</ref>

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[[Category:Commodities]]

[[Category:Business]]