Commoditization is the process by which goods that have economic value and are distinguishable in terms of attributes (uniqueness or brand) end up becoming simple commodities in the eyes of the market or consumers. It is the movement of a market from differentiated to undifferentiated price competition and from monopolistic to perfect competition.
This is not to be confused with commodification, which is Karl Marx's term for manufacturing things for sale, as opposed to making things for personal use.