A commodity, by definition, is a good without qualitative differentiation. It is fungible, meaning that it doesn’t matter anymore who produces the product. Its individual units are capable of mutual substitution. Most markets are near-commodity markets: price, brand, or quality still play a small role in customer decisions, and products are not completely fungible. Whether a product is a commodity or not is defined by markets, not by companies. In effect, one can influence markets in order to make products or services commodities. Why would you want to do that? Every company will try as hard as it can to protect its strategic value chain elements. There are two strategic options to do that, generally referred to as “rising above the playing field” and “leveling the playing field”:

● Dominate: If you want to rise above a commodity level, effectively becoming non-fungible, you need to differentiate yourself through either one of customer relationship management, product innovation, or infrastructure management: The first two will help you compete on brand and product, the later one on cost and price.

● Commoditize: You bring everyone else down to a level where their profit sanctuaries, operational advantages, or differentiations are annihilated. You can also level the playing field if that increases your total addressable market size and you can address that market better than anyone else. Or you can level the playing field to reduce a competitor’s advantage in its value chain positioning and wallet share. Operational advantages and uniqueness of services dwindle. You effectively created a commodity market. Google’s Strategic Value Chain Elements