Definition of Commoditization:
Almost total lack of meaningful differentiation in the manufactured goods. Commoditized products have thin margins and are sold on the basis of price and not brand. This situation is characterized by standardized, ever cheaper, and common technology that invites more suppliers who lower the prices even further.
Commoditization refers to the process of making something into a commodity. A commodity is a fundamental good used in commerce that is interchangeable with other commodities of the same type. Commoditization removes the individual, unique characteristics and brand identity so that the product becomes interchangeable with other products of the same type. Making commodities interchangeable allows competition with a basis of price only and not on different characteristics.
When a financial contract such as a mortgage becomes commoditized, the contract becomes liquid because it can be bought and sold readily. This liquidity promotes trading in that market because the agreements do not have to be assessed individually and treated uniquely.
The action or process of treating something as a mere commodity.
How to use Commoditization in a sentence?
- There was a lot of commoditization between the goods and I could not tell the difference between them at all.
- My business started out so well a few years ago as few other people were selling my product, but as commoditization set in, and more and more competitors entered my market, I could no longer differentiate myself.
- Businesses that use the practice of commoditization do not make goods with high quality, rather cheap in the advantage of quick profits in bulk amounts.
Meaning of Commoditization & Commoditization Definition