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> Chances are that your company or your industry will be commoditized especially when you don’t think it can happen because, in reality commoditization always h

by oneye 13y ago

> Chances are that your company or your industry will be commoditized especially when you don’t think it can happen because, in reality commoditization always happens Everything else in the post rests on this, and I'm not sure that its true. Do you have research or statistics to support this claim? I'm curious what these industries are. Oil? Investment funds? Pharmaceuticals? I'm thinking that there are a few industries where commoditization has not happened over the last few hundred years. Of these, I'm curious how many of the industries commoditization could happen in, but has not, and how many (for some reason) are strongly resistant to commoditization.

itsprofitbaron 13y ago
In regards to the commoditization point & to you examples of Oil, Investment Funds and Pharmaceuticals there has been consolidation within these. For instance, OPEC has effectively brought all the oil-producing nations under one rule so to speak which has established uniform pricing throughout the world. Moreover, commoditization doesn't happen immediately as there may be industries who disrupt existing solutions (as SaaS has done to Enterprise Software) but aren't yet fully established themselves (or in particular verticals of the new industry) and these can have time to evolve before commoditizing. Having said that, it's always better to commoditize yourself before customers (and potential customers) perceive you as a commodity. The reason for is that it becomes much harder to evolve into a preferred partner/problem service where you can make much higher profit margins during this stage as you are being compared on price & not your defensible value add.
yummyfajitas 13y ago
Huh? Oil the perfect example of a commoditized market? You go buy oil on a commodities exchange and take delivery from whoever bothered to fill your contract (you don't really care who).
inthewoods 13y ago
Pharma is a great example of what happens in commoditization. Patents allow the Pharma Co. to charge a large amount in the beginning of a product, then, when the patent expires (and the Pharma Co. has finally given up fighting it), the generic manufactures step in and take the price to the bottom.

by oneye 13y ago

itsprofitbaron 13y ago

In regards to the commoditization point & to you examples of Oil, Investment Funds and Pharmaceuticals there has been consolidation within these. For instance, OPEC has effectively brought all the oil-producing nations under one rule so to speak which has established uniform pricing throughout the world. Moreover, commoditization doesn't happen immediately as there may be industries who disrupt existing solutions (as SaaS has done to Enterprise Software) but aren't yet fully established themselves (or in particular verticals of the new industry) and these can have time to evolve before commoditizing. Having said that, it's always better to commoditize yourself before customers (and potential customers) perceive you as a commodity. The reason for is that it becomes much harder to evolve into a preferred partner/problem service where you can make much higher profit margins during this stage as you are being compared on price & not your defensible value add.

yummyfajitas 13y ago

Huh? Oil the perfect example of a commoditized market? You go buy oil on a commodities exchange and take delivery from whoever bothered to fill your contract (you don't really care who).

inthewoods 13y ago

Pharma is a great example of what happens in commoditization. Patents allow the Pharma Co. to charge a large amount in the beginning of a product, then, when the patent expires (and the Pharma Co. has finally given up fighting it), the generic manufactures step in and take the price to the bottom.