A New Perspective on the Evolution of Porsche 911 (What is Commoditization?)

 

A bit of disambiguation…

Commoditization: the negative force exerted on a product’s perceived value that is driven by the accumulation of knowledge about that product in the marketplace

commoditization: the process in which a product’s value and thus the profit per unit drops, as a result of normal business activity / (with every product sold, the knowledge about that product in the marketplace increases)

All products commoditize, but not all become commodities.

A commoditized product is a product with a lower perceived value relative to its original perceived value.

A commodity is a product with a perceived value positioned at the lower end of the entire value spectrum for all of the products in an economy.

A commoditized product may or may not be a commodity. But a commodity is always a commoditized product.

(The term product is used here in a broader sense, covering all types of offerings.)

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A more detailed account of this particular understanding of the concept of perceived value is available in Cristian Mitreanu's 2007 paper A Business-Relevant View of Human Nature.

 
Cristian Mitreanu