INSTRUCTIONS: Please RESPOND to this answer from the Point of view as a student. Use credible sources and respond as if you are a manager of a marketing agency. Tell this student what your marketing agency would think of each of these answers from a Management perspective in about 4-5 paragraphs:
As Quelch (2007) comments, like death and taxes, commoditization of your product is a given. Often there are products and services that grow to become indistinguishable from other products and services, that ends up posing a challenge to each respective company to continue to differentiate themselves. In the smartphone industry, companies such as Samsung have followed Apple’s lead in certain features, such as voice-activated assistants (Siri). Also, both Uber an Lyft are providing on-demand transportation services through apps in the same fashion.
There are actions that companies can take to mitigate and anticipate commoditization, so that their company or product does not get lost in the commoditization shuffle. “The first approach is a value-added, or “bundling,” approach by which the firm increases service benefits while simultaneously either raising or holding prices,” (Carpenter and Sanders 2008, p. 177). This value-in-use approach is a special case of differentiation that increases the likelihood of a consumer valuing their commoditized product over a competitor’s product that has not been bundled. Common with certain gym memberships, consumers can pay more to have access to multiple gyms, not just one gym. This allows the company as a whole (such as 24 Hour Fitness, Planet Fitness, LA Fitness, etc.) to collect higher payment from customers without providing any more significant services to that particular person. Consumers need to feel that they are getting a greater value, so that they do not switch over to a competitor’s product or service due to commoditization.
The other approach to anticipating commoditization is the process innovation approach, in which “the firm tries to lower its cost position so that it can further cut prices,” (Carpenter and Sanders 2008, p. 178). This is a logical approach as it forces companies to examine where costs can be cut and where additional value can be created for consumers. “One way firms do this is by eliminating services that others provide and finding alternative ways to substitute for those services,” (Carpenter and Sanders 2008, p. 178).
In regards to the timing of anticipating commoditization, companies need to be very aware of what is going on in the industry and what their competitors are doing. When a product is introduced and is seeing success, that is when companies should start considering the value-in-use and the process innovation approaches to mitigate the consequences of commoditization.
Carpenter, M., & Sanders, W. (2008). Strategic management: A dynamic perspective–integrated StratSim simulation experience. Upper Saddle River, NJ: Pearson/Prentice Hall.
Quelch, J. (2007, December 14). When Your Product Becomes a Commodity. Retrieved November 23, 2016, fromhttp://hbswk.hbs.edu/item/when-your-product-becomes-a-commodity