What causes companies to become commoditized? A thorough introduction to the meaning of commoditization and examples!
One thing that companies can easily fall into as they continue to operate for many years is "commoditization." We will explain the specific meaning of this phenomenon, japan cell phone number list also known as obsolescence, using several examples.
First, let us explain what we mean by "commoditization."
Products that were differentiated through originality and brand power become generic due to the emergence of many similar products.
Commoditization simply means becoming commonplace.
For example, smartphones, which are now commonplace, were something brand new and unique when the first "smartphones" appeared a dozen years ago, and therefore had extremely high market value.
However, nowadays, many companies, both domestic and overseas, develop and sell smartphones, and they have become so widespread that there is almost no one who does not know what a smartphone is. It has become commonplace to be able to take very high-resolution photos and videos, and play high-quality games.
Even if a company were to boast from now on that they would "release a smartphone," it would be meaningless, as smartphones have become so commoditized that no one will pay any attention to them, so in order to survive in the market they will have to compete on the performance, cost-effectiveness, and unique features of their smartphones.
As in this example, products and services that were originally revolutionary when a few companies started to offer them lose their initial advantage as many other companies start to offer similar products. This "commonality" is what we call commoditization.
Commoditization does not necessarily have a negative meaning. There are many other products that have become commoditized in a good sense. In addition to cameras, televisions, refrigerators, cars, and cameras are examples of commoditization in a good sense.
Recently, "AI that can draw pictures" has become a hot topic, but in the future, as many companies develop products and services using AI technology, it will become a commodity and will no longer be a rare technology.
AI will eventually become integrated into people's daily lives, and products that use AI technology are expected to become commoditized, in a good sense, just like cameras in the past.
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Causes of commoditization
Taking smartphones as an example, it could be said that many of the companies currently developing smartphones in Japan are being swept away by the wave of commoditization.
Company-side causes
It's clear that commoditization stems from companies struggling to differentiate themselves from other companies.
However, sometimes commoditization is aSituations when market share should be considered
Market share should be considered when you want to sell your own products or services, and it is important if you are aiming for efficient sales by analyzing market share.
There are three main situations in which you should consider market share, so we will explain each one below.
There are three situations in which market share should be considered:
When you understand your company’s position in the market
When you want to analyze market share characteristics
When you are considering entering the market
When you want to understand your company's position in the market
Once you know your company's market share, you can also understand which targets you have achieved, which will allow you to understand your company's position within the market.
How much influence you have and how much market share your competitors have can serve as guidelines for setting future targets .
Also, if you are offering a niche product in the market, it is possible that no company has yet established a position in the industry.
In such cases, you need to position yourself so that you don't lose out to other follower companies.
When you want to analyze market share characteristics
It is also recommended to consider market share when you want to analyze market share characteristics and decide which parts of your company's products or services need improvement .
It is not uncommon for a company to have a low market share when viewed from the perspective of the overall market, but a high market share in its target market.
You can also use the results of market share analysis to consider how to approach your target.
After approaching your target, it is recommended that you calculate how much share you can gain and then deploy it accordingly.
When you are considering entering the market
If you are considering entering a new market, you should first check the market share to see which companies have what share.
It can be said that the behavior of new entrants will be significantly different depending on whether the market share is broken down into multiple companies or one company with a large share.
When a large company has a monopoly, there is a risk of price war even if the company produces a good product.
Price competition may put mid-sized companies at a disadvantage compared to larger companies and force them to change their strategies.
In such cases, it is better to increase the value of your products and services by adding value rather than competing on price.
Understand your market share and develop a business strategy!
By understanding your market share and developing a business strategy, you will be able to sell your products and services efficiently.
In addition, the impact varies greatly depending on the market share a company has, and each company sets its own targets and conducts its business accordingly.
Be sure to do the calculations correctly and keep in mind the different types of market share and the targets you should aim for, in order to achieve effective marketing.
n inevitable choice, and often a rational one.
For example, developing and releasing a unique smartphone may generate temporary buzz, but whether it is practical and sells is another matter entirely.
One example is a "roll-up smartphone" that was announced by a company but was ultimately discontinued in development and sales.
Although a large amount of development costs may have been spent, it is not easy to balance the costs and get the product on the market at a level that many consumers can afford.
If a project fails, no matter how revolutionary the product may be, it will remain just a pipe dream unless it is commercialized.
Also, another company may develop and sell a better similar product and become successful.
So what do most companies do? They have no choice but to compete based on their unique strengths and price wars while staying within the trends of other "general smartphones," which ultimately leads to commoditization.
In reality, no matter how hard a company tries to avoid commoditization, it is extremely difficult to "develop a completely unique product and have it accepted by many people" because it takes time and the cost is passed on to the price.