Why Do Some Brands Become Commodities Despite Having Better Products?

A company may invest heavily in improving a product, yet shoppers might still choose the cheapest option if they cannot see what makes the product different. This is known as Commoditisation: when customers begin to view products as interchangeable and focus mainly on price.

Better features alone do not always prevent Commoditisation. Understanding why distinctive products can come to seem generic can help businesses protect their value and avoid competing only on price.

How Brands Fight Copying Physical Features Quickly in Commoditisation

Technology companies regularly introduce new features, such as improved camera lenses for smartphones. But competitors may copy these innovations within a few months, leading to Commoditisation. When phones begin to offer similar cameras, shoppers may see little difference between them and choose based on price.

McKinsey research suggests that hardware advantages can last less than nine months. Once a feature is widely copied, the original brand may lose its edge, making it harder to stand out from lower-priced competitors.

A television brand may offer a technically superior screen, but if it does not explain what makes the technology different, shoppers may not notice its advantages. When customers cannot see or understand the difference, the products can seem interchangeable, leading to Commoditisation.

Kantar research suggests that shoppers are less willing to pay extra when technical differences are unclear. Marketers should explain product benefits in simple, accessible language so customers understand what sets the screen apart and why it may be worth a higher price.

Sales teams may cut prices repeatedly to close deals, but competitors can quickly match those discounts. When businesses compete mainly on price, their products can start to seem interchangeable, contributing to Commoditisation.

As we discussed in our previous article about Pricing Power, constant price competition can weaken a company’s ability to protect its margins. A classic study by McKinsey consultants, published in the Harvard Business Review, found that if sales volume stays the same, a 1% price cut can reduce the average company’s operating profits by 11%. Rather than relying on discounts, retailers should highlight what makes their products valuable and distinctive.

Large online marketplaces such as Amazon list thousands of products together, often making price comparisons easy. This can contribute to Commoditisation, especially when premium products appear alongside cheaper generic alternatives.

For example, a premium coffee brand may be shown next to low-cost coffee beans, and shoppers may focus mainly on price rather than the brand’s unique qualities. Forrester research suggests that premium brands can lose online revenue when they lack a distinctive presence on marketplaces. Building a dedicated brand page or selling through a company website can help businesses highlight what sets their products apart and protect their premium positioning.

Many factories make basic white soap, making it difficult for one product to stand out from similar options. Building customer trust and loyalty can help a brand avoid Commoditisation and give shoppers a reason to choose it over a cheaper generic alternative.

Companies that try to sell the same product to everyone can struggle to stand out. For example, a shoe brand offering a generic gray sneaker may face Commoditisation as shoppers compare it with similar, lower-priced options.

Also read: Why Does Assortment Planning Matter More Than Simply Offering More Products?

A competitor that designs a durable shoe specifically for construction workers can appeal to a clear customer need and justify a higher price. NielsenIQ research suggests that specialized products can maintain their profit margins three times longer than generic mass-market products. By serving a well-defined audience, businesses can differentiate their offerings and support more stable revenue.

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–Written by Rajnish Kumar, a copywriter and strategist with a background in fast-paced journalism, who explores the gap between what brands promise and how consumers actually behave.