The Death of Commoditization. The Birth of the Small Business

October 20, 2009

by joseph.young.2009

Image Source: Wired.com

Image Source: Wired.com

In today’s society, there is the belief that “free is good.” I have this belief as well, but I do think there are times when the saying isn’t always true. A situation that stands out for me is new products in the marketplace. When you see or hear about a product from a friend, in the news, or by any other means, what you’re hearing a someone’s invention. It is something they (the company) created by trying to understand their customer (often themselves) and making a product that serves their customer. That is the essence of new product development. You find a need in the market, and then you try to fill it with a product that you think the consumer would enjoy and purchase. And you, as the creator would be rewarded. In today’s society, that reward is financial, social, or some other high value asset.

Source: stock.xchang

Source: stock.xchng

So back to the inventor. This inventor has created something that they think you will like. And by buying their product, you say, “I like your product and I will support you.” What makes you decide to buy it? Maybe you tried it. Maybe a trusted friend recommended it to you. By some marketing initiative, you became aware of the product and decided that you wanted it enough to be willing to pay for it.

Source: Stock.xchng

Source: Stock.xchng

The problem with commoditization is that it drives down the quality of the product as the price drives towards zero. One example of this direct relationship between quality and price can be seen in toilet paper. Toilet paper is, in essence, free. If you wanted to, you could get toilet paper free for the rest of your life and never have to pay for it. Now I don’t know where to get reliably source of free toilet paper from, but a quick search would answer that question. The bigger point is that even in a market with free products, people pay. And people will pay a fair amount for high quality toilet paper. The point is that a commoditized product is often of poor quality, so the majority of consumers will pay for a higher quality product. You can pay with money, as in toilet paper, or with information, as in Google.

Source: stock.xchng

Source: stock.xchng

My proposal to you, the consumer, is to consider, “Why would somebody create something in a commoditized market?” Are they trying to make a quick buck? Or are they making something they believe in and think will improve your life. If you believe the reason they made the product is to make your life better, then I ask you to buy it. By buying that product, you are supporting the inventor’s dream. You are an early adopter. You buy into their dream product. The current iteration of the product may not be your dream product, but by supporting them, you give them another chance to make something better. You keep their company in the race. By selecting a commoditized version of the product, you don’t give them the chance to even try again. Aren’t we supposed to support smart risk taking? Without such, society wouldn’t grown and flourish.

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One Response to “The Death of Commoditization. The Birth of the Small Business”


  1. just passing through liked the blog


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