• Many manifestations of commoditisation - product or a service

• Shift in consumers’ minds from being aspirational to becoming just another need

• Loss of branding power resulting in reduced pricing power

• At some point, differentiation between competing brands becomes so indistinguishable that the product or service becomes generic,

• That time, consumers‘ buying behavior undergoes a fundamental shift

Commoditization

• Process first started to happen in early 1970s in US

• Mass retailers first experimented with “brown-bagged” products (early precursor to what is now known as “private labels”) in categories such as sugar, wheat flour, breakfast cereal and several other FMCG products.

• Over the last 40 years, share moved up to 40 %- FMCG

• P&G, Unilever, Nestle and a few others have still managed to hold ground and even expand,

• Countless other brands & producers become terminally weakened.

• Consumer durables and kitchen appliances were the next category

• Kitchen appliances such as mixer, grinders, electric irons, etc., have already been commoditised,

• DVD player, with retailers like Wal-Mart selling millions of units per year, with no history as a brand in such categories.

• Which are the next in the list of endangered species (from the perspective of branding and pricing power)?

Commoditization

• Categories to see very disruptive changes in consumer behaviour include color TVs, digital cameras & mobile telephones.

• Demographic shifts that are leading to massive shifts in consumption aspirations;

• entry > 300 Mil new consumers to the consuming class in the last 20 years

• Expected entry of another 200 Mil in the next 10;

• Commoditisation of technology and of manufacturing leading to open-source availability of product design, technical knowhow, and manufacturers;

• Changes in modern retail formats and increasing multiplicity of retail channels that not only include internet, direct door-to-door selling, catalogues, and even TV shopping channels.

• In ever expanding basket of consumption categories, more and more consumption is happening in the “lifestyle” and “aspirational” categories.

• Leisure and entertainment, food services, communication (talk time), education and coaching / training (self and for children), health and well being, personal grooming, etc.

Commoditization