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Are U a commodity?

I just had a relaxing Father’s Day weekend at Cape Cod with the family. We gorged ourselves on lobster, scallops and oysters, and over-indulged on ice cream sundaes at the Sundae School. It was so nice to get away for a few days, kick back on the beach, eat like pigs, and and enjoy each others company.

This summer, our oldest daughter, Bridget, is “slaving away” (that’s her take on working) in the office. One of the words she overheard me say was “commodity.” and she asked me what it meant. So, if a 15 year old wants an explanation, I might as well share it with y’all.

Commodity

A commodity is an ordinary, common, even mundane product or service that, in the absence of differentiation created by its provider, is perceived by the consumer as having limited, usually low value, and being interchangeable with other products or services of its type.

Generally speaking, for consumers, grocery items, household cleaners, paper products, batteries, gasoline, auto insurance, and a car wash are commodities items.

For business/industry things like raw materials, cleaning supplies, office supplies are commodities. A universal example would be coffee.

To a great many consumers coffee is coffee and there is no reason to pay more for one brand of coffee or another, or to favor getting it from a convenience store on the far side of the street vs the near side of the street. If anything else, lowest price might sway such a decision. Yet Dunkin’ Donuts and Starbucks prosper, at excessively higher price levels and margins.

Aspirin is in fact, aspirin, yet Bayer Aspirin exists as a brand and sells for a higher price than the generic equivalent, side-by-side on the same shelf.

Permitting yourself and your security business to be perceived as an interchangeable commodity (i.e. commoditized) is a fast and certain path to price and profit erosion.

There is no such thing as a commodity, there is only commodity thinking!

Have a great week!

Bob

P.S. Another word that you should totally despise is “Vendor.”

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