Toward an Understanding of Industry Commoditization: Its Nature and Role in Evolving Marketing Competition

International Journal of Research in Marketing, Vol. 27, No. 2, pp. 188-197, 2010

Posted: 4 Mar 2011 Last revised: 28 Nov 2012

See all articles by Martin Reimann

Martin Reimann

University of Southern California

Oliver Schilke

University of Arizona

Jacquelyn S. Thomas

Southern Methodist University (SMU) - Marketing Department

Date Written: 2008

Abstract

This paper aims to improve current knowledge on the commoditization of industries, a unique phenomenon of evolving marketing competition characterized by increasing homogeneity of products, higher price sensitivity among customers, lower switching costs, and greater industry stability. As commoditization is relevant to an ever-greater number of diverse industries, this research addresses two main questions: (1) How can managers assess their industry's level of commoditization to be better informed about their firm's competitive environment? and (2) How does the level of commoditization in an industry affect the effectiveness of marketing strategies? Initially, in-depth field interviews identified the characteristics of the commoditization phenomenon. Subsequently, a survey study among 141 companies from ten industries applied a measure to assess an industry's commoditization level. The results showed significant differences between high and low commodity markets in terms of the impact of three different strategic orientations on firm performance. The application of the value disciplines framework revealed that as commoditization increases, operational excellence and product leadership lose impact, while customer intimacy becomes a more vital performance driver. The results indicate that commoditization assessment may become a vital part of a firm's strategic efforts to address evolving marketing competition.

Full text PDF available online.

Keywords: Marketing Strategy, Survey Research

Suggested Citation

Reimann, Martin and Schilke, Oliver and Thomas, Jacquelyn S., Toward an Understanding of Industry Commoditization: Its Nature and Role in Evolving Marketing Competition (2008). International Journal of Research in Marketing, Vol. 27, No. 2, pp. 188-197, 2010. Available at SSRN: https://ssrn.com/abstract=1774143

Martin Reimann (Contact Author)

University of Southern California ( email )

2250 Alcazar Street
Los Angeles, CA 90089
United States

Oliver Schilke

University of Arizona ( email )

1130 E. Helen St.
McClelland Hall
Tucson, AZ 85721
United States

Jacquelyn S. Thomas

Southern Methodist University (SMU) - Marketing Department ( email )

United States

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