Real markets often do not conform to our efforts to categorize or change them. Sometimes products are hard to classify, in that regard. Consider home broadband and mobile phone services, which might be considered commodities by some; but the opposite by others.
Any “commodity market” requires products that are standardized and therefore interchangeable across providers, with competition primarily driven by price, with little differentiation in quality or features. Agricultural products, metals and energy products provide good examples.
But it is a judgment call whether mobile services have such properties, as competitive as the market might be.
Mobile phone service has some commodity traits (price sensitivity, partial standardization), but significant differentiation through network quality, branding, and bundled services, along with limited fungibility (one provider’s product is quite similar to all others), makes it a non-commodity.
Broadband is the most commodity-like (compared to either mobile phone service or electricity) due to high standardization, fungibility, and price-driven competition. However, bundling and infrastructure variations introduce slight quasi-commodity traits.
Home Broadband might be the most commodity-like due to high standardization, fungibility, and price-driven competition in markets with multiple providers. Its differentiation through bundles (streaming services, mobility, linear video) is secondary to price and speed.
Electricity might be a quasi-commodity, highly standardized and fungible in deregulated markets but constrained by regulated monopolies and infrastructure dependence in many regions.
Mobile phone service might be considered a non-commodity, with significant differentiation through network quality, branding, and bundled perks, despite some price sensitivity.
Whether an industry’s products are commodities or not also shapes business and revenue models. Even products we might assume are definitely commodities, such as electricity, might actually be “quasi” commodities.
In most regions, electricity, gas, and water are delivered by regulated monopolies, meaning consumers have no choice in providers. This lack of competition undermines the commodity trait of market-driven pricing.
Unlike true commodities (oil traded globally), these utilities are tied to local infrastructure (grids, pipelines, water systems), which effectively means an electron for sale in Atlanta, Ga. is not interchangeable with an electron to be sold in Los Angeles, Calif.
That might not seem so important, but it means that retail electricity for consumers is not an actual commodity (implying alternate suppliers), but more a “quasi-commodity” as there are, in many markets, no competitors.
The point is, our efforts to categorize and understand ”commodity” products, and company and industry efforts to prevent products becoming commodities, is harder than it might seem.
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