Toward an understanding of industry commoditization: Its nature and role in evolving marketing competition

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.ijresmar.2009.10.001 Byline: Martin Reimann (a), Oliver Schilke (b), Jacquelyn S. Thomas (c) Keywords: Marketing strategy; Survey research 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. Author Affiliation: (a) University of Southern California, Seeley G. Mudd Building, 3620 McClintock Avenue, Los Angeles, California 90089-1061, United States, Tecnologico de Monterrey, EGADE Business School, Campus Monterrey, 66269 Monterrey, Mexico (b) Stanford University, Building 370, 450 Serra Mall, Stanford, California 94305, United States, RWTH Aachen University, Center for Entrepreneurship, 52056 Aachen, Germany (c) Cox School of Business, Southern Methodist University, P.O. Box 750333, Dallas, TX 75275-0333, United States Article History: Received 13 December 2008 Article Note: (miscellaneous) Area editor: Aradhna Krishna