Is commoditisation a state of mind?

July 19, 2008 at 11:16 pm Leave a comment

In Seth Godin’s post ‘No such thing as price pressure’ he stated that companies are not selling a commodity unless they want to and they can address this by adding value to their products.

Though I agree with this in principle, is it not the case that with retailers adding value to own label products and buying at ‘near cost’ prices they are driving down the overall market value in many categories?

In the stationery market for example, major retailers are purchasing from the Far East, adding many features which are created using cheap manual labour and shipped in bulk. Major brands focus on sustainability of paper sources, quality and other valuable features but cannot hit the price-points to make the products viable in this environment due to the actions of the trade. It becomes more and more difficult for the brands to compete with own label offerings. So Seth’s comment that we are choosing to sell commodities as we aren’t adding enough value to products is not necessarily the case.

Are retailers and other intermediaries not damaging the long term value of their markets?

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Entry filed under: Marketing, Office Products Market. Tags: , , , .

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