Glossary entry (derived from question below)
English term or phrase:
more of a commodity
English answer:
a staple product, like sugar or milk, which is unlikely to be differentiated by brand
Added to glossary by
alen botica (X)
Aug 20, 2006 22:13
18 yrs ago
English term
alen botica (X)
more of a commodity
English
Bus/Financial
Management
management/merger
Does the phrase mean the product is becoming an expendable or... or better yet, in what way something that becomes "more of a commodity" can be having (plummeting) negative connotation...
taken from the following paragraph...
In its conversations with customers, the firm learned that while the market for yogurt in Latin America was indeed growing, profitability was plummeting because the product was becoming more of a commodity. Bridgepoint concluded that this decline in profitabilty was irreversible, because both the company's customers and their customers proved unlikely to tolerate increased prices. Again, this downward trend boded ill for FruitCo.
...
(In Croatian)
U svojim razgovorima s klijentima, tvrtka je doznala dok je tržište za jogurt u Latinskoj Americi doista bivalo sve veće, profitabilnost je padala jer je proizvod postajao..... Bridgepoint je zaključio da je ovaj nazadak u profitabilnosti bio jednosmjeran i to zbog toga što su oba klijenta tvrtke i njihovi klijenti pokazali kako će malo vjerojatno trpjeti podizanje cijena. Opet, dalo se naslutiti da će ovaj negativan trend biti loše po FruitCo.
taken from the following paragraph...
In its conversations with customers, the firm learned that while the market for yogurt in Latin America was indeed growing, profitability was plummeting because the product was becoming more of a commodity. Bridgepoint concluded that this decline in profitabilty was irreversible, because both the company's customers and their customers proved unlikely to tolerate increased prices. Again, this downward trend boded ill for FruitCo.
...
(In Croatian)
U svojim razgovorima s klijentima, tvrtka je doznala dok je tržište za jogurt u Latinskoj Americi doista bivalo sve veće, profitabilnost je padala jer je proizvod postajao..... Bridgepoint je zaključio da je ovaj nazadak u profitabilnosti bio jednosmjeran i to zbog toga što su oba klijenta tvrtke i njihovi klijenti pokazali kako će malo vjerojatno trpjeti podizanje cijena. Opet, dalo se naslutiti da će ovaj negativan trend biti loše po FruitCo.
Responses
+4
5 hrs
Selected
a staple product, like sugar or milk, which is unlikely to be differentiated by brand
In this context, the consumer is unlikely to pay more for a particular brand of yogurt because it is perceived as a basic product which is similar from manufacturer to manufacturer. Thus the consumer is likely to buy the cheapest yogurt available.
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Note added at 21 hrs (2006-08-21 19:41:35 GMT) Post-grading
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The reason the profit drops is that the manufacturers must compete by lowering the price as there is no other incentive that they can offer the customer. A commodity is not like an automobile that can compete by style, prestige or horsepower. Since the customer regards all the competing products as equal, price is the only factor which distinguishes the brands. To stay competitive, all the manufacturers must lower their prices, ruining pfofitablity for all of them.
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Note added at 21 hrs (2006-08-21 19:41:35 GMT) Post-grading
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The reason the profit drops is that the manufacturers must compete by lowering the price as there is no other incentive that they can offer the customer. A commodity is not like an automobile that can compete by style, prestige or horsepower. Since the customer regards all the competing products as equal, price is the only factor which distinguishes the brands. To stay competitive, all the manufacturers must lower their prices, ruining pfofitablity for all of them.
4 KudoZ points awarded for this answer.
Comment: "i guess that means the product, specific kind of product, becomes popular or a main commodity and thats why the profits might plummet because competitors' products are also available as a diversity"
32 mins
Roddy Stegemann
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subject to greater competition
Other suppliers have entered into a market that was one held by a sole supplier.
+2
18 mins
less of a luxury product/more of large-scale distribution product
I think that the implication is that because the market has grown margins have been driven down by competitive or market forces, and so the product has become less profitable.
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Note added at 35 mins (2006-08-20 22:49:39 GMT)
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Sorry, that should be "more of a large scale distribution product".
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Note added at 35 mins (2006-08-20 22:49:39 GMT)
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Sorry, that should be "more of a large scale distribution product".
Note from asker:
| thx cordially |
Peer comment(s):
| agree |
Can Altinbay
12 mins
|
| neutral |
Roddy Stegemann
: In economics luxury goods and necessities are considered opposites, and their classification is defined by their elasticity of demand -- not supply.
19 mins
|
| agree |
ErichEko ⟹⭐
: Yes, more like a mass, machine-made product than hand-made, customer-specific product. This can have negative connotation for products considered exclusive, such as Ferrari sport car.
22 mins
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