Commoditization

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Commoditization – noun – /kəˌmädədəˈzāSH(ə)n/ 

  1. the action or process of treating goods or products like a mere commodity.
  2. the process in which, over time, a good or product becomes less and less distinguished from similar/competing goods or products.

Commoditization Explained

Commoditization, or commodification, refers to the slow-moving process whereby any good, product, or service becomes fungible amongst similar and or competing goods, products, or services. The first step toward commoditization is differentiation. Taking the cannabis industry as an example, differentiation causes a wide range of quality and price when it comes to marijuana products. Some cannabis products are so much stronger than others that those who produce them can fetch a higher price in the marketplace. Eventually, as more and more qualified participants enter the marketplace, competition and standardization will lead to declining profit margins, and a smaller range in terms of differentiation…therefore, commoditizing cannabis.

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