In business and economics, commoditization is the process by which goods which were previously differentiated by brand name or uniqueness come to be viewed by consumers as generic items differentiated only by price, in other words, a commodity.

Basically, you know a product has become fully commoditized when quality and reputation is relatively consistent across all brands, to the point where people don't care at all which brand they buy.

Commoditization is strongly associated with extremely thin profit margins, as barriers to entry fall or vanish and intense competition leads from monopolistic competition toward something like perfect competition.

Commoditization is a natural tendency of markets and industries as they become mature. However, sometimes it is possible to reverse the flow, although usually only briefly. The opposite of commoditization is "differentiation." The reigning champions of differentiation are the folks at Apple Computer, who recently differentiated the highly commoditized cellphone market with the iPhone, and are now looking to do the same with the even more highly commoditized market for televisions.

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