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Difference Between Commodity and Product

October 14, 2012 Posted by Admin

Commodity vs Product
 

Commodities and products are similar to each other, in that, effectively they are both products that are sold to achieve business goals. However, commodities and products differ in their characteristics, prices that can be charged, and target audiences to which they are sold. In today’s extremely competitive marketplace, it is essential to understand the difference between commodities and products and how products are differentiated by companies to compete efficiently in a particular industry. The following article provides a clear overview of the difference between commodities and products and outlines the differences between the two.

What are Commodities?

Commodity refers to a generic form of a product that is very basic and undifferentiated. Examples of a commodity include sugar, wheat, copper, bio fuels, coffee, cotton, potatoes, etc. A commodity is a product that cannot be differentiated because every commodity is equal to each other and cannot be separated out. For example, copper is a commodity as it is impossible to differentiate between metals such as copper as they are all equal. However, certain items that are made out of copper such as electrical stereo systems are products since they can be differentiated by brand, quality, sound system, etc. It is important to keep in mind that, since commodities cannot be differentiated from one another, the price charged for commodities will be equal universally.

What are Products?

A product, on the other hand, is different to a commodity in many ways since products can be differentiated in terms of look, feel, smell, quality etc. For example, coffee beans are a commodity and cannot be differentiated. However, drinks made using coffee beans such as coffee lattes and cappuccinos, coffee mochas etc. are products since they are different to one another in terms of taste, quality, and brand. The prices charged for a product will also vary because they can be differentiated and more value can be added. Products can also be sold under a number of brands as they are different to one another. For example, coffee beverage brands include Starbucks, Gloria Jeans, Dunkin Donuts, etc.

Commodity vs Product

Commodities and products are similar to each other in that a product is a glorified, value added, and differentiated form of commodity. However, there are a number of differences between the two. Commodities are products that cannot be differentiated and, therefore, are sold at the same price universally. Products, on the other hand, can be differentiated so that value can be added, and can, therefore, be branded and marketed to be sold at different prices depending on the differences in quality. Another major difference between commodity and product is that, commodities are sold usually from business to business to be used as raw material, to manufacture differentiated products. On the other hand, products are sold to consumers who are consistently looking for differentiated products that are better in quality, style etc.

Summary:

Difference Between Commodity and Product

• Commodities and products are similar to each other, in that, a product is a glorified, value added and differentiated form of commodity.

• Commodities are products that cannot be differentiated and, therefore, are sold at the same price universally.

• Products, on the other hand, can be differentiated so that value can be added, and can, therefore, be branded and marketed to be sold at different prices depending on the differences in quality.

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Filed Under: Marketing & Sales Tagged With: commodity, product

About the Author: Admin

Coming from Engineering cum Human Resource Development background, has over 10 years experience in content developmet and management.

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