How Value Chains Mature – The Dangers of Creeping Commoditisation

Many organisations are dealing with the issue where parts (all?) of their market-place are commoditising, i.e. where the customer perceives the product/service they are purchasing is sufficiently understood by them so that the decision as to which one, independent of any technical or expert help where key benefit attributes like quality, reliability and availability can be taken as given, can be made on price.

What many organisations don’t realize is their own unconscious role in accelerating their own journey into ‘commodity hell’. One of the major faults organisations make is not understanding how value chains mature, so not employing the appropriate strategies at the right time.
What is your market place(s) at present?

Key Questions
  1. After establishing the current stage of maturity, what competitive strategies are you going to deploy?
  2. If the market is normalised and mature, commoditisation traits will be evident. To combat this, how can you create new forms of competitive advantage? Is lowest cost producer status available to pursue? How do you build different value propositions that increase the customers need for your expert advice and help?
  3. If your value chain is more immature you have the opportunity to slow its maturity through constant innovation focused around beneficial customer centric change.
Taking a strategic approach to how you compete in your market-place, and pro-actively choosing how you propose to compete in the future is critical if you are going to avoid being pulled into selling commodities.