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what is the difference between Physical product and Commodity product?

former_member671720
Participant
0 Kudos

Hi,

can you please explain the difference between Commodity & Non-Commodity Products and
how it is different from a Physical Product?

Thanks
kishore

Accepted Solutions (1)

Accepted Solutions (1)

CiaranHarron
Employee
Employee

Hi,

A commodity is a product where there is no differentiation with the competition other than pricing. If you take utilities as an example, two utilities are selling the same commodity energy services measured by kWh and there is no differentiation between utilities providers other than pricing.

Non-commodity products on the other hand have some added value. For example a utilities provider may offer a mobile app to monitor consumption in the home, adjust temperature remotely, switch on/off lights, heating, AC, etc. That may be a value added service that differentiates against competitors so they can price this separately.

Another example of a non-commodity could be lighting as a service where the utilities company bundles the lights, bulbs and energy consumption into a single price with no upfront costs. There might be different packages depending on the type of lights offered to the customers.

Typically for non-commodity products and services, there needs to be more flexibility on pricing.

Hope this makes sense

Ciaran

Answers (0)