What is a commodity?

A commodity is a type of product that, by its nature, cannot be substantially differentiated from competitors.

Characteristics and Evolution of Commodities

Commodities include products that cannot be enhanced with packaging, special communications, or simply cannot be advertised in a particularly unique way.

They are products that vary mainly in the price placed on the market.

Some examples of these products are commodities and cannot be presented differently. Consider oil, sugar (except in rare cases), or wholesale grains and meats and products of this type.

Others, however, have moved out of the rigid dynamics of commodities to enter more competitive markets even at the level of communication and marketing mix.

Consider coffee, which used to be a commodity but has now become a mass consumer product with intense competition among brands that use packaging and the most unique communication possible as strategic weapons to outperform one another.

The main characteristic of these products, which cannot differentiate themselves from other competitors, is the battle on price. In the case of oil, for instance, there are third-party entities that limit this war and thus standardize producers to minimal variations. Here we are talking about the Organization of the Petroleum Exporting Countries (OPEC).

Commodity approach and consumer approach

In the early 1960s, commodities were distinguished into three types (reds, yellows, and oranges) that differed based on the frequency of repurchasing a particular good.

In the following years, however, there will be a tendency to give more importance to consumer purchasing behaviors rather than the intrinsic characteristics of the products themselves.

Products that are part of commodities are still important for some sectors and, very often, as seen in the case of oil, are regulated by external entities to limit speculation on their prices.