Richard A. D'Aveni, Professor of Strategic Management

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Beating the Commodity Trap

Beating the Commodity Trap

Beating the Commodity Trap

"A challenge every company must face."

- Financial Times of London and the Los Angeles Times

Commoditization—a particularly virulent form of hypercompetition—is destroying markets, disrupting industries, and shuttering long-successful firms. Conventional wisdom says the best way to combat commoditization is differentiation. But this strategy is difficult (and expensive) to implement, and it keeps you ahead of the pack only temporarily.

In Beating the Commodity Trap, Richard D’Aveni provides a radical new framework for fighting back. Drawing on an in-depth study of 30-plus industries, he recommends first identifying the commoditization trap you’re facing. He describes three:

Deterioration: Low-end firms enter with low-cost/low-benefit offerings that attract the mass market—as Zara did to high-end fashion companies.

Proliferation: Companies develop new combinations of price paired with several unique benefits that attack part of an incumbents’ market—as Japanese motorcycle makers did to Harley-Davidson.

Escalation: Players offer more benefits for the same or lower price, squeezing everyone’s margins—as the iPhone did in mobile devices.

The author provides a tool for diagnosing your competitive position and shows how to improve it while also increasing your pricing power—by destroying the commoditization trap confronting you, escaping it, or even turning it to your advantage.

Illustrated with a wealth of examples, this concise, practical guide gives you the framework and tactics you need to battle commoditization.

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