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What Part Do Commodities Play in the Market and in our Shopping?
Commodities are any goods or wares that are up for sale or
trade. These things include such things as food, furniture,
cars, or anything that is generally manufactured, sold or
traded.
Commodities are a part of life! We use them all the time! The
coffee on your cupboard, the cereals, the soap, the shampoo, the
toothpaste - all of these constitute everyday commodities.
The word commodity comes from the French word commodité. This
means 'benefit' or 'profit.' This too comes from the earlier
Latin word commoditas which refers to good quality or propriety.
The word commodité is related in meaning to the French word
biens. Biens means goods. Many people use goods and commodities
interchangeably.
Definition
As a business word, commodities are products that can in fact be
worth more to their owner if sold instead of used. For example,
you might have a large stock of canned goods that you won't be
able to consume before it expires. It would be better to sell
them off instead, since you would benefit more from the sale
than from just eating all of them.
In the business world, the most common examples of commodities
are oil, chemicals, raw materials, canned goods and other
consumer goods that are often bought or sold.
Originally commodities were things that had value. Commodities
had to be uniform in their quality and mass produced by
different entities to be considered as such. There is an
unwritten contract among these producers that their products
must be of such standard that they can be at least
interchangeably used to some degree. This allows the consumers
to, for example, to switch brands of flour when baking without
having to agonize too much over the brand of the flour product.
Let us take,
for example, producers of powdered milk. Although
they belong to different brands with different organizations and
process management, they will still be expected to produce a
powdered milk brand that is similar, in category. There will be
differences in quality, taste and some other attributes.
However, when you think of powdered milk, these products will
have to fit the bill.
Strictly speaking, commodities will often refer to wholesale or
brandless goods. This means that the commodities will come from
direct suppliers of these goods and do not go through the
process of marketing, and branding.
A good example of this is oil. The supplier in this case does
not matter. Oil is assumed to be oil, and that the use of such
should not depend on the supplier. That is why, in commodities
trading, once you've seen one barrel of oil, you've seen them
all.
Branding
Producers may want to have their products distinguishable from
other products. To do this, they employ branding. Branding is
the activities engaged to make a product, from a certain
producer, stand out from other products of the same kind. Taking
the milk example from earlier, we could give one of the
producers the name, Moo Milk. It could be told apart from others
because of its label, marketing, and container. It might differ
a bit from other products in quality.
This will most definitely increase the price of the goods. The
upside to this is that the particular product with the best
brand name and brand recognition is sure to get a better portion
of the market.
About the author:
David Arnold Livingston is a successful business owner and
entrepreneur. He recommends the resource: For Commodities
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