Ask HN: What can prevent a product to become a commodity?

1 point·skdotdan··5 comments

Network effects is a well-known effect that can prevent a product to become a commodity.

Are there other similar effects? Is there any systematic way to think about them? Any well-known theory or resource (books/blogs)?

I'd say it would be useful to have basic knowledge about this topic, for both investing or discarding business ideas. In my case it's just for the sake of curiosity.

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There's some mystery in this, according to Warren Buffett. He knows that breakfast cereals aren't commodities - they can charge a premium, and stay in business profitably for decade after decade. But most of the other goods in the same supermarket are much closer to commodities. He isn't sure why. (Maybe it's cause we find it difficult to make decisions in the morning and so become captive to habits then, but not at suppertime?)

(Yes, IP is a way to escape the commodity trap, too: but not suitable in most cases. File IP under "nice work if you can get it," because almost always it's rather easy for others to work their way around your IP. Even with patents - it's an intentional feature of the patent system that others be allowed to find and use their own methods to accomplish what you just showed can be done.)

Thank you for your answer. Do you have the original source of Warren Buffet saying this?

might be because cereal is more of a family/kids decision versus say laundry detergent or lunch which is more of a shopper decision.

Trademark

Patent -

Trade secret - coke, pepsi

Manufacturing Scale - intel, cars, etc.

patent/trademark combination - patent an idea and market it with a trademark

Great list. Thank you for your answer.

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