By analyzing more than 30 real-life examples from companies including Dell, Harley-Davidson, Geico, Sears, and Zara, D’Aveni shows the three most common and damaging “commodity traps” companies can fall into: deterioration, where a low-cost competitor makes it next to impossible for a company to compete; proliferation, where rival businesses create new price-benefit positions and fragment the dominance of a company’s product; and escalation, where lower-cost products are rolled out with new benefits at a lower price.
In his book, D’Aveni provides a framework to help companies develop win-win solutions to combat price wars and product-segmenting competition. In each chapter, he shares how proven commodity trap tactics works for a range of companies. “By improving their power over real prices, firms can actually beat their commodity trap rather than simply trying to outpace it,” D’Aveni states.
Well, commoditization can happen to any business or product, even the most iconic – constant business model innovation can help not so much in breaking the cycle, but in finding ways to escape the traps.