Interesting, but incomplete

Whether your business is mobile handsets, financial services, apparel, telecom services or any other, the spectre of commoditisation stalks every category. So it is with some anticipation that one opened this book, whose very title sounds like an answer to your prayer: Beating the Commodity Trap.

The book has real-life stories that offer interesting perspectives on this problem such as work on restaurants in New York and with Primo, a Fortune-500 manufacturer of industrial materials. The book also offers other not-soobvious insights: "...to make escalation work... relentlessly reduce your cost before reducing your prices." Advice that the Indian civil aviation business would do well to heed!

Sometimes, though, the advice is contrary to the title, involving capitulation. So, describing changes in the hotel industry, Richard A. D'Aveni, Professor at the Tuck School of Business at Dartmouth, US, says, "...the majority of entrants in the late 1990s and early 2000s... are aimed at the upper end of the midscale to the lower end of the upscale market." It is difficult to understand who exactly is being targeted in this word-play with undefined points such as 'lower end', 'upper end' and 'mid-scale'.

Or, on IBM trying to face the commoditisation created by Dell, he writes: "...IBM took a different approach...( it sold) its personal computer business to...the Chinese manufacturer Lenovo." There is an element of oversimplification regarding the basic tool used by the author: Price-benefit trade-off analysis, which plots the price of various players against the 'primary benefit' of the category.

Consider some of the 'primary benefits' mentioned. In artificial sweeteners, it is equated to 'multiples of sugar's sweetness', in restaurants it is called 'customer experience' (how do you plot this on a line?) and in the case of the Apple iPod, where the brand itself is treated as a 'category', and its own versions plotted, the primary benefit is described as "multifaceted functionality combining...storage, software, content, sleek design and features".

Using such wide-ranging descriptions to force-fit a single price-benefit line makes the exercise academic rather than practical. The same academic distance from reality comes up in the categorisation of commoditisation into three types of traps. Deterioration, where prices are driven down along with benefit delivery by one player and everyone is forced to follow; Proliferation, where prices and benefits go up or down, and different players at different price-benefit points 'surround' a company's products; and Escalation, where the prices go down, even as the benefits improve (as in consumer electronics.)

This is fine in theory, but what about the real world? In the mobile handsets market today, all these are happening simultaneously! There are brands that are pushing down the price, others that are showing proliferation characteristics and others that are escalating the game!

One would have expected more actionable and proven approaches from an author with D'Aveni's credentials. There's this apocryphal story about Nike founder Phil Knight and his athletics coach. Knight asked him: "What should I do to improve my timing?" and he was told: "Run faster". A smart quote for the soft board, but not of much practical utility.

— The reviewer is CEO, Chlorophyll Brand & Communications Consultancy.