Question

What is the difference between a commodity and a brand? Define and give an example of each.

Answer 1

The difference between a commodity and a brand is as below:

1. Connect: Brands connect with their customers based on emotions. The example can be superior customer service experience, product experience and problem-solving. However, the commodity connects with the customer through price only.

2. Visibility: The brands provide visibility to their customers based on their size and equity. However, a commodity does not provide clear visibility as it is a standardized product. So commodities, as compared to brands are considered invisible.

3. Promise: Brands provide a long term promise for quality and performance. However, the commodity provides a short term utility only. This is the reason the customers are willing to pay a premium for a brand but not for a commodity.

Example:

1. Brand - Apple

Commodity - Smartphone

2. Brand - Starbucks

Commodity - Coffee

3. Brand - American Express

Commodity - Credit card

4. Brand - Nike

Commodity - Clothing