Beating the Commodity Trap

THREE

The Proliferation Trap

How to Manage Multiple Threats to Your Competitive Position

Proliferation, the second commodity trap, appears when new price-benefit positions proliferate, surround, and erode a product’s value proposition by targeting smaller segments of the customer base. With the fragmentation of markets and new, more focused business models, competitors can target narrower segments or use substitutes that serve some of the same customer needs. Where there once were a few broad positions, there are now many narrower ones. Rivals use these new positions to slice away slivers of the market of broadly positioned incumbents.

It is ironic that extreme differentiation results in commoditization. But as firms produce many products that ...