When consumers do not perceive any differentiation between competitive offerings, we call them commodities. Here one product offering is just like another in a particular product category. Generally, food items such as milk and vegetables or raw materials are iron ore or bauxite come to the mind. Maybe, there are quality differences, but when specifications are given, one milk bottle is just like another milk bottle.

Commodities are bought on the basic of price or availability. They are not purchased on the basis of the manufacturer’s name , or the brand name. Petrol is sold as a commodity, based on price and some promotions like mileage points to ensure repeat purchases.

A commodity can be converted into a brand. This starts with value add-ons like packaging and promotion. Similarly, brands, tend to get back to the commodity status if the marketing assets base is allowed to erode.

Brands and commodities are distinguished on the basis of added values. A brand represents more than the summation of its components. It has some additional attributes for the buyer which may be either real or perceived. Mostly, these added values are emotional values. A product acquires these values by a particular marketing mix of product, price, promotion and place. A particular mix helps in developing a position of the product in the mind of the consumer. Commodities, being undifferentiated, occupy virtually identical positions, and thus are substitutable. A well-positioned brand is difficult to substitute.

The core product represents the tangible features of the product, and can be copied. The augmented product made by added values called product surround differentiates it.

The larger the product surround as compared to the base product, the greater is the differentiation from the competitive product.