In business literature, commoditization is defined as the process by which goods that have economic value and are distinguishable in terms of attributes (uniqueness or brand) end up becoming simple commodities in the eyes of the market or consumers.
Hence, the key effect of commoditization is that the pricing power of the manufacturer or brand owner is weakened: when products become more similar from a buyer's point of view, they will tend to buy the cheapest.
This is not to be confused with commodification, which is the concept of objects or services being assigned an exchange value which they did not previously possess by their being produced and presented for sale, as opposed to personal use.
In social sciences, particularly anthropology, the term is used interchangeably with commodification to describe the process of making commodities out of anything that was not available for trade previously.
According to Neo-classical economic theory, consumers can benefit from commoditization, since perfect competition usually leads to lower prices.