On Thu, Jul 9, 2009 at 12:36 PM, Gruss Gott<[email protected]> wrote: > I won't get into the definitions argument of "commodity" (btw, the > airlines don't consider their services a commodity and by historical > definition, given it's a service, its not). > > But assuming we can define services as commodities, for example an > economy class flight to miami is mostly the same, how is knee surgery > different?
You are correct that a commodity has historically referenced a physical good, not a service. More generally, however, it references the notion that two lots can of similar things can be swapped without need of differentiation. A metric ton of yellow corn #2 from Iowa is treated the same as a metric ton of yellow corn #2 from Ohio. There may be some individual differences, but most people honestly don't care about them and they are treated as the same as far as the market place is concerned. >From that stand point, most air travel is a commodity. If I am doing leisure travel and have to get from Portland to NYC, a flight of roughly the same length from Delta is largely indistinguishable from one from United. Airlines try to make their offerings less of a commodity when they can, hence the aggressive pursuit of rewards programs. Those programs exist because airlines know that their offerings are commodities and so they try to encourage brand differentiation and loyalty through kickbacks. Given 3 competing flights all roughly 7 hours, I'm going to take the one that is cheapest. That's why it is difficult for one airline to raise fares without the buy in of other airlines. One will raise fares, wait to see if the others follow suit, and if they do not, the price usually drops back down. Why? Because it is a commodity and a substantial portion of buyers don't care which airline they fly on. Healthcare is substantially different. I'm not afraid to fly, say, Delta because they are a brand new business with a poor safety record. All the airlines are fairly similar in those regards. A knee surgery, on the other hand, is something where the training, talent, experience and judgment of the physician comes into significant play. The characteristics of an individual physician has the potential to strongly differentiate themselves from other physicians in terms of the service they offer and the quality that they provide. That is not true of, say, airlines. Judah ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~| Want to reach the ColdFusion community with something they want? Let them know on the House of Fusion mailing lists Archive: http://www.houseoffusion.com/groups/cf-community/message.cfm/messageid:299728 Subscription: http://www.houseoffusion.com/groups/cf-community/subscribe.cfm Unsubscribe: http://www.houseoffusion.com/cf_lists/unsubscribe.cfm?user=89.70.5
