What is the Difference Between Commodity and Product?
🆚 Go to Comparative Table 🆚The main difference between a commodity and a product lies in their definitions and stages in the production process. Here are the key differences:
- Commodity: A commodity is a raw material used in the production process to manufacture finished goods. It is a basic good that serves as an input in the production of goods and services. Commodities are often found in early stages of production and can be grown, extracted, or mined. Examples of commodities include crude oil, wheat, copper, gold, and coffee beans.
- Product: A product is a finished good sold to consumers for consumption. It is the result of the manufacturing process that transforms commodities into everyday goods. Products can be separated, and value can be added by the manufacturer through promotion and advertising. They are sold at a price that reflects their added value.
In summary, commodities are raw materials used in the production process, while products are the finished goods sold to consumers. Commodities are typically found in the early stages of production, while products are at the final stage of the production process.
Comparative Table: Commodity vs Product
Here is a table highlighting the differences between commodities and products:
| Feature | Commodity | Product |
|---|---|---|
| Definition | A commodity is a raw material used in the production process to manufacture finished goods. | A product is a finished good sold to consumers. |
| Differentiation | Commodities are typically interchangeable and have little differentiation across producers. | Products can be distinguished by their quality, features, and sometimes branding, varying depending on the manufacturer. |
| Value Addition | No value is added to a commodity, which can be grown, extracted, or mined. | Value is added to products during the production process, and they can be sold at different prices based on their features and quality. |
| Production Stage | Commodities are in the early stages of production. | Products are in the final stage of production. |
| Trading | Commodities are traded on exchanges through futures contracts, stocks, and ETFs, and can also be bought and sold in their physical states. | Products are sold on the market for consumption by the average consumer and can also be found in stores. |
In summary, commodities are raw materials used in the production of finished goods, while products are the completed items sold to consumers. Commodities are typically interchangeable and have little differentiation, whereas products can be distinguished by their quality, features, and sometimes branding. Value is not added to commodities, but it is added to products during the production process. Commodities are typically in the early stages of production, while products are in the final stage.
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