In general, the transformation of goods, ideas, or services, that are not normally viewed or considered goods, into a commodity. That is, when a product becomes difficult or impossible to tell apart from other similar products, and therefore consumers buy on price alone without consideration to any other aspect, it transforms into a commodity. More broadly, commoditization occurs when the market of branded products becomes a market of undifferentiated products.

In economics, commoditization implies the assignment of economic value to something that was not previously considered to have economic significance or existence (see commoditization in economics).

Commoditization is also sometimes used to indicate commodification, though the latter was mainly used in the Marxist political theory to describe the process of bestowing upon something an economic value, whilst the former is principally used in business theory to denote the movement of a market from differentiated to undifferentiated price competition and from monopolistic to perfect competition.

In financial markets, commoditization occurs when illiquid financial contracts are adjusted or modified so as to expand the scale or volume of trading, consequently rendering the market more liquid (see commoditization in exchanges).