Marketing from commodity status – Understanding, Innovation & Inbound

Dave Kaupp | Sep 25, 2012

If they say it, must you agree?

What really constitutes a "commodity" product or services and how this might be defined in the context of your company's business strategy? If you see your business falling into this definition, here are several ways to market, change perceptions and your business beyond just a "commodity" sell.


Innovation Google


Price, Price, Price…NOT a problem.
Dyson vacuums entered the US market long after the former market leader, Hoover, had deemed vacuums a commodity product and priced itself into a market-bottom pricing strategy. Dyson now owns more than 21% market share in the US (to Hoover's 15%), selling vacuums in the $300 - $500 range (to Hoover's $75 vacuums). Consider price as only part of the equation.

Develop differentiation based on competence.
Gillette, Cisco Systems and even Google (even though search is "free") leverage public relations and customer education to increase market share and profit margins. Competence-based or thought-leadership marketing, based more on what you think and say than what you make and sell, makes it more desirable for your customers to buy from your firm.

Understand your customers.
The most common response to my question "have you asked your customers what they want and why they buy from you" is a flat "NO." How can you say whether or not you're a commodity, competing on price alone, when you don't even know why your customers chose you in the first place? Get out and ask questions.

Segment, target and position.
Marketing 101 tells us to understand our customers, meaning from their perspective, inclusive of segmentation and targeting into distinct groups. Sometimes you might find that you may be doing business with the wrong customers. When you serve a market segment that values everything you offer as a company (including knowledge, competence, price and other tangibles) profits, loyalty and satisfaction flow easily. When dealing with a strictly 'economic' buyer, the rest of your value and differentiation is lost on them. Review your marketing focus yearly to ensure that you are still focused on the right customer, and make some hard decisions.

Conduct Research.
Customer knowledge is the key. Use phone and e-surveys as well as insights from internal sales people, distributors and channel partners. Make sure you gather a large enough sample from your audience to gain clear insights for differentiation. Identify the basis for differentiating your product from all similar products in its category. Analyze product features and product quality. Look at service and support systems. Determine if there are bundling or risk management factors that separate you from your competition. Visit your customer, with the clear intention of learning what they really think, and what their customers do and think regarding your product or service.

Segment your audience by industry and customer type.
Identify higher value customers and those with potential for becoming even higher value. They are the ones on whom you need to focus most of your efforts. If you need to reposition your brand for these segments then do so. Creating a powerful image for your brand and your messaging should be highly targeted, and relevant to specific customer and industry segments. Give customers emotional and rational reasons to buy.

Engage your sales team.
Activate channel marketing efforts. Restructure if necessary. Invest in training so brokers and frontline sales people can articulate the important differentiating factors that will motivate sales and build share.

Innovate wherever possible.
Innovation can help you add value and win back market share.
Yes, all of the above is indeed hard work. But it's not as hard as making a living as a commodity.

The key to changing status
Doing a search on almost any topic or area, using any of most large search engines and online directories available today, usually brings up a long list of choices. Unfortunately, most of them are just commodities or paid ads that interrupt the real search results you desire. The choices on the list come and go, and without them, people, at worst, have only to look for a different second choice in the search engines. That is why it is so critical to be able to quickly position yourself differently from all of the other options that appear. If you're not the Trusted Authority, you're just a commodity. You could disappear from the market place without it really affecting anyone's life. Obviously, it would be in your best interest to prevent this from happening! Content and Inbound Marketing can help you gain authority and increase your search rankings over time.

An alternative to being just a commodity is positioning yourself as the Trusted Authority in your field of enterprise. This means that you must build unequivocal trust in the people that constitute your demographic or are target customers. They need to understand that no matter how successful you become, you're always interested in serving their needs above anything else. Learning to focus your efforts on needs of others before needs that are more self-serving is the key. When people look at the goods and/or services you offer, they're not doing so out of concern for your bottom line but rather what that good or service can do for them. Most firms claim to focus on satisfaction of customer needs, but do they? …Really?

Becoming the Trusted Authority starts with adhering to the principles of totally committing yourself to your core competency, developing trust and building community through strategic content development. It also requires some skill at inbound marketing and positioning yourself as the authority in whatever field it is that you offer goods and/or services. If you don't learn how to do this, you are basically condemning yourself to second place, at best. When you do become the Trusted Authority, however, you can be sure that you have not only succeeded in the eyes of your customers but have also assured long-term financial success of your enterprise, which history has proved is much more important than fleeting short-term monetary gain. When you become the Trusted Authority in whatever it is that you do, you become something truly unique and very relevant to the search engines especially Google whose algorithm for search is primarily based on relevancy and authority only achieves through a properly planned inbound marketing strategy. You're not like the rest of the herd. You have more to offer than the average entrepreneur.

So do commodities still exist?
The old saying, “If it looks like a duck and quacks like a duck…..” doesn’t necessarily hold true! You could look like a duck but act like a goose! The more one looks at so-called commodities (anyone buy bottled water lately?), the more you'll find that “commodity” is generally a term in rhetoric only and often employed by companies who have lost the drive to innovate, engage in intelligent marketing or truly understand the value their customers require from them. Most commodities exist only in the mind of the misguided manager. Even products with stable sales, recognized names, differentiated marketing, and sales people who know how to sell competitive advantage are falling into the black hole of commoditization. In the long run, not even a toaster is really just a toaster.

If you're ready to innovate, think out of the box, create change that will drive your business and engage your customers then give us a call. We're Consilium Global Busines Advisors and we're here to help reinvent your business.