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You and your competitors are always competing on price.

Each of you is trying to sell the exact same products to the same people. You’re working with lower and lower margins. If this sounds like your company you might have a commoditized product offering and business can be a struggle. It used to be that only raw materials, like wheat or paper pulp were considered commodities, but things have changed.

When the product you offer is no different than that of your competitor you are selling a commodity product. When there is no discernable difference between you and the other guy, then you will be competing on price and availability.

Today's Commodities

Here are some examples of products that would be considered commodities today. Electronics, TV’s and large appliances are perfect examples of commodity products.

IMAGES: Today’s commodities are varied amongst many industries.

 

Consumers can shop online or in-store and compare exact models and pricing across a huge span of retailers. Other commodities are branded consumables like those carried by distribution type retailers – liquor stores, hair salons, pharmacies, grocery stores and such. When we think about liquor stores, we all have several of them around where we live so there’s lots of availability. Now it might be just down to price, as many liquor retailers stock much of the same product.

So how do you stop competing on price at the retail level? Differentiate

Give your customers more factors to consider within the sale. It is important with any product or service, but it’s critical when it comes to commodities. Differentiation creates choice beyond price and availability. Building a differentiated brand ads value and helps your customers choose you over your competitors. That’s how much differentiating your company through brand matters.

The Starbucks brand de-commoditized the coffee market.

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They replaced the fifty-cent cup of joe with a high priced coffee that could be customized. This is their differentiation. Yes, they still offer plain coffee but most of their customers want it just the way they like it. “I’ll have a Grande, no fat, extra sweet cappuccino, to go, please.” They have escaped the commodity trap and you can, too.

Read more ways to tackle commodity products and create a unique, differentiated brand. See our article entitled: 5 Ways to Differentiate With Commodity Products

 

 

 

hayley-blog-imageHayley Ballinger, Principal & Creative Director.
Hayley has a passion for asking the questions
that reveal buried opportunities. 

 

 

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