No Such Thing as a Commodity Product

January 26th, 2016
Steven Howard

You can differentiate any product or service

Product differentiation is a marketing technique that can be applied to any product or service offer.

It is my deep-seated belief that there is no such thing as a commodity product….there are only products that are marketed like commodities.

Remember: Customers do not buy products — they buy solutions. One way to differentiate your product is through the way it provides solutions. Another is through the “total customer experience” that it provides.

One of the best marketing articles I ever read came from the global consultants Booz Allen & Hamilton, and was titled How to Brand Sand. It gave a case example of a company that turned sand into silicon, gave it a brand name, and captured a huge portion of its market by becoming the industry standard….even though the characteristics and technical specifications of the product were no different than the other silicon products offered by competitors.

One of my favorite marketing stories is about a sales person at Ciba Specialty Chemicals who was selling pigment to a paint manufacturer in Taiwan.

Now the pigments that go into paint are about as close to a commodity product as one will find.

These pigments are sold within the industry in 30 kilo bags and shipped in large palletized lots. The salesman found out that his customer was using 75 kilos of this particular pigment in every batch run. Thus, the customer was using 2½ bags of the pigment, which meant that half a bag needed to be stored somewhere until the next batch run.

The salesman worked with Ciba’s bag manufacturer, and his own internal manufacturing and shipping people, and learned that it was possible to have 25 kilo bags made and palletized.

Now, for this particular customer, Ciba ships this pigment in 25 kilo bags and the customer no longer has to measure out half bag allotments nor store half bags of pigment.

The result: Ciba Specialty Chemicals now has almost 100% customer share with this particular customer because they found a way to meet the individual and specific needs of their customer with a unique solution.

Through an innovative packaging technique, Ciba found a way to differentiate paint pigment.

Surely you can find a way to differentiate your own products and services.

 

Key Point: there is no such thing as a commodity product — there are only products that are marketed like commodities.

Taking Action: describe the “total customer experience” for your products. How does this differ from that of your competitors?

Where are the opportunities to differentiate your product in a way that such differentiation is meaningful to your customers? Can this differentiation be made in packaging? Product enhancements? Facets of delivery? Your sales terms and conditions?

Does your staff believe you are selling a commodity or that you’re in a commodity industry?

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