If you’re selling a commodity, blame your branding

Do you find yourself struggling with sales because purchases come down to price? Does proving the value of your product or service feel like a losing battle? If you’re honest with yourself, are your competitors’ products almost equal to yours? If this sounds familiar, your business may be in danger of becoming a generic commodity.

A lot of us think that we can’t be a commodity business because we command a high price point or deliver a service instead of a product. If only it were that easy.

The Starbucks story is an old tale, but let’s view it from a different perspective.

Coffee was once a well-known commodity. You bought it at the grocery store or you grabbed a cup at a diner. Maybe you added cream and sugar, but nothing differentiated one cup from another.

Then Starbucks made an experience out of coffee with choices, atmosphere and baristas. Coffee was elevated to a luxury item at a premium price. That was the big story 20 years ago. But now, in every market across the country there is steep competition providing the same product. Coffee has become a commodity again.

The point is, if your customer thinks you are equal to your competitors, you are. And they’re not going to choose your brand if your competitor is cheaper, faster or more convenient. That’s how commodities work.

Avoiding the commodity trap isn’t easy, but it can be done with clarity, innovation and strategy.

Let’s start with clarity

Begin by listing your offerings and related competitors. Remember, competitors aren’t always obvious. For example, you might assume Home Depot’s biggest competitor is Lowe’s, but for many homeowners, the decision is DIY, do-it-yourself, versus hiring a contractor.

The “let’s do this” campaign was a result of recognizing this nontraditional competitor and targeting homeowners who wanted to save money, but weren’t sure if they could do it themselves.

Once you have your services and competitors figured out, be honest about what is most relevant to customers.

For each competitor, identify the things you do better. Maybe it’s personal service, being eco-friendly or quality. Whatever you determine, make sure you can back it up with provable facts, not just internal biases. When your assessment is complete, you’ll start to see where you consistently differentiate from others.

Here’s a local example.

Intereum, a Minneapolis-based office furniture dealer, hired our firm to elevate its brand. Through an assessment process, we discovered the industry had a commodity problem. Sales were often won or lost on price.

Intereum decided it had to change the conversation.

As the only certified Herman Miller dealer in Minnesota, Intereum had more data about workplace environments and worker trends than its competitor. It also had a trademarked process to design smarter, more efficient office spaces and offered technology as part of the solution.

Once the strengths were clear, it was easy for Intereum to stop focusing on furniture sales and start focusing on its ability to transform office spaces and office culture—a service that was more meaningful (and valuable) to customers.

On to innovation

Once you’ve identified your strengths, it’s time to push things even further. That might mean being more distinct, narrowing your focus or completely changing the game.

Being distinct is essential.

You need to do what competitors won’t do and own it—because having a smaller, more loyal customer base is more valuable than a large un-loyal base. The trick is to do it in a way that appropriately reflects your brand.

Take for instance Cards Against Humanity and its provocative card game containing the most un-PC phrases you can imagine—not a game you would play with Grandma. However, by targeting an audience that shares a love of crass humor, the game has generated a loyal following.

The company is famous for its Black Friday antics.

Last year, it sold “nothing” for $5 a pop and raised $71,145 because fans thought it was funny. Cards Against Humanity is not trying to be all things to all people. Instead, by using niche marketing it has avoided commodity status and created profits.

If your marketplace is overly saturated, you may need a more drastic change.

Let’s go back to coffee. Green Mountain Coffee realized incremental product improvements wouldn’t be enough to beat out the Starbucks experience. So it started by exploring the process of buying a single cup of coffee—analyzing the benefits (customized, personal, full-service) and identifying the drawbacks (costly, requires travel, inconsistent).

The outcome was a fresh idea to evolve the product into a single-cup, at-home gourmet experience. The Keurig K-Cup was born and Green Mountain Coffee had created an entirely new marketplace to sell its beans.

Once you’ve figured out what’s special about your business, you need to establish a brand strategy.

Map out where you’re going (your goals), how you plan to get there (your strategy), and what you will do to accomplish your goals (tactics and channels).

Then, support your plan with a consistent visual system, meaningful customer touchpoints, and internal training that gives employees the tools to promote your brand and understand its importance.

Ready to get started?

Shifting from a commodity mentality to something unique doesn’t happen overnight. But you can start today. Ask yourself these questions:

  • What can we do that no one else is doing in our marketplace?
  • How can we invest to take our unique offerings to the next level?
  • How can we promote our product or service for a new use or in a new context?
  • What new marketplace can we create to change the game and stop competing with other commodities?
  • What can we do to uniquely connect with our most valuable customers?
  • Are our employees equipped and trained to be advocates for our brand?

Then take action to move away from the commodity pricing wars and toward a sales process based on clear brand value.

Contact:  Diana Lillicrap is co-owner of 5 by 5 Design in Minneapolis, a strategic marketing, graphic design and creative communications firm: 952.233.3735; diana@5by5design.com; www.5by5design.com.

Diana Lillicrap

5 by 5 Design Inc.