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Published by: saima jabbar on Oct 12, 2010
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The dictionary says that a commodity is "anything bought or sold.

" That's way too wide a definition for our use. In business, a commodity is a product or service over which the buyers have most of the influence when it comes to price. Mainly, this is because they see little or no difference between versions of this product or service as it's offered for sale. On the business side, if you're selling something that consumers see as a commodity, you have little chance of taking business away from your competitor because the only difference the consumer can see is price. Lack of other differentiation almost invariably drives down the selling price. That means you can't make a profit selling (what appears to be) the same damned thing as everyone else. The easiest differentiation is name. That's why you have Joe's Diner, Rita's Diner, Mel's Diner, etc. As long as the named person is some kind of celebrity, or is known by the intended customer in some capacity, then they have a chance at getting some of the business in that industry. But as soon as an "outsider" wants to purchase what you and your neighbors are selling, the name difference is negated. So calling your business "Joe's Web Hosting" will, by itself, get you no customers. We are programmed to look for differences. In a crowded field of competitors, setting yourself apart in some way is necessary. Ultimately, you are looking to create and direct your brand. Most people can't accurately define what a "brand" is. Most assume that a company's logo, or the proprietary typeface with which it's name is spelled is the "brand." Here's a concept most business owners don't seem to want to understand: A brand exists only in the minds of your consumers, potential consumers, competitors, peers and the public at large. You can try to create and influence your brand, but that's all. A brand is a shortcut in a person's mind. If I mention the name of a national burger chain (let's call it JesterBurger) to you, all the thoughts, memories and feelings you have about that particular place is the brand. Huge corporations try to influence your thoughts and feelings via advertising campaigns, store layout, customer service, and a million other interactions. If you are a hard-core vegan, your perception of any burger chain is likely to be negative, regardless of how positively they promote themselves, and how great your friends feel about eating there. There are essentially three levels of information gathering. For our purposes, we'll talk about Primary, Secondary, and Tertiary. Primary information source gathering consists of actually experiencing something (a product or service, in our case).

well. and how you're unique as compared to all your potential competition. The thoughts and feelings you have about JesterBurger after your visit are from a Primary source . your perception can be influenced by anything and everything during your Primary experience. Although JesterBurger has done everything they possibly can to positively influence your experience during your visit. Tertiary information comes from things like media stories.Secondary information source gathering is hearing about other peoples' Primary experiences.com has probably loaded their site with negative information. Your bad review to your friend is an example of a Secondary source.you actually went there and had an experience. A simple. they call it Buzz Marketing. and other sources. marketing materials. what services you offer. The food appears quickly and the temperature is hot enough that you can assume it was freshly made. Tertiary is . No. It's called anecdotal evidence. and head for the restroom to wash your hands. What does this have to do with defining your brand? You are trying to make certain that your potential client understands what it is that you do. Similarly the person running JesterBurgerSucks. She's never been there and asks whether you'd recommend it for lunch. and you air dry your hands with the air jet. You sit in one of the comfortable booths. you tell her. and are happy to receive most of your $10 bill back as change. After finishing your meal. You see that the place is clean. The water is quickly hot enough to wash with soap from the dispenser above the sink. and looks and smells clean. or Word Of Mouth. You notice that the restroom is well maintained. there was a screaming kid next to you all during lunch. These are usually created. by the subject company trying to influence your thoughts. or at least placed. You walk into a branch of our fictional JesterBurger. When marketing professionals try to create and manage it. you throw your garbage into the conveniently located can. You order a complete meal. everything else. and the people behind the counter are smiling. Don't go. representative list might be: * Location (local vs exotic) * Services (broad vs narrow) . and you tell her it was JesterBurger. Your friend asks you where you had lunch. advertisements. bite into your JesterBurger Deluxe and decide you enjoy the taste and texture. You need to focus on a few key things about you and your company that would appeal to potential clients. all in an instant. and is also trying to influence your opinion. the colors are bright.

H o w t o B r a n d a n d M a r k e t a . with offices in Fulton.com.* Time in businesses (new vs established) * Ownership (small vs large) * Design philosophy (simple vs fancy) * Attitude (funny vs serious) * Education (6th grader vs PhD. you have a brand whether you want one or not. Fulton NY 13069. what image are you trying to project. Marketing Action and Sales Action. Agile' Marketing can be reached by e-mail at FultonOfc@AgileMarketingServices. If you do try. Scott Gardner is the owner of Agile' Marketing Services. His articles on marketing and sales have appeared in publications across the US.) * Experience (big shop vs entrepreneur) * Price (low vs high) If you're in business. If you don't attempt to control your brand and make the best impression possible. which will be published in Summer of 2009. and how will you go about it? Again. your choice. Agile' publishes two monthly newsletters. Suite A. you are letting your business be seen as totally interchangeable with all the other look-alike web hosts out there. by phone at 315-439-7326 and by mail at 151 North 2nd Street. NY. Profitable Web Hosting. It's your choice to attempt to manipulate it or not. This is an excerpt from his book.

" Definition of Commodity Commodity products are largely undifferentiated products that offer little or no perceived differences between competitive offerings. and healthy profits is to create and manage strong brands for their products and services. The increase in competition in just about every product category coupled with the ability for most consumers to quickly and easily seek out and compare all competing offerings via the Internet has put a great deal of pressure on brands to strengthen their positions and continually seek ways to deliver greater value to customers. These are lowly differentiated products or services with high levels of substitutability and straightforward price discovery. it is indeed "A new brand world. We are seeing countries such as China.C o m m o d i t y Introduction Branding as a marketing strategy has seen a significant increase in interest in recent years due to a variety of factors. author of the book by the same name. Korea. They're discovering that it is desirable to compete on more than just price and volume. Companies are now fully realizing the importance of creating strong brands that provide real customer benefits so they can avoid the vicious practice of continual price slashing and cost reduction due to the downward pressure that exists in commodity markets. The Global Trend Toward Brands Companies on a global scale now realize that one of the most promising paths to long term longevity. Commodity products are fungible as competitive offerings are easily . India and Finland. a prosperous organization. In the words of Scott Bedbury. put forth powerful brands with global impact.

With little-to-no perceived difference. Conduct a brand audit and conduct primary research to understand why your customers choose your product. conduct a communications audit to uncover the real messages you are sending to your internal and . Your USP is a claim of a unique set of benefits not found anywhere else. Let's take a closer look at steps to commodity branding Step #1: Conduct a comprehensive audit Launch an initiative to understand how your current clients perceive you and your product or service. Study your competition and examine industry trends. Once you have defined your most important unique selling proposition. the market is mature enough to have attracted multiple competitors. Producers of commodities are driven to compete on low price and high volume. consumers shop for commodities primarily on a low price basis. What do they value? What guides their daily behavior on the job? What brand promises do they feel they must deliver on? Are their goals in line with the goals of your organization and your stated mission? Lastly. customers have widely adopted the product. This distinction as to why your brand is unique in your category is also referred to as your unique selling proposition. and the market expands while prices decline as consumers demand price concessions. Your unique selling proposition (USP) tells your target market the main and most important reason they should choose your brand over competing brands. Find out what all stakeholders think and feel about your brand. Commodity marketers are often very surprised to learn from customers that price is not the most important factor—let alone the only factor. How are your competitors positioned? What are their brands' or products' strengths and vulnerabilities? How does your position compare with competitive positions and how will those positions be affected by industry trends? Conduct an internal audit in additional to your external audit. the product life cycle is at the point where significant customer education and assistance is not required. How to Brand Your Commodity How then do you go about branding a commodity product? The answer lies in first identifying or devising ways to create unique attributes and unique promises of value offered solely by you and your product offering. In general.interchangeable. then you begin to build your brand based on it.

once this . Even in industries where clients say. B) Plus 1 features "Plus 1 features" are small. however. fret not. the most important goal to accomplish at this point is to emerge with an accurate picture of the current state of affairs. then you can make a list of all the ways you are unique. Other times not. Remember. your company. your service. Innovate and redesign your product to include new and unique features. What makes your company unique and preferred in the mind of the prospect might be something in the product. or other intangible qualities that are unique to your total product offering. the support you offer. These attributes can apply to your product itself. Suspend judgment on what you find. What have some commodity sellers used as points of differentiation? A) New product features Look for ways to create new product features that certain customers will value. something in the manufacturing process. Sometimes obvious differences will be defined in your product offering by this point. Are your marketing communications saying the right things in the right ways consistently over time and across all media? Are your internal communications to employees and shareholders doing the same? If you discover some inconsistencies and liabilities during this phase. Be wary. Step #2: Find and define points of differentiation in your offering Once you have conducted your audit and surveyed the competitive landscape. your brand may offer value not found anywhere else. Provide reasons other than rock-bottom prices as to why you are different and why people should buy your products or services. incremental differentiating features in products.external stakeholders through your communications." we can find branding opportunities. or maybe even some strongly-held corporate belief or philosophy. Remain objective and seek to define things how they really are. be it pleasant or unpleasant. Only once you have accurately diagnosed any illness can you begin to prescribe the cure. What else can serve as the basis for differentiation? Uncover hidden differentiators:Many things can serve as the basis of differentiation for and subsequent branding of your commodity. By adding incremental features into your product offering. "all of the products from us and our competitors are the same.

digital cameras in phone models. or being flexible with your payment terms to meet the standard business practices of your customers." and enhanced support packages in order to offer greater desired value to their customers and reduce the overall cost of ownership. You may address such concerns by creating different levels of value to your customers such as a Bronze. or Internet service providers who offer spam blocking software or personal Website storage space as part of the purchase in addition to their core product offering. You may be able to find ways to offer several features. promise free repairs or replacements. free financing. Silver. This strategy is often found in high technology industries where manufacturers will add Plus 1 features such as additional software pre-installed on computers. services. C) Bundles Bundling several options. value-added package. and Gold levels of support packages available. features. This can be a good strategy in high volume markets that are expected to last indefinitely. however. I've seen companies offer extended warranties. then by offering more generous terms and longer guarantees you might be able to increase the value you offer without investing significant capital toward new product features and value-added "giveaways.practice is common in any competitive environment there will come constant pressure to add Plus 1 features while continuing to cut price. offer "try before you buy" evaluations. or services into your package can significantly increase the value of your offering. E) Better quality Reduce your defect rates and the value you offer your customers will increase by improving reliability. or delaying your invoicing." Other tactics might be to do simple things that make customers happier. such as utility companies billing in equal. This will help meet the needs of those who value additional assurance while proving a low cost option for those most driven by price alone. predictable monthly amounts to counter spikes during peak usage months. lengthen money-back guarantees. . D) Payment terms and guarantees Does everyone in your industry offer net 30 terms and 30-day guarantees? If so. a supply of relatively inexpensive consumable items as "starter kits. Other ways to reduce or reverse risk are to offer free trials. 100-percent-satisfaction-no-questions-asked return policies. By segmenting your customers you may find different levels of risk-aversion amongst them. F) Reduce uncertainty Offer money-back guarantees or other means to make it easier for customers to trust you. or options and package them together to create a "bundled". new ring tones for mobile phones.

fulfillment. Overnight shipping. For example. Step #3: Choose the most compelling and unique point of differentiation to create a strong position for your brand . more secure shipping. That. or available backup delivery methods might be things you can explore. J) Customer-driven added value Ask your customers what they wish you could offer or what they would like to see and often they will tell you exactly what you can do that cannot be found anywhere else. Just make sure you do it in a way that is valid and statistically significant through research. installation and training. Teflon and Dolby for its inspiration. Sometimes just being the person in your industry with the highest on-time delivery or fulfillment rate can make the difference. Don't try to guess what your customers might respond to. Have a clear understanding of what your customers want and need before tying your brand to what you perceive to be a customer value. Customers have a way of knowing what unmet needs there are and they are usually happy when a company comes along and asks them how to serve them better. You might just promise something that none of your competitors are willing to put in writing. in and of itself. K) Look outside the industry for examples Intel looked to examples of component (or ingredient) branding in other industries such as NutraSweet. and appealing packaging can alone be the only point of differentiation you need in order to start building a powerful brand. Ask them! More often than not they'll tell you. it is nearly impossible to see the unique colors and artwork on a bottle of Tide laundry detergent and not know which brand it is—long before you even see the name on the label.G) Better product delivery Find a way to get product to your customers better or faster. might make you unique in your industry… just be sure you deliver on your promises. They are comparing you against your competition constantly and will often have insights and data that you don't. unique. You might just uncover a benefit that you never would have thought about on your own. Often by increasing your distribution network you can offer faster response and reduced delivery time. I) Definition and communication Define and communicate your standards for secure ordering. delivery. staggered shipments to meet your customers' inventory needs. and technical support. Innovative. H) Packaging and design Often innovative or eye-catching packaging of a product can serve as a strong differentiator and help become a part of the brand's DNA. Airlines often use their "on-time departure" ranking as a differentiator.

Be honest with yourself and seek to uncover and understand the reasons customers choose to not do business with you.Perhaps even more important than defining points of differentiation for your brand is to make sure these points offer customer value for which your targeted customers recognize the value offered. build your new image through a combination of words. or simply your location. but not worth anything to you if your customers do not recognize them or see any value associated with them. There may be many possible positions for your brand but it is important to choose the one that is most defendable. Be different! Find a way to offer something unique that cannot be found anywhere else. Differentiators are nice. Do not try to incorporate so many points of differentiation in your positioning that your customers become confused or overwhelmed. poor post-sale support. Build the image so it is distinctive and easily recognizable to your target market. least likely to be copied. Other reasons people will not buy from you might be confusing billing and/or payment terms. Create a visually effective logo. imagery and other devices that appeal to human logic and emotion. but often companies unwittingly offer certain things or behave in certain ways that turn potential customers away. In the computer and software industry we often see customer resistance to purchasing from vendors who "lock in" customers through proprietary systems and software. Step #5: Create a powerful image for your brand Create and build a powerful image for your brand. Once you make your product or service distinctive. Step #4: Eliminate reasons for your customers not to purchase from you This one sounds deceptively simple. unique. cannibalize sales of your higher profit offering(s). . unfriendly sales staff. Choose or create a memorable name for your brand. Your most important. most compelling. and least easy-to-copy point of differentiation should be the unique selling proposition for your brand and serve as the basis for your branding efforts. Identify the reasons people avoid choosing you and eliminate these reasons if you can. A brand must communicate what it distinctively stands for using as few words and/or images as possible. and be very difficult to manage. This might cause competition with yourself. so keep the message simple but memorable. Why should somebody choose you over your competition other than price? The answer to this question might help you choose the best position upon which to build a strong brand. Write a tagline or slogan for the brand that concisely captures and communicates the essence of your unique selling proposition. and most unique.

or a catchy slogan. Commodity products require unusually clear communication of the value offered in both economic and emotional terms. Strategic awareness occurs when you have differentiated your brand in the mind of your market. Strategic awareness occurs when not only do your customers recognize your brand. Highly targeted and sharply focused communication must take place within the framework of an integrated marketing communications plan that includes one or more parts of the marketing communications mix: personal selling. and consistently across all marketing communications channels will enable you to build strategic awareness. direct marketing.Image alone can help differentiate a commodity-whether based on real or perceived benefits—as long as the strategy is executed properly. Such strategic awareness will allow the brand to enjoy greater loyalty from your market while commanding a price premium with better margins. and stay ahead of the competition. Communicating your brand promise clearly. Do this through a comprehensive program of differentiation. Only when strategic awareness is established can you hope to create brand preference within your market. Branding is more than the development of a memorable name. All components of a brand must work together to create a differentiated personality for the brand that heightens awareness while building preference. but they also understand the distinctive qualities that make it better than the competition. service. Going Forward Continually look for ways to innovate. consumer research. Once brand preference is created. Eventually all forms of differentiation can be copied. advertising. in their own minds. A brand is an identifiable entity that makes specific promises of value and all aspects of your brand's identity must communicate those promises and convey the uniqueness of your brand so you create the desired image within your market. promotion. Step #6: Market the brand Brand communication is an essential part of building a strong brand for your commodity. concisely. delivery and quality . so continually stay ahead of the curve to ensure that your brand remains differentiated from the commodity pack mentality. then it becomes a scientific exercise to quantify the price premium that can be commanded by your brand. they simply cannot live without. an appealing logo. product development. and public relations. Images can be built to inform consumers about hidden or small differences that they might otherwise be unaware of and thus turn these differences into something that. create customer value. The brand value must be communicated clearly and consistently over time and across all chosen communications channels. image building.

Routinely measure factors such as: brand loyalty. Focus on continually improving the four core customer values of convenience. Dave Dolak. availability. and creating powerful brands that foster price inelasticity. you must resist the urge to cut prices. When marketing and selling commodities. . Summary Commodity selling is a challenge that presents unique opportunities for creative marketing. relevance and preference. seek ways to protect your price by offering more value.improvement. perceived quality. and relationship to find ways to continually increase the value you offer to your customers. All rights reserved. Instead. finding unique ways to differentiate yourself. Copyright 2005. product or service functionality. name awareness.

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