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).
Secondary information source gathering is hearing about other peoples' Primary
experiences.

Tertiary is - well, everything else.

You walk into a branch of our fictional JesterBurger. You see that the place is clean, the
colors are bright, and the people behind the counter are smiling. You order a complete
meal, and are happy to receive most of your $10 bill back as change. The food appears
quickly and the temperature is hot enough that you can assume it was freshly made. You
sit in one of the comfortable booths, bite into your JesterBurger Deluxe and decide you
enjoy the taste and texture. After finishing your meal, you throw your garbage into the
conveniently located can, and head for the restroom to wash your hands. You notice that
the restroom is well maintained, and looks and smells clean. The water is quickly hot
enough to wash with soap from the dispenser above the sink, and you air dry your hands
with the air jet.

The thoughts and feelings you have about JesterBurger after your visit are from a Primary
source - you actually went there and had an experience.

Your friend asks you where you had lunch, and you tell her it was JesterBurger. She's
never been there and asks whether you'd recommend it for lunch.

No, you tell her, there was a screaming kid next to you all during lunch. Don't go.

Although JesterBurger has done everything they possibly can to positively influence your
experience during your visit, your perception can be influenced by anything and
everything during your Primary experience.

Your bad review to your friend is an example of a Secondary source. It's called anecdotal
evidence, or Word Of Mouth. When marketing professionals try to create and manage it,
they call it Buzz Marketing.

Tertiary information comes from things like media stories, advertisements, marketing
materials, and other sources. These are usually created, or at least placed, by the subject
company trying to influence your thoughts. Similarly the person running
JesterBurgerSucks.com has probably loaded their site with negative information, and is
also trying to influence your opinion.

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, what services you offer, and how
you're unique as compared to all your potential competition, all in an instant. You need to
focus on a few key things about you and your company that would appeal to potential
clients. A simple, representative list might be:

* Location (local vs exotic)

* Services (broad vs narrow)
* Time in businesses (new vs established)
* Ownership (small vs large)
* Design philosophy (simple vs fancy)
* Attitude (funny vs serious)
* Education (6th grader vs PhD.)
* Experience (big shop vs entrepreneur)
* Price (low vs high)

If you're in business, you have a brand whether you want one or not. It's your choice to
attempt to manipulate it or not. If you do try, what image are you trying to project, and
how will you go about it? Again, your choice. If you don't attempt to control your brand
and make the best impression possible, you are letting your business be seen as totally
interchangeable with all the other look-alike web hosts out there.

Scott Gardner is the owner of Agile' Marketing Services, with offices in Fulton, NY. His
articles on marketing and sales have appeared in publications across the US. This is an
excerpt from his book, Profitable Web Hosting, which will be published in Summer of
2009. Agile' publishes two monthly newsletters, Marketing Action and Sales Action.
Agile' Marketing can be reached by e-mail at FultonOfc@AgileMarketingServices.com,
by phone at 315-439-7326 and by mail at 151 North 2nd Street, Suite A, Fulton NY
13069.

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Introduction

Branding as a marketing strategy has seen a significant increase in interest in recent years due to a variety of
factors.

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.

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. They're discovering that it is desirable to compete on more than just
price and volume.

The Global Trend Toward Brands

Companies on a global scale now realize that one of the most promising paths to long term longevity, a
prosperous organization, and healthy profits is to create and manage strong brands for their products and
services. We are seeing countries such as China, Korea, India and Finland, put forth powerful brands with
global impact. In the words of Scott Bedbury, author of the book by the same name, it is indeed "A new brand
world."

Definition of Commodity

Commodity products are largely undifferentiated products that offer little or no perceived differences between
competitive offerings. These are lowly differentiated products or services with high levels of substitutability and
straightforward price discovery. Commodity products are fungible as competitive offerings are easily
interchangeable.

With little-to-no perceived difference, consumers shop for commodities primarily on a low price basis.

Producers of commodities are driven to compete on low price and high volume. In general, the product life cycle
is at the point where significant customer education and assistance is not required, customers have widely
adopted the product, the market is mature enough to have attracted multiple competitors, and the market
expands while prices decline as consumers demand price concessions.

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. This distinction as to why your brand is unique in your category
is also referred to as your unique selling proposition.

Your unique selling proposition (USP) tells your target market the main and most important reason they should
choose your brand over competing brands. Your USP is a claim of a unique set of benefits not found anywhere
else. Once you have defined your most important unique selling proposition, then you begin to build your brand
based on it.

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. Conduct a
brand audit and conduct primary research to understand why your customers choose your product. Commodity
marketers are often very surprised to learn from customers that price is not the most important factor—let alone
the only factor.

Study your competition and examine industry trends. 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. Find out what all stakeholders think and feel about
your brand. 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, conduct a communications audit to uncover the real messages you are sending to your internal and
external stakeholders through your communications. 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, fret not. Suspend judgment on what you
find. Remember, the most important goal to accomplish at this point is to emerge with an accurate picture of the
current state of affairs, be it pleasant or unpleasant. Only once you have accurately diagnosed any illness can
you begin to prescribe the cure. Remain objective and seek to define things how they really are.

Step #2: Find and define points of differentiation in your offering

Once you have conducted your audit and surveyed the competitive landscape, then you can make a list of all
the ways you are unique.

Provide reasons other than rock-bottom prices as to why you are different and why people should buy your
products or services.

Even in industries where clients say, "all of the products from us and our competitors are the same," we can find
branding opportunities.

Sometimes obvious differences will be defined in your product offering by this point. Other times not.

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. These attributes can apply to your product itself, your service, your company, the
support you offer, or other intangible qualities that are unique to your total product offering.

What makes your company unique and preferred in the mind of the prospect might be something in the product,
something in the manufacturing process, or maybe even some strongly-held corporate belief or philosophy.

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. Innovate and redesign your
product to include new and unique features.

B) Plus 1 features
"Plus 1 features" are small, incremental differentiating features in products. By adding incremental features into
your product offering, your brand may offer value not found anywhere else. Be wary, however, once this
practice is common in any competitive environment there will come constant pressure to add Plus 1 features
while continuing to cut price. This can be a good strategy in high volume markets that are expected to last
indefinitely, however.

This strategy is often found in high technology industries where manufacturers will add Plus 1 features such as
additional software pre-installed on computers, new ring tones for mobile phones, digital cameras in phone
models, 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.

C) Bundles
Bundling several options, features, or services into your package can significantly increase the value of your
offering. You may be able to find ways to offer several features, services, or options and package them together
to create a "bundled", value-added package. I've seen companies offer extended warranties, a supply of
relatively inexpensive consumable items as "starter kits," and enhanced support packages in order to offer
greater desired value to their customers and reduce the overall cost of ownership.

D) Payment terms and guarantees

Does everyone in your industry offer net 30 terms and 30-day guarantees? If so, 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." Other tactics might be to do
simple things that make customers happier, such as utility companies billing in equal, predictable monthly
amounts to counter spikes during peak usage months, or being flexible with your payment terms to meet the
standard business practices of your customers.

E) Better quality
Reduce your defect rates and the value you offer your customers will increase by improving reliability.

F) Reduce uncertainty
Offer money-back guarantees or other means to make it easier for customers to trust you.

Other ways to reduce or reverse risk are to offer free trials, lengthen money-back guarantees, promise free
repairs or replacements, offer "try before you buy" evaluations, 100-percent-satisfaction-no-questions-asked
return policies, free financing, or delaying your invoicing.

By segmenting your customers you may find different levels of risk-aversion amongst them. You may address
such concerns by creating different levels of value to your customers such as a Bronze, Silver, and Gold levels
of support packages available. 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.
G) Better product delivery
Find a way to get product to your customers better or faster. Often by increasing your distribution network you
can offer faster response and reduced delivery time. Overnight shipping, staggered shipments to meet your
customers' inventory needs, more secure shipping, or available backup delivery methods might be things you
can explore. Sometimes just being the person in your industry with the highest on-time delivery or fulfillment
rate can make the difference. Airlines often use their "on-time departure" ranking as a differentiator.

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. For example, 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.

Innovative, unique, and appealing packaging can alone be the only point of differentiation you need in order to
start building a powerful brand.

I) Definition and communication

Define and communicate your standards for secure ordering, fulfillment, delivery, installation and training, and
technical support. You might just promise something that none of your competitors are willing to put in writing.
That, in and of itself, might make you unique in your industry… just be sure you deliver on your promises.

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. 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. They are comparing you against your competition constantly and will often have insights and data that
you don't.

Have a clear understanding of what your customers want and need before tying your brand to what you
perceive to be a customer value. Don't try to guess what your customers might respond to. Ask them! More
often than not they'll tell you. Just make sure you do it in a way that is valid and statistically significant through
research. You might just uncover a benefit that you never would have thought about on your own.

K) Look outside the industry for examples

Intel looked to examples of component (or ingredient) branding in other industries such as NutraSweet, Teflon
and Dolby for its inspiration.

Step #3: Choose the most compelling and unique point of differentiation to create a strong position for
your brand
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. Differentiators are nice, but
not worth anything to you if your customers do not recognize them or see any value associated with them.

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.

There may be many possible positions for your brand but it is important to choose the one that is most
defendable, least likely to be copied, most compelling, and most unique. Do not try to incorporate so many
points of differentiation in your positioning that your customers become confused or overwhelmed. This might
cause competition with yourself, cannibalize sales of your higher profit offering(s), and be very difficult to
manage.

Be different! Find a way to offer something unique that cannot be found anywhere else. Your most important,
unique, 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.

Step #4: Eliminate reasons for your customers not to purchase from you
This one sounds deceptively simple, but often companies unwittingly offer certain things or behave in certain
ways that turn potential customers away. Be honest with yourself and seek to uncover and understand the
reasons customers choose to not do business with you.

In the computer and software industry we often see customer resistance to purchasing from vendors who "lock
in" customers through proprietary systems and software. Other reasons people will not buy from you might be
confusing billing and/or payment terms, poor post-sale support, unfriendly sales staff, or simply your location.
Identify the reasons people avoid choosing you and eliminate these reasons if you can.

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, build your
new image through a combination of words, imagery and other devices that appeal to human logic and emotion.

Choose or create a memorable name for your brand. Create a visually effective logo. Write a tagline or slogan
for the brand that concisely captures and communicates the essence of your unique selling proposition.

A brand must communicate what it distinctively stands for using as few words and/or images as possible, so
keep the message simple but memorable. Build the image so it is distinctive and easily recognizable to your
target market.
Image alone can help differentiate a commodity-whether based on real or perceived benefits—as long as the
strategy is executed properly. 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, in their own minds,
they simply cannot live without.

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.

Branding is more than the development of a memorable name, an appealing logo, or a catchy slogan. All
components of a brand must work together to create a differentiated personality for the brand that heightens
awareness while building preference. Such strategic awareness will allow the brand to enjoy greater loyalty from
your market while commanding a price premium with better margins.

Step #6: Market the brand

Brand communication is an essential part of building a strong brand for your commodity. Commodity products
require unusually clear communication of the value offered in both economic and emotional terms.

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, promotion, direct marketing, advertising, and public relations. The brand value must be communicated
clearly and consistently over time and across all chosen communications channels.

Communicating your brand promise clearly, concisely, and consistently across all marketing communications
channels will enable you to build strategic awareness. Strategic awareness occurs when not only do your
customers recognize your brand, but they also understand the distinctive qualities that make it better than the
competition. Strategic awareness occurs when you have differentiated your brand in the mind of your market.

Only when strategic awareness is established can you hope to create brand preference within your market.
Once brand preference is created, then it becomes a scientific exercise to quantify the price premium that can
be commanded by your brand.

Going Forward

Continually look for ways to innovate, create customer value, and stay ahead of the competition.

Eventually all forms of differentiation can be copied, so continually stay ahead of the curve to ensure that your
brand remains differentiated from the commodity pack mentality. Do this through a comprehensive program of
differentiation, image building, product development, consumer research, service, delivery and quality
improvement.

Routinely measure factors such as: brand loyalty, name awareness, perceived quality, relevance and
preference. Focus on continually improving the four core customer values of convenience, availability, product
or service functionality, and relationship to find ways to continually increase the value you offer to your
customers.

Summary

Commodity selling is a challenge that presents unique opportunities for creative marketing. When marketing
and selling commodities, you must resist the urge to cut prices. Instead, seek ways to protect your price by
offering more value, finding unique ways to differentiate yourself, and creating powerful brands that foster price
inelasticity.

Copyright 2005, Dave Dolak. All rights reserved.