I’ve been guilty of this myself: thinking that the label “commodity” conveys an assessment of value (usually negative or lesser) as well as a clear description of what it is. The more I work with companies that put commodities in the market, the more I believe that the word “commodity” is neutral. It’s an easily understood description of a product or service delivered to a customer or client.
Take wine for example. We all understand the word “wine.” Yet the wine industry goes to great lengths to differentiate each producer’s wines and even different wines within one producer.
Many examples are found in various services industries. Tax returns are often seen as a commodity. Two simple words, tax return, convey a specific output. A professional who completes tax returns doesn’t need to explain what it is. Everyone knows. The same with legal services providing contract or lease review. Even more complex legal needs such as estate planning and family matters are clearly understood in just a few words. The same goes for hair salons, landscapers, and sports coaches and many more.
Too many companies offering these commodities become alarmed by numerous competitors and resort to competing on price, including sales and discounts, “freemium” and other tactics that reduce revenue.
Here’s the thing to remember: the commodity label is not qualitative. Just because your products and services can easily be described by a few well-known words does not mean you are doomed to fight in the discount wars.
Marketing is your friend when done effectively. Marketing draws attention to your company and the value it delivers. It is always about speaking to needs and wants of the intended market and never about how your company compares to others in the industry. If you remember this, you will then begin to market creatively and effectively. Price wars and cash reduction will become a thing of the past.
To effectively market your commodity make a list of the value it delivers to the buyer. Be imaginative and go far afield when describing the value to your buyers. It is not what your offering is or does, it is how buyers are better off from having made the purchase. Surprise prospects by challenging their assumptions about this commodity. If everyone thinks a tax return simply satisfies the annual IRS requirement, it’s up to you to describe the value of doing that. Peace of mind, perhaps, or insight into how you spend your money.
When our client companies focus on value, they’re delighted to realize that their commodity stands out from the crowd. When they think in terms of value, they stop competing on price and they make more money.
Go All-In on Your Chosen Market
The key to successfully marketing a commodity is to choose an intended market and go all-in on that market. If you want to be all things to all people, you’ll be nothing to anyone. By going all-in on one market you will learn what people in that market value and your marketing will emphasize that value. Those people learn that your company cares about them specifically. It’s the best use of social proof, the phenomenon that causes people to buy–everyone they know is doing business with your company, not simply buying the commodity from a nameless entity.
Take Pride in Your Commodity
When a company takes pride in the value of its commodity, that shines through in their marketing. What pride do you discern when you see marketing that brags about a lower price than the guy down the street? None. And you can bet there’s another company getting ready to lower the price even more. Do not fall into that trap.
A company shows pride when it showcases client successes and testimonials that emphasize value. Others want to enjoy that value too. Your marketing can enhance the value in people’s minds about your company. Instead of selling a commodity, you are delivering value.
We have tons of resources on our website, www.susantrivers.com. You’ll find a lot of information on marketing, pricing (so important!) and getting off the revenue roller coaster. Take a look now, while you’re thinking about it. Use the site-specific search tool to find our resources about Cash, Pricing Models, Cultivate and Nurture, and Imagination on Demand.
This post about commodities was prompted by a conversation about the opposite of commodities: services that are hard to understand with just a few words. Browsing our website will help you understand what we mean when we say that Trivers Consulting Group helps private companies make more money. Give us a call at any time. 703-801-0345.