Decommoditizing a commodity: the marketing challenge

by admin on April 17, 2020

A commodity is a raw material, product or service indistinguishable from other things like it–– water, oil, air, rocks, agricultural products and money, for example.

If these commodities were your business, your challenge would be to stand out from the crowd. You could differentiate on price or overall value. The value can be developed and defined by how the product is positioned, and by the brand promise that stands behind the offer.

In the case of drinking water, Voss® focused on packaging with purity positioning. Perrier® positioned as mineral rich, infused with gas and created added value with sparkling water. And in the tropical fruit commodity world, Chiquita® focused on building brand awareness of its bananas based on the quality and consistency of the product. If you choose their fruit and their mark isn’t on it, you won’t know what you’re buying. It’s as much about creating impulse to buy your product as it is in creating doubt in purchasing someone else’s.

Converting sedimentary rock into shale oil, is a commodity turned big industry. The underlying point (if your product exists in an intensely competitive category) is that you must elevate your offer and create reasons to buy. Do this by creating brand distinctions, comparative advantages, price differences, location or shelf advantage, enhancements, top-ups and other points of difference. In the end, you’re looking to decommoditize your brand, product and offer.

To best form strategies to create differentiation, a good starting point is to take inventory of your existing product(s) and identity barriers of entry within the competitive landscape. The lower the barriers, whether physical, psychological, regulatory or otherwise, the higher the commodity index.

Marketing, advertising, packaging, design and product development all play important roles in making the ordinary extraordinary. It’s about conveying the sum-total of doing business with a company or product through what a brand stands for and what it stands behind.

Convergence Group has helped many clients take what may be perceived as a commodity by consumers and turned them into pedigree products and brands. See how we can help your business: Email us or call 302.234.4901 to schedule a free consultation.

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