De-commoditization

Selling commodities is hard, or should I say, selling anything as a commodity is hard. But what is a commodity when it comes to marketing? Is water a commodity? I think we have discussed this extensively in the past, so let’s move on to something else that looks like a commodity. How about coffee? Coffee is something many people need as the first thing in the morning. But then you put down $4 for a cup of it at Starbucks when you can clearly get it much cheaper at other places, let alone making your own coffee at home. This clearly throws it out of the commodity category.

Why are basic things like water and coffee not treated like commodities anymore? I think it is because companies like Fiji Water, Evian and Starbucks have very successfully applied the skill of “de-commoditization”. Anything that is treated like a commodity can be moved out of this commodity bracket with the help of marketing principles used by these companies.  All you need to do is make your product as attractive as possible and differentiate it from the lot. Whether it is by calling your bottled water as Artesian water and importing it from a far off place, or by finding tongue twisters to the name of your coffee and creating an atmosphere in there as cosy and comfortable as possible.

Let’s take something that is marketed as a commodity and play with it to de-commoditize it.  How about rice? Let’s try and de-commoditize rice, theoretically (I am not saying it is an easy thing to do. We all know that it took lot of hard work for the likes of Evian and Starbucks to master de-commoditization. We will just think out-loud and put some ideas on the table for the sake of this discussion). Rice is a food product, so like any other food product, we need to bring in two factors into consideration – purity and health – while marketing our brand of rice. Talking of purity, some things that come to mind are things like how it is handled, packaged, added coating and so on. As far as health is concerned, things like fat content, impact on cholesterol, organic production and healthy for heart are some factors that appeal most to the customers while making a buying decision. By advertising and marketing this product around these factors, we can create an impact on customers, hence persuading them to go for this brand of rice. 

In order to add the final push, we need to take packaging into account. This is something that is super important as well. Aren’t you wowed seeing the iPod packaging? Aren’t you excited to open something that is packed with lots of artistic integrity? So to add value to our product, let’s create an attractive packet for it with option to preserve the packet after using it or keep using it on an ongoing basis instead of emptying its content in a box.

By differentiating your product by using aspects like purity and health, and making it attractive using a unique packaging, we are now selling something that is much more than just a packet of rice…so what is it? It’s faith, health and purity being sold in that packet which contains a byproduct known as rice!

The point here is that it is not important what product you are trying to sell, what is important here is how you are selling it. Doesn’t matter how common or how lack-lustrous (you think) your product is, you can make it cool and attractive. Just think about it…if water, coffee and eggs can be de-commoditized, then your product or service can as well!

6 responses to “De-commoditization

  1. I was just browsing, when I found your blog. This is well written and informative, so you can count on me coming back to read more. I have not looked at your other topics yet, but I would be interested in the idea of service as a commodity, and how you would treat that. Thanks.

  2. Nice to have you here.

    I don’t think there is any considerable difference between product and service when it comes to de-commoditization. Just like in case of products, you will have to look for differentiators and try to make your service more attractive as compared to competition. I think as far as service is concerned, the quality of service and gaurantee of work done can act like the factors that customers keep in back of their mind while making a decision. Referrals and customer feedbacks on web site, brochures and newsgroups can act as the things to make the offering more attractive than competition.

    Look forward to getting your comments on other posts as well.

  3. Pingback: Marketing Experience « Adscovery

  4. Pingback: Let’s think green « Adscovery

  5. Pingback: It’s all about the perceived value « Adscovery

  6. Pingback: Dell and Apple « Adscovery

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s