Commoditization is Today’s Threat To Your Business

To sustain growth in an era when customers no longer care where or from whom they buy, you must have a strategy that focuses exclusively on one highly valued customer benefit that prospects and customers alike will associate with your firm.

November 23 2011 by Robert H. Bloom


If you want to take your business to the next level, you must generate and sustain growth in a marketplace that is suffering from the convergence of globalization and overabundance. Moreover, these powerful twin forces are driving commoditization in every business sector.

How the marketplace became a sea-of-sameness

Worldwide competition and excess choice gave customers vastly expanded options in every commercial sector and motivated them to shop more, buy more, and haggle more.

Armed with an immense amount of information on the internet, aided by social media’s ability to share news about buying “victories”, and enabled by smart mobile devices that compare competitive prices in real time and deliver valuable coupons everywhere, customers demanded concession after concession from businesses of every type, size, and location.

Business leaders, deeply concerned about share loss to aggressive competitors, responded to customers’ demands and this reduced their firms’ margins. Out of necessity, business leaders decreased or eliminated investment in their brands and businesses. Brands, already ubiquitous, became less and less valuable to customers and taglines, already dismissed by customers as seller-centric over-promises, became superfluous.

When customers could no longer discriminate between one-brand-or-another and one-business-or-another, commoditization put down roots in today’s marketplace.

This sea-of-sameness sent a powerful message to customers: “A tangible benefit is far more rewarding than a brand with a puffy promise.”

To combat commoditization, you must have a practical strategy firmly based on today’s realities

All too many business leaders will decide that their only solution is “differentiation”. Before you go down this path, consider this fact: in his Theory of Monopolistic Competition, Edward Chamberlin first proposed the idea of “differentiation” in 1933.

In the intervening 78 years, a massive amount of books, articles, and theses extolled the virtues of “differentiation”. However, very little of this content referenced the continuous changes in the marketplace during those nearly eight decades. Nor did this content take into consideration the fundamental realities of today’s generation of technology-empowered customers.

“Differentiation” was always an ambitious, expensive undertaking and today it is incompatible with customer buying behavior. Today’s customers, live and work, shop and buy, and accept or reject the overabundance of offerings in the commoditized marketplace they now control. They are the judge and jury of your products, services, and the customer experience you deliver. Moreover, they do not want a differentiated brand — they want a tangible benefit.

If you do not deliver a benefit they want, need, and value, your customers will find it somewhere in the overabundance of the marketplace.

To sustain growth in an era when customers no longer care where or from whom they buy, you must have a strategy that focuses exclusively on one highly valued customer benefit that prospects and customers alike will associate with your firm. I call this wanted or needed customer benefit a firm’s “Inside Advantage” because, more often than not, it is an undiscovered or underutilized customer benefit the firm owns, but has never exploited.

From my experience in working with businesses all over the world, I have confirmed that every business has an “Inside Advantage” that is waiting to stimulate and sustain the business’ growth.

Your underutilized strategic asset — your different customer benefit — does not have to be bigger or better than competition, but it must be real, not phony, and it must be different from your competition.

The strategy that will enable you to deliver a different customer benefit

In one day of hard work, you can identify a different customer benefit your brand or business can own and you can implement this strategy with little or no investment.

Here are the three steps in the deceptively simple “Inside Advantage” strategic process that can help you stand out in the commoditized marketplace:

Step one:
  • Generate a lengthy list of potential customer benefits (each less than ten words) that you now deliver but are not capitalizing on.
  • Look for a benefit that, if selected, can be made bigger, better, and stronger with imagination and time.
  • Look for a benefit that, if selected, is different from your competitors or can be sufficiently modified to be different with imagination and time.
  • Look for: a special process you use; an uncommon way you work or think; a proprietary tool or system you have developed; a benefit that current customers tell you they particularly value; or an approach to customer engagement that is different.
  • Narrow the list to a few. Make sure each of the finalists: is real – not phony; is different from competitors – not copycat; has the potential to be improved; and is easy to communicate and recall.
Step two:
  • Gain internal consensus and genuine enthusiasm for the different customer benefit your business will exploit.
  • Translate it into a simple statement of less than five words that is devoid of adjectives, cliché’s, industry jargon, and exaggeration.
  • Above all – be sure it is credible and that does not begin with the word, “we” because your customer benefit is not about you or your business, it is about your customer’s wants, needs, and preferences.
Step three:
  • Use this identical statement at every customer touch point: in your email signature; phone message; packaging; letterhead; business cards; signage; trade-show booth, etc.
  • Use it consistently – internally and externally, because you want your prospects and customers to remember it, value it, and make it part of their vocabulary. Furthermore, you want them to use it as they tell others why they prefer your firm, rather than your competitors.

This is how your business or brand will own a different customer benefit; how you will sustain growth in today’s commoditized marketplace; how you will capitalize on your “Inside Advantage” with little or no investment.