Strategies For IncreasingThe Value Of A Commodity Product
By Gregg Gordon, Senior Director, Manufacturing Practice
Commoditization of a product is a natural evolution of the market and is not the worst-case scenario. If you are responsible for a commodity product, there is still a viable market for what you build. This is a much better proposition than being obsolesced.
Your main problem is that while you have been working to build brand awareness, optimize distribution channels, add features, improve quality, reduce costs, and shorten lead times, your competitors have been doing it faster and better. Or it could be as simple as your patent expired.
You still have some options. Performing some market and customer research may yield some ideas to breathe new life into those now low-margin products. Below are some time-proven strategies for increasing the value of a commodity product.
Create a New Category for the Product
Don’t confuse this with marketing efforts like new labeling or exciting new advertisements. I’m thinking about thoughtful extensions to a product.
Reduce Risk and Uncertainty for Your Customer
Are your products used in critical applications where downtime is expensive or causes bad publicity?
Improving Outcomes and Reducing Costs for Your Customers
Visit with your customers all through the downstream supply chain and review their processes that relate to your product. Are they performing processes that you could perform more efficiently?
Your Customers Can Receive Value from Your Existing Data
The hot buzzword these days is Big Data. Any data that your company possesses was expensive to collect. Reusing it to provide value to your customer is a great way to differentiate yourself from your competitors.
Lean Selling Is the Prescription for a Commodity Market
These are just a few examples of how to differentiate your company’s offering with little or no change to the product and limited capital investment.
The good news is that these techniques apply to every product whether commoditized or not. Second, it’s a profitable experience for everyone. Customers, your salespeople, and your company all benefit when waste is removed and value is added back to a commoditized product.
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