One of my Twitter follows recently asked me, “How do you differentiate a commodity product?” My first reaction was, “Well that needs more than a 140 character response!”
In actuality, I could have answered the question in one word: Branding. Instead, I promised to write a post about it, so here are my thoughts on the matter:
Differentiation is critical with any product or service, not just commodities. You may have a preferred brand of milk, butter , or rice. You routinely choose one gas station over another. You probably also have a preference in terms of things like auto insurance, financial planning and banking.
In all these cases, the basic product or service is the same. The difference is in how you see the brand. In spite of the similarities between these commoditized offerings, not everyone makes the same choices.
People decide what to buy based on factors like price, (perceived) quality and affinity for the brand. This is why billion-dollar corporations spend so much money on brand advertising, sponsorships and experiential marketing.
A Super Bowl ad for GoDaddy won’t demonstrate that GoDaddy’s domains are in any way different from those available at Register.com or other competitors. The GoDaddy brand message is “Geeks win!” and their ads appeal to people who identify with the underdog. The ads imply that choosing GoDaddy will help buyers magically acquire tech sex appeal, a coveted attribute among awkward, self-described computer nerds.
Without a strong brand, commodity buying decisions are extremely price driven. If an apple is an apple, why pay any more than necessary? Branding can create an aura that adds value, justifying a higher price. (In fact, sometimes, the higher price is the brand strategy: “We’re worth more because we cost more.” Yes, it’s counterintuitive, but sometimes it works!)
How much does brand matter?
An excellent example of the impact of a brand can be found in the cola-flavored soft drink market. Most of us would readily avoid super-market brand sodas, insisting upon one of the major brands. I know many people (myself included) who will request an alternate beverage – “Unsweet tea, please” – when our favorite cola brand is not available.
Ironically some of the most impassioned soda brand advocates have been shown to be incapable of identifying their favorite brand in blind taste tests. If you can’t tell the difference, what’s the difference?
Yes, brand is the secret to making a product stand out among seemingly equal rivals. So how do you achieve brand stardom? Here are a few quick pointers:
- Be precise in determining your target market. Who are they and what do they want? It’s NOT the same thing your competitors are selling. Look for hopes and desires you can tap into.
- Get crystal clear in your messaging. Once you decide how to appeal to your target buyers, be sure everything about your brand calls out to them in an irresistible way.
- It’s not about the product. Differentiating a commodity is all about the experience. Create a memorable brand experience and the fact the your core product is like all the others becomes irrelevant.
- Aspirations are your friend. People shop for utility, and they buy because they want to be transformed. What aspirations can your brand promise that other products don’t offer?
To put this into action, think of ways you can create a memorable experience when customers engage with your brand. Maybe you are selling just another rice product. But yours has a story about where it came from or why it offers health benefits your customer demand.
Ancillary services, like cooking classes for customers who buy your rice, can add more value and create a stronger connection with customers.
For service businesses, the brand IS the service. A room in a hotel is simply a place to lay your head for the night. How customers are treated, the environment you create, the experience of arriving, dining and being pampered defines the difference between a $29.99 a night room and a first class hotel.
Why do people pay $400 a night to sleep? Because the hotel they choose speaks to who they are, who they want to be, and how they want to be seen. Price matters because it creates a framework for choice, narrowing the range to $150 – $250 a night for example. Once basic budget criteria are met, brand takes over.
Ultimately, the same is true for any brand buying decision – commodity or not.
Image via SXC.hu