A question to ponder this week… What would your customer’s identify as the number one reason for buying your brand?
If the answer is ‘low price’ or ‘convenience’ your brand could be at major risk of becoming just another commodity brand; a very risky position for any brand to be in.
When it comes to commoditization, no industry is safe. Whether you produce consumer products or supply professional services, when your customers can no longer differentiate your offering from that of your competitors it puts the company’s success and profitability in jeopardy.
Commoditization is a never ending reality in business today. No matter how hard a successful brand works to be different, their competitors are working equally hard to replicate it.
Markets are awash with ‘me too’ products. Customer choice has never been greater online and offline. Brands need to be very proactive in reinforcing their differentiating factors to their customers i.e. the reasons why their customers should choose them. But without a truly unique product or service that process is becoming more and more difficult.
Is Your Brand At Risk?
How easily can you quantify the differences between your products and services from those of your competitors? Think then about how easily your customers and prospective clients can make the same distinction? What’s your big why for your brand? What does it stand for?
When the tangible differences between competing brands diminish, the danger of commoditization grows. But all is not lost. Many brands enjoy a sustainable longevity in their market, despite aggressive copycatting, and do so by identifying the broader value offered by their brands.
Articulating the extended intangible values of your brand creates a tougher opposition for competitors. Replicating a product is easy, replicating a brand identity is not.
5 Ways To Safeguard Your Brand Against Commoditization
The first step for any company in safeguarding against commoditization is to use internal knowledge to identify the company’s broader value. Take time to consider the intangible benefits of your brand, the perceived benefits to customers, and the desired emotive response when someone experiences the brand. Think back to the very beginning and refocus on the brand identity. What were the core values that established the brand?
Apple’s strength lies not just in innovation but on a dedication to producing a high quality product. Their product prices are amongst the highest on the market but their willingness to lose a portion of market on price reaffirms their dedication to their core value of quality and establishes their brand identity in the mind of the consumer.
Tangible elements are easy to replicate. Strong brands succeed in developing strong relationships with their customers. Leverage face-to-face interactions and social media to learn more about your customer and start a dialogue that fosters a meaningful relationship that extends beyond the brand experience.
3. Leverage the Corporate Brand
The corporate brand often has sustainable equity. Leveraging the corporate reputation and trust can deliver broader value to product brands and help shape a comprehensive offering to customers that extends beyond the product service attributes.
Innovative packaging that creates an aesthetic beyond function can help increase perceived value to the customer and enhance market share. The O’Egg brand focused on package differentiation to turn a commodity product into the pre-eminent egg brand in Ireland.
5. Brand Experience
When a product or service is easily replicated, innovating brand intangibles can strengthen the position of the brand and protect it from the threat of commoditization.
Think differently about your business. Change how its’ perceived. A unique service area, outstanding customer support, or special loyalty rewards can set your brand apart.
Starbucks’ strength grew from creating a brand experience around a commodity product. What set the brand apart were the various elements that nurtured the customer’s experience of the brand; from the service setting, to the coffee ordering system, to the interactions with staff. They changed the way the world ordered coffee.
Global giant that it is, Starbucks is now under threat because the brand experience has become the commodity and the Starbucks focus has drifted to profit margins and market growth rather than extending customer value. The brand is currently in the process of returning their focus to their core value, putting the customer’s coffee experience at the heart of their operations again.
One of the biggest problems that lead to a weakening of brand equity is a lack of awareness in the company of the causes of commoditization.
Businesses end up spending valuable resources on updating products and expanding product lines without having a real understanding as to what their customer’s really need and value.
• When was the last time you surveyed your customers or researched your market properly?
• Do you really know what’s happening at grass roots level in your market?
• Do you need a brand audit?