What if you are selling a commoditized product, what is the best way to differentiate your offerring?

Here are some ways to differentiate a commodity product:

1. Whether we like it or not, commodities are differentiated on price.

2. Many companies successfully wrap services around commodity products and differentiate around these services.

3. The personal relationships that a salesperson or executive build with the customer can provide real differentiation as well. This in my opinion is underestimated in the world of selling.

I hate to nitpick words, but here I go again . . . if there were a universal standard for what 'commoditize' means, it would be easier to offer a strategy or tactic to fight that event--assuming that's what you want to do.

According to Webster: Commoditize = "to render (a good or service) widely available and interchangeable with one provided by another company." Ouch! As Craig points out, someone didn't do his or her job. Market forces alone can't commoditize, unless someone (marketing or product executive, or salesperson) is asleep at the switch.

The fact that you've used the past tense (commoditized) means that in your mind, the perception of interchangability has already gelled in the prospect's mind. I've been there as a salesperson, and it's not a good place to be. I got sick of hearing "just give me your best and final price!"

I will add to Craig's recommendations that by looking at your customer's problems in a fundamentally different way from your competitors will put you on the pathway to meaningful differentiation.

There are plenty of case studies of visionary entrepreneurs who were successful in doing just that. If you're pressed for time, look no further than what Frank Perdue did with selling chicken. Were he alive today, he'd strenuously contest anyone's assertion that chicken is a commodity.

Of the 9 answers so far (all good), only one, Howard's, mentioned benefits. It's necessary to do all of the hard work mentioned above to identify (or create) the features that differentiate the product/service from others of its kind, but it's not sufficient.

The next, crucial but often neglected, step is to redefine features as customer benefits and communicate them consistently to customers and prospects. That's what customers really care about. That's what will make you successful.

Look what Morton ("When it rains, it pours") has done with salt for something like a century more-or-less.

Scott Albro wrote:

"The personal relationships that a salesperson or executive builds with the customer can provide real differentiation. This in my opinion is underestimated in the world of selling."

In about 40% of commodity buying situations, price is the defining factor. In the other 60% being "competitive" gets you in the door. Develop a relationship of mutual trust and respect with the decision maker(s) and they will tell you how they want you to differentiate your products and services.

Example:
A supplier of ready mixed concrete provides their customers with important quality information. It consists of a printout of the exact time that the mixer truck was loaded, the component ratio of the ingredients, and the guaranteed workability time.

Their trucks are gleaming white and the sluices are cleaned where they will not stain the job site or nearby roads.

Their prices are about 10% higher than their competition.

Craig makes some good points, I would add two more:

1) Take time to understand what and how they want to use the product by asking questions.
2) Once understood, relate the features and functions of the product[s] to demonstrate how the buyer will ‘benefit’ based on their stated needs. This approach is called Feature | Function | Benefit.

Good luck,

Howard

Some great points above, I would add a few simple but important things:

- Availability – if I leave you hanging once too often I am at risk.
- Credit terms, if you can work with the user of the commodity that helps them in the rest of their process. Think of a farmer buying fuel at the start of planting season - cash-flow picture, etc.
- Ease of resolution of problems or issues. While the "thing" may be interchangeable, resolving invoicing issues, access to expertise, etc.
- The perception of and actual market leadership; all things being equal, price, quality, so on, buyers still want to deal with someone who they perceive to be a market leader in terms of product and R&D. Just look at the work the auto gas companies do to influence perception of their gasoline coming from the sale refinery as the other guy's gasoline. Which I guess takes us back to marketing.

At the risk of sounding like a pollyanna, I'm going to suggest that no matter what you sell, the best differentiator is you. There's nothing out there that can't be duplicated, replicated, copied or improved by somebody else--if not tomorrow, then sometime soon after--so the best thing you have going for you is you.

All things being equal, and they are more often than we like to think, it's the relationship that counts--and it's sustainable. Sell that.

well all being said , i think the question itself does not specify things as you have a million commodities and each behave differently.

Though there are ways to focus on logistics and credit etc.... once it's purchase relies highly on price or politics you have two options.

- For one all your offering should not be just commodity, you should have something that shows you are a businessman with some value offering. offer a bundle.
Or you have to hedge different commodities with diff buying cycles, buy when low i.e. off season and sell when price goes up. etc....

two: a commodity does not mean there are no margins, competitors need to survive too. so unless a competitor can afford to sell below cost to push you out there will be a min margin for everybody.

but again these comments are umbrella comments and it's not specific enough.

Some companies offer incentives, Daimler Benz just paid a 100M EU fine as it gave kick backs to get business.
Being a commodity can be ugly even for mega corps.

skill in making money in commodity is not in selling, it's in knowing how to buy.

If the product is sold at a low price and your company has the resources to develop the product, try to improve it or modify it so differently and push your price above competition as long as you add value for money. This way your product doesn't become easy to compare with traditional competition.

If you're a dealer and you can't develop the product, work on several supporting factors such as:
- Delivery. Offer it if competition doesn't or offer it faster or in a more convenient way for customers. Never underestimate the power of convenience.

- Packaging. Make the packaging more beneficial or reusable. For example, can you give tote bags so that customers can use them in their other shopping? Or can you have fun with witty messages and useful tips on the boxes?

- Warranty. Back up your product to make it easier for the customer to purchase from you rather from competition.

If your product is deeply looked at as a commodity, look for ways to tie it up with other products or brands. Your product could be an added value for a bigger purchase from another brand. It might affect your profit margin per item, but if you team up with the right partner, their volume could increase your overall profit...and that's just my two cents.

I would say ongoing innovation and continuous effort on listening to consumers. They will eventually tell you thair needs and how to differentiate your product if you listen to them carefully.

Guarantee: If you don't like our product better than any other that you try send the UPC from their product, purchase receipt your return address & we'll send you a voucher for reimbursement of our product.

It's seemingly always the young guy who makes mistakes, I didn't save my Answer and then was told to Log In first prior to Posting. Here's a synopsis of what I wrote:
Make your commoditized product sound inferior to the customer and that is why you are intent on ensuring you let them know there's a reason I offer an inferior product. Then assure the customer your product is actually equal and you just wanted them to focus on why you should buy the same from you/new venor what have you. I was also wondering IS a commodity a product?

There are many definitions of a product...tangibility might be the most crucial feature. I can touch my dishwasher, but not my checking account. Customers today assume the product or commodity they buy will be of a quality they can trust--a table stake. Without a quality product, I would fold up the tent and go home! So, the best differentiator is uniqueness...is there anything like it in the marketplace? Assuming there are similar offerings, then the customer experience you surround the product with can help differentiate it. L.L. Bean sells high quality hiking boots. But, I can buy similar boots at Cabelas or Bass ProShop. So, L.L. Bean provides over-the-top service as a differentiator. Price as a differentor can only work for a short time and for a limited share of the market. Customers assume the price they pay for a product will be fair, another table stake.

Dang. All my classmates would have agreed with you on LL's customer service. It was so commoditized though that everyone at Dartmouth was wearing the same boots because it was Easier for us to order online than it was to hike over to Timberland. The Hanover Inn offers seating at the table despite whose boots you're wearing.

I agree with Scott and Chip on this one. Delivering an awe-inspiring customer experience will differentiate even a commodotized product from the competitors. That delivery of KnowHow and coaching with a personal touch through your service organization will help deflect the minor differneces in price and/or features that will distract your customers!

I'm late to the party - there's already been a ton of conversation on this topic, so here's my short but sweet response.

You can differentiate yourself by creating a niche market (who you sell to), changing up the way you offer your product (how you sell), and focusing on the benefits (what you sell).

Decent blog on this topic:
http://www.experienceprosblog.com/helping-your-company-stand-out/

Lot's of great answers. Speaking as someone who sells a series of equipment that most people believe is heavily commoditized. I bring as much of myself into the equation that I can. I customize and simplify my clients world as much as possible and that differentiates myself from other people selling the commodity. My goal is to become a valuable asset to their team that they just can't live without.

Best of Luck!

Christos Zafiropoulos
Sr. Account Manager
B2B Computer Products
630-396-6306
christos@b2bcomp.com
http://www.linkedin.com/in/b2bchristos
Leverage my resources and get me involved in your IT strategy planning.
The earlier in the process you get us involved the more we can usually
$ave you in Time and Money.

I would take a 180 degree different direction to differentiate your offering. There is something powerful and often hidden in most products that connects with emotion, identity and use in people's lives. Once tapped into it will be hard 'not' to sell your product on the merits of consumer relevancy.

1. Identify what is unique, better, different...(poses strong service or function attributes to your market sector) about your product and...

2. Deconstruct the communication (words, brand signals, media channels) that you are using now and ask if your communications vehicle is carrying enough of the workload of selling.

If you've already done these things and you're happy with the results, there may be more to evaluate and leverage in terms of social/cultural research and strategic communications that meets your consumers needs in a timely way.

I've found that we can never get close enough to the needs of the consumer and the audiences of our offerings. There is always more to uncover, research and strategize. It's creative and fun work and the consumers often flock to the thought provoking brands, the clear, no nonsense products that are immediately useful; that have done the hard work of masking the complexity to make their lives easier.

I hope this helps a little.
And, great question!

You have had loads of "Marketing" advice,
so here is some Sales Advice!

"Selling a commoditized product,
what is the best way to differentiate your offering?”

PRICE. Find the 'Win Price' for your Product/Market,
then reduce your costs to meet the Margin/Contribution goals
(or reduce those!) of your Company.

Or, close-up and give the Product/Market to the Chinese.

Selling any product follows the same rules: start by helping the buyer recognize and manage all of their decision issues along their path to getting buy-in for change.

When it's a commoditized solution, a great Facilitative Question might be:

Since our solution is so similar to others on the market, how would you know that purchasing one of the products over another would meet your criteria best?
or
Our solution is similar to others on the market: what criteria will you and your Buying Decision Team be using to choose one over the other?

Buyers have to do this anyway - with you or without you. So it might as well be with you. And helping them carefully define their criteria for choosing - service, quality - will give you both an opportunity to noodle on the best choices.

They will rarely say 'price'; if it's only price, you don't want that client anyway as you can almost never maintain a lowest price. But if they say 'quality' or 'service', the next Facilitative Question would be:

Given you haven't worked with us yet, how would you know before you purchased our solution that we would be able to give you the type of service/quality you deserve?

It's a decision. And it's not about your solution - it's about how they choose. Help them by competiting through excellence.