How Innovation Adds Value In Commodity Style Markets (by Lori Colman)

Do you operate in a marketplace with little perceived distinction between product offerings, where purchasers believe they can substitute one product for another, and products compete mainly on price? If so, your product or service is being "commoditicized," perhaps with disastrous results. We all know the warning signs: no perceived distinction between competitive offerings, high levels of substitutability, competition based on volume and price.

Even products with stable sales, recognized names, differentiated marketing and sales people who know how to sell competitive advantage are falling into the black hole of commoditization. Research conducted by Colman Brohan Davis for a global ingredients manufacturer found that you can still be perceived as a commodity if:

" Your product or service is handled by a sales force or broker network that also handles other, similar offerings.

" Your product exists within a silo-type organization or within a business unit of a very large enterprise. The farther down the organization chart your brand appears, the less likely it is to get the attention it needs. And even though the corporate parent name may be known, your particular brand may not be memorable.

" Your revenue is static or in decline and you've been marketing the same way for more than two years. Meaning, you have talked about the same product attributes, using the same sales force, with the same sales pitch, using the same materials, relying upon the same media mix and approaching the same customers.

If you see yourself on this slippery slope to commodity status, it may be time to reinvent your brand.

The Keys to Innovation

Four overarching directives contribute to a successful innovation process.

1) Collaboration with all stakeholders. Build an Innovation Team that includes key players within your organization as well as outside sales or broker teams, customers and marketing partners.

2) Keep on open mind. This is easy to say but often hard to do in the face of entrenched structures. Older products or services especially are often burdened with "we've always done it this way" baggage.

3) Keep a laser-sharp focus on the customer. Elevation above commodity status is done through and by your customers. What you find out about, and from, your customers and their customers will influence all your key decisions and keep you on track to affect meaningful change.

4) Think like a CEO. Analyze. Prioritize. Rank the discoveries that will come out of the data. Be bold in championing new approaches that reflect the new information you have worked so hard to collect.

From Commodity to Brand

The journey from same-as commodity to a value-add brand begins with industry, competitive and company data. Audit your current situation thoroughly. Industry trend data is needed along with a complete competitive analysis. Map your sales processes and your internal and external communications.

Customer knowledge is next. Learn what your customers do and think, and what their customers do and think regarding your product or service. Use phone and e-surveys as well as insights from internal sales people and broker teams.

Identify the basis for differentiating your product from all the similar products in its category. Analyze product features and product quality. Look at service and support systems. Are there bundling or risk management factors that separate you from your competition?

Segment your audience by industry and customer type. Identify higher value customers and those with potential for becoming higher value. They are the ones on whom you should focus most of your resources.

Create a powerful image for your brand. Your messaging should be highly targeted and relevant to specific customer and industry segments. Give customers emotional and rational reasons to buy.

Now engage your sales team and activate channel marketing efforts. Restructure if necessary. Invest in training so brokers and frontline sales people can articulate the important differentiating factors that will motivate sales and build share.

Innovation can help you add value and win back share. Yes, it's hard work. But it's not as hard as making a living as a commodity.

Lori Colman is the founding partner and Co-CEO of Colman Brohan Davis, a Chicago-based strategic branding and creative marketing firm founded in 1988. Lori is instrumental in developing brand strategies and marketing initiatives for business-to-business companies in industry sectors including technology, financial services, professional services, pharmaceuticals and manufacturing. A particular passion is adding value to commodity-style products and markets. Colman Brohan Davis is included on BtoB Magazine's current "Top Agencies" list and is a certified Women's Business Enterprise. Contact Lori at lcolman@cbdmarketing.com