Founder & CEO, the Imagine companies
How easily can you quantify the differences between your products and services from those of your competitors? How easily can your clients or prospects make those same distinctions? How can you continuously differentiate your company when market forces are constantly commoditizing your business? Think about that question for a moment. It is the biggest challenge facing businesses of all sizes in the 21st century.
Commoditization is the evolutionary process that reduces all products and services to their lowest common denominator. The Commoditization Trap is the situation businesses find themselves in when their focus is mainly on the product or service they offer instead of a quantifiable difference between their product and their competitor’s.
Imagine Consulting has asked over 2,000 business owners and salespeople “Why should people buy from you instead of your competitors?” Here is what many answered:
- We give better service.
- Our clients get better results with us.
- We know what we’re doing better than our competition does.
- Our products and service are better.
These answers may sound familiar. But as nice as they sound, and even as true as they may be, these answers are all indicative of a we are better value proposition. Distinguishing your company in such a manner puts you in The Commoditization Trap™. These answers do not differentiate you. No one is out there saying: “We’re not as good.” Even companies for which price is the primary selling point insist that their products are just as good.
The Commoditization Trap, ensnaring businesses, impacts businesses in ways not readily apparent to them. Unaware of the causes of commoditization, businesses often unnecessarily expend valuable resources. Addressing the symptoms of commoditization, rather than focusing on their origin, businesses look internally to solve the problem. This actually propels them deeper into the trap. Businesses invest in new product development. They change their marketing plans. They change their advertising. They reprint their brochures. They change the sales process by eliminating salespeople if they have a sales force or hiring salespeople if they do not have a sales force. In an attempt to get out of the trap, businesses do all of this under the mantra of “ giving added value” to their customers. The problem, however, is that businesses fail to ask themselves if any of these changes actually add value.
CONCLUSIONS
The tighter "The Commoditization Trap" is on a company or an industry, the more that company or industry must look outside – to its customers, clients and prospects to find, and, more importantly, understand the unique problems that face them. Companies must stop being “solution” specialists and become “problem” specialists. If you want to avoid or escape "The Commoditization Trap" you must find ways to add value (something people are willing to pay for) before the product or service becomes an issue.
From a packaging development specialist point of view, like we are, the COMMODITIZATION TRAP is not only a "danger" , but a reality caused and accellerated by:
- the increase of Food safety issues, norms and requests of controls
- the standardization of the materials imposed by local pubblic laws to facilitate the waste management.
- the buying activity for facilitate the e-auctions
- the research of the max efficiency possible on existing process
- the necessity of intensive capital for the development of innovative more sustinable materials, process and solutions.
SO PLEASE ASK US TO SOLVE YOUR PROBLEMS INSTEAD TO LOOK FOR INNOVATIVE SOLUTIONS!!!
https://www.youtube.com/watch?v=Hssd84U2470
A good example will follow!!
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