Combating CommoditizationCombating Commoditization

Commoditization occurs when the market moves from the status of a differentiated good to a commodity. Many products on the market such as gasoline, butter and milk can be all considered commodities because there aren’t drastic differences among them. As the world becomes increasingly technological, executives have to make sure that their technology software and products don’t become as interchangeable as butter. Here are a few tips to help combat commoditization. Commoditization occurs when the market moves from the status of a differentiated good to a commodity. Many products on the market such as gasoline, butter and milk can be all considered commodities because there aren’t drastic differences among them. As the world becomes increasingly technological, executives have to make sure that their technology software and products don’t become as interchangeable as butter. Here are a few tips to help combat commoditization. 

Micro-segment the market. Micro-segmentation is the practice of dividing a company’s customers into precise groups based on different factors, such as behavioral predictions. This allows for marketers to directly target these groups with specific content in hopes to maximize the effectiveness of getting, and maintaining contact with each customer. As a result of having homogenous groups, finding out which marketing actions have the most impact on each set of customers becomes easier and more visible.

Interact with customers. Sometimes customers attach importance to functional distinctions that suppliers don’t even know about. Not only is this useful information to know about your current customers, but it also reveals knowledge that could be used in order to market to prospective customers from a new angle.

Don’t just focus on the price. In the majority of B2B markets, 70% of customer’s buying decisions are based on non-price factors. Many companies use price to create leverage among their competitors by creating discounts or lowering prices. By solely adjusting price and not focusing on quality and service, they are actually losing a large percent of prospective customers.

Have a supported product. Customers always like value service-like features, such as consulting services and maintenance. No matter how strong a product is alone, it needs to be supported by great quaility and service in order for customers to seriously consider your product. Customers also value on-time delivery, level of technical support and service, constancy of performance, constant contact with sales rep and a variety of products.

Micro-segment the market. Micro-segmentation is the practice of dividing a company’s customers into precise groups based on different factors, such as behavioral predictions. This allows for marketers to directly target these groups with specific content in hopes to maximize the effectiveness of getting, and maintaining contact with each customer. As a result of having homogenous groups, finding out which marketing actions have the most impact on each set of customers becomes easier and more visible.

Interact with customers. Sometimes customers attach importance to functional distinctions that suppliers don’t even know about. Not only is this useful information to know about your current customers, but it also reveals knowledge that could be used in order to market to prospective customers from a new angle.

Don’t just focus on the price. In the majority of B2B markets, 70% of customer’s buying decisions are based on non-price factors. Many companies use price to create leverage among their competitors by creating discounts or lowering prices. By solely adjusting price and not focusing on quality and service, they are actually losing a large percent of prospective customers.

Have a supported product. Customers always like value service-like features, such as consulting services and maintenance. No matter how strong a product is alone, it needs to be supported by great quaility and service in order for customers to seriously consider your product. Customers also value on-time delivery, level of technical support and service, constancy of performance, constant contact with sales rep and a variety of products.

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