Commodity products: how to avoid falling into the trap

Do you think all products are the same?

Do you really think your product is impossible to differentiate?

Do you know if you have got a commodity as product?

If you haven’t wondered never once one of these three questions, read carefully the whole article.

 

I wondered: in line of large retailers, for the customer, are all the products replaceable?

Is it enough that a product with a lower price arrive to change your mind?

In many cases it is, and it is like that until the packaging takes the field.

In fact, before its characteristics, a product is evaluated depending on its aesthetic features: the packaging.

The final purchase decision is taken very fast, this is also for the lifestyle which brings us to take some actions faster and faster.

Nowadays is unthinkable expecting to have the total attention from the customer and ask them to dedicate time to our product. It doesn’t work. We have to make the effort to summarize a simple and immediate message which pushes customer to choose our product and this can only be done developing an effective packaging.

Practically, nowadays, in order not to be crushed in the war of prices, every product should be able to hit the customer during their run among shelves and stay in the mind of the customer with a clear image.

If you close your eyes thinking about a category, a market segment, you think exactly to that product, to that brand: you recognize it thanks to its Packaging Positioning®. It can’t be otherwise.

Without investing on the packaging it is not possible and the destiny of whom is so determined to think exclusively about the offers and the characteristics of the product, is becoming a commodity product.

 

What is a commodity product?

A commodity product is a replaceable product, without any uniqueness and devoid of the capacity to support the comparison with other products which are sold at a lower price.

In many cases the sad thing is that it could be a product with several qualities and uniqueness but it remains unknown because these qualities are not communicated to the customer. Try to guess who should communicate it to the customer? Yes, it is up to the packaging.

In reality all of us, at least once in our life, put a product back on the shelf because we had seen a similar product which was in offer. You have seen doing it a lot of times at large retailers: products which are initially chosen but put back when better offer is turned up.

Why does it happen? Because that packaging for customer was just a simple commodity.

 

When discount and offers become the rule your packaging is in danger

You will understand that is not the best thing being evaluated like that because it resets your margin of negotiation with buyers of large retailers – they know very well how your product is perceived – and it threatens your sales obliging you to use discounts, offers and promotions to sell. Discounts and offers which become the rule and not just an occasional choice.

A liter of gasoline, a kilogram of sugar and a liter of milk are commodity until it is decided to communicate actively their uniqueness.

 

When you can succeed in this delicate operation the product stops being a commodity and it starts to become a unique product.

Remaining on these three examples which I have just written about, it is easy to see how just a simple liter of gasoline can become a gasoline 100 octane (Eni Blu Super +), or how a simple kilogram of sugar becomes a crystal sugar which is extracted from pure grape dextrose (Naturalia sugar), or even how common milk becomes a specific milk for the foam of cappuccino (ReCappuccio which means king of cappuccino in Italian).

It is true, it is not just packaging who can change the fortunes of a product, it needs a clear strategy of positioning, but nothing is possible if we are not able to translate the differentiating idea to associate to the product with a specific Packaging Positioning™.

 

“The first purchase is on the packaging, not on the product: the packaging, initially, is the product itself”

 

In the lines of the large retailers the packaging speaks, it is the protagonist of the strategy which is done in the meeting room.

In the lane in a split second you can catch either the customer’s attention or disappear.

 

Here I have described 6 key points to avoid your products becoming a commodity to the customer’s eyes:

• Identify a distinctive characteristic of your product
• Be sure that your distinctive characteristic is not already used as a strength point from one of your competitors (If so, come back at point 1)
• Build (or re-think) the naming of the product to make sure it exists the highest coherence between the strength point of what you want to point on and the name of the product
• Build (or re-think) the logo of the product
• Develop a Packaging Positioning™ to translate what decided in a scientific marketing tool
• Structure all the actions of communication to amplify the differentiating element on which want to point (from the communication with the buyer to the advertising towards your end customer)

 

 

The advantages of not being considered a commodity product

I think you’ve already understood some of the advantages which derive from a clear positioning of your product, but I would like to summarize them:

• Identity: being recognized always and anyway (from customers to professionals) is a vaccine which protects from many dangers that are in the market
• Marginality: a product which positions itself for its uniqueness, it always positions itself in a high range of price and this means more marginality for the producer
• Negotiation: when for the buyer your product acquires a specific identity the things chance. Your power of negotiation increases and it is much easier to close commercial agreements

 

Can everybody save themselves from the trap of commodity product?

The answer is yes. I am going to show you some extreme examples which are below our eyes every day and for this reason we consider as common things.

Is it simple?

No, not at all! But after doing that everything will look easier to you.

Chiquita: how to win on the commodity products in three moves

Banana is more than a product, it is a pure commodity; even so Chiquita was able to associate it to banana which is not just a banana, but it is a Chiquita.

Chiquita did a very ambitious but simple packaging operation: the blue sticker. We can easily say that there are bananas and there is Chiquita, a banana which we are able to recognize only thanks to its packaging that I could define it of the Genetic Profit™ for three main reasons:

• Unique format and differentiating in the category of the fruit
• Institutional yellow color
• The first that branded the banana product

Bonduelle

Another perfect example is Bonduelle: positioning a common product as lettuce using the strength of the packaging. Try to think how it was in 70’s and 80’s when people went to the butcher’s, the hardware store, the fruit vendor and not to the grocery store or the shopping center.

Would you have ever imagined to see on the shelf of the large retailers some lettuce inside a plastic packaging?

In these cases it is clear that we’re dealing with common products commercialized in the 99% of the cases how commodity, but they become perfectly recognizable and saleable to an higher price thanks to the packaging.

Now I ask you in all honesty: have you ever had the sensation to be threatened from the competitor’s promotions? Have you ever had the necessity to use a downward price policy to stay competitive on the market with your products?

If that’s the case, it is clear that your products are in trouble to become a commodity or they already are.

The solution is a development of Packaging Positioning® thought in every detail for your product: this is our job.

If you want to know more about our services contact us without any commitment.

 

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