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Compete and win by avoiding commodity hell

DS“Either you innovate or you’re in commodity hell” according to Sam Palmisano, CEO of IBM. Colgate and Crest now have over 40 varieties of toothpaste. A shopper asked what kind of toothpaste they purchased replied “Colgate.” When asked which variety was preferred the response was, “Buy one, get one free.”.

Market leaders are being imitated by seasoned competitors and new entrants make incremental improvements on the market leader’s products or services. The “me-too” age has arrived where customers, overwhelmed by the choices in everything from deodorants to rug cleaning services…unable to differentiate, simply buy whatever is cheapest. Commoditization leads to low profits, slow growth and no future.

Low cost manufacturing in underdeveloped nations, coupled with widespread and inexpensive access to information, talent, and technology makes it easier to duplicate good products and copy great service processes. Customers bypass organizations’ marketing plans and distribution channels and get together through e-mail, Web sites, or chat rooms to share product information. Easy access to information has both increased customer awareness and lowered the barriers to entering a business.

Recent mega-bucks-marketing efforts by GM, Levi Straus and AOL revolving around high-profile endorsers and expensive television advertising have flopped. Marketing is still critical to an organization, but only when highlighting the distinguishing features of your product or service.

Break From the Pack author Oren Harari, says that for an offering to be distinctive one should remember the acronym EMBER, Extraordinary, Matter, Break New Ground, Evolvement, and Real.

According to Harari, extraordinary means making your enterprise stand out, as did Apple with its highly visible, much-discussed iMacs and iPods.

Products that matter get people excited. An entire aisle of deodorants at the drugstore or a thousand sales companies saying “we’ll help you increase sales” just doesn’t motivate customers.

Breaking new ground was accomplished by JetBlue when it put TV screens on the back of each seat and is being achieved as home entertainment centers go from color to a high definition television.

To encourage evolvement, Harari suggest that organizations gear toward making the product one step in a constant state of evolution. “Add features, ramp up service, or improve the distribution.”

To be sure that your success is real you must have systems in place to provide accurate data to ensure that your venture is profitable. Selling more cars each month through reduced prices and 0% financing could be a recipe for disaster.

To avoid commoditization choose your product or service, markets, and customers very carefully. Colin Powell said: “Choose your battles very selectively, then go in with overwhelming force.” Focus on what you’ve selected, make a commitment to dominate it, and abandon everything else.

To dominate a market one does not have to be big. United Airlines and Delta are very large companies, but neither is dominant and even though United’s revenue may top Delta’s…what does it matter if they’re both in financial trouble?

A central idea or easily understood higher cause is required to peak curiosity and avoid commoditization. The March of Dimes “improves the health of babies,” Starbucks wants to “create a third place, a safe refuge for people, after their home and office.” Apple Computer wants “to make a contribution to the world by making tools for the mind that advance humankind.”

Whole Foods Market’s says “our children and grandchildren will be living in a world that values human creativity, diversity, and individual choice by changing the way we think about the relationships between our food supply, the environment, and our bodies.”

The central idea or higher cause must be authentic and is best if a little bold, revolutionary and challenges the status quo. It should cause people to think different, bigger, and define who you are, who you serve, where you’re going and what you stand for. It should positively impact the lives of your present and potential customers, and maybe even the world.

Above all, make sure that it’s yours and break away from the “me too” commoditization age. However, make sure that your customers and prospects are in love with your higher cause as much as you are. If people’s emotions, values needs and wants are not served, just like recent product launches from GM, AOL and Levi Strauss… your higher cause will fail.

If however, customers and prospects do love your idea, you’ll have an unpaid marketing force telling other people who trust them about your product or service through word-of-mouth, e-mail, blogs and chat rooms. In addition, you won’t have employees who come to work each day to do their jobs. Rather, you will have zealots who believe in your cause and committed to making it happen.

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This article is provided by Joe Murtagh, “The DreamSpeaker™” www.TheDreamSpeaker.com. For keynotes, facilitation, workshops, consulting and questions or or a free report on The 3 Most Common Mistakes Organizations Make, email us at Joe@TheDreamSpeaker.com or call 800-239-0058.

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