Published: August
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Many of our clients in commodity markets come to us feeling trapped'struggling to compete and survive as competition drives prices lower. Their question is simple:
How can we grow our business if price is the only thing that matters?
In answering the question'and growing many commodity businesses'we have found three things to be true:
In many commodity markets, 'the winner takes all' (or at least 'the winner takes most'). It is particularly true of online businesses. That truth carries an important implication:
If you want to be twice as profitable as your competitors, you don't have to be twice as good as them. You just have to be slightly better.
This phenomenon is sometimes called the 'slight edge.'
We have already shared many strategies for developing your own slight edge in pricing, offers, and competing with Amazon. The following article contains strategies especially relevant to companies selling commodities.
Offer a low initial price, then make money from subsequent sales. For example, many subscription companies (such as internet providers and television networks) offer discounted fees for the first six months of the contract.
Upsell or cross'sell your customers. Low-cost airlines are experts of this tactic. After you choose a flight, the airline will upsell luggage capacity, legroom, speed of boarding, and more. Once in the air, you are cross'sold food and drink, duty'free goods, or destination car hire. Ryanair even sells inflight scratchcards to help pass the time. Customers are thus able to select the components they value. Few flyers ever pay the commodity price.
Create a unique offer so it can't be compared with competitors. Cell networks work hard to create unique plans that include a Netflix subscription or unlimited data for popular social networks. The most successful examples add genuine value for the customer.
Price lower than your competitors for products or services that can be compared directly, and have higher margins on others. Supermarkets compete on staple products like bread and milk'because people know what these items should cost'and make a profit on others, such as prepared foods and beauty products.
Market your product for a particular audience niche. Manufacturers of computer monitors sell gaming'specific versions that offer slightly tailored features and designs.
Give reasons why customers shouldn't shop just on price. Do you pay your workers a fairer wage, have a better warranty, or use 100% renewable energy? If so, let your customers know.
Have the lowest 'first-purchase' price, then profit later from related products and services. Home security companies sell low-priced hardware, profiting from the subsequent subscriptions. Razors are cheap to buy, and the companies make their profits on the blades.
Include personal rewards and extras for your customers. This strategy is particularly effective (and common) in B2B markets'where customers shop with their employer's money. Consider ways of personally rewarding them. For example, make the order process frictionless, airlines give air miles for personal use, and office supply companies include free chocolates.
Reframe your commodity as a solution. Prospects buy solutions because of their value, not their price. For example, a sun cream could be marketed as simple UV protection or a solution to avoid premature aging. Building materials such as ceiling tiles are often sold as systems'with the tiles, connectors and fittings comprising an easy-to-install system.
Give away information, because it costs very little and can be really valuable to customers. In , fewer than 3,000 cars were on the roads of France. To encourage people to travel more'thereby boosting car and tire sales'Michelin distributed 35,000 free copies of their first guide, the Michelin Guide. It is perhaps one of the most well'known marketing strategies of all time.
Be top of mind when it matters. Diaper brands provide free supplies to neonatal units. Food manufacturers negotiate for eye'level positioning on supermarket shelves. Look for ways to get your product and services closer to the places (and moments) where your customers need them.
Many of our clients thrive in commodity markets, using the strategies above. By being slightly better than their competition'developing their own 'slight edge''they've seen game-changing profits.
Now it's your turn.
Pick a strategy'aim for the one that matters most to your customers'then, once you have a 'slight edge' over your competitors, don't become complacent; choose another.
Where will you start?
We've generated hundreds of millions for our clients, using our unique CRE Methodology'. To discover how we can help grow your business:
Schedule your FREE strategy session
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When it comes to choosing a marketing strategy for commodity products versus luxury goods, there are several key factors to consider. First and foremost, the target market for these two types of products is vastly different. Commodity products are aimed at the mass market, where the goal is to reach as many consumers as possible and provide them with a basic, affordable option. On the other hand, luxury goods are targeted toward a niche market of discerning customers who are willing to pay a premium price for exclusive and high-quality products.
Considering the differences in target customers, it becomes clear that the value proposition for commodity products and luxury goods are also distinct. Commodity products typically focus on functionality and price, offering a practical solution at an affordable cost. On the other hand, luxury brands emphasize craftsmanship, superior materials, and exclusivity, providing a unique and prestigious experience for their customers.
This contrast in value proposition greatly influences pricing and competition. Commodity products rely on economies of scale to offer competitive prices, as they are often produced in large quantities. Luxury goods, however, can command a higher price due to their perceived value and rarity. This pricing difference allows luxury brands to position themselves as aspirational and maintain a level of exclusivity in their market.
In terms of marketing strategies, commodity products often rely on mass marketing techniques to reach their target audience. They focus on broad advertising campaigns, price promotions, and accessibility to ensure widespread distribution. On the other hand, luxury brands employ more targeted marketing approaches, such as influencer collaborations, high-end events, and personalized experiences, to create a sense of desirability and exclusivity among their niche audience.
Overall, choosing the right marketing strategy for commodity products versus luxury goods depends on understanding the unique characteristics of each market segment. By aligning their marketing efforts with the specific needs and desires of their target customers, businesses can effectively differentiate themselves in the market and build a strong brand presence.
When it comes to marketing commodity products, there are several advantages to consider. One major advantage is the wide range of potential customers that can be targeted. Commodity products appeal to a larger market segment as they fulfill basic needs and offer practical solutions at affordable prices. This allows for a larger customer base and more opportunities for sales and growth.
Contact us to discuss your requirements of commodity department store. Our experienced sales team can help you identify the options that best suit your needs.
Additionally, marketing commodity products can benefit from economies of scale. Due to their high demand and mass production, commodity products can be manufactured and distributed at a lower cost per unit. This cost advantage can enable businesses to offer competitive prices and attract price-sensitive customers who prioritize affordability over brand prestige.
Another advantage of marketing commodity products is the potential for repeat purchases and customer loyalty. As these products often fulfill everyday needs, customers are more likely to repurchase them regularly. By focusing on quality and ensuring customer satisfaction, businesses can build strong relationships with their customers and create a loyal customer base.
To effectively market commodity products, businesses can leverage various marketing tools and techniques such as targeted advertising, price promotions, and online platforms to reach a broader audience. By emphasizing the practical benefits and affordability of their products, businesses can position themselves as reliable and convenient choices in the marketplace.
When it comes to marketing strategy, one key advantage of commodity products is their ability to expand a company's potential customer base. Unlike luxury products, which often cater to a niche market of consumers willing to pay a premium price for exclusivity and prestige, commodity products have a wider range of appeal. These products are typically more affordable, making them accessible to a larger pool of price-sensitive consumers.
Understanding the disposable income of potential customers is crucial in this strategy. By targeting price-sensitive consumers, businesses can tap into a market segment that values affordability over luxury. This means considering the average income levels of their target audience and aligning their pricing strategy accordingly.
A prime example of the effectiveness of this strategy can be seen in the cosmetics industry. While luxury cosmetic brands like Chanel and Dior cater to a high-end market, there is also a significant demand for more affordable options. Drugstore brands such as Maybelline and L'Oreal thrive in this space by offering products that are accessible to a wider range of consumers. This approach allows these companies to tap into a potential customer base that seeks quality products at a lower price point.
Similarly, the consumer products industry, encompassing everyday items like household cleaners, personal care products, and food, also benefits from targeting a wider range of price-sensitive consumers. By offering commodity products at competitive prices, companies can capture a larger customer base and increase market share.
In conclusion, marketing commodity products can expand a company's customer base by appealing to a wider range of price-sensitive consumers. Understanding disposable income and strategically pricing products accordingly is key to the success of this strategy. Industries such as cosmetics and consumer products effectively leverage this approach to tap into a larger potential customer base.
Luxury brands and commodity brands may seem like opposite ends of the spectrum when it comes to consumer goods. One evokes images of opulence, exclusivity, and high prices, while the other brings to mind everyday items that are easily accessible and affordable. But what exactly sets these two types of brands apart?
At its core, the difference lies in the perceived value and the emotions they evoke. Luxury brands are built on the foundation of craftsmanship, exceptional quality, and the promise of a unique and indulgent experience. They create an aura of exclusivity and cater to consumers who yearn for the finest things in life. These brands often rely on prestigious materials, sophisticated design, and meticulous attention to detail to create their luxurious image. Think about a Louis Vuitton handbag or a Rolex watch ' they are symbols of prestige and status.
Commodity brands, on the other hand, focus on meeting basic needs and offering affordable solutions to a mass market. They are more concerned with functionality and practicality rather than indulgence and luxury. Commodity products often have little differentiation among competitors, with price being a key factor for consumers. For instance, think about a basic toothpaste or a generic brand of cornflakes ' they serve a purpose and are widely available to the masses at an affordable price. Marketing strategies for commodity brands revolve around price competitiveness, convenience, and wide availability.
Understanding the difference between luxury and commodity brands is crucial for marketers. It helps them craft tailored marketing strategies that resonate with their target audience. While luxury brands aim to create desire and aspiration through exclusivity and exceptional quality, commodity brands focus on meeting the needs of a larger consumer base. By understanding these differences, growth marketers can effectively position products in the market, identify target markets, and deliver compelling value propositions. Ultimately, it's about creating a connection with consumers that aligns with their preferences, values, and aspirations.
Luxury product marketing is an art form in itself. Unlike the marketing of regular consumer goods, luxury product marketing involves creating an experience and a lifestyle rather than simply selling a product. It goes beyond practicality and functionality and taps into the desires and aspirations of consumers who crave the best of the best.
To be successful in luxury product marketing, it is essential to truly understand the luxury consumer. These are individuals who appreciate craftsmanship, attention to detail, and the finest materials. They value exclusivity, and they are willing to pay a premium price for it. It's not just about the product itself, but also the story, the heritage, and the luxury experience that comes with it.
A key aspect of luxury product marketing is the fine-tuning of the approach. It's about understanding the needs and desires of the target audience and tailoring marketing messages and strategies accordingly. This personalized approach allows luxury brands to connect with their consumers on a deeper level, building a loyal customer base that truly values and appreciates what they have to offer.
As wealth trends continue to evolve, luxury product marketing becomes more important than ever. Today's luxury consumers are not just seeking material possessions; they are seeking meaningful experiences and products that align with their values and aspirations. By understanding these evolving trends and tailoring their approach, luxury brands can generate more sales and build lasting relationships with their customers.
Luxury goods and commodity goods may seem like opposites in the world of marketing. The fundamental characteristics that differentiate these two types of products lie in their perceived value, emotional connection, and overall experience.
Commodity goods are typically viewed as everyday, utilitarian products that satisfy basic needs. They are mass-produced, widely available, and usually sold at lower prices. The focus of marketing these products often revolves around price, convenience, and functionality. The consumer's purchasing decision for commodity goods is primarily driven by practicality and value for money.
On the other hand, luxury goods are synonymous with exclusivity, superior quality, and prestige. These products offer a unique experience and often cater to the desires and aspirations of consumers who seek elevated status and refined taste. Luxury goods are crafted with meticulous attention to detail, using the finest materials and techniques. The marketing of luxury goods centers around storytelling, heritage, and the emotional appeal of the brand. It aims to create a sense of desire and exclusivity among consumers, provoking an emotional connection that goes beyond functionality.
Marketing strategy plays a pivotal role in effectively targeting the high-end consumer segment and building a sustainable competitive advantage in the luxury goods market. By understanding and tapping into the aspirations and emotions of luxury consumers, brands can create a compelling narrative that sets them apart from commodity goods. This involves identifying and leveraging key differentiators, such as craftsmanship, heritage, and limited availability. It also requires cultivating a strong brand identity and using targeted marketing channels and tactics to reach the right audience.
In summary, the difference between luxury goods and commodity goods lies in their perceived value, emotional connection, and overall experience. While commodity goods focus on price and functionality, luxury goods appeal to consumers' desires for exclusivity, superior quality, and a sense of prestige. Through effective marketing strategy, luxury brands can establish themselves as providers of unique experiences and build a loyal customer base that transcends the utilitarian value propositions of commodity goods.
In the world of marketing, understanding the concept of commodities versus brands is crucial to developing effective strategies. Commodities are products that serve basic needs, are mass-produced, and are widely available. They are often viewed as interchangeable and price-driven, offering little differentiation in the market. On the other hand, brands are distinguished by their unique qualities, which set them apart from competitors and elicit emotional connections with consumers.
Commodities serve a functional purpose, satisfying everyday needs and providing convenience at a lower cost. They are easily replaceable and consumers' purchasing decisions are primarily driven by price and practicality. In contrast, brands offer something more than just functionality. They have a distinct identity, reputation, and value proposition that resonates with consumers on a deeper level. Brands create a sense of loyalty, trust, and aspiration, tapping into consumers' desires for prestige, quality, and a unique experience.
The key to successful marketing lies in understanding the difference between commodities and brands. For commodities, the focus is on cost efficiency, distribution channels, and convenience. Marketing strategies aim to maximize reach and drive volume sales. However, with brands, the emphasis is on building a strong reputation, creating emotional connections, and establishing a loyal customer base. By understanding the concept of commodities versus brands, marketers can tailor their strategies to effectively communicate the unique qualities and value that a brand offers to consumers.
Luxury marketing is fundamentally different from marketing everyday consumer goods due to several key factors. One of the main challenges faced by luxury brands is the growth of low-priced premium brands, which offer products that aim to imitate the luxurious image and appeal to a wider audience at a more affordable price point. This poses a threat to traditional luxury brands, as it dilutes the exclusivity and prestige that they have traditionally represented. In response to this challenge, luxury brands must find unique ways to differentiate themselves and strengthen their brand positioning in the market.
Another challenge that luxury marketing faces is changing consumer behavior. In today's fast-paced world, consumers are becoming more informed, discerning, and selective in their purchasing decisions. They seek out brands that align with their values and offer a meaningful and authentic experience. Luxury brands need to adapt their marketing strategies to appeal to these evolving consumer preferences. This involves creating compelling brand stories, engaging with consumers on social media platforms, and offering personalized and immersive experiences.
Furthermore, the rise of the omnichannel world has also impacted luxury marketing. Luxury brands must ensure a seamless and consistent brand experience across multiple touchpoints, both online and offline. They need to leverage digital marketing tools and techniques to reach and engage with their target audience effectively. While the challenges for luxury marketing are significant, the rewards can be equally substantial. Luxury products are defined by their exceptional quality, craftsmanship, and exclusivity. What makes them unique and desirable is the combination of tangible and intangible attributes. Luxury products often use rare and high-quality materials, undergo meticulous craftsmanship, and have limited availability, which adds to their allure. The intangible attributes, such as the brand story, heritage, and reputation, create a sense of aspiration and symbolism for consumers. All these elements come together to create a sense of luxury that goes beyond functional value, evoking emotions and desires for a unique and prestigious experience.
In conclusion, luxury marketing faces distinct challenges in the form of low-priced premium brands, changing consumer behavior, and the omnichannel world. However, luxury products are defined by their exceptional quality, craftsmanship, exclusivity, and intangible attributes that create a sense of desirability and aspiration among consumers. By effectively addressing these challenges and leveraging unique brand attributes, luxury brands can continue to captivate and cater to their discerning audience.
What sets luxury brands apart from commodity products is their ability to create a strong emotional connection with their consumers. Luxury brands understand that their target audience seeks more than just functional value ' they want to experience a sense of prestige, exclusivity, and aspiration. To achieve this, luxury brands employ various strategies to establish a deep emotional connection with their consumers.
One of the most powerful tools in a luxury brand's arsenal is its brand story. Luxury brands excel at crafting compelling narratives that resonate with their target audience. By showcasing their heritage, craftsmanship, and unique values, luxury brands create a sense of authenticity and meaning behind their products. They transport consumers into a world where luxury is not just a transaction but an experience that aligns with their aspirations and personal values.
Exclusivity is another key strategy employed by luxury brands. They understand that scarcity and limited availability are powerful drivers of desire. By intentionally restricting the availability of their products, luxury brands create a sense of exclusivity that fuels demand. Limited-edition releases, collaborations with prestigious designers or artists, and membership programs are just a few examples of how luxury brands make their products highly sought after.
For instance, Hermès, a renowned luxury fashion brand, is famous for its highly exclusive Birkin handbags. The limited supply, combined with the craftsmanship and prestige associated with the brand, has created a cult following and a waiting list that spans years. Similarly, luxury car brands like Lamborghini employ exclusivity as a marketing strategy, producing limited numbers of each model to ensure that owning one is a symbol of status and rarity.
In conclusion, luxury brands create a strong emotional connection with their consumers by leveraging the power of their brand story and exclusivity. By crafting compelling narratives and making their products scarce, luxury brands tap into consumers' desires for prestige, authenticity, and exclusivity. These strategies not only drive demand but also solidify the emotional bond between luxury brands and their consumers.
Luxury strategy is the approach employed by luxury brands to position themselves in the market and create a distinct and compelling value proposition for their target audience. It goes beyond traditional marketing strategies and focuses on creating a sense of exclusivity, aspiration, and emotional connection with customers. Luxury strategy is all about crafting a unique brand story, leveraging craftsmanship and heritage, and using scarcity and limited availability to drive demand.
One of the main elements that distinguish luxury strategy from general marketing strategies is the emphasis on the brand story. Luxury brands understand that their customers seek more than just a product; they want an experience that aligns with their aspirations and personal values. By showcasing their heritage, craftsmanship, and unique values, luxury brands create a sense of authenticity and meaning behind their products. Take the example of Louis Vuitton, a renowned luxury brand known for its distinguished history and craftsmanship. Each Louis Vuitton product comes with a story that reflects the brand's long-standing tradition of excellence.
Another key element of a luxury strategy is exclusivity. Luxury brands intentionally restrict the availability of their products, creating a sense of rarity and desirability. Limited-edition releases, collaborations with prestigious designers, and membership programs are just a few examples of how luxury brands make their products highly sought after. For instance, brands like Rolex and Patek Philippe release limited quantities of their timepieces, making them exclusive and highly prized by collectors.
Overall, a successful luxury strategy involves creating a strong brand identity, delivering exceptional product quality and craftsmanship, and leveraging exclusivity and scarcity to drive demand. It also requires a deep understanding of consumer behavior and the ability to create meaningful connections with consumers. By effectively employing brand management techniques and understanding the psychology behind luxury purchases, luxury brands can develop compelling marketing campaigns that resonate with their target audience and stand out in the market.
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