Do I Need Branding for Commodity Products?
Ever consider expanding business opportunities into the commodity market? These are undifferentiated or homogenous items widely available in the market. Some examples include sugar, coffee, apples, gold, minerals, fuels, and other agricultural products.
Some entrepreneurs are quite apprehensive to venture in this business, believing competitive price advantage and economies of scale are the only effective strategies to gain market share and reap profits. On the surface it may appear this way but underneath this allegedly low-profit, “boring” segment is a very lucrative opportunity once you realize the value of branding.
Aside from different strategies for fighting low-priced competitors, CapForge shares an interesting advice on turning commodity products to successful niche businesses. Starbucks is one of the most successful cases of this strategy. There is nothing significantly unique about their coffees but the ambiance and so-called “Starbucks experience” created strong differentiation and addiction amongst consumers.
In an environment where marketing is less intensive, you have the opportunity to capture a big market by creating a unique selling proposition not anchored on price and discounts.
This concept is further substantiated by a strategy+business article titled How to Brand Sand, saying strong marketing efforts can even make bricks and sand set high prices despite being a commodity.
Commodity differentiation must be tangible, robust and capable of withstanding intense scrutiny. There are always ways to differentiate, through both how you add value and how you deliver it. Value is created in commodity products through improving the consistency of the offering, making it more convenient or aggressively customizing it to the customer’s operation. This value can be delivered either through the product itself or through service enhancement.
