Shedding the Commodity Mind-Set

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MANOZ M A R K E T I N G 79 Shedding the commodity mind-set John E. Forsyth, Alok Gupta, Sudeep Haldar, and Michael V. Marn No product really has to be a commodity. The trick is to know what services your customers want—and to charge more. C ompanies that sell soap, perfume, candy bars, and other consumer products are expert at “decommoditizing” them: finding and capturing the value of intangible benefits and building strong brand names that can provide a kind of differentiation in the minds of consumers. But companies that sell products such as bulk chemicals, paper, and steel to businesses tend to be unsophisticated in these matters. Burdened by corporate cultures that emphasize operations and sales over marketing, many of these…show more content…
The company managed to increase its sales by 15 percent in a single year by determining which important attributes it was best at providing and focusing on the buyers that valued them most. Conjoint analysis and needs-based segmentation So many companies segment their customers by size and other such criteria because this approach is easy to carry out, and the companies falling into these gross categories do tend to have similar needs. But to have a truly actionable segmentation scheme, you must divide your customers into much more precise groupings based specifically on their needs. SHEDDING THE COMMODITY MIND-SET 81 In the business-to-consumer (B2C) market, this kind of segmentation is often quite hard to undertake because the obvious differences among customers—age, income, geography, and so on—usually don’t correspond to their preferences for, say, shampoos, books, or even clothing. To solve this problem, consumer goods companies have developed elaborate statistical mechanisms, such as dual-objective segmentation.1 But because these complicated algorithms are not typically used by business-to-business (B2B) suppliers, those companies divide their world by weak identifiers such as size and geography. The good news is that B2B companies don’t necessarily need to use elaborate and sophisticated methods; only a large consumer goods customer base— often comprising millions of individuals—demands them. In many B2B markets, 25, 15, or even just 10 customers
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