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Marketing Commodities: Differentiation Makes a Difference

The first lesson in marketing commodities is this: There are no commodities. Why is it that we understand that the beef we buy from Ruth’s Chris is not the same as what we buy from McDonald’s? Yet in other industries, a product from one company is perceived to be the same as another. “Just give me the lowest price,” buyers say.

The late former Nucor CEO Ken Iverson is one of the most celebrated leaders in the modern era for his ability to grow an unknown company into what has become the largest steelmaker in North America. He’s been lauded in Harvard business case studies and business books like Good to Great. When questioned about his commitment to advertising and marketing a product considered a commodity, he had this to say: “When three bids are on the desk, people are going to pick Nucor because they know us and they just feel comfortable with us.” Iverson instinctively knew that the power of marketing could give people warm feelings—even for cold metal.

Ken Iverson made that conclusion in the early 1970s, and Nucor has been advertising and marketing ever since. It continues to be the most consistently profitable company in its industry. Its campaign was even named Creative of the Decade by B-to-B magazine, along with decidedly non-commodity companies like Accenture, Dow, FedEx, GE, Panasonic and UPS.

So if you have a product that’s been commoditized, you don’t have to take it anymore. Here are five ways to differentiate the undifferentiated.

1. Add Value

Okay, so people think your product’s a commodity. It doesn’t mean that your company has to be.

Dynacast is the world’s largest die caster of zinc, magnesium and aluminum parts, with facilities all over the globe. These parts form the skeleton-like frame inside the iPod, the tiny Mercedes symbol on the ignition key, the handle of the Gillette Mach 3 razor, and much more. One metal part’s the same as any other, right? Well, maybe if you’re buying parts from one of a gazillion other die casters around the world.

But with Dynacast, you get some of the best metallurgic experts in the world that can actually help make a difference in your product. You get Solutions Made Solid, as its tagline reads. And suddenly, people don’t mind paying a premium for the part, because they realize they’ll be saving time, trouble and money in the long run. This innovation is reflected in every element of Dynacast’s campaign. The design of its website is as sleek as something you might see from Apple. Its campaign even features an online game that entices prospects to guess what product the mysterious-looking part comes from, leading prospects to learn more about the precision solutions Dyncast provides.

2. Turn Mere “Parts” into a “System”

Charlotte Pipe & Foundry, the largest maker of cast iron and PVC pipe in the U.S. found itself getting caught in the commodity trap. They realized they were the only major manufacturer in the industry that made the pipe and the fittings, and that their products fit together better than pairing one manufacturer’s pipe with another’s fitting. Viola! Charlotte Pipe introduced its True-Fit System, and brand preference for Charlotte Pipe skyrocketed.

3. Sell Assurance

After having great success with its True-Fit System, Charlotte Pipe began to experience extreme price pressure from imports. Many of these products were inferior, not held to the same standards for content as Charlotte Pipe and other domestic manufacturers. Some of these import products experienced failure, causing callbacks on jobs that had already been completed.

Charlotte Pipe launched an aggressive effort to raise awareness of these issues, and the assurance that you get with buying their products. The campaign includes print ads with acquired photos showing the inferior conditions in some foreign factories. And a funny viral video campaign touts mythical companies such as The Pipe Whisperer and Roscoe’s Pipe-Sniffing Dogs, with a stinger at the end revealing that, unfortunately these pipe-verifying companies don’t exist. The answer? Get your product from Charlotte Pipe, where the product comes with detailed inspection reports.

4. Raise the Tide for the Category

Like all paper companies, Domtar finds itself in a world trying to go paperless. As North America’s largest maker of white copy and printing paper, that’s a problem. But Domtar figured it was an opportunity. If they could get people thinking about using paper again, Domtar would benefit more than just about everyone.

The answer? A multimedia advertising, PR and interactive campaign reminding people that paper is a good thing. Using paper isn’t “killing trees,” as some pundits put it. In fact, thanks to the paper industry, there are more forests than 100 years ago, because healthy forests are needed to make paper. Sending someone a note on paper is far more impactful than sending a text or an email. Paper doesn’t lose battery power. It has more weight and substance for legal matters and events that need commemorating.

To kick off its campaign, a survey was conducted asking environmentally conscious college students whether they thought it was a good idea to go paperless. The majority responded “yes.” Yet when asked if it would be okay to get their diploma in an electronic format, most thought it was a bad idea. Video interviews were conducted and turned into an entertaining online video, and results of the survey were released to the media. It was widely publicized that college students aren’t quite ready to go paperless. The survey was even profiled on the front page of USA Today in its famous “USA Today Snapshots” graphic.

5. Save the World

Does your company or your product do something to help save the planet? More and more, people want to associate with environmentally friendly companies and products. Nucor touts how it’s the largest recycler in North America. Domtar talks about how paper is a plant-based, renewable resource, and that its paper comes from FSC-certified forests. Charlotte Pipe and Foundry has introduced a first-of-its-kind PVC pipe made from recycled content. Many times, these environmental practices are already in place. It’s just a matter of letting people know about them.

So if you find your product getting commoditized, fight back. Chances are, there are many aspects of your company that make you better than the other guys. It’s a matter of finding those differences that will resonate with your customers and telling the world about them. There are no real commodities. Only companies that are all too willing to accept that label.