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November 25, 2022
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Competing in a commoditised environment.

A commodity is something that is freely accessible, commonly available and wherever you look someone has something similar to it.

One example is auto insurance –  there is basically no difference, because underwriters and actuaries all use more-or-less the same data to determine the price or value of the insurance policy.

Another is hot cross buns – the features and benefits are similar and available from 50 to 200 to 20 000 providers.

In the United Kingdom, where the stats are really good, there are 15,277 printers servicing this tiny island, and most of them are still in existence even though the market is flooded.

The question we should be asking is how do those companies survive, and what do they need to do to set themselves apart from each other? Because that’s where the art of selling and differentiating what you do in a commoditized world becomes the art of business growth.

In this podcast of the Money Show Pavlo Phitidis breaks down the commoditised environment.

Consider one of the most basic commodities available… a bar of soap. There are hundreds of thousands of variants.

Pavlo recollects on a business owner who started a soap manufacture business 15 years ago – much to Pavlo’s horror as soap is soap is soap!

This business owner entered the hotel amenity business, where a single major corporation dominated as most hotel chains wanted the cheapest of the cheapest while still maintaining quality. Amenities and soaps were things that nobody wanted to pay attention to. In a highly commoditized market such as this, he had no choice but to think outside the box, so to set himself apart, he set about understanding the brand of the hotel.

He did a deep analysis and discovered that there were approximately 3200 activities that contributed to the guest experience. It’s an incredibly complicated activity, and much of it is outside of that hotel’s control, from the arrival, travel to the hotel and activities as well as the departure.

He nailed the essence of what would appeal to tourists going through that hotel. And he began to craft a collection of amenities that were designed to specifically encourage guests to be taken home after their stay, through their packaging, their fragrances, and the feel of the amenities being used in the showers and bathrooms. The baobab scented shampoo that reminded them of their safari or the amarula bodywash to hint at sundowners in the bush.

He had conducted genuine and in-depth study to demonstrate how the senses reproduced experiences, which was what made what he did and was what made the selling propositions he had devised for the hotels so ingenious.

He created an experience to set his product apart, beyond the commoditised features and benefits.

And he was able to persuade one of the main worldwide companies that if the guest had a pleasant stay, he or she should be able to experience the physical sense and scent of the product that he supplied. When the tourist returns home, they will remember the experience, and they will remember the vacation they had at that particular hotel group and wish to remain with the same hotel group the next time they visit another destination.

” And that’s the art of differentiating in a commoditized world. You’ve got to go the extra mile to create an experience that sets you apart, as opposed to the features and criteria of your product”.

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