How to Differentiate a Commodity

There are specific challenges associated with selling commodities. The term commodity generally applies to agricultural products like soybeans or corn – products in which each unit is the same no matter where you buy them. However, consumers see any product as a commodity if they could buy it anywhere – for instance, a specific brand of gum. It is notoriously challenging to sell commodities because customers assume they are interchangeable and will buy them wherever they are able to obtain the best deal.

This means companies tend to think they are able to compete based on only price. If a customer goes elsewhere and obtains the product for less money, do you drop your price as well? You could try to undersell the competition, but at a certain point, you need to make sure you remain profitable. Is it possible to sell a commodity without selling based only on price? The answer is yes. Companies do it every day. Here are some tips for sales teams when dealing with a product your customers see as a commodity:

Believe in the business
According to Rapid Learning Institute, sales representatives are often more likely to think of their products as commodities than customers are. Clients worry about making the right choice, and price is not the only factor they consider. When sales teams face challenges with a sale and drop the price, they encourage customers to think of the product as a commodity. Companies need to stand behind their products and be able to explain why their pricing is fair. It may be higher than a competitor's price, but be prepared to highlight the reasons for this.

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It is more than a product
When two distributors sell similar products, it is the distributor that differentiates these items. Each business offers something unique and valuable. It could be extremely knowledgeable sales teams, a guarantee or return policy. Think of what you sell as an offering rather than just a product. This is especially important if you sell a product customers are able to obtain elsewhere. What makes your business model different? As the Association of International Product Marketing pointed out, Staples, the office supplies store, does a good job of this. Its "Low Price Guarantee" tells customers they will match any price, which makes consumers want to shop there. Do you have free shipping? Free repairs? These are attributes that set you apart from the distributor across town.

"Highlight your unique value proposition."

Find out what is important to the customer
Regardless of what you think makes your business different, it is the customer's perspective that truly matters. What are customers looking for? They are rarely purely interested in the best deal. There are other factors at play. Learn what these are. For instance, your customer may not care that your business is family owned. What they do care about is that they receive awesome service from their vendors. In this case, demonstrate the personalized service customers receive.

You are even able to personalize each deal. If you are the closest distributor to this potential customer, you know that is a strong factor in his or her decision. If customers need a product, you are able to send it to them more quickly than any competitor.

At the end of the day, if customers see your products as commodities, it is up to you to change that perspective. Stop talking about cost and start talking about what you have that competitors lack. Discover your unique value proposition and communicate it to customers.