Commoditization. How to avoid the commoditization trap.

We report very interesting an article taken from the Harvard Business Review John Quelch professor of business administration of Charles Edward Wilson at Harvard Business School with a joint appointment at the Harvard School of Public Health, as a professor of health management policies. How many times have you heard a manager blame "commodification for not inventing sales or profits? If you heard, perhaps you wondered if it was just an excuse or if the manager had a valid reason to admit. The truth is that, even when a raw material has no added value and the quality standards are established by law or industry, There are still plenty of opportunities for differentiation around availability, delivery, shipping quantity, payment terms and all other services that accompany the main product.
Marketers should always use their imagination and still.
As the saying goes "There are mature products, only mature managers". Said this, l' intense global competition , outsourcing and offshoring are reducing margins, increasing sensitivity to customers' price and making it difficult to maintain the differentiation between brands. The life cycle of the product suggests that, as they mature product categories, become more sensitive to the commodification forces . The difference today is that the speed from launch to maturity is faster than ever. Marketers can do three things to fight the inevitable forces of commoditization: Innovate. A new product that best meets the needs of consumers, Also an update of an existing product, It can unite the competitors and force them to invest in matching or exceeding the new specifications. Bundle. The sale of a commoditized product with differentiated ancillary services (such as after-sales service) You can attract buyers willing to pay a premium for convenience. Segment. Mature markets are large markets that can be divided into more profitable segments. Marketers can focus on providing application expertise for customer segments less sensitive to the price for which the product is still important. The most overlooked investment that a marketer can do ahead to the inevitable commoditization is a relationship management with customers that enables the calculation of the profit margin associated with each customer, based on the price paid less the cost-of-service. Companies must quickly invest in these information systems to have the information readily at hand once the margins begin to be crushed. But how to survive if you are in a field of commodification characterized by me - too products, overcapacity and frequent price cuts? How can you make money? 1. Decide what you want to serve customers NOT, try to renegotiate prices with them and, if not, escludili . You'll lose market share but will improve the profitability. 2. Compensate the sales force on the profit margin, no of sales revenues. A force based on volume sales will record any customer, irrespective of the profitability. Okay early in the life cycle of the product but not to maturity. 3. Reduce costs and acquire competitors (with profitable customers) to extract the maximum economies of scale in procurement, production and distribuzione.4. If you are not the low-cost producer, your complicated tariff structures so that customers can not easily make comparisons side by side and provide discounts, if necessary, on published prices artificially gonfiati.Affrontando the commodification and the non-existent product innovation, some companies withdraw to serve a progressively smaller niche of customers insensitive to price and service-oriented. Others with favorable cost structures may point to increase market share, but face the challenge of managing the hybrid deployment, because some customers want to go purchase through distributors (at lower prices) while other customers are still looking for a direct sales support (but may not be willing to pay to cover the cost).However you approach the commodification, seeks to innovate at all costs to beat. Why, in the words of Peter Drucker: In a commodity market, you can only be as good as your dumbest competitor".

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