The Commodity of Kings
by Andrew Shedden
Articles about the high tech meltdown can be found worldwide every day throughout the newspapers and business press. You might think that the rapid consolidation and demise of various companies in the high tech industry have nothing to do with you. You might also think that there is nothing that can be learned from their misfortune. You might want to take another think.
There has been no end to the ruminations and speculations about the current state of the high tech industry. The simple explanation is to remember what you learned (or ought to have learned) way back in Business 101. If there is no perceived difference between products price will have a high influence on the buying decision. Whether you are selling steel mill equipment or running a travel agency, you aren't immune to the same market forces that created the high tech meltdown.
How this applies to technology
About ten years ago - in the very distant computer past - as a high technology consumer you had a wide variety of options from which to choose. You had choices in software, hardware, and operating systems. You could buy from Apple, IBM, Commodore, Compaq, PCDOS, Lotus 123, Word Star, and a whole host of other computer hardware and software providers.
We all know over time Microsoft and Intel totally dominated the marketplace by virtue of smart marketing and financial clout. As Microsoft and Intel gained market share the "Wintel" machines became the industry standard. Once the "Wintel" architecture became the industry standard other manufacturers in the high tech world had to adapt to these standards or face obsolescence. In an interesting and somewhat perverse final twist to this saga these companies destroyed themselves by becoming industry standard compliant.
Unfortunately for these providers there were no perceived differences in products being supplied to the marketplace. This meant the only remaining area of difference became price. There is a great adage in marketing that you should never forget. "If they come for price, they'll leave for price."
In an effort to survive these companies began to try to buy their market share by price-cutting. They quickly entered the classic death spiral of: Low price. No margin. No customer loyalty. Declining revenue. No promotional budget. Layoffs.Closed
If you watch closely, you will see this practice becoming prevalent in other industries. This means there will be lots of consolidation and closures. Some examples that come to mind are cellular phones, wireless technology, and Internet service providers.
How this applies to your company
Don't become a victim of poor positioning. Accentuate your differences. The business world is littered with the corpses of the companies that adopted "me-tooism" as their positioning strategy. Saying that you are as good as _________ means less than nothing. You want to be able to position your company so that you really stand for something.
Spend some time on developing your unique selling proposition (USP). One easy way to do this is to consider how you would complete the following sentence. "Your company will benefit from dealing with__________because we are the only company in the__________ business that__________."
Probably one of the best, and best-known, USP's belongs to Domino's Pizza, which ends in "30 minutes or it's free." This is what built their company. An effective USP can also build your company.
What you can do
Make sure that you have properly differentiated your company in the marketplace. Advertising agencies and Business Schools will spout off about brands and branding ad infinitum. Although this becomes tedious there is a method in their madness. In all of your marketing activities the underlying objective should be to further enhance awareness and build a successful brand.
I mentioned travel agencies at the beginning of this article. Travel agencies are very topical as air travel has dropped so precipitously and they can easily be viewed as commodities. If I owned a travel agency my primary focus would be on differentiating me from the large (and better-financed) competitors doing things like taking full page ads in the Toronto Sun. In fact, here's what I would do to differentiate Andrew's Travel Agency
I would actively promote my travel agency as the one that takes care of every detail with one call. I wouldn't promote travel. I'd promote that "One Call Does It All."
I would cut out all institutional advertising immediately. If I couldn't measure it, I wouldn't do it. It's still a bad time to try to entice new travelers. It's never a good time to waste money.
I would employ direct marketing techniques to my database of existing customers. I would be offering reassurance about the safety of air travel as well as special incentives.
I would offer more services to my existing public clientele.
I would focus on providing outstanding, unique, and complete services to business travelers as for the most part they have no option about traveling.
I would offer attractive and thoughtful train and bus travel options.
I would look into packaging full service traveling services for choirs, seniors' groups, and
other private and public organizations.
I would make a point of doing nothing that everyone else is doing.
Your brand is the cornerstone of your differentiation. Your differentiation is what creates awareness of your company in the marketplace. Awareness of your company is what leads prospects to call you.
You can differentiate your business by speed of delivery, service, quality, and any other number of combinations. The last choice of manner in which to differentiate your business is price, unless of course your price is the highest. You may have read that "Gold is the commodity of Kings." This may be true in the workday world. In the marketing world the true commodity of Kings is differentiation.
