Increase Your Competitiveness by Selling Value, Not Commodities

Posted by Webmaster - July 20, 2012 - Blog - No Comments

Commodities are notoriously difficult to market and promote. Why? Because the primary driving factor of commodities is price. Why would someone pay $10 for a pound of rice rather than $3? The same could be said for oil, gold, hotel rooms, flights and any number of other products.

Competing as a commodity is virtually impossible. No matter how much you try to differentiate yourself, at the end of the day people still view you as a dime in a dozen and gauge you based on price.

That’s why no matter how much companies like United Airlines try to promote their airlines as a classier service, the reality is that discount airlines like Southwest are quickly taking a market share. Airfare is a commodity and the vast majority of the market is based on cost.

==> Taking Yourself Out of the Commodity Market

If you want to build a successful company, you have a much better chance of competing if you sell based on value rather than based on price.

Value is “what’s in it for you.” It’s something unique that nobody else can deliver.

Take health and personal fitness coaching. There’s a wide continuum of people who charge different rates.

The vast majority of coaches sit on one end – between $50 to $100 an hour. These coaches are selling a commodity.

You can hire a personal trainer at your local 24 Hour Fitness center or just by heading to Craigslist. You know approximately what the prices are. Why would you pay $300 an hour when you can find a coach for $70 an hour? Coaches also know where the market is at (approximately) and set their rates accordingly.

Yet there’s a whole different market of personal trainers that do charge several hundred dollars an hour, sometimes more.

They do this because they sell based on value, not based on the commodity market. They sell you on the dream body you want and help get you there. They don’t price themselves by the hour, but by the month, the year or the total package. They take themselves out of the commodity market and instead place themselves in a completely different category.

==> Value-Based Selling

Sell to people based on value, or how you can change their lives, rather than price.

Why do some people pay $300 for a haircut, when they could get one for $20 right down the street? Because they’re buying sexiness, the perfect look, understanding from the stylist and so on. The stylist is in the market of providing unique value, rather than competing in the commodity market of haircuts.

Trying to compete in a commodity market is extremely difficult. You can do it, but you’ll be constantly watching your supply chain and be competing on razor-thin margins. Instead, whenever possible try to position yourself as a value brand rather than a commodity brand.