How to de-commodotize if you are selling a commodity product?

How to de-commodotize if you are selling a commodity product?

By Rajesh Setty on Sun 31 Jul 2005, 5:00 AM – Leave Comment

One of my new friends asked me the above question “How to

de-commoditize if you are selling a commodity product?”. He knew that

commodity products usually get differentiated by price and wanted to

escape that.

That’s a problem for many companies. Adrian Slywotzky has a cool book

called How to grow when markets don’t

where he talks about the story of Cardinal health. A division of

Cardinal health sells hospital supplies, mainly surgical instruments

(can be argued as commodity products) and instead of differentiating

the produts they (Cardinal Health) studied how these supplies get used

in the hospitals (value chain) and came up with a solution to help

streamline the process of packaging and delivering surgical instruments

“just in time” for the operation. The package would contain everything

that a particular operation would require in the order the doctor would

want. In fact, it would include the instruments of the doctor’s

preferred brand. You just can’t beat that with price. Instead of

competing on the price of the product, they sold a solution and an

experience that is hard to match by a competitor.

We talked about this and discussed if there was a possibility of “knowledge arbitrage” for his business.

More companies (think Starbucks) are selling experiences rather than products and of course, are charging a premium.

Something to think about…


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