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How to Escape the Commodity Trap

(February/March 2017) posted on Tue Mar 21, 2017

Why do things become commodities? More importantly, how can you prevent your business from becoming a commodity? It all starts with understanding your customer.

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By Mark A. Coudray

It happens to every business, in a cycle that’s taking place more rapidly now than ever before. I’m talking about being commoditized, when buyers lump your company in with every other player or poser in your market. Customers don’t know any different, and that’s the problem. It’s a trap, but fortunately, it’s one that you can escape.

Why Do Things Become Commodities?
Here is one dictionary definition of a commodity: “A good or service whose wide availability typically leads to smaller profit margins and diminishes the importance of factors (such as brand name) other than price.”

But this doesn’t tell the whole story. It does not mention that in a commoditized market, the customers set the price they are willing to pay. The sad truth is customers don’t see the value of what we do. They do not feel they have a compelling reason to pay one source more than another. From their point of view, every provider is interchangeable, so the decision comes down to which is cheapest.

How did we get here? There were two causes: information and access. Everyone can get information easily via the internet, with global access to providers that appear to be cheaper. The power of Google has dramatically accelerated commoditization, but it’s a natural process and it’s not a new phenomenon.

Here is a bit of historical perspective from our industry. Printing started off as a trade. Craftsmen were trained in the secrets of the craft through apprenticeships. It took years to become a journeyman. As the only provider in town, you controlled the price. Most work was customized, not mass-produced.

Sooner or later, a trained journeyman would leave his employer and move to another town. This is how the freemasons started, too. If you were a stone mason, you could travel freely and find work by showing you knew the secret signs and then demonstrating your skills. You got the job interview and, ultimately, the work.

If you landed in a town where someone wasn’t already established, you became the town blacksmith or mason or carpenter. Eventually, you also hired apprentices, and the cycle repeated.


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