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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

Differentiation
Another path to differentiation that seldom provides a lasting benefit is to find some way to extend a process during the later stages of the innovation cycle. Examples for us include printing bigger, wider, faster, in more colors, on more substrates, at higher resolution, with finer halftones, and so on. These are process-oriented extensions, and it’s logical for printers to focus their attention here because they know and love the technology.

The problem is that process-oriented extensions seldom become deciding factors for the customer, because every competitor is doing the same things. In order to differentiate, you have to be different. This means looking beyond the obvious.

All this became clear to me when I started studying behavioral economics – the branch of psychology that looks at how we make decisions. Like most people, I assumed it was through logic. In reality, we all make decisions at the emotional level and then justify them at the logical level.



For those familiar with the neuroscience, the emotional level is called the limbic system, comprising several different parts of our brains. Language isn’t part of the limbic system – it communicates with feelings. So when you follow your “gut feeling” or get a sense that something just isn’t right, that is your limbic system communicating.

We take those emotional responses and verbalize them through our neocortex. This is the new (neo) part of our brain, evolutionarily speaking, and it has the logic and language capability that makes us human.

It turns out that customers are looking for a lot more than the lowest price. They really want the best value for the money they spend. “Value” is simply a term we use to equate the transfer of money for goods or services, and it’s a relative comparison. People will spend more money for greater value – it’s just a matter of negotiating what that price will be.


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