The Commoditized Customer
When has a product category been commoditized? Most managers and business scholars will tell you it’s when competing products are indistinguishable in terms of tangible features and capabilities. But our research shows that commoditization is as much a psychological state as a physical one. A commoditized market is one in which buyers display rampant skepticism, routinized behaviors, minimal expectations, and a strong preference for swift and effortless transactions regardless of product differentiation.
The key, therefore, to escaping commodity status is not what you do to your product—it’s what you do to your customer. You must find a way to reengage a buyer who is past caring. Commoditized customers choose on the basis of price because they have become convinced that the options available are equally palatable and the minor differences among them are not worth investigating. They have lost the habit of asking “Which of these suits me best?”
That’s why turning the tide is so difficult. Fresh rounds of innovation go unnoticed, and better-formulated marketing messages don’t get through. This will remain true until you make consumers sit up and take notice. The best way to do that, we’ve discovered, is to take the one thing they’re focused on—the price of your offering—and alter it in a surprising or challenging way.