5 ways to rise above commoditization.
Obviously, price plays an important role in how current and potential clients or customers compare you with competitors. However, there are several ways you can reduce the role price plays, allowing you to maintain or increase your current margins, even in a competitive marketplace.
1. Perceived Superiority
People will not hesitate to pay more for something they believe to be better than the competition. But just having a superior product or service is not enough. You must clearly and consistently communicate what makes you better, or at least different. And while it’d be great if your point of differentiation were some obviously tangible, super important thing, sometimes your product or service superiority can be intangible, subjective, or even superficial, as long as it is relevant to your audience.
2. Additional Services of Products
An added service makes your product more valuable, and an added product makes your service more valuable. Not only will these added products or services help you win if you’re competing against someone that’s comparably priced, it also will enable you to charge more for what you’re offering.
3. Brand Loyalty
Brand loyalty is created when a product or organization has consistently satisfied a client or customer. The customer comes to believe that there’s no reason to even consider a competitor. When brand loyalty exists, price shopping stops – unless prices get way out of whack.
3. Process & Experience
The better the buying process and customer experience, the more you can charge for a product or service. Some of the factors that go into a superior customer experience include convenience, speed-to-purchase, knowledgeable salespeople, and useful sales aids.
5. Brand Image
The most intangible of all factors that go into reducing price sensitivity is brand image. If people attach some level of prestige or superiority to your product or service, they’ll pay more for it. Brand image can be built through a number of different factors – even elitist pricing. Yes, sometimes, just having the audacity to price your product or service higher will make people think it’s worth it.
Combining two or more of the above.
Any one of the five tips above can help you compete on a plane where price is less of an issue, but if you can have two or more, price will soon become something you and your customers rarely even consider.
Sometimes, the best strategy can be to have the lowest price, or at least one of the lowest prices, but competing solely on price is a dangerous position. To protect against price erosion, lower-priced entries to the marketplace, and commoditization; combine a low price with some of the factors above to develop great brand loyalty and market share.