Internet Radio Show: 21st Century Entrepreneur | Developing A Business That Works | Aired Friday December 19 at 12 Noon [Final Show of 2014]
This Friday December 19 we will be airing the “21st Century Entrepreneur” which is an Internet radio program aimed towards educating business owners and their advisors on how to make their businesses more successful and profitable. It is a show hosted by JC Maldonado who is the CEO of BizGro Partners, a Business Development Firm that helps small and midsize companies grow, expand, and transition. This week we will be discussing how to make a business really work. We will be interviewing David Shriner-Cahn, the CEO and founder of TEND Strategic Partners. David Shriner-Cahn is a highly regarded consultant with over 30 years of experience in the specialized field of organizational development. He advises CEOs, entrepreneurs, investors and non-profit leaders. Through rigorous independent analysis, David crafts innovative yet achievable solutions that remain consistent with the organization’s structure, resources and culture. David turns concepts and entrepreneurial passions into economically successful business models. Prior to forming TEND Strategic Partners, David served as a CEO, COO and CFO in the not-for-profit sector as well as a project manager in the private sector. A graduate of Columbia University GRADUATE SCHOOL of Business’s Institute for Not-for-Profit Management, David received his Bachelor of Science from Lafayette College, a Master of Science from Cornell University, and attended Technion Israel Institute of Technology as a Fulbright scholar.
Below is a blog discussing how to promote and brand a commodity which is a major challenge for many businesses and is a topic we will cover during our interview with David. Finally, we have had some exciting interviews with interesting business people in the last month or so. To hear a recorded version of past shows, click below on the LED icon
“Decommoditize” Your Commodity
In a selling environment that comprises of a longer selling cycle, price pressures have increased dramatically in the world of B2B business as commercial entities attempt to increase their profitability by simply reducing your price. When price is the sole issue in the selling process, the “seller” is totally demoralized and his value, both business and personal, is diminished. Nevertheless, many studies have shown that price may be the 4th or 5th most important component in the sales process. If this is true, why do so many entrepreneurs and salespeople alike struggle with underpricing their solutions. The answer is simple. Your product or service is viewed as a commodity, not a unique solution. What is the answer to solving these underpricing issues? “Decommoditize” your commodity.
The Definition of a Commodity
Definition of ‘Commodity’
1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often used as inputs in the production of other goods or services. The quality of a given commodity may differ slightly, but it is essentially uniform across producers. When they are traded on an exchange, commodities must also meet specified minimum standards, also known as a basis grade.
The above definition is “Investopedia’s” definition of a commodity. Pay attention to the words “basic good” and the quality of the product differing slightly but essentially being “uniform” across producers. In other words, if your target marketplace of customers views you as a seller of a commodity, they will see no difference in what you sell versus what your competition sells in terms of quality. Therefore, the only way they can see distinction among producers is through the reduction of price. From their perspective, if you reduce the price, then it is worthwhile doing business with you. The problem with being perceived as a commodity is your ability to generate a profit while being under the pressure of perpetually reducing your prices. This, in the long run, can prohibit you from generating a profit in your business.
As stated above, the answer to being perceived as a commodity business is to “Decommoditize” your commodity. In other words, manage the perception of your marketplace in a manner in which they start to see your business as something more valuable than just a mere commodity. Here are 3 key strategies to achieve this objective:
Turn Your Commodity into a Brand
In past articles we described a brand as consisting of a unique promise combined with the delivery of that promise and communication that manages the perceptions of the marketplace on a consistent basis. Essentially, the one thing that the history of free enterprise has proven is that you can brand anything, even water. Hence, one way to “decommoditize” your business is to simply communicate that your version of the commodity is better, and then make sure it is better when your product or service is delivered. And then once the “better” product or service is delivered, spread the news so that the marketplace starts to perceive that your product or service is a “better” version of the commodity you sell.
Hide Your Commodity in a Bundled Package
Have you ever received a gift basket filled with a variety of goods. The basket may include flowers, chocolates, soaps, perfumes etc. When you saw the basket, did you notice the soaps or did you see the uniquely packaged basket? What product did you see? If you are like most people, you probably saw the basket and how nicely packaged it was plus the time and effort it took to put together the package. You thanked the person who gave you the basket. Now, how would you have perceived the gift if the person who gave you the gift would have given you a bar of soap along with a perfume box individually? Do you think you would have had the same appreciation for the gift? One way to “decommoditize” your commodity if you cannot deliver a “better” version of this commodity is to sell your commodity in a package that includes other commodities, or in conjunction with a unique item that has independent value and may not be perceived as a commodity. The new “product” in this case would be the package instead of the commodity itself. In fact, you can even give the package a name and make a unique marketplace promise associated with the package. In the above example, the “basket” is the product as opposed to the perfumes and the soap. If the “basket” is the product you can charge a price for the basket that enables you to profit from the commodities included in the basket. Since the customer only sees the basket, he will not beat you down on the prices of the individual commodities inside the basket.
Productize Your Service
If you are in an “advice giving” professional services business, you may want to tackle the challenge of being perceived as being a commodity by selling your services in a product form. What do we mean by product form? For example, the tax attorney may want to promote a specific strategy such as a “charitable remainder trust” that helps defer capital gains taxes while selling certain appreciable assets such as real estate and businesses, or the financial planner may want to promote the concept of “premium financing” for life insurance as a way help a business owner offer his employees free employee benefits. Most professional service businesses can find a way to promote unique tangible products that touch upon the theme of their practice. If they are able to generate client interest in their product, selling their time and expertise becomes a no brainer without having the client question the value received.
To learn more strategies on how to differentiate your offerings in your marketplace, feel free to call us at 201-496-6931 or email us at firstname.lastname@example.org.