How To Get More Business And Command Top Dollars By Avoiding Commoditization
January 5, 2010 by akemi · 2 Comments
This is something I didn’t include in my eBook “Lightworker’s Guide to Self-Employment” because it’s more about business improvement than startup. If you are in business, it’s critical you differentiate your offers. This way, you get more business even in a bad economy and can ask for higher prices, increasing your profit and therefore enabling your to improve your offers even further.
And the key is to think as a fellow human of your customers. (Photo credit)
What is commoditization?
First, the definition. Wikipedia says:
Commoditization is the process by which goods that have economic value and are distinguishable in terms of attributes (uniqueness or brand) end up becoming simple commodities in the eyes of the market or consumers. It is the movement of a market from differentiated to undifferentiated price competition and from monopolistic to perfect competition.
This is a natural flow. Something unique comes to market. Everyone is excited and willing to pay premium price. They even line up and get on the waiting list. Soon, others copy it, letting people start comparison shop. Merchants whose only sales pitch is to lower price go ahead and lower their price. Others follow.
Our challenge as business owners is how to keep providing additional value so that people seek us out, happy to pay extra. This divides the market to two: One is the commoditized offers and the other is the unique special offers. This way, consumers can choose which depending on their value system.
You may be thinking, “Boy, that sounds good, but I have no idea how to do it. It sounds difficult.” Sure is. Avoiding commoditization takes the heart and the brain. This is why it gets rewarded well. So you have a choice. (You know I am big on free will and free choice.) You can take the easy route and work like crazy or you can think, change the way you do business, and be well rewarded.
Avoiding commoditization helps consumers, too
Please understand this approach is beneficial for consumers, too. “Perfect competition” sounds nice, but what results is a boring world of lookalike commodities. Further, it causes quality compromise because, after cutting a big portion of profit margin, it’s the only way to keep the low price. Do you really want to live in a world where only cheap boring low-quality stuffs are available?
If you love and care what you do, taking the time and effort to think how you can add unique value to your offer is worthwhile. Your spiritual commitment helps you.
5 approaches to counter-commoditize your business
Where in the commoditization process is your business in? Are you virtually free from competition? Are you in severe price war against your competitors? Somewhere in the middle?
Here are five approaches, or hints, to counter-commoditize your business:
1. Be the authority in your field
Learn your trade really well. Invest in your education. And establish yourself as the authority in your field by publishing books or speaking in public. Your authority status becomes the special value to your customers. For example, there are people who seek out the life coach they saw on the media rather than hiring any coach who advertise on the paper.
2. Educate your customers
While you yourself get educated further about your trade, educate your customers. For instance, if I were to sell soaps, one of the most commoditized products, I will make a presentation about the various ingredients that go into a soap, how each influences your skin, the negative effects of the additives commonly used in supermarket soaps on you and the environment, how mass production and old fashioned soap making are different, etc. Then I will sell soaps made in the old fashioned way with only good ingredients at premium price. The education and the proof of quality of the soap that satisfies such educated customers are the additional values in this case.
3. Personalize the service
Make your product or service one of a kind by adding personalization. I once saw an artist who paints rockstar portraits on the LP records. People buy their favorite artists’ portrait for their nostalgia. This is quite unique already, but what if the picture came with a line of your favorite lyrics and your name? Adding this doesn’t take much time for the painter, but means a lot for the customer. Would they pay a good amount for this extra feature? I think so.
4. Narrow down your target market
This may sound so counter-intuitive. You might say,”Narrow down the target market? You must be joking. I want more customers. ANY customers.” The fact is you might get more customers by tightly defining your target market and changing aspects of your business to deliver specific value this target market want.
As an example, I’m thinking of car mechanics. Even today, many women feel uncomfortable going to car mechanics. All the places I know are so male-oriented even though close to half the car owners are women. I would pay some extra and drive at least 10 extra miles to go to a garage where I feel more comfortable.
It doesn’t mean there has to be a female at the store although that may be helpful. It definitely doesn’t mean the servicemen have to wear pink. How about making the waiting area more female friendly and pleasant to sit? Offering additional service such as car wash might help, too, because a lot of women just don’t like going to places that has anything to do with car care. It saves their time, too.
I don’t have kids, but if I do, I’d be so pleased to find some kid-friendliness, too. I’m sure McDonald’s gets extra business for their play area (not for better taste over other burger chains).
This doesn’t mean you reject customers who don’t match the description of your target market. Using the same example, I think men would love the kid-friendly features just as much.
There are many ways to use this approach. Target the long tail. This may also make you the first or best known authority in this tightly defined market.
5. Get empowered by synergy
You can offer additional value by teaming up with other businesses. The key is to come up with a winning combination.
Hmm, I’m still thinking about car care. Offering additional service of car wash is a kind of synergy already, but what if the garage had a drive-up coffee shop on their premise? The customers can sip fresh brewed coffee while waiting for their cars to be serviced. It’s not just any old car place, it’s a gathering place for car owners!
And all the customers of the coffee place inevitably see the repair shop, so next time they need a service (notice they all have cars to drive up) they might just come to this one. This is synergy, helping both businesses and delivering additional value to customers.
Adding entertainment or comfort factor is an easy way of synergy. This is why restaurants host live music. It’s not just somewhere to eat, you get to hear music at that restaurant! Well, having music is getting common, how about having a magician go around the table on weekend nights? (A lot of amateur magicians would love that kind of part-time opportunity.)
This is in no way the comprehensive list of ways to avoid commoditization. What other ways can you add unique value to your business? Think from the perspective of a consumer. What do you wish to see in the market? What additional service or products make life easier and better?
Related post: Another example to counter commoditization by Seth Godin
Review: The Slow Down Diet By Marc David
January 1, 2010 by akemi · 9 Comments
Happy New Year! Making a health and wellness resolution is the new tradition of New Year, so here is a book on diet that I highly recommend. This is by far the best book on healthy eating I’ve read (and I’ve read a lot), serves well any time of the year for all age and gender groups.
Although The Slow Down Diet: Eating for Pleasure, Energy, and Weight Loss
What you eat is NOT what you get
He skips the part about numbers for a good reason — because it’s largely meaningless. Just because you eat, say, 40 grams of protein or 1000 mg of calcium, doesn’t mean you receive that much of protein or calcium. If your metabolism is down, you cannot assimilate what you eat. And if your metabolism is down, you cannot fully burn what you eat — which leads to weight and other health problems. Further, there are various hormones that determine how the calories get utilized.
Our metabolism is different from one person to another, and it changes within the same person. This is why dogmatic approaches such as “We must never eat any animal products.” fails. Yes, eating plant-based diet is helpful for many people, but there is no one ultimate best way to eat.
For instance, if you eat under stress, worrying about work, money, relationships or eating on the run (I heard some people eat in the moving vehicle!?), your sympathetic nervous system becomes dominant and your adrenals produce stress hormones like cortisol and insulin. Sympathetic nervous system drives the blood to your muscles, not to your midsection where your stomach is. This made sense when the stress was caused by a bear and we had to run as fast as possible.
So our bodies are designed to sacrifice digestion when we are under stress. It was okay when the stress was short term — we could eat and digest after we got away from the bear. Today, however, we are under constant stress, so our digestive system, too, is routinely stressed.
At the same time, stress hormones work out another reactive strategy in our body — it stores fat. It’s kind of like us restricting spending and trying to save money under bad economy. Studies show that the same persons eating the same diet can gain or lose weight and fat depending on the stress level under which they eat.
8 factors that improve your metabolism
The author discusses eight factors that affect our metabolism:
1. Relaxation
The above explanation is only tiny part of stress response in our body. There are more, like bone loss with stress. So slow down and relax. Eat like the French and Italians, blessing the foods and enjoy the company of your loved ones. Consciously breathe deeply — it gets you to relax. (And I say, don’t fool yourself thinking that eating in front of the TV is relaxing. It’s not.)
2. Quality
Foods contain not just known nutrients but also more organic information. This is confirmed by quantum physics — every matter is energy and information. And this information in the foods affects our metabolism. So eat the best quality foods that convey good information to your body. Fresh, organic, whole foods that are prepared with love. If you choose to eat meat, choose happy, humanely-raised animals that are free of growth hormones, antibiotics, and stress.
3. Awareness
30-40% of digestion is due to cephalic phase digestive response (CPDR), meaning your recognition and awareness of the foods. So don’t multitask, be present when you eat. Enjoy the look, smell, and taste of your foods. This naturally controls your appetite.
He also writes about the “brain in the gut”, enteric nervous system (ENS). Our head brain doesn’t tell the gut how to digest — our gut brain figures it out and tells some more to the head brain. We can be the best nutritionist for ourselves by trusting our own ENS.
I guess slowing down and eating high quality foods helps boost your awareness of eating. So these factors work in tandem.
4. Rhythm
Our metabolism change according to the circadian rhythm, so eating to the rhythm helps our body. It’s best to eat the largest meal at lunch, not dinner. Eat breakfast to jump start your daily metabolism, eat substantial lunch, and eat light dinner well before bedtime. And sleep well — remember, stress makes you fat.
5. Pleasure
Enjoy your foods. Eating is inherently pleasurable — we are wired this way. When we eat (without the sense of guilt and shame), endorphins are produced, making us feel happy, and — take note — endorphins also burn fat. Our pleasured body also produces a chemical called cholecystokinin, boosting digestion and telling the body when to stop eating. (So, counter to common belief, good pleasurable meals don’t make us eat endlessly. It has natural appetite control system.)
Eating for pleasure doesn’t mean you want to party with sugary foods, caffeine, and alcohol. Health is the ultimate pleasure factor. (The author does emphasize including healthy fat to boost the sense of pleasure.) Also, bring in more pleasure and joy to your other areas of life. This reduces the need to seek pleasure only in foods and thus prevents overeating.
6. Thought
What we think and feel about foods affects our metabolism. Our thoughts in the cerebral cortex (the higher brain) are transmitted to the limbic system (the lower brain), causing feelings. Then the hypothalamus in the limbic system sends out messages to various parts of the body, regulating sympathetic / parasympathetic nervous systems, hormones, etc.
Do you have a friendly relationship with foods? Or are you loaded with negative beliefs about foods — leading you to negative consequences? (Remember The Biology Of Beliefs by Dr Bruce Lipton?)
7. Story
We all have stories about ourselves. Is your self story filled with love and energy? Or is it a story of a victim? Victim story dampens your metabolism. Change your story to an empowered one and boost your metabolism.
The author further suggests aligning the way you eat with your life purpose. I think this is cool. (You know I’m big on living on purpose.)
8. The Sacred
Even though science hasn’t uncovered the exact relationship between our soul and the body, our spiritual well-being affects our physical health. The author maintains spiritual qualities such as love, truth, courage, commitment, compassion, forgiveness, faith, and surrender are as essential to the body as food and water. They support our metabolism. By contrast, when we choose to, say, carry grudge rather than to forgive, our own metabolism carries its weight.
Dump the calorie equation thinking
The mechanical idea of “(Calorie intake) – (Calorie output) = Weight gain / loss” is so outdated. I hope you are starting to see this.
I strongly recommend this book if you’ve ever had challenges in eating better, if you ever felt your willpower to quit eating certain foods or certain amount wasn’t strong enough (most likely, it has nothing to do with willpower, he maintains), if you have weight or other health problems, or if you want to learn truly healthy way to eat. Gee, that might mean the majority of the population, I guess.
