The rapid commoditization of everything.

Porter CommunicationEventually, every product or service will become a me-too commodity that competes on price alone. The pace of product and service innovation is now so accelerated that one can hardly determine who is first to market with a valuable new idea before a competitor knocks it off, adds a feature and lowers the price.

Whether the innovation is radical and disruptive, or lesser incremental improvements to features and functions, everything will, in time, be commoditized to the lowest common denominator. However, the time it takes for this to happen is shrinking exponentially.

Continuous improvement is no longer enough.

A little over a decade ago the mantra of “continuous improvement” was what everybody in product development believed was fashionable thinking. That’s no longer so. The rapid pace of innovation happens too fast. Regardless of the product category, very soon everyone else will be offering those same features. Everything becomes at parity with everything else. In an effort to exploit full market potential, marketers are charged with broadening the appeal to the largest customer segment possible. Eventually, every innovation becomes watered down to a commoditized version of itself.

This established trend has critical implications for marketers struggling with brand relevance and differentiation–especially in low emotional involvement categories like soft drinks, breakfast cereals, underwear, and car insurance.

Innovate greater meanings not more functions.

It’s our belief that it will be essential for marketers to realize that new products, no matter how innovative at their introduction, will become the accepted norm in the category at vastly discounted prices. Seemingly more and more innovation just speeds up the race to the middle if not to the bottom.

The question now is how do marketers turn this me-too trend around and differentiate product brands on something more transcendent then function or performance?

Staying ahead of the commodity curve.

To lock onto relevant differentiation means to provide something that is highly valued and not in abundant supply. People naturally place more value on things (ideas too) that are limited than things that are abundantly available. Innovate greater meanings not more function. The infinite value of product innovation is found in what the innovation means to people. Marketers must answer the difficult question–how does the innovation add to the deeper life experience of the intended user/ consumer?

In the face of this rapid commoditization of everything, marketers must buck this trend by using their collective creative imaginations to fashion a higher (more relevant) meanings around their products and services.

In the imagination, there is no shortage of supply. Everything needed is present–it’s just not in form. Starbuck did this by making the experience of coffee uniquely different. Swatch did this by focusing on creating a unique means for personal expression while their competitors were innovating precision timekeeping through quartz technology. Fruit of the Loom dominated men’s underwear, available everywhere for about $1 a pair until Calvin Klein un-commoditized the category by presenting the valuable idea that it’s ok for men to feel and be sexy. For that valuable new meaning men happily paid more!

When your brand or product provides new meanings to people, it automatically extends its use value to people in such a way that price is no longer the issue and competitors are no longer relevant. To get “there” requires a dedicated and continuous creative effort to un-commoditize your value by proposing new meanings that separate your brand from the slush pile.

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