The commoditized customer

Photo: Generic Cereal by beketchai on Flickr

Maybe it's not our products that are getting commoditized. Maybe it's the customer. Consider this great quote about customer commoditization in May's HBR:

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.

That's from Marco Bertini and Luc Wathieu. It's an important insight because, as marketers, our impulse is to try and product innovate and communicate our way out of the commodity trap. But, if customers have become convinced that the available choices are all OK and that any differences between products don't really matter, our efforts may be in vain. We may just end up adding to the noise that the customer is trying to avoid and not shifting opinion in any meaningful way.

So, how do we escape from this kind of commoditization? We need something out of the ordinary to jolt the customer out of their mindset. If line extensions and new features won't do it perhaps an entirely new customer experience might?

But the authors come up with a different and counter-intuitive idea. They propose that you fight disengagement with the one marketing variable that these customers do still care about: price. If they are fixated on price then give them price, only do it in a way that challenges them to figure out what they are actually paying for and makes it more difficult for them to just go for the lowest price option. More on this in a later post...

Source:
1) How to Stop Customers from Fixating on Price by Marco Bertini and Luc Wathieu in May's HBR (subscription required)

Got Broccoli?

Photo: Broccoli by La Grande Farmers' Market (Flickr)

Apparently there's no official Broccoli Day. It's one of the most unloved of vegetables. But yesterday, broccoli had a little moment in the sun after Matt Yglesias asked: "Where are the broccoli ads?" Why aren't producers trying to sell more? His questions triggered lots of comments on the site and a slew of other posts. To summarize the collective wisdom:

1) No branding: The most obvious reason for the lack of marketing is that broccoli is unbranded and, therefore, undifferentiated. So, if one grower was to promote his/her product, everyone would benefit. Whereas, when McDonalds promotes its Big Macs, it's the one that benefits. Once a product is branded, it can be lifted out of commodity status allowing for premium prices and advertising support.

2) Lack of collective action: A number of other agricultural products have solved this not-branded problem by taking collective action. Examples include the California Milk Processor Board's Got Milk? campaign and campaigns for avocados, apples, beef, pork and many more. No-one had a particularly convincing argument for why some agricultural products are successfully organized and others are not. It may be a question of the size of the industry plus the determination of the growers. (Note: There is collective broccoli action in Canada.)

3)Lack of imagination: Another way that potentially commodity products have managed to differentiate themselves is via packaging and product innovation. Pom Wonderful has transformed the pomegranate industry, Diamond Foods has done the same for nuts. Other examples: Packaged salads and let's not forget bottled water.

4) Promotion via/by third parties: Maybe there aren't any broccoli Super Bowl ads but that doesn't mean that there's no marketing/promotion. Everyone knows that broccoli is good for them. We've heard it in the media, our kids are taught it at school, we see broccoli piled high at Farmer's Markets and Whole Foods and it's always on the menu at restaurants. How much of this promotion is organized by the growers and how much is organic I don't know, but the message is getting out.

5)Tastes horrible: What's to like? Several people attributed the lack of marketing to the general awefulness of the product itself--the taste, the texture, the stalks But marketing has the power to change perceptions, even for kids, notorious veggie-haters. A few years ago, The Atkins Foundation sponsored some research which showed that kids preference for broccoli vs. chocolate could be radically changed just by the addition of an Elmo sticker on the broccoli. In a control group, 78% of kids chose a chocolate bar over broccoli (as someone asked, what's up with the 22% who chose broccoli?). But when an Elmo sticker was added, 50% selected the broccoli.

Despite the perceived lack of marketing and some people's dislike of the taste, it appears that U.S. broccoli producers aren't doing that badly. According to the Agricultural Council of America, we are eating 9x more broccoli than we were 20 years ago--4 1/2 lbs a year. That's a whole lot of broccoli! Pass the cheese sauce.

Sources:
1) Where're the Broccoli Ads? Matt Yglesias
2) Advertising Fruits and Vegetables: The Incidental Economist
3) Two posts (1, 2) on Marginal Revolution
4) "IF ELMO EATS BROCCOLI, WILL KIDS EAT IT TOO?” sesameworkshop