In economics, a commodity is a good requested by the market that is offered without a particular differentiation compared to competitors. Wheat, oil, copper, just to name a few, easily understandable examples. They are basic, not elaborate products, simple and specific.
In marketing language, to decommoditize means to raise a basic product from its being normal, being basic. To decommoditize means to define a brand as the differentiating element as opposed to banality.
Illy coffee has been decommoditized, the same happened to similar brands like Lavazza or Chicco d’Oro. Chiquita bananas were decommoditized too.
Differentiating is a common process in daily business. That’s what sellers at the local market, and big brands on TV commercials, do. In a highly competitive market, being different is useful in order to defeat competitors.
Differentiation does not only concern products. Let’s take oil as an example. One litre of oil is one litre of oil. The difference is determined by the sale price, the reserves that the producer can guarantee, the continuity in supplying: a set of elements that have a little to do with the product.
When considering agricultural products, differentiation takes a more significant role. Peculiar elements of the territory become important: everyone knows that grape from Bordeaux area is better than that cultivated in India, thus everyone can grasp that French wine is better than Indian wine.
If we think about bananas, coffee, pineapples that more or less come from the same areas of the world and are very similar, the thought changes. The differentiating element is the processing.
There is a difference between coffee beans harvested at the right moment, processed in a certain way compared to a late harvest, badly roasted, maybe burnt. There is a difference between a cultivation that implies child work and another cultivation that respects work rules and safety. There is a difference between a cultivation that respects nature’s rhythms and another extensive one.
Therefore, there are some elements of the production process which are “friends” of
In order to recognize a good product from a bad one, a guarantee is necessary. We can speak about guarantees, without any criticism. There are brands that certify the origin of products, seriously managed, such as Marchio Ticino.
There are others that are merely image operations, behind which it is difficult to distinguish substance and originality of the product.
Consumers generally trust origin brands if they are located close to where they live, or if they are very well known.
For different reasons, if on the shelf there are strawberries produced by Mr. Mario from Preonzo, they are better perceived than those produced by Mr. Pedro from Seville. If Mr. Pedro sells them at half price and they more or less look the same to those by Mario, Ms. Maria will make herself some questions.
Mr. Mario from Preonzo will necessarily act in some way. Either he will reduce the price of his strawberries, or he will try to decommoditize them.
In order to do so, quality brand is an excellent tool.
Branding is a very competitive tool. Even big budgets cannot be enough. A brand has a value when it can rely on a strong relationship with its consumers, when it has an excellent reputation. In order to build up a relationship with consumers, several years of coherence are necessary.
Let’s analyse what a brand is not. A brand is not a friend of yours, it doesn’t comfort you when you are sad, it isn’t loyal as your dog or cute as your cat, it doesn’t visit you when you are ill (…unless it is a pharmaceutical brand).
Let’s see what a brand is. A brand is all over the place (Corriere del Ticino), it touches your intimate parts and you don’t complain (Cotonella), it is inside yourself (Marlboro), you wear it (Armani), you give it all your personal data and your passwords (Visa).
From his part, a brand knows you and many others like you, and makes some synthesis. It suggests you the best sources of information, how to keep your bottom’s skin soft, how to burn your lungs, how to make you look beautiful and stylish, how to best manage your money.
The relationship between you and the brand is very clear. You two have an intimate relationship linked to a mutual need. Your need is about consumer goods, the brand’s need is about knowledge.
You can choose the best. The brand knows you, it knows many people like you and is constantly competing with other brands, thus it will probably try to do everything in order to understand what suits you best.
Very pessimistic people and those who always see how negative the world is will tell you that brands are weave in order to cheat on people and to make easy money.
Genuinely, and after many years spent in consulting for big brands, I don’t believe that. Moreover, I believe that brands do whatever they can in order to improve themselves, in a very cynical and competitive market. Some brands manage to do that maintaining a coherent profile, others act cunningly but then get punished, and stop to be reliable.
The honesty factor of a brand is the most precious one for decommoditization, but also the most fragile.
Decommoditizing is a difficult exercise, and is often a tricky one. At the end of the day, Mario’s strawberries are from Ticino, genuine and cultivated properly, but if they cost the double, some questions will raise spontaneously in Ms. Maria’s head. To these questions it is useful to reply coherently, keeping in mind that people are ready to spend like crazy, but for a good reason.
In order to succeed, it is necessary to be really the best. For this reason, I personally admire those business and associations of producers who managed to build up a brand representing very basic products. These companies are really the masters.
Just try to build up a very successful brand in order to sell a tomato, an apple or a chestnut.
by Mirko Nesurini, CEO GWH Swiss SA