Commodity or not? Avoiding an unwanted label takes a review of why customers buy a product

Editor’s note: Mal Mixon, former chairman of Invacare Corporation and a well-known entrepreneur, will regularly share his business advice and experience with Smart Business readers. Ask him a question at [email protected] and your inquiry could be the inspiration for his next column.

Q: We are a manufacturer of precision custom springs and wire forms that are considered commodities. How can we set ourselves apart from competitors? We all promise competitive pricing, quality and fast deliveries. Why should a customer choose our company?

A: I encouraged all my associates to differentiate their products and not make them a commodity. I hate that word. Invacare was even able to differentiate products that you would think you couldn’t really differentiate.

The most impressive example in Greater Cleveland of how to market a commodity product is how Jack Kahl, CEO of Manco Inc., created Duck Tape®, instead of duct tape. Customers think his duct tape is better than other brands of duct tape.

Kahl made a brand. He developed a list of things that you make with Duck Tape® and enter them into contests. That’s brilliant marketing.

The most commoditized product I can think of is salt. Yet, buyers think of Morton Salt and truly believe its salt is somehow better. Few entrepreneurs have enough capital to build a brand. It’s a long journey, not a destination.

If you set price and brand aside, there are really four other reasons that people buy a product.

The first one is really the product itself. Can you make it different? If you can’t differentiate the product, you risk staying a commodity. Sometimes differentiation is very simple. If not function, try styling. Keep trying; brainstorm with your team.

Another reason is relationships. Customers are reluctant to buy from Avoiding an unwanted label takes a review of why customers buy a product from an unknown face. If you have high quality sales representatives, customers will buy from your company based on trust in the person representing your company. They are buying from Joe or Alice.

A third reason people buy is availability. You have it just when I need it. As an example, if I am in the desert driving my car and the fan belt breaks, I will walk 10 miles to a service station. It could be 50 miles to the next one. I will pay $75 for this fanbelt, but if I were in Chicago, I could buy it for 79 cents. But I am not in Chicago, and I don’t want to walk 50 miles to try another place. I need it, and I need it now.

Another example is if I don’t have a certain part, that situation could shut down my whole assembly line and plant. I need it now.

The fourth reason is convenience. While in line at the grocery store checkout, you notice on the check stand some razors. It’s more convenient for you to buy those razors than to drive another 10 blocks to a drugstore. That convenience is a reason people buy from you. If you have a warehouse near the customer, it makes it more convenient for the customer to buy something he or she would otherwise have to drive across town to pick up.

Mal Mixon is the ormer chairman and CEO of Invacare Corporation. A complete story of Mal’s rise from rags to riches is told in his book “An American Journey,” published by Smart Business Books. It can be found at www.anamericanjourneybook.com and on Amazon.com.