How to De-Commoditize Your Commodity Business

It sucks to have to market a crappy product or service. It also sucks to market something that isn't unique.

I'd rather market a very unique product that has some major flaws (so long as there are some major strengths that certain kinds of customers appreciate), than one that is virtually identical to offerings from a dozen other companies in an industry.

While most everyone I mention this idea to understands it, they get stuck on how to de-commoditize their business. In fact, there are very few businesses that are truly commodity businesses. For example, everyone thought coffee beans, a commodity that's literally traded on the commodities, is a commodity.  Yet Starbucks and their billions in revenue proved that one wrong.

You could say a head of lettuce is a commodity, but look at my grocery bill from Whole Paycheck, ahem… I mean Whole Foods, the organic supermarket that's the fastest growing chain in the country, and you'll see that a head of lettuce is definitely not a commodity.

So if you don't want to be in a commodity business, but feel like you're in one, here's how to de-commoditize your business.

There are three ways to do this:

1) Solve a unique problem

2) Solve a common problem, but in a unique way

3) Solve a common problem in a common way, but for a unique audience

I suppose the "all of the above" option should be mentioned of solving a unique problem, in a unique way, for a unique audience.

Incidentally, hands down, one of the best academically oriented business books I've read that speaks to this topic is Blue Ocean Strategy. As an ex-McKinsey guy and someone who has been a featured speaker at Harvard Business School, I've come across a lot of MBA-oriented books. Most propose interesting theories to think about, but Blue Ocean Strategy is actually practical.

You can actually read it, be exposed to a new idea, AND immediately start doing something about what you learned. Very few business books pass that test. I certainly aim to do that with my books and appreciate others who do the same.

Okay, so let's get back to the three ways to de-commoditize your business.

1) Solve a unique problem

Here are a couple of examples of businesses who do this.

• FedEx - get stuff there overnight when nobody else in the world offers to solve this problem
• Costco - buy large volumes of stuff cheap. Sure, you get like a one-month supply at a time, but darn it's cheap. If you don't want a month's worth of supply, you go to a grocery store. But if you need to, say, feed an army, you go to Costco.

Solving a unique problem always gets you some interesting solutions and opportunities. Just be sure it's a problem that customers actually have and are willing to pay to solve.  In other words, don't create the world's greatest solution to a problem nobody has.

2) Solve a common problem in a unique way

Many of us need a kick of caffeine to get us started in the morning. Sadly, I'm no longer such a person and have switched to decaf. But the point is that we all need a way to get our day started. Starbucks offers to do it for us in an "affordable luxury," "just for us"  kind of way. They sell decent coffee with a heck of a pretty good experience to go along with it.

It's not like coffee hasn't existed for a hundred years. It's not like we haven't been eating breakfast for a hundred years. Everyone and their brother and mother know what breakfast is, so this get your morning started problem isn't all that unique, but Starbuck's approach to it is.

3) Solve a common problem, in a common way, for a unique audience.

Black Enterprise Magazine = Inc Magazine for African American Business Owners

Do African Amercian owned businesses have problems with generated sales? Certainly. Do they have problems with managing people? Yup. Do they want to move their businesses online? Certainly. Are they worried about having a good retirement? They sure are.

So what in the world are they concerned about that's different than business owners of other ethnic backgrounds? As far as I can tell, 90% - 95% of what they worry about is very similar. So Black Enterprise Magazine solves a fairly common problem of business owners wanting more useful business information. They solve this problem through a magazine format that's very similar to existing magazines in the category, but, and this is a big one, they target what they offer to a specific audience.

It's the uniqueness of the targeting that sets them apart. It's very simple. If you own a business and you are African American, you're just supposed to subscribe to Black Enterprise Magazine. Doesn't it just feel like an automatic, "of course you would" type of decision? This is the power of targeting a unique audience.

Targeting can be by demographics, industry, region, specific types of problems, and by countless other ways. In fact, targeting a business to a specific market is the easiest way to stand out in crowded market.

You don't have to change what problem you solve. You don't have to change your product or service. The core of the business can remain the same. But once you target an audience that's desperately craving the attention, it becomes very easy to stand out and get new business.

What Now?

Pick whichever approach makes the most sense and make sure you stand out in some way to some audience.