Lie #8: 'You can't charge premium prices for a commodity product.'
If you're fooled into thinking this is true, you'll live by cheapest price and die by cheapest price all day long. People who believe this have thin profit margins and low morale. But they don't have to.
Case in point: Starbucks, AOL, and Microsoft are ALL in commodity markets but have managed to re-define the rules such that they are relatively immune from price competition. And I can assure you that there are THOUSANDS of small businesses as well, who use the same shrewd tactics to sidestep the whole issue of 'commoditization.'
Being a 'commodity' is the pits. The worst situation you can be in is to sell something that's readily available from dozens of other people. But you can change that. I have a very specific terminology and strategy for re-inventing your
business and making it clearly stand out from your rivals, even if you ARE in a commodity market.
It's the same thinking process that AOL, Microsoft, McDonalds and Starbucks all use - seemingly invincible companies that dominate fiercely competitive commodity markets.
Let's take AOL as a brief example. You can become an Internet Service Provider with a few thousand dollars of cash and some phone lines. Some ISP's have even given away their services for free. But AOL maintains a fat-margin price of $23/month.
How can they do it? Because AOL is fundamentally different than all other ISP's. They have FORCED themselves to come up with unique ways of making themselves non-interchangeable with others. They have AOL instant messenger, all kinds of online communities, and proprietary software. And once you're on AOL, it's hard to get off.
You can lift ideas right out of AOL and Microsoft and cleverly apply them to your business, so that apples-to-apples comparisons to your competitors are difficult or impossible. If you are in a commodity business - then you MUST do this. *It's not an option.* When you do, it makes everything you do vastly easier and more effective.
Original Source: Perry Marshall
If you're fooled into thinking this is true, you'll live by cheapest price and die by cheapest price all day long. People who believe this have thin profit margins and low morale. But they don't have to.
Case in point: Starbucks, AOL, and Microsoft are ALL in commodity markets but have managed to re-define the rules such that they are relatively immune from price competition. And I can assure you that there are THOUSANDS of small businesses as well, who use the same shrewd tactics to sidestep the whole issue of 'commoditization.'
Being a 'commodity' is the pits. The worst situation you can be in is to sell something that's readily available from dozens of other people. But you can change that. I have a very specific terminology and strategy for re-inventing your
business and making it clearly stand out from your rivals, even if you ARE in a commodity market.
It's the same thinking process that AOL, Microsoft, McDonalds and Starbucks all use - seemingly invincible companies that dominate fiercely competitive commodity markets.
Let's take AOL as a brief example. You can become an Internet Service Provider with a few thousand dollars of cash and some phone lines. Some ISP's have even given away their services for free. But AOL maintains a fat-margin price of $23/month.
How can they do it? Because AOL is fundamentally different than all other ISP's. They have FORCED themselves to come up with unique ways of making themselves non-interchangeable with others. They have AOL instant messenger, all kinds of online communities, and proprietary software. And once you're on AOL, it's hard to get off.
You can lift ideas right out of AOL and Microsoft and cleverly apply them to your business, so that apples-to-apples comparisons to your competitors are difficult or impossible. If you are in a commodity business - then you MUST do this. *It's not an option.* When you do, it makes everything you do vastly easier and more effective.
Original Source: Perry Marshall
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