The second installment of Nick Carter’s series focusing on Avoiding Commoditization With Hi-Tech Solutions. Click here to read the first part of the series.

"Distinguishing your product or service from those offered by the competition is primarily a function of marketing." -Nick Carter

"Hello." The caller avoids pleasantries and gets right to business, "I'm trying to get quotes for ..."

Calls that begin this way may invoke excitement for salespeople, but it's a frightful indicator of a commoditized market. Last week, we looked at how customer perception is the primary factor that drives once-vibrant and profitable markets into the doldrums of price-warring competition. This week, we'll focus on changing those perceptions and generating leads interested in your sharp mind more than your sharp pencil.

Innovation By Differentiation

Distinguishing your product or service from those offered by the competition is primarily a function of marketing. Consider Starbucks, which charges considerably more for a cup of coffee than the rest of the industry. How is this elevated price accepted by the customer? Think package design, product styling and customer experience. Hang a few pendent lights over the bar and feature local artists on the walls, and suddenly you've created a customer experience that people will pay to enjoy.

In high-tech markets in which retail visits are rare, the sales approach itself can also be a marketing tool. For example, deliver "proposals" to potential clients instead of quotes. This allows for elaboration of the standard features of your solution sale.

Innovation By Addition

The simplest method of offering a "solution" sale is to bundle services or auxiliary products with a commoditized product. Tech support and training, for example, are add-on services that are commonly offered ... So much so, in fact, that a services bundle may hardly differentiate you from your competitors.

General Motors has effectively achieved innovation by adding OnStar to many of its vehicles. Likewise, other automobile manufacturers are looking to the integration of widely popularized consumer electronics like MP3 players and mobile phone docks to set their own products apart.

Innovation By Innovation

Finally, there is innovation by innovation alone. Companies like Apple that redefine common products every day achieve higher margins than their competitors while sales remain unhindered by the premium prices. Similarly, you may recall when Autodesk realized its need for this type of innovation in the mid-90s. Although AutoCAD had been its flagship for more than 20 years, the company expanded its product line through acquisition and spawned a new era of growth for the company.

Regardless of the strategy for avoiding commoditization, for manufacturers and suppliers, the desired result is the same. When consumers perceive your product or service as beyond compare in its total offering, they won't have the luxury of shopping it around. If you want to restore your profit margins to the levels they once were, you must dare to be un-shopped.

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