How to de-commodotize if you are selling a commodity product?

One of my new friends asked me the above question “How to
de-commoditize if you are selling a commodity product?”. He knew that
commodity products usually get differentiated by price and wanted to
escape that.

That’s a problem for many companies. Adrian Slywotzky has a cool book
called How to grow when markets don’t
where he talks about the story of Cardinal health. A division of
Cardinal health sells hospital supplies, mainly surgical instruments
(can be argued as commodity products) and instead of differentiating
the produts they (Cardinal Health) studied how these supplies get used
in the hospitals (value chain) and came up with a solution to help
streamline the process of packaging and delivering surgical instruments
“just in time” for the operation. The package would contain everything
that a particular operation would require in the order the doctor would
want. In fact, it would include the instruments of the doctor’s
preferred brand. You just can’t beat that with price. Instead of
competing on the price of the product, they sold a solution and an
experience that is hard to match by a competitor.

We talked about this and discussed if there was a possibility of “knowledge arbitrage” for his business.

More companies (think Starbucks) are selling experiences rather than products and of course, are charging a premium.

Something to think about…