Prices: How to Decommodify our Proposal?

"If we overcome the mental barrier of commoditization, identifying and communicating those added values going beyond our basic proposal, we will have the opportunity to take our profitability to another level."

Friday, August 21, 2020

Ariel Banos, founder of Fijaciondeprecios.com explains that when a proposal is a commodity, in other words, it lacks differentiation with respect to others offered in the market, the only alternative is to align itself with the prices charged by competitors. There are no magic solutions.

However, and fortunately, in 99% of the cases the situation is not as dramatic as initially perceived. The concept of a commodity is deeply rooted in the mentality of those who sell, or even in the company's own executives, but not in the client's pocket. Often the buyer values and pays for aspects that go beyond the physical product or the basic service offered by the company, which in fact may be equivalent to others available in the market. This represents a huge opportunity to stand out from the rest of the competitors, and thus bring price to the forefront of the customer's analysis.

If we overcome the mental barrier of commoditization, identifying and communicating those added values going beyond our basic proposal, we will have the opportunity to take our profitability to another level.

Complementary aspects to the physical product or the basic service can be transformed into valuable differentials that help decommodify our proposal, and thus defend the prices charged.

Here are 20 examples of attributes to help decommoditize your proposal (and there are more!) and add up differentials:

  • Delivery time
  • The delivery conditions
  • The proximity
  • The speed of attention
  • Opening Hours
  • Ease of access (own parking, public transport, bicycles)
  • The financing term
  • The acceptance of different means of payment
  • Seller's experience and background
  • The seller's online reputation
  • The packaging
  • The logistic service
  • Warranty terms and conditions
  • Training and customer support
  • Customer service
  • Installation and maintenance services
  • Warranty and return policy
  • The provision of spare parts
  • The technical assistance service
  • Compliance with health and safety standards (post-covid-19)

See full article (in Spanish).

Do you need to analyze the new commercial reality and its impact on companies?

Check out the "System for monitoring markets and economic situation in Central American countries", developed by CentralAmericaData.



More on this topic

How to Stop Competing Just for Price?

December 2019

Charging tariffs consistent with the positioning of the brand and communicating its differentials with respect to the competition, is essential to stop competing for price and redirect the strategy according to the value of the product.

Ariel Baños, specialist in price management and founder of Fijaciondeprecios.com, explains three strategies to avoid competing only for the price factor, because in these struggles there are no winners and only attract the least loyal customers.

Prices: What Discounts Do Consumers Prefer?

July 2019

Discount promotions expressed in percentage terms rather than absolute values are typically those that consumers prefer when analyzing available purchase options.

Ariel Baños, a price management specialist and founder of Fijaciondeprecios.com, explains how consumers value discounts more, depending on how they are expressed in promotions at sales points and in advertising spaces.

Keys to Stop Competing for Price

April 2019

Identifying a segment that values the differentials of the product or service and charging a price aligned with the company's strategy are essential to avoid competing with the lowest prices in the market.

Ariel Baños, specialist in price management and founder of Fijaciondeprecios.com, explains how through the implementation of an appropriate strategy, it is possible to compete in a market where there are suppliers who charge derisory prices.

How to Compete Against Low Prices

February 2019

The right choice of the marketing system and the partners who will sell the product is key to compete profitably with other options with lower prices.

Ariel Baños, price management specialist and founder of Fijaciondeprecicios.com, explains how through proper marketing, it is possible to compete against the prices of companies manufacturing their products on a large scale and at lower cost, such as those made in China.

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