And I left 'em sweating and stealing a year and a half behind.
Rudyard Kipling, The "Mary Gloster"
Commoditization can take several forms.
In the first instance, your product may be one of dozens in the marketplace, all of which appear to be identical. The differentiator then has to be price, or service, or the added value of expertise, which can be sold along with the product. Since you presumably know more about your own product than the end user does, you are in a position to advise him on how to use it most efficiently, how to use it in other applications, how to substitute it for similar products (simplifying inventory), how to use it creatively, and how to purchase the optimum form of the product for the intended use.
This, of course, involves understanding the customer's business and his specific needs, and gaining trust based on the value of your expertise, which acts as a profit multiplier – for you and the customer. But once you gain this trust, having demonstrated the value of your input, your product has ceased to be a commodity. You've become part of the customer's valued team, and price is no longer the key criterion in purchase – and re-purchase – decisions. You've leveraged customer service to a new, more powerful level. This approach, aptly named "Consultative Selling" by Mack Hanan, (in his seminal book of the same title, published by the American Management Association) works especially well with industrial and commercial customers, where such expertise can be a make-or-break factor.
The challenge then becomes communicating this critical added value to potential customers around Tom Friedman's newly flattened globe. This requires an understanding and expanding of the consultative selling process, as well as a high degree of strategic, tactical, and communications creativity.
Another kind of commoditization takes place when someone deliberately clones your product, and sells it in direct competition with you. Your product's uniqueness suddenly evaporates. Patent law was designed to protect against this, but there are ways around patents. In any case, many of the things that make a product unique are not patentable.
When Tic-Tacs were introduced by the Ferraro Candy Company of Italy, they owned just such a non-patentable uniqueness. A breath mint the size of a pignoli nut delivered a mouth-filling blast of refreshment that was startling. The TV campaign urged the consumer to "Put a Tic-Tac in your mouth, and get a blast out of life." The graphics were explosive, and the accompanying music was loud to the point of raucous. The communication was complete. Trial went through the roof, and the television budget soared above ten million dollars. (You can make a nice buck selling an ounce of sugar at Tic Tac prices.) Then, inexplicably, sales hit a wall, and experienced a steep slide, despite the fact that hordes of new customers were coming aboard daily.
At first, it appeared that the company had identified the culprit. Warner Lambert, which sits astride the breath market like a colossus, with a wide range of products from mouthwash to chewing gum, had introduced a Tic-Tac clone, right down to the size and shape of the pill, and the handy purse-or-pocket-sized plastic dispenser. The only difference was that Dynamints (note how the name cleverly captured the unique feature of the product) came in an extremely hot cinnamon burst, reminiscent of the old Red Hots candy. Otherwise, the mouth feel and experience were identical. Dynamints were cannibalizing Ferrero's mints.
Then, a strange thing happened. SAMI reports showed that Dynamints were experiencing a delayed, but parallel plummeting sales curve. The problem, whatever it was, was common to both brands. Ferrero hastened to run some focus groups. They found that the brand delivered on its initial promise – in spades. The tablets turned out to be too hot for consumer taste, so initial trial did not translate into repurchase. At the price point of candy mints, that was the kiss of death. The bucket was leaking faster than it could possibly be refilled.
No problem. Ferraro reformulated its Tic-Tacs, reducing the minty blast. Back to focus groups, where they were informed that the product now failed to deliver on its promise. Its ballyhooed explosive mouth feel was gone, and the product had become the boring equivalent of a quarter of a Life Saver. Intent to purchase was zip.
The company faced a conundrum. They couldn't spice the product up, and couldn't spice it down. They certainly couldn't leave it as it was. The product's very reason for being had vanished. That's when they came to us. In the middle of our initial meeting, after they had related all of the foregoing, one of my partners had launched into the credentials part of our presentation. Having heard it all before, I began to (apparently) absentmindedly pour some Tic Tacs into my coffee spoon. One of the Italian marketing people interrupted the flow of the presentation, exclaiming, "Mr. Jackson, that's not how we use the product."
"I'm well aware of that," I responded. "But it appears to me that you need a new place to stand. Your flavor story is shot. The equity you had it that claim is down the drain. However, I just got a dozen of these Tic Tacs to fit in my teaspoon. I think I remember that sugar has about sixteen calories per teaspoon. The product is mostly sugar, right?"
"Yes, sugar, peppermint flavor, and a carnauba wax coating."
"Well, I realize that this is not a regulation teaspoon, but it appears that these Tic Tacs have roughly two calories each."
"Why does that matter?"
"Mints are about breath. Breath is part of appearance. So is weight. Your heavy-user category has to be concerned about the consequences of consuming all that sugar. I believe we've found our place to stand."
They phoned Italy from our office. Within two days, the factory responded. A single Tic Tac, it turned out, contained a bit less that one-and-a-half calories. We rounded the decimal up, and a slogan was born: The 1 1/2 calorie mint. (See my website, dickjackson.com.)
Warner Lambert, which doubtless had analyzed their sales plunge with equal alacrity, discontinued Dynamints, leaving the field to Ferraro. Tic Tac's new positioning worked a miracle. The sales curve reversed, and soon surpassed its previous highs. The company introduced flanker flavors, including spearmint, citrus flavors, and yes, cinnamon. The hot spiciness of all of these was drastically reduced, but it no longer mattered. The customer had a better reason to purchase the product than simple novelty. This claim had staying power. More important, it had frequency-of-use power, and all-important repurchase power.
The phoenix had risen from the ashes, stronger than before.
What would have happened if Dynamints hadn't forfeited? Difficult to predict, but we can venture a guess. Tic Tac would likely have maintained its loyal base. Its flankers would have protected its position. The 1 1/2 calorie claim, once made, belonged to them. Though not unique, it was uniquely claimed, and had become what Rosser Reeves, in his Reality in Advertising, (Alfred Knopf, New York, 1968) revealed as a U.S.P.: unique selling proposition "If the product cannot be changed, and remains identical, it is possible to tell the public something about that product which has never been revealed before. This is not a uniqueness of the product, but it assumes uniqueness, and cloaks itself in uniqueness, as a claim."
No one has said it better, before or since.
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