The Idea in Brief
In mature markets, heavy competition has a commoditizing effect, and customers become increasingly fixated on price.
When marketers refer to “commoditization,” they typically mean diminishing differences among offerings. But it’s also a psychological state: Consumers fall into a mind-set that makes them less receptive to innovation or marketing campaigns.
Paradoxically, one of the most important levers managers can use to revive consumer interest is price. The authors describe four pricing moves that can call attention to how an offering is different—and why it deserves to fetch a premium.
At a consumer products company we’re familiar with, no one on the senior team would ever refer to the company’s products as “commodities.” Managers there know what the competition has to offer, and they know their goods are different. They can name the distinctive features and explain their value—and they can tell you how much they’ve spent on innovation to keep that edge.