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Branding of Commodities

In: Business and Management

Submitted By Saifjsw
Words 3607
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By: Sumit Gupta MBA(IB)-2002-04 IIFT, New Delhi

DATE: 2nd September, 2003

This document is created using PDFmail (Copyright RTE Software)


By definition, commodities are products and services that customers perceive to be exactly the same. A market becomes a commodity market if the suppliers choose not to differentiate themselves, either through their products/services, or through their brands. Equally, any market can become a branded market if the suppliers choose to differentiate themselves. But companies that sell products such as bulk chemicals, paper, and steel or milk, salt, cement, etc. tend to emphasize operations and sales over marketing, striving to unload as much inventory as possible at the prevailing market price. Viewing themselves as commodity producers, they particularly overlook the nonfunctional features of their products—delivery speeds, aftersales service, distribution, Pricing, Customer servicing, Segmentation, Positioning and Communication. What these producers lose out on is the opportunity to increase their gross margins, create consumer demand for their specific items(s), and build valuable Brand Equity by employing the branding practices made successful by consumer packaged goods enterprises. The biggest challenge facing manufacturers today is how to differentiate their commodity so that their business rises above the commodity market place to enjoy the margins and premium associated with consumer packaged goods markets. Therefore the key to the success of marketing commodities in today’s market place is an intense focus on creating true economic value for those customers who are willing to pay for it and a brand strategy based on product, delivery or service differentiation. In this...

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