Specialized Commodities

What do Starbucks and Apple have in common? Both of them are championing strategies that turn commodity-like products into an experience.

Coffee is abundantly available but nothing like sipping a brewed-to-order Grande Cappuccino in a cup stamped with a crown-wearing-queen. Who wants to be noticed, let along drink, at a McDonalds sipping a McLatte or at a Dunkin Donuts joint sipping their coffee. Granted Starbucks sources their beans from some real exotic places but that makes for a real small part of the price. What drives the price is the overall experience that brings together elements of exclusivity, aroma, style, emotion, and maybe, just maybe, taste.

Let’s now consider Apple. Music players, tablets, and computers are all abundantly available. But there is something about an Apple product that makes you go – “I’ve got to have that!”. Who wants to be noticed holding a boring and dull Samsung or HTC or Amazon or B&N product? None of those will give you the coolness, hipness, creativeness, or classiness like that iPod, iPad, or iMac! An Apple product immediately transforms you from a dry and dull person into one who is in with the times, is going places, and is ready to conquer the world.

I will give you one more example, which is close to my home (Northern Virginia). This one is a grocery store chain by the name of Wegmans. Boy does my family love to spend time here! People of all ages want to come here and hang out. Do you remember the last time you were at a grocery store and you just wanted to hang out? Wegmans is unlike any other grocery store because they have approached the store design, layout, inventory, and ambience with a purpose of transforming the act of grocery shopping from an errand to an experience. The strategic lighting, the samples and tastings, the choo-choo train running on an overhanging rail, the kids area where you can leave the little ones, the sprawling wine and cheese selections, etc. When I am at Wegmans, I am like a kid in a candy store. I want more and I do not want to leave!

Bottom line – It’s the experience that matters and savvy firms have internalized this important lesson. How often do you see a Starbucks ad? Can’t remember the last time I saw an Apple or a Wegmans ad? As a firm, the idea is to spend upfront, not after the fact. Spend the money to design the best product available in the market, at just the right price, and then you don’t have to spend a dime on marketing to existing customers. This strategy renders the competition meaningless and helps you create a “Category of 1”.

Be sure to look up the Kazira article on “Blue Ocean Strategy” for more ideas/insights on this topic. If you liked what you just read, please support Kazira by sharing it with your network (click on Share It link below). Thanks!