Companies are often in a dilemma to work towards physical product differentiation or perception creation of the same. If one goes into the manufacturing technology and quality measures employed by commodity companies, one will realize that there is not much difference in the product coming out from comparable size companies. Yet the perception in the consumer’s mind is different for each brand. The advantage of differentiation is two-fold. First the customer does not need a lot of convincing as he is already aware of the product. Also, he pays a premium for the differentiated product. Undifferentiated products are often not in his consideration set.
A lot of effort has gone into creating an aura of differentiation for their products in various categories by the brand leaders. Consumers view cement from Ultratech, steel from Tata, paint from Asian Paints, glass from Saint Gobain, tiles from Kajaria, etc. as reliable products to use. A simple way to find whether a particular product category is treated as a commodity or is identified by various brands in the market is by checking the price indifference of the customer to the various options available within the product category. If the customer is not willing to pay differently for the various brands available, it means that the product is still a commodity in the eyes of the customer.
The taglines, choice of celebrity endorsers, message in TV commercials, packaging, all go into creating a perception of a different product within a category. It is due to these efforts by the marketers that the customer builds a respect for the brand. Also, the way, a customer is provided services by the company in terms of timely supply, satisfactory response to his queries, sample packaging, all go in building an emotional connect with the brand. The customer might not have necessarily used the product till now, yet he has built a perception of the brand.
In cement, since the success of Ultratech, all companies are trying to be a preferred brand by the engineers. This is because among all the influencers, engineers are seen as the most learned lot. The brand in a way has given a promise of better or more reliable performance than its competitors.
When we say product differentiation, we do not necessarily mean that the product is different from the competitors in its technical specifications or has a better functionality or user interface. Often creating differentiation in the product itself is difficult, but there are opportunities to create the differentiation in the brand.
After-sales service, complaint attending speed, timely & transparent accounting system with the channel partners, fast delivery of material to the channel partners or customers, credit policy for the customers, ease of complaint registration by the end users telephonically or online, availability of the product in close vicinity of the consumers, etc. all help in creating product differentiation. The role of marketing communications is to emphasize that the company’s products are the best. This, play an important role in this perception creation. In a nutshell, it is possible to create product differentiation.
Product Differentiation levels
Below is the author’s classification of various types of commodities under one of the 5 levels of product differentiation as seen by customers. However, this might change region-wise. Also, a few brands within the category might be an outlier. That is, within a mostly commoditized category, there might be a few established brands and within a category dominated by brands, there might be a few unorganized sector players, catering to the needs of brand apathetic customers.
Undifferentiated: Sand, Gravel, Bricks, Seeds
Mostly undifferentiated: Cement, Steel, Glass, Petrol
Little differentiated: Cement sheets, GI sheets, Aluminum sheets, Barbed wires, Plywood
Medium Differentiated: Sanitaryware, Electric fittings, Fertilizers, Electric wires, Gypsum boards
Highly differentiated: Pumps, Paints, Tiles, Cement boards
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