How Can I Differentiate A Commodity?

Branding Strategy Insider helps marketing oriented leaders and professionals like you build strong brands. BSI readers know, we regularly answer questions from marketers everywhere. Today we hear from Espen, a future marketer studying at the University of Birmingham in the UK who writes…

I just read your post on branding commodities and noticed that you carried out a workshop in Dubai with participants from several energy companies. I am currently working on a class project that involves the branding of commodities. Could you give some examples of how you would brand electricity, which is a very particular type of commodity, to consumers? I have been looking into green branding (e.g. green certificates etc) but have concluded that it is impossible to promise that the electricity is green as one does not know where the electricity comes from in deregulated open markets. Perhaps you and BSI readers have other suggestions?

Espen, we’re happy to help. We will interpret your question to mean, “How can one differentiate one electricity brand from another?” When attempting to differentiate commodities, you should explore the following generic strategies:

• providing value-added services
• providing superior customization options
• customized approaches to pricing, sales terms and invoicing
• product/service bundling or unbundling
• vertical or horizontal integration
• exceeding industry standards on performance consistency
• being the most responsive to customer needs and requests (delivery, installation, customer service, technical support, etc.)
• overlaying your product or service with high style or improved aesthetics
• increasing the breadth of your offering, attempting to become a “one stop shop”
• becoming the most ethical provider in the industry

Here are some specific ideas for electricity:

• charge a higher price and donate the difference to “green” charities
• also offer gas and oil and other types of energy and invoice all of them together in a combined bill (increasing customer convenience)
• deliver a comprehensive program of energy savings assessments and tips to help lower your customer’s energy bills
• offer innovative billing programs (such as level month-to-month payments or lower payments with a balloon payment once a year in the month of the customer’s choosing)
• target customers with multiple properties and invoice them for all of their properties in one bill, perhaps summarizing the charges as requested by them based upon their business groupings
• help set customers up with their own solar and wind power so that they can lower their ongoing energy bills and perhaps even sell energy back to the grid
• specialize in serving businesses that require no fluctuations and no outages, set up safeguards (perhaps even including customer site backup generators) to insure that you are delivering a higher level of performance against this objective, obviously you would charge a premium for this
• allow for invoicing on the customer’s preferred billing frequency and cycle
• target “style conscious” customers and develop a brand identity that delivers high style in everything that you do (invoices, mailing envelopes, etc.) (analogous to the introduction of decorative keys)
• Publicly and consistently support important local charities over time

Our exploration of the main sources of brand differentiation may also help.

Good luck with your commodity branding project.

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