During the weekend I did our supermarket shopping. One of the items to purchase was cans of tomatoes. In our supermarket there are about 6 different brands of canned tomatoes, and most weeks one of them is on special. Each week we buy the brand on special. In my mind a can of tomatoes is a can of tomatoes, and there's little difference between one and another. Some are better than others, but at the end of the day, when tipped into a casserole or curry the difference in "quality" is hard to notice.

Having worked in the supermarket industry I know that specials or promotions by suppliers are intended to build loyalty. The idea is that by purchasing your product at a special price you get to experience the difference, and will be more likely to purchase the following week at normal price. The reduced margin on promotion is made up for by the increased volume and increased ongoing sales.

For canned tomatoes this isn't working. The suppliers are reducing their margin on promotion for a short term increase in volume.

So as suppliers, how do we give our products some differentiation so that when customers do try them, they like them, become loyal, and maybe even agree to pay a premium? 

By comparison we bought a pair of shoes for my son in the weekend. He was very clear they had to be Adidas. They cost us exactly twice the price of another pair available in the same shop, which to me looked pretty similar, and we paid without (much) hesitation.

Differentiation is about quality, service and branding. In this case, for a teenage boy, it's mostly about branding.

Have a think about this for the glass and window industry. Does anyone in your market, yourself or your competitors, provide this level of differentiation? At first you might think no, but I suspect in most if not all markets there will be suppliers who have strong and loyal relationships with their builder or retail customers. So strong that the builder won't even ask for pricing from others.

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