Marginal value on Commodity Items

February 25th, 2010

If I gave you $40,000 to go buy a new car, you’d probably go away, scan the car yards and come back with a few options.

You can pretty much guarantee a certain level of safety standards, fuel economy and performance.

Unless you’re looking at Luxury Cars the car itself is a commodity. ¬†You buy it for the brand; experience, status…

This is the exact play that firms are using once their product slips into the commodity category.

You see when everything else is the same firms need to focus on the marginal value, the base value is assumed (safety, fuel economy, performance) – but what is the secret sauce? It may seem trivial but it’s the little things which can swing consumer preference.

You need to focus on that marginal value and stretch it, reposition it, make it meaningful to your consumer base.

Clearly the experience is a start, is being your customer a real experience worth sharing?

Photo Credit: Alex4981

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One Response to “Marginal value on Commodity Items”

  1. Sam Farrow Says:

    I love the application of marginal value to cake.

    The highest marginal value for cake consumption is realised on the first bite which provides both the taste and texture of cake without the negative externality of calories.

    Following this logic to its logical conclusion a successful cake management strategy would encourage more and more smaller and smaller bites of cake.

    As the size of the bites tend towards zero it becomes possible to have your cake and eat it too.



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