Recently ABC News did a piece on Farmers who have found new ways to improve their profit margins. They are creating brands to set their products apart from the generic commodities.
The feature of the story was that of Damien Rigali a lettuce grower. He had invested heavily in creating healthier vegetables with more nutrients through a variety of tools around soil management, reducing pesticides and other farm techniques. But whilst he had a better product it was still being lumped in with other produce that had not been farmed in the same way.
The solution – he created a brand and packaging. He sends his product now called Baby Leafs in a red box which has become hugely successful.
In the article there is a great quote by Damien – “If I had headed down the same path that most people head down, I would’ve found myself going backwards in the next five years’ time”.
He knew he to find an add distinct value. People are interested in more things than price when they are buying and the producers mentioned in the article found a way to add value. They found ways to unlock the real value of what they are doing.
The key lesson though from Damien’s statement is that he knew if he continued to compete on price he would be going backwards. The price competition can only be won if you are the most cost efficient producer which usually takes huge scale.
Even a dairy with such a commodity as milk was able to unlock the value through looking at the product in terms of packaging, the process, flavour, nutritional value etc.
So this ABC article focused on traditional farming commodities and their quest to really unlock the value within their product the lessons can be applied right across business.
Whether you are in the agriculture sector, manufacturing or the the knowledge industries competing on price is just crazy. The real key is to unlock the real value and position and package this in the mind of your customers.
What is exasperating when I see businesses (particularly professional services firm, financial services businesses & consulting business) who have differentiated offerings making decisions that are converting their products or services into commodities.
The sources of real profits lies in unlocking the value of what you do and communicating that to your customers.