When leading the company, whether it is in B2C or B2B sector, there is always a risk of the commodity trap. A commodity trap occurs when the offerings from your competitors become so similar that customers stop valuing the brand and perceive yours or your rival’s products as substitutes. None of the businesses would like that to happen.
Competitive advantage is crucial for companies to stay afloat. It creates continuity of demand, market entry barriers, and improves customer retention. One of the ways to create such an advantage when a commodity trap occurs is to transform your business from product- to solution-focused.
Solutions are usually mutually created processes that bring value to the customer and supplier. A collaboration with your customers allows you to optimize the processes to the demand. From a supplier (company) perspective, it is a customized bundle of goods and services. However, for the customer, it creates a larger value. Customers view solutions as relational processes with the firm, which include not only listening to the customer's wishes but also supporting the customer throughout the whole process.
Solution-business is a perfect way to create more value in industries where:
- There is a high customer power
- High level of commoditization
- Low level of technology intensity
How it could be advantageous for the business?
- It intensifies the relationship between the company and the customer.
- It allows the company to differentiate, and therefore create more tailored high-price products.
- Solutions are usually created with contracts. Therefore, there is no need to worry about customer retention.
- It creates a deeper understanding of your customers, which allows developing products that will be in demand.
