Shedding the Commodity MindsetA while back I was prompted to think afresh about the meaning of "commodity" when a colleague referred to the Associated Press's reporting as "commodity news." Since I find browsing the AP articles that are headlined on my browser homepage a particularly reliable way of keeping up with news during the day, I wasn't inclined to think of the AP's work in "commodity" terms.
Is the word "commodity" thrown around too much? I'd venture to say yes. For me, the latest indication is "Even Commodities Have Customers," an article by François Jacques in the May issue of the Harvard Business Review. Jacques is the senior VP responsible for marketing at the cement division of Lafarge, the world's largest cement producer, with 122 plants in 46 countries (though its market share is only about 6%).
Jacques describes in accessible detail the steps he took, starting in 2002, to build marketing capabilities in the cement division. Managers in the division believed they were selling a commodity and acted accordingly: they had no aspirations to beat the competition except on price. Beginning with four pilot business units, Jacques introduced the basic marketing tools of customer segmentation and pricing strategy and immediately began moving Lafarge's cement profit margin up.
Key to the marketing function's success was uncovering opportunities to differentiate Lafarge's cement products. The general approach included capitalizing on superior supply chain execution (e.g., improving the ordering and delivery process), creating a specialized sales force for each channel, and introducing value propositions for newly defined customer segments.
In the area of employee development, Jacques worked with the HR and training departments to develop marketing and sales competency profiles and an assessment tool that became the basis for development planning.