It’s Only Common Sense: Turning a Commodity Into a Premium Product

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I want to talk about an amazing product. It is the story of how smart people (maybe with the help of gullible people) turned something we all have in our own homes for almost free and in unlimited amounts it into one of the most sought-after products in the world. It sells for prices higher than oil and gasoline.

That product is, of course, water.

Full disclosure, I got the inspiration for this column from a fantastic new book called Sales Differentiation: 19 Powerful Strategies to Win More Deals at the Prices You Wantby Lee B. Salz. All salespeople need to—no, I order you to—buy and read this book. It will make your year!

Ask yourself if you would pay, and I mean gladly pay, for something you get for free. And you will answer, “Of course not.” But then again most of us are doing exactly that every single day.

According to the Beverage Marketing Corporation, Americans spend nearly $15 billion a year on bottled water. Water is, by far, the largest beverage category by volume, period.

What stuns me personally is that we are always moaning and groaning about the price of gasoline. Most of us know down to the penny what a gallon of gas costs. And we usually talk about this this while sipping water out of a 16.8-ounce plastic bottle of water that costs about $7.50 a gallon.

The last time I checked, no one I know has yet to install a tap in their house for all the gasoline they want, but everyone I know has between one and 20 faucets in their house where they can get perfectly fresh water any time they want.

Okay, maybe not in Flint, Michigan. But in most other places in the U.S., everyone has access to all the good fresh, clean water they want, at any time they want. Yet, we’ll panic and run to the store when we run out of bottled water. “Oh my God! There’s no water left!”

Oh, I can hear you saying that this water is not free, and you are absolutely right. I just checked my water bill where I live in Waterville, Maine, (really) and I pay a whopping $1.20 for every thousand gallons that I use. That’s less than a penny a gallon, and I can drink that anytime I want. We even have these reusable insulated water bottles that we fill up so we can have all the conveniences that store-bought bottled water gives us.

The next town over from where I grew up is a little place called Poland Springs. Yes, that Poland Springs. And there was a place on the side of the road where spring water literally came out of a pipe in a rock and people would go there with their jugs and get fresh Poland Springs water any time they wanted.

But I can hear you saying, the bottled water you are buying at Trader Joe’s is so much better. Well, my friend, unless they are adding something to that water (and then they are going to charge that much more for it), it is the same water you can get at home.

In 2007, Aquafina was required to change its labeling because their water comes from a public source. Then Dasani had to follow suit because their water came from a public source. And Poland Springs? Well, I already told you about that. While you can no longer get Poland Spring water from the pipe in the rock of the side of the road, you can go visit the spring at the source and they might even give you a free bottle of water.

So then, knowing all of this—and I know you all knew this long before I “spilled the beans”—why do we keep buying it? Why have we allowed what should be the very definition of a commodity to be sold? And at premium prices, no less?

The answer to that is the lesson for today. How do you take what is obviously an inexpensive commodity and get people to buy it at premium prices?

It all boils down to just a few things:

  • Because it is convenient
  • Because it is available wherever we go
  • Because we can buy it in any size bottle we want
  • Because drinking a certain brand of bottled water actually (we think) defines who we are

Think about it—from Peregrine and Perrier to Poland Springs, Dasani and the no-label brand you get at the discount store, the product is virtually the same, but the brand that you drink defines what kind of person you are from a Paris Hilton to a Larry the Cable Guy. Please do not doubt me on this. I know people who would not be caught dead drinking a bottle of Costco’s house-brand water, which goes for about twenty cents a bottle.

In the end this is what it is all about: people are willing to spend more money for what they perceive to be meaningful value. And that applies to everything, and I mean everything. Think about it, it’s not always just about price, it just depends on what kind of salesperson you are.

It’s only common sense.

Dan Beaulieu is president of D.B. Management Group.



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