Many companies are facing the challenge of product ´commoditization´ over time. Commodities are offerings with no unique differentiators, sold primarily via low prices. Example: 10 years ago, the mobile phone was something special and the privilege of important decision makers who had to be accessible at any time. Today, mobile phones offering the basic ´telephoning´ function have become a commodity (throw-away product), and competition has shifted from hardware (the mobile phone) to software and internet connectivity.
Many producers of industrial products are facing increased price pressure. Competition is mainly coming from Asian low-price companies which aggressively enter European markets. To avoid a cutthroat price battle, an increasing number of companies offer services in addition to their physical products. This allows them to create added value for their customers and to differentiate themselves from low-price rivals. In addition, product-enhancing services help to build customer loyalty and to generate additional income.
Given limited sales resources, (even the biggest company has ´limited´ resources), ambitious growth and profit targets can only be achieved by strictly focusing on attractive customers. This, of course, does not mean that the other customers should no longer be served. The question is, however, how much time and attention is allocated and through which channels (distributor or internet instead of personal sales) they are served.