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These are wonderful times for economists to fret about recession and for doomsayers to point at slowdowns, consolidation and commoditization in the cannabis industry.
The widening acceptance of cannabis as well as the historical success of health and “sin” products in past recessions suggest minimal impact and potential pluses for the industry during a recession.
Commoditization is characterized by ease of substitution, consolidation and generic products distinguished primarily by price.
Commoditization might be both a threat and an opportunity to prosper.
While price is a factor, a multifaceted success strategy is the best bet for the long haul.
Whatever your firm’s niche in the industry, tactics to mitigate the impact of commoditization apply equally to recession.
Deep customer knowledge is the most powerful weapon in your arsenal when commoditization lurks.
How do you cultivate that depth of knowledge? Of course, every contact is an opportunity to capture that customer’s contact info, but it doesn’t stop there.
You might do a net promoter score survey to get a baseline of your customers’ willingness to recommend you.
Customer research can round out your customer knowledge profile. It can help figure out which of your contact messages is most effective. A research firm might help with this.
Research might also help you decide whether you focus attention on existing products and services or look beyond your current offerings to meet unmet needs.
Refining customer segmentation might suggest new channels and methods to exploit.
As you go, consider customers’ wants as well as pain points and must-haves.
What is their price tolerance? How do they perceive your firm as compared to your competitors – and can you capitalize on differences?
You might confirm your customer info with surveys (on-line, phone, email).
The more you know about your customers, the better you can build a road map to meet their needs, whether in normal times, during a recession or when commoditization occurs.
Customized services, promotions and products go hand in hand with deeper customer information.
With better contact and use-pattern info at the retail level, date, product and service-specific offerings can be promoted more efficiently and at a potentially lower cost than mass marketing.
Instead of promoting what customers might not want, your offers are specifically tied to exactly what they do.
Brand identity is an essential – and often overlooked – part of telling the world about your company and creating sticky customers.
Your brand is the bundle of your logo, your promise, physical presentation, social media, packaging, level of service, business practices and values and other observable aspect of your business.
In short, all the tangibles and intangibles of your business that make you unique, how you stand apart even – or especially – in a commoditized market.
Talking about brand can be an effective team effort – what do members of your team think are the most important aspects of brand?
You can also use your robust customer identification data to discover your strongest brand aspects.
(For more about branding, the August 2022 edition of MJBizMagazine includes a couple of great stories.)
Promotions, advertising and packaging/bundling can be unique.
Here again, what you know about customer wants, needs and habits will inform your specific approaches to specific customers to optimize contacts – and outcomes.
Promotions can be built around specific customer populations; multiple advertising channels can be used to reach specific customers.
Packaging might not be controllable, but bundling products to suit specific customer wants and use patterns, combined with customer-unique marketing, could be effective.
Customer experience is an opportunity for differentiation. Experience is different from service.
Your customers’ experience is the sum of all the elements of their contact with your business, from the friendly golden retriever at the front door to clean windows to typo-free communications.
Everyone in your company can take part in helping to define your customer’s experience.
And of course, pricing strategies flow from branding, customer feelings, preferences and loyalty as well as service and customer experience. How well a firm can differentiate itself in other key factors will decide where you land on the commodity spectrum, which in turn will decide your pricing flexibility.
Any commodity can be differentiated.
Think bottled water. While tap water is arguably as good and free, bottled water is a $20 billion-a-year business with hundreds of entrants small to global.
Entrants survive and prosper on the strength of their customer knowledge, brand, targeted marketing, packaging, unique delivery methods, advertising and pricing.
John Stearns can be reached at editorial@mjbizdaily.com.
