Price to win in Canadian cannabis
Do the math
Optimizing your pricing strategy has never been more critical than right now.
The market reality is sobering: though falling, avg. legal prices remain 20%-40% higher than the illicit market, which many heavy users still believe delivers a higher quality product. Most brand's awareness & equity are too low to deliver meaningful consumer loyalty. The number of suppliers is increasing (not decreasing) and high inventories continue to bedevil the sector.
Pricing is the only strategic tool that can quickly boost profit – and keep your business afloat.
What are many LPs to do? I see two strategic options, neither risk-free or for the feint of heart:
1. Go for market share
Accept the inevitability of lower industry pricing. Drop your prices 25%-35% and go all-in for market share with your ‘good enough’ product. There will be a margin hit but you may make it up with scale economies and improved market presence, or;
2. Shrink to grow
Keep you price steady but cut production, cull your SKUs and restrict market scope. Concentrate on creating meaningful product differentiation for your target segment. What you lose in revenue may be compensated by lower costs, higher quality and improved corporate focus & agility.
#LPs #Canada #pricingmanagement #margins #pricingstrategy #revenuemanagement