Increase Market Share
Do you know that market share is the core metric of market performance? Read the article and learn how to increase the market share of your business and beat the competitors!
Increase Market Share
Organizations usually increase their market share with the help of innovation. They strengthen their customer relationships and use smart hiring processes as well as acquiring competitors to reach their prime gradually. Increasing the market share is no easy task since it requires carefully crafted strategies. If you want to learn how to apply cutting edge tricks to increase the market share of your cannabis-related business – keep reading!
What is market share?
Market share is the percentage of the market which a cannabis company controls by selling its products or services. You can calculate it by dividing the total number of sales by the overall size of the market. Therefore, if the total sales of a cannabis-related firm account to $1 Million and the complete sale of the industry is $100 million, its market share is 1%. Another way to calculate the market share of your business is by using the percentage method of units, a company that sells 100,000 units in one year in an industry that sells 10 million units in one year overall, has a market share of 1%.
When your cannabis business has a higher market share, it gains an advantage over its competitors. Cannabis producers who were the first to capitalize on the market when the statutory bodies legalized it, we're able to get more perks. This strategy led them to enjoy lower prices from the suppliers since they place large order volumes and for this reason, they have significantly higher buying powers. Therefore, it can be assumed that a significant market share combined with a higher production capability, leads to lower prices of production and selling.
Ways to increase market share
One method which is guaranteed to increase the market share of cannabis-related companies is innovation. Whenever any firm brings something new to the market which its competitors do not have, the consumers are attracted to it. For instance, when the pre-rolled joint came into the industry, it was a reasonably new product offering that interested a lot of customers. This is because consumers who only use minimal amounts of marijuana like to carry some of it with them. A pre-rolled joint was an efficient option for them. Due to the pre-rolls, people could skip the hassle of going through the whole process of preparing the joint. Even if the consumers did business with other cannabis producers before, the new product offering made them change vendors. Such innovation in the industry earns customers’ loyalty. Innovation can come in a lot of ways. For instance, Besito, a cannabis selling company, sells its product in the form of vape pens. These pens are sleek, stylish, and come in a bright blue colored box. This reduces the attached stigma to the product and makes it more socially acceptable, which is how Besito reached the top of the market.
- Strengthening customer relationships
Another method to increase market share is by building and then strengthening customer relationships. Companies also protect their existing market share by making sure that their customers stay loyal to the company and do not roll over to a competitor for a new offering. Some cannabis producing and selling companies keep their market share by defending their customers and providing them with better products and services. The consumption of cannabis in many states of the US was already high; however, ever since the legal system of the US legalized marijuana, the use further increased.
Furthermore, as the act of consuming cannabis gained legality, demand for the product increased. The existing companies of cannabis exploited this opportunity as satisfied customers spread positive word of mouth in their personal circles who become new potential customers. Building and increasing market share through positive word of mouth drive up the revenue without having pressure on the overall experiences of the company.
A lot of cannabis companies that are currently leading in the states of Washington and California received a huge market share due to specification. Specification means that they critically focused on producing a niche product that was targeted. For instance, products of Besito contain a low or light amount of THC with a high amount of CBD formula. Both of the chemicals are combined in a balanced way to provide less paranoia and more pleasure to the customer. The company also focuses more on female consumers by selling all of its vape pens in bright blue colored hexagonal boxes.
- Developing a unique brand position
A unique brand position is when a brand develops itself. This is when the brand is categorized as ‘market-focused’ or ‘customer-focused’. A customer-focused brand puts a lot of research into the pre-launch phase of the product. In this phase, it finalizes the segment, which it will be targeting. Once the proper blueprint of the target segment is developed, the company channels and all of its marketing efforts put towards this one goal. Starting from the marketing activities and ending on the final design of the product, everything is customer or market-focused.
Importance of market share for the cannabis business
Market share is significant for cannabis business, since the overall market is a complete pie, and the bigger the slice, the more profitable is the pie. When your cannabis company grows efficiently, the market share starts to increase. This means that usually, firms strive to keep their competitors at bay from taking market share.
The concept is straightforward and easy to understand; a more significant market share means more profitability. Investment can differ according to the method of increasing market share. For instance, when a company invests in marketing activities, its market share can grow, but a part of it goes to the marketing expense. On the other hand, when a company strengthens customer relationships, its market share can increase from positive word of mouth, which does not require any investment. Therefore, profitability remains high.
‘Sonder’ is also a cannabis selling company, which is one of the topmost cannabis firms in the US. It has managed to increase its customer share by becoming indulgent and aesthetic. The main focus of Sonder is an artist inspired love and wonder of the ’70s. The composition of the product remains cheeky, playful, and mystic. This is a strategy that has helped Sonder win market share.
Market share as an indicator of your market performance
It is essential to track market share as well. Several companies that were pioneers in the cannabis industry did not engage in competitor monitoring and remained excessively optimistic. They overestimated their market share by almost two factors. This did not add up with the sales figures that they predicted. As a result, these companies were run out of business by the competitors which were more innovative, creative, aggressive, and alert.
Furthermore, market share is an element or a key indicator of market competitiveness. It allows the executive to analyze the growth of the market (or decline) with which they can identify key trends in consumer behavior. Several cannabis companies were able to remain in the market by using market share to judge market potential and market opportunity. Once the overall potential of the market becomes clear, the company knows which exact areas it can exploit and take advantage of. In the case of Sonder, benefiting from an aesthetical approach due to its general popularity among the society resulted positively.
To sum up, market share is a factor that is a crucial indicator for every type of business. There are several different ways through which cannabis companies can increase their market share. While some strategies are more comfortable and cheaper to implement, some are expensive. Word-of-mouth is a relatively less costly strategy to increase market share. On the other hand, regressive marketing is a relatively expensive strategy to increase market share. Companies like Besito and Sonder have been able to achieve good market shares only through the use of these strategies. While some of them have good brand positioning, others are customer-focused. This is generally the key to surviving in the growing cannabis industry. It stems from traditional or unfocused growth strategies that have become obsolete. Firms from industries all around the world are in a contest to provide the best value to their customers. Innovation, however, is a timeless concept that can be a big break for any company. New products like pre-roll joints and CBD vape pens have been the latest innovations in the cannabis industry. These products have brought an increase in market shares for their respective companies.