In almost every product market there is an evolutionary journey that a product at the start of its lifecycle will move through.
Typically, that curve describes the inception of innovation, its launch then movement towards maturity and decline, much like the 3rd law of thermodynamics, and the movement towards minimum entropy.
Product Maturity AKA Commoditisation
Products start life with lots of energy and innovation, often playing to their specific and individual product-leadership strengths. If they are successful it’s because they have a unique selling proposition (USP), and then enjoy a boom period and market share growth. With the progression of time eventually, the market reaches saturation point, all offerings are seen by the customer as the same, therefore a commodity, with no more feature advantage in a crowded marketplace, price pressure is inevitably a downward trajectory. Therefore, to win customer approval and market share from competitors lowest price starts to become the USP, rather than product values. So, with the progression of time correspondingly profit will increase and then diminish represented by the X and Y-axis respectively.
The Shift to a Service Offering
One of the many tactics that product marketing professionals employ, to avoid this inevitable product revenue decline as a result of maturity is to shift to a service proposition?
So what does that look like in real terms? Typically, a product will go through the standard lifecycle curve, then with downward pressure on margins and price-point.Electricity and how we used to purchase that as a product rather than as a service, is a good example of this transition. 150 years ago, if an industrialist wanted to power his factory with electricity, he could commission a company to build him a power generator, this would supply electrical energy to his factory and allow him to manufacture his goods.
Today that same electricity is provided as a provision, without a need to have a power plant in a factory, or engineers to tend that generator or feed it with fossil fuel. You take it for granted that if you simply push a switch you have electricity for any need based on a monthly service charge. This is an example of a product starting as a unique offering then transitioning into a service-offering. Mobile phones, cars and even desktop printers and their ink cartridges have all undergone this transition.Medicinal cannabis is primed to make that leap earlier than normal, given that this is an emerging market, this usually occurs much later in a product lifecycle after saturation and commoditisation have occurred.
So, what is driving this shift to services trend? Innovation and experience, becoming unique in a crowded highly contested marketplace forced the early adoption of a service or subscription model, also the need to deliver a safe and precise dosage without medical supervision has combined to make this trend happen sooner rather than later. So, partnerships between suppliers of medicinal cannabis and pharmaceutical companies have emerged.
Precise Clinical Doses
The low oral bioavailability of cannabinoids (Slow rates of absorption and low dose concentrations occur after oral administration) has led to a race to develop alternative and feasible methods of dosage administration. These have included, transdermal route, intranasal administration and transmucosal absorption.
This becomes interesting as now we have a delivery device and also a consumable “refill”. Some of the most successful transition to service business models have included a low cost “dispenser” and a “consumable” that the device, well..consumes. In this case, we would have a medicinal cannabis clinical-dose device and refill capsules so the perfect ingredients for a successful model, think inkjet printer and ink capsules. The ink refill-capsules are now available from many vendors, as a service, with a remote capability of the printer sending data to the service provider with the user getting regular inkjet capsules though the post as long as they stay subscribed.
One of the good examples of this service offering as a medicinal cannabis product is from Syqe: (https://www.syqemedical.com/) the device is a simple but precise clinical dose dispenser via inhalation, it loads a capsule of the medicinal cannabis drug that the consumer then inhales via the device, delivering a precise clinical dosage.
This type of business model and product/consumable as a service offering will propel medicinal cannabis sales to higher and higher levels year on year, good news for consumers, and patients and good news for investors.