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Building Cannabis Brand Equity Through Brand Segmentation

In any industry, quality marketing is key to long-term success

In any industry, quality marketing is key to long-term success.  But when an industry is young, as is the case with the legal cannabis industry, there is often an awkward stage where businesses try out traditional strategies and learn as they go what works and what doesn’t.  Today, we are going to take a look at brand segmentation for the marijuana industry, starting with establishing profiles for your two types of customers: medical cannabis users and recreational cannabis users.

 

Medical vs. Recreational Users

If you are operating in a market where medical use is the only legal use, this is not a concern; even if some of the patients coming to your dispensary use your product for recreational purposes, you likely need to keep your marketing to medical use only due to legal concerns.  If, however, you operate in a market that is open to both medical and recreational use, you need to consider the marketing approaches that work on your two types of customers, which is where brand segmentation comes in.  So, how are medical-use customers and recreational-use customers different?

Medical-Use Customers

  • Devoted to a specific product or product category
  • Intensely concerned with quality and consistency
  • Driven by the goal to improve quality of life
  • Three times as likely as recreational customers to use cannabis products on a daily basis
  • Develop personal connections to the staff at the dispensary they work with
  • Prefer products without psychoactive effects

Recreational-Use Customers

  • Enjoy experimenting with different products and strains
  • Willing to try new products rather than sticking to those they have used in the past
  • Driven by the experience the product offers
  • Concerned with a balance between quality and price
  • Are open to multiple methods of administration
  • Have a strong interest in the products with psychoactive effects

As you can see, these two groups do not have much in common aside from being interested in cannabis products.  This means that you cannot take a one-size-fits-all approach to marketing towards them.  In fact, they are so dissimilar that it is recommended you create two separate brands in order to draw them in effectively.

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The Disadvantages of Marketing to Both Groups Under the Same Brand

Most markets with legal recreational use started with legal medical use.  For medical dispensaries already in operation, it feels like a logical step to build on an already-established brand and simply expand to offer recreational products as well.  While this seems like the logical choice, it is not an effective one.  Why is that?

First of all, it results in brand degradation.  Medical dispensaries best succeed when they earn the trust of their customers based on their expertise regarding the medical effects of their products.  Many customers see them as they would a doctor or pharmacist.  Now, imagine your doctor or pharmacist suddenly starts offering medicine for recreational use.  It radically changes your perception of them and their professionalism and calls into question their recommendations.  The same thing can happen when medical dispensaries begin marketing their products for recreational use.

Secondly, it muddies the waters of your brand message.  Marketing to medical users means focusing on healing, well-being, and compassion.  Marketing to recreational users means focusing on the social aspects of product use and the experiences those products offer.  The end result is marketing without a clear message, likely resulting in a very low return on investment.

Finally, when your marketing strategy is ineffective, you have to resort to other means to try and draw in customers, and one of the only options available to you will be lowering the sale price of your products.  This can lead to a very small profit margin and the failure of your business to thrive.

 

Segmenting Your Brand

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The best option for those operating in markets with both medical and legal recreational use is to segment your brand.  While you can create two distinct brands with nothing clearly linking them, you can also opt to create two brands that are united by a parent brand.

How might this look?  If you already have a medical dispensary and the market is opening to recreational use, you can either opt to keep the dispensary as-is and for the recreational brand, simply add something to it.  For example, if your dispensary is CannaPlus, your recreational brand could be CannaPlus Social.  If you want to create further distinction, you could add a tag to both businesses: CannaPlus Medical and CannaPlus Social; this option is also a good choice for those who are newly entering the market and want to serve both medical-use and recreational-use customers.

Some of the advantages of brand segmentation include:

  • Generating greater goodwill
  • Making it easier to train staff to meet the needs of customers
  • Developing better connections with the customers
  • Enhanced ability to market effectively and use niche marketing
  • Option to tailor retail spaces to the wants of the customer

 

You Build Brand Equity When You Meet the Needs of Your Market

Brand equity is vital to success in any industry, and the best way to build brand equity is to tailor your approach to the needs of your market.  Without brand segmentation, this cannot be done.  Skip the one-size-fits-all approach, no matter how tempting it might be, in order to tailor your approach and offerings.

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