Why choosing the right segment is your important cannabis business decision

In my experience, poor segment choice is the number one reason why ~90% of all cannabis products miss their revenue goal and fail to generate buyer loyalty, irrespective of how good the product is, its competitive price or how much it is promoted.

Years into legalization, it still is surprising how many cannabis firms have a generic or ill-defined consumer target and the proper metrics to track its performance.

There is a basic reason for this stumble.   Most cannabis companies create brands using a product-first approach, aiming for high quality (whatever that means) or to keep up with the strain or THC arms race. Little thought is given to which segment of consumers would really want the product and why.

The best cannabis (and CPG) brands first choose an appealing segment, deeply understand their consumers and then build a product feature set, price point and marketing mix that consistently delivers the brand in a relevant and authentic way. 

Pantry Food Co, a leading premium cannabis edibles brand in California, is a best practice segment-driven marketer. (They are not currently or previously a client) Here is their approach:

Pantry begins with the supposition that there is no one consumer type. They employ an analytical process to find the consumer’s biggest pain points and build their strategy, goals and values around solving them.  

For each segment, Pantry explores the consumer's psychographic traits, what needs are they solving for, where they shop, what they look for in a brand before purchasing, etc. plus the real size & growth of the market. Going even deeper, Pantry takes into consideration how different environments shape different purchasing outcomes.

Pantry’s macro-to-micro analytical approach synthesizes everything from large data sets to one-on-one surveys to arrive at a ranking of appealing segments.

This extra analytical work is worth it.  Pantry can target consumer clusters who aren't driven by price, THC levels and are more inclined to purchase loyalty, versus targeting segments made up of low consumption, low loyalty, and high cost-to-acquire brand-switchers.

Clearly, picking the ideal segment is not a simple or quick decision;  it must take into account a variety of quantitative and qualitative factors.

The outcome of this process will be segments like these:

- Baby boomers and seniors seeking alternatives to traditional medications;
- Professional women who want to incorporate cannabis into their self-care routine;
- Fans of a specific music genre, sport or pastime.

To recap, you won’t hit your market share and profit bullseye if you do not aim at the right consumer target and execute with excellence.

#segmentation #branding #consumerneeds #PantryFoodCo # targeting