Evolution of the Cannabis Consumer Market
The cannabis consumer market in the US is drastically evolving in response to three major changes.
First, growing legalization of medical and recreational marijuana enables credible tracking of transactions, which generates more information on existing and new cannabis consumers.
Second, legalization is attracting new and unexpected demographics (or else the new information is revealing existing consumers); according to a study from BDS Analytics the majority of new consumers are women, and Flowhub claims that “individuals over 50 are the fastest growing group of recreational marijuana consumers.”
Finally, the circumstances of the pandemic affect consumers psychologically and pose operational challenges (like in-store shopping regulations, backed-up online orders and delayed mail).
Amid these dramatic industry developments, cannabis producers need to be informed and thoughtful about the diverse demographics of consumers, the experience of new consumers, and the experience during the pandemic.
How to Market to Diverse Demographics
Identifying and characterizing market segments is essential for designing strategies based on their purchasing behaviors. A study in New Theory, for example, shows that older consumers purchase less frequently and spend more money than younger consumers; meanwhile Flowhub claims that Millennials trust endorsements from their peers more than they are loyal to brands. This informs the marketing and pricing of loyalty programs.
The study from BDS Analytics reports that, generally, men and women purchase cannabis for different purposes: Men purchase more often to relax and enjoy socially and women purchase cannabis more often to relieve stress, anxiety, and menstrual pains. This informs the marketing strategies and informational tools for different product types.
How to Market to New Consumers
The legalization of an existing product creates unique circumstances for new consumers, like lingering social stigma and lack of knowledge–even misinformation. Research report “The 2020 Cannabis Consumer” from ICR and Spectacle Strategy highlights that 73% of cannabis consumers claimed social stigma is the top barrier to consumption. This impacts the delivery systems, packaging, and other methods for discretion that must be employed by cannabis brands.
Flowhub claims that older consumers are more likely never to have used cannabis before,” which should be taken into consideration when preparing a customer service strategy, free-trial promotion strategies, and considering the optimal number of alternative product options.
How to Market During the Pandemic
The effect of the pandemic on consumer behavior is not always intuitive and requires careful attention. For example, social distancing restrictions, contrary to reasonable instincts, have not dramatically increased online orders because consumers were primarily making online orders to begin with; the Cannabis Consumer Insight Series reports that only 25% of US cannabis consumers were purchasing cannabis in brick-and-mortar stores in 2019 and, according to Flowhub, consumers ages 56-76 make 20% more online purchases than Millennials.
The circumstances under COVID-19 do, of course, pose additional considerations regarding consumer behavior and marketing strategy. Whereas consumers previously relied more heavily on recommendations from their peers, their increased activity online during the pandemic increases the influence of digital promotions, which plays a pivotal role in digital promotion strategies.
Among companies experiencing low labor supply and high demand there have been delays in transactions and deliveries. This both is important to communicate and impacts the viability of bulk promotion strategies.
Amid health concerns, it may also be more relevant than ever to clearly describe compliance with public health standards and quality-management practices.
How to Adapt to Inevitable Change
The single constant amid the extraordinary growth of the cannabis industry is change. The key for any cannabis producer or dispensary, then, is to continuously and systematically track consumer demographics and behaviors, research trends and changing circumstances, and adapt marketing strategies accordingly.
For more Cannabis industry news, trends, technology, and research, check out the official Ispire blog.