Commodities, Cannabis & The Decisive Role Of Branding

With summer around the corner, licensed producers are getting ready to flex their newly minted recreational brands. Marketers and brand aficionados are eager for the start of the muscle show, many sharing their enthusiasm to see an industry start from scratch. Any marketer worth their salt knows the importance of branding and the role it will play in the recreational cannabis market. Why? Because the early stages of the recreational market will share many similarities with commodity markets such a bottled water or coffee pre-Starbucks days.

A commodity market is one where the majority of consumers aren’t able to tell the difference from one product to another. And, if there’s one truth about commodity markets, it’s the importance of branding. In commodity markets, brands not only help consumers identify differences between products but they further guide purchase decisions by building emotional connections to the commodity. A strong brand allows the business to increase its margins by increasing the perception of the product.

Branding will play a decisive role in separating the winners from the losers in the impending bloodbath that’s about to take place in the recreational cannabis market. If you want to find yourself on the winning side of this fight, we’d like to make a few suggestions for building a strong brand foundation in the early stages of this market.

First up, don’t make the mistake of confusing brand identity with brand strategy — we see it all the time. Although beautiful design and a clever name are important, they are not the foundation of your brand. In a commodity market, people choose products based on how well the brand aligns with their needs, values, beliefs, identities, and lifestyles. Your success in this fight will depend on your strategic ability to define a unique market position for your brand in the context of the competition and a well-targeted audience that will drive volume for your business. A.K.A Brand Strategy.

Next up. Although many LPs will invest in brand strategy, we predict that many recreational brands will circle around a common set positionings (such as “wellness” or alcohol lifestyle tropes such as music). To avoid launching a brand that is undistinguished, at risk of being drowned out by a bigger spender, or worse, one that helps your competitors bolster their brand position, a tightly defined brand strategy that looks beyond the obvious market positions will be critical. Though the future remains uncertain, we can say with confidence that if you’re a licensed producer (or aspiring LP) and you haven’t got the marketing budget to outspend the competition, the following brand narratives should be off the table for you:

With big players like Canopy, Aphria, and Aurora in the mix, most licensed producers are small fish in a big pond. If you can’t outspend the big fish, you’re known in marketing circles as a challenger brand. Without deep(er) pockets, you will have to rely on brains vs. buck$ to build a sustainable brand that contributes to a successful business. If you don’t have the luxury of speaking to everyone, your first step should be to get very clear on a specific audience segment. Your strategy to developing a sustainable brand is to gain a nuanced understanding of a specific audience segment and creating a brand that is more effective at aligning with their needs, values, beliefs, identities, and lifestyles. Through intimacy, you will nurture brand suitability.

So what could that look like? We did quantitative research earlier this year speaking to 1800 Canadians who currently consume cannabis and people who plan on consuming cannabis once it is legal. We learned a lot, here are an example of a half-baked opportunity for a licensed producer looking to build a brand around a specific target audience.

We learned that approximately 17% of Canadians who don’t currently consume cannabis plan on trying it once it is legal and nearly 40% of this segment have a household income of $75+. Let’s zoom in on this audience because 61% told us they are likely to purchase cannabis once it is legal and 23% said they would definitely purchase cannabis once it is legal. Among a number of things, what’s interesting when you look at this group of people is that 43% of them haven’t consumed cannabis in over a decade and the #1 reason they want to try cannabis again is curiosity. From this handful of insights, you could explore a brand strategy that speaks to this audience’s curiosity and craft a positioning that celebrates exploration, rewards inquisitiveness and addresses to a universal human truth: to see what’s over the fence.

With legalization only a few months away, the first wave of recreational cannabis brands are already staking claim to market positions and building brand saliency with cannabis users. Their ability to retain their positioning and build brand saliency will depend on the caliber of their creativity, their scale of investment in execution and a commitment to staying true to their brand strategy. If you are an LP and you’re at the drawing board or don’t have the dollars to outspend the competition, for the sake of your recreational brand:

Don’t get brand identity confused with brand strategy. Both elements need to work together to create a magnetic and sustainable brand.

Be a stickler. Identify a targeted audience segment that will drive volume for your business and commit to understanding their needs, values, beliefs, identities, and lifestyles.

Leap over the obvious brand positioning and create something unique that aligns with your targeted audience. Push yourself and don’t settle for something that feels undistinguished.

We’ve developed brand strategy for many brands and in a wide variety of categories. Since opening our consultancy in 2016, we’ve had the pleasure of crafting brand strategy for brands in the craft beer category, consumer packaged goods, start-up technology and charitable services. Like many marketers, we’re excited about the launch of the recreational cannabis sector and we look forward to the opportunity to partner with bold marketers to craft distinguished brands that thrive by leading a new, emerging culture.

Wishing you all the best — paper strategy

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