Understanding Consumer Preferences in the Cannabis Market
Aug 27, 2024
Why Market Segmentation Matters in the Cannabis Industry
Market segmentation, which involves dividing the consumer base into distinct groups based on shared characteristics such as demographics, behaviour, and preferences, helps businesses do just that. Here’s why segmentation is crucial:
Identifying Target Audiences:
Segmentation helps businesses pinpoint specific consumer groups that are most likely to be interested in their products. This allows for more focused marketing and better communication with the right audience.
Tailoring Product Offerings:
Knowing the needs of different consumer segments helps businesses create products that match specific preferences. Customising products in this way enhances customer satisfaction and gives businesses a competitive edge.
Optimising Marketing Strategies:
By segmenting the market, businesses can design marketing campaigns that resonate with different consumer groups. This leads to more efficient use of marketing resources and a better return on investment.
How to Segment the Cannabis Market
To effectively understand and reach cannabis consumers, businesses can segment the market using several key factors:
Demographics:
Characteristics such as age, gender, income, and location can significantly impact consumer preferences. For instance, younger consumers may have different attitudes towards cannabis than older generations, and cultural or legal differences across regions can affect preferences.
Psychographics:
This involves understanding consumers' lifestyles, values, and motivations. Some consumers might prioritise wellness and sustainability, while others focus on recreational use or specific health benefits.
Usage Behaviour:
Segmenting consumers based on how they use cannabis—such as frequency of use, preferred product types (like edibles or vapes), and desired effects—helps in crafting targeted products and marketing messages.
Medical vs. Recreational Use:
Differentiating between consumers who use cannabis for medical reasons versus those who use it recreationally is essential, as these groups have distinct needs and preferences.
Strategies for Reaching Different Consumer Segments
Customised Marketing Campaigns:
Develop marketing messages that resonate with specific segments, highlighting the benefits that appeal to their unique needs.
Product Differentiation:
Offer a variety of products tailored to the preferences of different segments, such as different potency levels, flavours, or forms.
Personalised Experiences:
Use consumer data to create personalised experiences, such as targeted promotions and loyalty programs.
Ongoing Market Research:
Stay updated on consumer trends through continuous research and adapt strategies as preferences evolve.
New Insights into Cannabis Consumers
Recent data from New Frontier Data’s report, "Cannabis Consumers in America, Part Three: Identifying Key Archetypes," provides fresh insights into how U.S. cannabis consumers are changing.
Based on a survey of over 80,000 consumers, the report identifies nine distinct consumer archetypes, each with unique habits and preferences:
Savvy Connoisseurs (18%): Frequent users who prefer high-quality products and are likely to buy from dispensaries regularly.
Legacy Lifestylers (16%): Long-time recreational users often found in illicit markets, favouring traditional forms like smoking.
Contemporary Lifestylers (14%): Consumers in legal markets who are more likely to purchase in-state and are open to a variety of products.
Medical Lifestylers (12%): Focus on cannabis for medical purposes, seeking products for specific health benefits.
Modern Medicinals (9%): Use cannabis as part of a health-focused lifestyle, favouring products like tinctures and topicals.
Engaged Explorers (7%): New users exploring recreational cannabis, often preferring easy-to-use products like edibles and vapes.
Social Nibblers (7%): Infrequent users who consume socially and prefer shareable products like edibles.
Holistic Healers (6%): Integrate cannabis into a broader wellness routine, prioritising organic and sustainable options.
Infrequent Partakers (11%): Rare users who consume occasionally and typically purchase in small quantities.
Trends in Cannabis Consumption
Understanding these archetypes helps businesses tailor their strategies to meet the needs of different consumer groups. For example, "Savvy Connoisseurs" are ideal targets for high-quality products and loyalty programs, while "Engaged Explorers" may prefer convenient options like edibles and vape pens.
The cannabis market is expected to continue its rapid growth, with the U.S. legal market projected to exceed $57 billion by 2030. As legalisation spreads, the number of both medical and recreational consumers is likely to increase, presenting significant opportunities for businesses that understand and adapt to changing consumer preferences.