Does money really grow on trees?
No, but it may grow on hemp plants. The long-dormant cannabis industry is finally beginning to take off as governments around the world begin to embrace pro-cannabis legislation. While the transition to full cannabis legalization is still in progress, CBD has emerged as the perfect commodity to test the financial potential of a legal cannabis-derived product.
And so far, the results are very positive.
According to Health Europa, the global CBD market is expected to exceed a $23 billion valuation by 2025. At that rate, the European CBD market would be set to grow by more than 400%. As enticing a market as this is, its success is not invisible. An industry this young and this profitable is beginning to see thousands of players enter the market.
For business leaders looking to grow their CBD business, this increased competition may be extremely detrimental. But only for those enterprises that are ill-prepared.
While there are about 8 million consumers currently in the U.K. CBD market, not all of them are looking for the same thing when it comes to their cannabidiol products. An opportunity like that means a CBD distributor can offer a differentiated experience if they successfully segment the market. The best way to engage a target market for CBD products is to optimize your CBD positioning.
To help assist both new and legacy CBD distributors overcome the challenges of market saturation, here are a few pieces of advice you can use to substantially improve your CBD branding.
Engage First-Time Customers:
When entering a nascent industry or a rapidly growing market, the last thing you want to do is focus on taking consumers away from existing products. Consumers are creatures of habit that aren’t necessarily hungry to try new things.
Naturally, this leads to them being very unlikely to leave brands they enjoy or are used to. Therefore, it doesn’t make sense to focus entirely on this segment. Instead, your business should look to engage first-time consumers who are looking for an enjoyable brand that they can prescribe their loyalty to.
A recent American study found that 40% of U.S. consumers above the age of 21 claimed they would consider trying CBD products. Experts even believe that this number will grow as the knowledge around CBD becomes more widespread and accessible.
Given the similar legal restrictions regarding CBD, the European market may have an equally large number of potential consumers looking to enter the market. Effective CBD branding should, therefore, reflect this particular demographic’s needs and interests.
If a lack of CBD education is the biggest obstacle for first-time users to overcome, then an informative campaign might be a really effective marketing tool.
Of course, this also requires the distributor to be informed and up-to-date on topics that would be of particular interest to this demographic, such as legalization status, health risks, and preferred method of delivery. Similarly, these types of CBD positioning decisions can be incorporated into company processes as well.
CBD distributors may want to offer discreet packaging for online deliveries to appeal to first-time consumers. Some people can feel embarrassed about some of the products they buy, especially if they are not publicly embraced. Many men’s healthcare providers, as an example, will use discreet packaging to deliver erectile dysfunction medication to their clients.
Those who are less familiar and comfortable with CBD may deeply value a discreet packaging service where they can feel more confident with their purchase.
Adopt a Physical Location:
This is one of the more effective and underutilized methods of CBD branding available. As the market currently stands, a large proportion of CBD distributors exist as an online-only business. While brick-and-mortar stores may not be pandemic-friendly, they may see a resurgence once social distancing restrictions begin to relax.
An American tech company, Cognovi Labs, recently used its Emotion AI machine learning software to evaluate the emotions of internet users during COVID-19. The results from the appropriately named CrisisMonitor have shown that the percentage of negative emotions associated with online retail is starting to eclipse the positive ones.
This means that users, as assessed by Cognovi Labs’ EmotionAi, have begun to express more frustration and despair when it comes to executing their online shopping experiences. A physical location, in this case, may be an excellent way to intercept another part of the consumer funnel when pedestrian traffic returns.
Taking advantage of a young, fast-growing business can be a fool’s errand if not executed correctly. With a market flooded by competitors, it is essential to utilize effective CBD branding strategies to differentiate your business from other competitors.
In order to do that, it helps to be well-informed. Industry information is often best acquired from market experts on the supply-chain side who are more familiar with the legality, chemical composition, and distribution processes of cannabidiol.
Philipp Fuhrmann is President and CEO of CanX. He has extensive experience in international compliance, international business development, and in navigating legislative frameworks in the Hemp and Marijuana industry. He also has a background in corporate structuring and has raised funds for a variety of projects ranging from technology to medicinal marijuana, hemp and CBD.