I kept seeing negative posts and opinions about marketing and sales in the cannabis industry that seem overly critical and lacking in insight. Here, I am going to shed some light on the California market and provide advice on how brands can overcome some of the current challenges.
Weed is a consumable product so packaging and branding are an important part of creating a competitive advantage across the entire business.
- Packaging should be convenient for dispensaries to intake. Look at the competition and ask what is preferred in the market.
- Pricing should be in line with the product quality as well as the COGs. If the price is determined reactively to undercut competitors, losses will result in perceived value and also limit the business’s ability to invest in staff and process improvements.
- Charging shelving fees prevent brands and dispensaries from marketing to new customers.
- Brand Equity takes years to develop. Messaging is the key to branding and creating a relationship with the customers.
- You can’t be all things to all people.
If you are interested in learning about concepts that can help stabilize the market, stay tuned; the only request is to take these ideas and apply them.
What does it take to be a successful cannabis brand?
There are several different answers to this question – price, differentiation, innovation, and customer base.
- Price: Low-cost leaders have been pushing prices down.
- Indoor flower: Automation, technology investment, and a strong supply chain network can contribute to a competitive advantage.
- Outdoor Flower: Automation and a strong distribution network can contribute to a competitive advantage.
The key to winning on price is scale and automation. The more you can automate and remove variance in production at scale, the more competitive you can be on prices.
- A differentiation strategy is the approach businesses use to attract and keep customers by giving them a unique product or service.
- What Features do your product offer that your competitors don’t? Ex: Clean green, freshness guarantee, live soil, charitable and socially conscious products, collaborations. What action is the company taking to be different in the work they do?
- Innovation: First to market. This is the true top dollar branding model – exclusive strains, rare genetics, small-batch purchases that are socially shareable experiences.
Branding can be more complicated if you really want to drive down into your customer profile and build out a long-term growth strategy for your marketing funnel. But, if you have a brand and you want it to last, you have to choose how you want to compete.
California has a serious retail channel problem. There is too much legal product and not enough dispensaries, and all the stores have the same brands and the same strains.
Message to retailers: shelving/slotting fees are not good for business. These fees drive up prices and in turn, drive down sales.
If there is an issue with retailers having enough revenue to operate, retailers should work with the brands for marketing dollars.
Brands need to spend money on marketing and IG stories are not going to get the brand nor the store the return on investment.
A few ideas for Cannabis friendly marketing
1: Podcast, Vlog, Blog Advertising.
2: Local promotional advertisements, Bench signs and periodicals etc.
3: Co sponsors – Education and outreach, events, and community service.
These can have measurable impacts and having brands willing to work with local dispensaries can build community and create a long-term relationship.
Obviously, all standard advertising is marketing, training for how company representatives interact with customers is marketing, text, and images on everything from white paper to web pages and business cards is marketing.
Brand strategy, customer rating of competitors and key success factors, points of parity, and points of differentiation. Brand mantra, brand equity strategy, vision, Mission, operationalization quality and trend-selling in product quality and style.
Brands and Dispensaries alike should be communicating their value propositions consistently and frequently.
As more and more flower is on the market, there is an unprecedented need to sell the flower. Obviously, this is a moment in time, but with an abundance of brands, we need to determine how they can develop and grow in the current market conditions.
Looking at every micro license, distro, and cultivation which translates to the potential of thousands of brands throughout the state.
There are many different ways to supply a brand with a product, and I am not going to dive into supply chains and white labeling.
There are a lot of ways to build and track inventory, which is absolutely critical to have accurate information for sales to meet market needs.
Now to the top of sales. There is a shift from independent contractors to on-staff sales teams to freelance salespeople. The freelance sales strategy has not proven to be good for brand growth and development, as freelance salespeople are not invested in the relationship with the product but in their own relationship with the dispensary. This dynamic creates a broker relationship with the dispensary, instead of a team member relationship, which adds a layer of unnecessary cost to the product. There are also a lot of freelance salespeople that I have seen get burned by dispensaries not paying and by brands shorting them on the compensation.
As the market grows, so will the consolidation of retailers, which will limit the freelance sales (brokers) ability to keep up with the changing market.
On staff sales teams can support business development and build brand identity while bringing resources and expertise to the business.
A few issues that are unfortunately common in the cannabis space that have an impact on sales, price, and reputation.
1: Brands that don’t have experience managing a suite of products and carrying too much inventory wind up losing cash flow from operations.
- This can happen from over purchasing raw materials without forecasting how much the market can take and what sales needs are.
- Lack of processes. The amount of time I have seen bulk flower come through and was rushed to meet a cultivation schedule resulting in less than desirable product is often enough to see a trend in the lack of contingency planning.
2. Retailers that over order and cannot move the product in time for the customer to have fresh flower.
- Again this is a lack of forecasting and understanding what is needed in a period of time to service the customer base.
3 This is the biggest issue for sales. There are no clear goals that are based on quantitative and qualitative metrics.
- Setting a sales goal should not be an emotional goal such as we need to be in X number of stores or we need $X in sales when that is not linked to an amount of product available or actual reach of the distribution network.
Brands need to train the sales staff to sell the product that is actually available and not just the brand. If they sell the brand and the product doesn’t align with the messaging, the dispensary will be misinformed and the customer will be disappointed, resulting in a negative experience.
Sell what you have not what you wish you had.
Pay your people and let them try to succeed.
The link between Brands, Retail, Marketing, and Sales is money, plain and simple.
Brands need money to pay for marketing and sales, and retailers need to sell products to pay brands. This is all obvious and on the nose but the marketing budget is the part that I want to dig into.
Where and what should the marketing budget include. Three areas:
- Pre sale marketing: before the dispensary is a customer
- Funding deals: Gift Card (coffee & tea), swag shirts, hats, pins, lanyards, pens, ligheters ect.
- Shared Marketing resources
- Product samples
2.Closing the sale
- Staff Samples
- Instore activations: PAD, Budtender educations, internal contests
- Bogo, Calendared Discounts
3. Continued relationship
- Community events
- Shared Marketing resources
Along with all of these concepts and ideas, I purposely did not name any brands, dispensaries, or individuals that are currently using any of these tools to their benefit. You can see through social media who is doing what well and who is missing out.
It’s disappointing that there are people reporting each other to the DCR and flagging social posts when they are part of the same community. If we spent less time complaining about the things we don’t like about our competitors and focused on being proactive and spotlighting all the success we see, we can start to show our strength and progress forward together.
Everything can be better!