The cannabis industry today is characterized by rapid growth and a degree of unpredictability as it faces issues including legality, stigma, and all the challenges that come with offering a product never before mass-retailed.
Dispensaries and other key market players have long been operating in the dark when it comes to their customers. With little data around the attributes and lifestyles of their target consumer, the new industry has a long way to go when considering marketing opportunities.
In order to shed light on the best marketing practices for this burgeoning industry, we surveyed over 8,000 consumers between the ages of 21 and 64, in the 21 states where cannabis is currently legal to create LOCALiQ’s Canna Curious Report. The report reveals the lifestyle attributes, shopping behaviors, consumption motivators and brand selection drivers for the industry’s top customer segments. The surveyed individuals were split into two groups, current consumers and acceptors.
Here are the key segments of consumers that industry companies should pay particular attention to impress:
Affluent Families with Children
We found that affluent families with children under the age of 18 were an active cannabis consumption group. Spending over $623 million on cannabis-related products, this group has the potential to grow to a market worth over $1 billion.
In this segment, dads were typically the more active purchasers, shopping at more than 4 dispensaries in the past 3 months, while moms tended to be more brand loyal and shop at the same dispensary.
The data supports that to impress this segment, dispensaries should focus on offering a wide variety of products, as well as prioritizing price and convenience.
Baby Boomers
Baby boomers were another top consumption group, with the majority of those surveyed going to a dispensary monthly, and 60 percent of non-consuming boomers more likely to consider it than millennials.
To reach this customer segment, companies will likely have the most success maintaining strong websites, advertising in newspapers, and creating online videos as these are top discovery sources for the baby boomer group.
The top motivator for usage in this group is strongly tied to health and pain management, with 58 percent of baby boomer respondents displaying a preference for alternative medicine.
Frequent Shoppers
The frequent shopper group is more diverse in demographics than our previous two categories, but has the most focused purchasing pattern, with most shopping at a dispensary 3-4 times per month. The frequent shopper group boasts the highest spending but tends to be the least loyal, easily swayed to competitors due to price, product variety and staff friendliness.
Promotions are more likely to be impactful with this segment, as 62 percent indicated receiving notifications of promotions through news sites and email or text message.
Acceptors
Defined as current non-users who are open to cannabis consumption in legal states, this group spans many demographics. These cannabis curious consumers cited reasonable prices, a good selection of products/strains, and friendly and helpful staff as their top brand selection drivers.
As dispensaries become more established in cannabis-legal states and competition intensifies, it’ll be more important than ever for sellers to understand their consumer, whose preferences vary widely by segment. For example, while a frequent millennial buyer may be well-targeted through personalized text message or email promotions, a baby boomer is much more likely to consult their local news for a trusted recommendation.
To grow alongside the quickly expanding industry, cannabis businesses should work to prioritize legal, digital marketing, storytelling, and target marketing expertise, to continue to attract and retain customers.
Anthony Bratti is the Regional President – West for the USA TODAY NETWORK/LOCALiQ. In this role, Anthony leads and supports the west coast sales teams as they drive digital advertising and strengthen relationships with local businesses. Anthony’s success as a leader and executive is rooted in nearly 20 years of global business experience ranging from early-stage start-ups to mid-level enterprises and Fortune 50 companies, as well as local community involvement. He is actively involved in the greater Phoenix economic development group and Phoenix Chamber of Commerce.
Prior to joining the USA TODAY NETWORK, Anthony enjoyed a long, global career at AT&T where he served both domestic and international markets, served as the SVP of Business Development at Buzzboard, and most recently, as the Head of Channel Sales at ReachLocal. His vast experience, deep knowledge of digital media, and innovative thinking make Anthony one of the most transformational sales and marketing leaders within the USA TODAY NETWORK.
Member Blog: Hemp And CBD Consumer Insights – Who, Why, And How
Hemp CBD became the fastest growing CPG product in 2019, following its legalization in the Farm Bill of December 2018. Consumers show great interest in its use for wellness, health & beauty applications and for pets. Its many distribution channels require integrating convenience store and shipment data not required for most dispensary products.
In U.S. Convenience Stores, total sales of CBD have increased 168% in the first half of 2019 while average weekly dollar sales increased by 235%.
The higher revenue growth accompanied CBD content per package increasing from 100mg on January 5, 2019 steadily to over 350mg on July 20, 2019, after having peaked briefly in June 2019 near 450mg per unit. See graph below.
Mg CBD per SKU at Retail
Medical Conditions Treated with Cannabis
Pain relief is the major reason cited as a medical condition for cannabis use, followed by nausea, PTSD, muscle spasms, IBD and opioid addiction as seen in the following table:
Source: Consumer Research Around Cannabis
Cannabis and Opioid Use Disorder
Of particular note is the growing number of consumers using Cannabis to treat Opioid Use Disorder (OUD). As of August 2019, seven states have approved medical cannabis for treating OUD: PA, NY, NJ, NM, MO, IL & CO. Twenty-one studies (2009-19) show the effect of cannabis on helping opioid users to reduce or eliminate the use of opioids to treat pain. NFL professional athletes have withdrawn from using opioids after they retire, with the aid of CBD and/or adult cannabis.
Consumer Purchase Drivers of OTC Hemp CBD
The top consumer drivers of OTC Hemp CBD are pain relief, reducing anxiety and helping sleep, as shown in the following graph.
Cannabis Product Composition and Patient Outcomes
Over the past several years, advances in technology have greatly enhanced the prospects for cannabis growers, processors, and dispensaries to provide medical cannabis products to patients that efficaciously treat the medical conditions and alleviate the incapacitating symptoms that they suffer.
Pre-clinical scientific research is determining the physiological effects of individual cannabinoids and terpenes on specific medical conditions and symptoms. Mobile apps are enabling the systematic querying of patients about the efficacy of specific cannabis strains and products in alleviating symptoms and conditions.
Collectively, these advances and other medical research are creating volumes of evidence to which human and artificial intelligence will be applied to develop insights for use by patients and medical researchers, growers, and processors in formulating products creating newer therapeutic options. Patients are already making informed decisions that improve individualized treatment of medical conditions progressively over time due to CBD being an approved over-the-counter consumer product.
Advanced Consumer and Patient Targeting to Improve Marketing and Medical Outcomes
Consumer attitudes, perceptions, and usage in local markets create richer, more actionable insights from customer segments, creating advanced quality scores and indices for scoring first-party internal data.
Cannabis consumer data is used for strategic and tactical product development, applications including:
Market Architecture: differentiating dimensions of product form and brand choice
Key Reasons for Use and Purchase
Affinity with Media, Channel, and other Product Categories
Multiple correspondence analysis of hundreds of consumer survey category questions is used to understand dimensional distinctions and differences between clusters. These key spatial dimensions for segmentation illuminate key differentiators, for use in innovation/new products, brand strategy, marketing execution, and digital media tactics.
Create Target Profiles
Merging cannabis consumer data with general consumer data such as Financial, Healthcare, Restaurants, Grocery/Drug Stores, and Media usage & exposure for each respondent facilitates creation of new consumer segments.
Using zip code identified respondent level data, the above Target Profile clusters can be integrated with other market and first–party data to prioritize personalization, enhance brand positioning, inform messaging, new customer marketing & acquisition efforts, and multi-touch attribution databases.
Mr. Stephen J. Gongaware is Sr. Vice President of Business Development at MSA (Management Science Associates, Inc.), a privately held diverse information technology development and service firm that for over 50 years has provided innovative solutions within its three core competencies of analysis, technology and data management. He has played a major role in developing and managing several MSA businesses in addition to his focus since 2014 on the medical value of cannabis for prospective patients, beginning with CBD and 20 other nonpsychedelic cannabinoids then measured by leading edge test labs. Other businesses he’s created and managed at MSA in the last 20 years includes services to develop/market pharma “rare disease” solutions, and MSA Casino Gaming solutions improving operation of slot floors, player satisfaction and also lead smart phone and sports book innovative projects with 6 of the Top 10 global casino operators and with several major gaming equipment manufacturers.
Prior to joining MSA, Mr. Gongaware was CEO of NetworkNext, an innovative national advertising firm; R&D Director at Cellomics, Inc. where he was awarded US Patent #US6365367; and an Electrical Engineer at Westinghouse Electric Corp. He received his BSEE degree from University of Pittsburgh in 1992 and his MBA from its Katz School of Business in 1995.
MSA is an Analytics firm with Big Data integration capability incorporated in 1963 to focus on improving government and management decisions. MSA has 800+ professionals with expertise in data science & AI, software development, test marketing, data management and management consulting and many of its innovations have become industry-standard solutions. MSA has served over 70 Fortune 500 Customers/Clients in the CPG, Media, Metals, Life Sciences & Pharma, and Casino Gaming & Sports Betting industries. It has been engaged in cannabis research since 2013 with the goal of providing the cannabis industry similar services to what has been now provided to the CPG, Steel, Tobacco, Casino Gaming, and Pharma industries for more than 50 years.
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Anthony Bratti is the Regional President – West for the USA TODAY NETWORK/LOCALiQ. In this role, Anthony leads and supports the west coast sales teams as they drive digital advertising and strengthen relationships with local businesses. Anthony’s success as a leader and executive is rooted in nearly 20 years of global business experience ranging from early-stage start-ups to mid-level enterprises and Fortune 50 companies, as well as local community involvement. He is actively involved in the greater Phoenix economic development group and Phoenix Chamber of Commerce.
