By Johanna Bloomquist, Staff Writer, NisonCo
We all know that cannabis is a growing industry, and we all hope that growth will continue as legislation catches up with popular opinion. However, the movements of individual markets sow doubt on this assumption. As each state’s regulated cannabis market matures, it eventually reaches a plateau; we can look to Illinois and Massachusetts for recent examples. How can we avoid this seemingly inevitable stagnation?
Recently, I read Theodore Levitt’s iconic 1980 article “Marketing Myopia,” which lays out four central myths to uncover why so many companies in growth industries inevitably fail. I was shocked at how well Levitt’s concepts fit the cannabis industry — a sector developed in the decades since the article was written. I believe these myths and the past examples they draw from provide a valuable resource for any cannabis company looking to build a sustainable competitive advantage.
1. The Myth of an Ever-Expanding Cannabis Consumer Base
The first myth of marketing myopia hinges on the assumption that a growing industry will continue to grow indefinitely due to an expanding customer base and increased spending by existing customers. While cannabis has followed this trend over the past decade or so, it’s largely because people have been waiting for decades for legal access to cannabis.
We can’t assume this trend will continue.
More than half of Americans now have access to the legal cannabis they have been waiting for. After a certain point, the industry will cease to gain new customers by merit of legislative progress.
Additionally, we are currently facing an economic slowdown. Granted, cannabis is a “sin industry,” and companies in this category typically don’t see as much of a slowdown during difficult financial times as other industries. However, we can be sure that cannabis won’t see the breakneck growth of the past.
Serving Existing Customers Is More Important Than Expansion
It’s clear that the cannabis consumer base isn’t going to continue to grow indefinitely. So what can we do about it to ensure that our companies, at least, continue to grow? First and foremost, we need to acknowledge this fact and stop relying on new consumers and new markets to drive growth. Instead, we need to focus on existing customers and what we can do to serve them better.
2. There’s No Substitute for Cannabis Until There Is
Levitt’s second myth concerns the idea that there is no substitute for a growth industry’s signature product, in this case, cannabis. And, just like in every other industry, this myth does not hold true.
The best example of the fallibility of this line of thinking is hemp and hemp-derived cannabinoids. These huge industries continue to grow even faster than the cannabis industry. Much of this growth is due to legislation; hemp and hemp-derived cannabinoids are not stuck in the same legislative quagmire as conventional cannabis. Hemp products can be sold over state lines, online, and in places without regulated cannabis industries.
Many cannabis companies have ignored the possibilities of hemp and even joined with conservative lawmakers to try to block hemp products from the market. These companies are missing a massive opportunity and, in the long run, are hurting their chances for success in an effort to control the industry — and what consumers want.
We’re beginning to see more cannabis companies realize that most consumers don’t care whether their products are hemp- or cannabis-derived as long as they are accessible and produce similar results. The cannabis companies expanding into the hemp market are taking a longer view of the industry and putting consumers at the center of their marketing strategy. In short, they are avoiding “marketing myopia” and stagnation.
The Cannabis Customer is Always Right, Regardless of What They Want
How else can cannabis companies address the idea that their product is irreplaceable? We need to realize the industry’s possibilities and the direction consumers are taking rather than sticking to our ideas about what customers “should” want. Even if we disagree with them, the customer is indeed always right when it comes to business. Think outside the box to figure out how to give consumers what they want, not just continue giving them your specific product.
3. Shifting from Selling to Marketing Cannabis
Levitt’s third myth concerns the idea that “if you make it, people will buy it” and an excessive focus on mass production. While this was true in the early days of the industry, when people were starved for legal cannabis and would buy whatever could land on the shelves, that isn’t the case anymore.
Now, we’re seeing states with regulated cannabis markets suffer from oversaturation and a glut of products. Many statewide cannabis industries have more cannabis than they can sell because production outpaced demand, and businesses focused on producing as much product as possible rather than figuring out how to leverage that product to fulfill customer wants and needs. The fact that other states don’t have enough cannabis doesn’t solve the problem, either, another issue that circles back to the lack of interstate commerce.
So, how do we solve this problem since we can’t rely on legislative change?
Instead of Producing More Cannabis Products, Market Your Lineup
We need to focus on refining brand and product differentiators, like the shopping experience, brand design, and product packaging, instead of simply making more of existing product lines. We need to consider cannabis products as items and experiences that fulfill customer wants and needs — which requires a focus on marketing — instead of as products that we can convert into money — which only entails selling.
4. Niche Cannabis Products Ignore Real Consumers
Levitt’s fourth and final myth regards the misguided idea that the “best” products will sell the best and confronts the resulting focus on continuous refining of existing products through product-focused R&D. The cannabis industry’s obsessive focus on breeding, pheno-hunting, and work to create products with the “best” terpene or cannabinoid profile reflects these concerns.
While striving for perfection is never a bad thing, and there will always be a market for hyper-specific products, the size of that market will always be limited. We can draw a connection to the alcohol industry here: People will always prefer fine wine or craft beer, but Barefoot and Bud Light will always outsell the “best” products. Most people simply aren’t interested in the finer details of the cannabis they consume; instead, they are concerned about price and general effects.
The excessive focus on R&D to create increasingly niche cannabis products especially ignores the wants and needs of new and occasional consumers. These customers make up a significant portion of the market, and these consumers, especially, want a product that’s more accessible than the most carefully bred flower with the “best” genetics. If we’re looking to serve consumers rather than rely on expanding markets (as discussed in the first myth), these consumers present an opportunity for forward-thinking brands to differentiate themselves and claim a sustainable competitive advantage.
Center Consumers in the R&D Process, Not Products
To avoid stagnation in this category, we need to shift our focus to customer-centered R&D rather than product-centered R&D. We need to find out what consumers want through surveys, data analysis, and observation and then do the research to meet those needs rather than the other way around.
Leveraging Marketing to Create a Sustainable Competitive Advantage in Cannabis
So how can cannabis companies — and the industry as a whole — avoid the stagnation trap that growth industries too often fall into? We must stop taking industry growth for granted and focus more on truly consumer-centered marketing.
It sounds counterintuitive, but we need to avoid focusing too much on the “cannabis’ part of the cannabis industry. Instead, we need to focus on what cannabis brings to consumers — like wellness or recreation — and dive into those characteristics to ensure growth.
I’ll close with one of Levitt’s most impactful examples in “Marketing Myopia.” In the late 1800s and early 1900s, the railroad sector was seen as the pinnacle of American industry. However, even this growth industry wasn’t immune to stagnation; the railroad industry crashed with the increasing availability of personal vehicles.
Why? Because railroad companies saw themselves as railroad companies rather than providers of comfortable, accessible transportation. What would America look like today if the railroad industry had adapted and ensured its growth rather than sticking to railroads and letting itself become obsolete? And what can the American cannabis industry grow into if we take lessons from growth industries of the past?
As an industry dedicated to change, I believe we can cure the myopia of past growth industries and take a longer-range approach to continued success.
Author
About Johanna Bloomquist:
Johanna joined the NisonCo team in 2022. She graduated summa cum laude from the University of North Carolina in 2019, earning a BA in English with Honors. Johanna is passionate about lifelong learning and the power of language in every form that it takes. Using years of researching, writing, and editing experience, she has worked as a content writer, marketing team member, salesperson, and business development representative within the cannabis industry. You can find her reading for fun, making something from scratch, or getting outside when she’s not diving into the latest niche topic for work.
Connect with Johanna on LinkedIn here.
About NisonCo: NisonCo is a media, internet and content marketing agency deeply rooted in advocacy. NisonCo is America’s oldest cannabis PR firm and was established in 2013 with an emphasis on harm reduction and cannabis legislation. As leaders in public relations for the emerging cannabis, CBD, and hemp space, NisonCo’s team is passionate about creating and maintaining a positive image for the industry. Access NisonCo’s free, resource-rich blog here and connect with them here.
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