The 3 Data Sets Essential to Establishing Your Cannabis Brand
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So you’ve finally decided on a product category to enter the cannabis industry with. Now, how will you make it profitable?
It’s obvious that data is useful when starting up a new business, especially when bringing a new product to market. However, there are also huge advantages in utilizing business intelligence to build a continuous awareness of where your brand fits into the market.
Whether you pursue edibles, beverages, topicals, vape pens, or flower, the rules of engagement are constantly in flux. In order to succeed, every business owner must focus on understanding the full potential of these segments and their sub-segments.
In the cannabis industry, each product segment brings with it a wildly different set of customers, and challenges. To build an iconic brand that will compete against the rest, market share analysis is key.
Questions that operators need to examine include: What are the gaps in the market? Is it saturated? Where are the opportunities? Which product types are trending, and among which demographics? In a particular product segment, how has the market share changed over time?
Using data software tools built for the industry, brands can dive deep into sales data, tracking by weight, THC content or unit price. That way, brands can see if there are gaps in the market for products in a particular weight, dosage or price point - and fill those gaps with new products.
Pricing and margins
To a customer at a cannabis dispensary, a few dollars goes a long way.
There are typically heavy taxes on adult-use cannabis, and even some on medical cannabis, depending on where you are in the United States. As a brand, you don’t want to “sticker shock” your customer, but the realities of the business require you to be in control of your costs and margins.
That’s why product pricing and profit margins need to be looked at with extremely detailed scrutiny. Pricing your product too high will be an immediate advantage to competitors in your segment, while pricing too low can put a brand out of business quickly due to rising compliance costs.
Explore opportunities around pricing and profit margins, such as average wholesale price versus average retail price, and number of units sold, for the product segment that you are entering. These data points can guide your pricing decisions, so you can boost your bottom line.
Related: The Bright Future of Cannabis Retail
As a cannabis business, you need to know exactly what, and who, your brand is up against. By finding all of your competitors in different segments, you can build an ongoing awareness of the overall business landscape.
When looking at competitor or segment data, ask yourself the right questions. How are they performing? Can you track any significant changes in their pricing and sales data over time, or geographically? Is there something unique about the packaging, marketing, advertising of these successful brands?
Once you know what questions to ask, finding the answers is much easier. While your brand colors, aesthetics, and brand name are all important, researching those factors will not ensure your success in the cannabis industry. Only an educated vantage point can.