Want to Create An Infused Product? Answer These Three Questions First
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Now is an excellent time to be in the infused products game. In the next four years, experts predict that legal retail sales of THC-infused products alone will surpass $21.5 billion. CBD is becoming more mainstream every day, and quality infused products are pulling in A-list investors.
Still, creating a successful infused product is very much a science —it does not happen by accident. Diligence, forethought, and adaptivity are the names of the game for any entrepreneur hoping to share in the industry’s growth and success. Before you cash out your savings, make sure your business plan answers these three essential questions.
1. Should I bring this product to market?
Unfortunately, it is not enough to have a great idea. There also needs to be a market for it. Entrepreneurs who are launching any product, whether cannabis or otherwise, should begin with extensive research to determine whether the idea is worth getting off the ground.
At this stage, it is essential to determine whether or not another company is already making a version of your product.
If the answer is yes, then determine at the outset whether yours will compete on price or quality. For products already in the market, a lot about the consumer and their preferences can be found by utilizing insights from Nielsen or SPINS. People vote for products with their dollars, and these companies make it their business to know exactly what products consumers are buying. It’s best to identify your branding, target audiences, and campaign strategy as early as possible to integrate this vision into the product development process.
If the answer is no, get ready for a more extensive research project. Just because a product is the first of its kind does not mean that there will be inherent market interest. You can hire a consumer testing agency or hire a moderator for a focus group to showcase your idea to consumers to determine whether it is a concept worth pursuing or whether there may be adjustments needed to fit consumer preferences. Forming a research partnership at this stage to accumulate data and refine your product and business plan will pay dividends down the line.
2. Who are my partners?
Bringing a successful infused product to market will require a host of partnerships and collaborations. Collectively these partners have the potential to make or break your product, so approach this question with care.
When choosing partners, ask these potential collaborators lots of questions. For example:
- Do you work with cannabis?
- What are your core values?
- Do you bill hourly or by the project?
- How many other clients do you work with, and how is priority determined?
- Are you ready to scale, or can you find co-manufacturers to help me scale?
- Do you offer other services and partnerships?
You may find a partner who fits your needs and can connect you with an entire network of resources, from development partners such as Symrise and Foodarom to co-manufacturers to flavor houses to packaging and labeling partners and more. Your partners will be the ones to help you to avoid the known pitfalls of launching a new product.
One of your most consequential decisions at this stage is your infusion partner. Whether your product is the first of its kind or a new take on a classic, the infusion partner should demonstrate a consistent and reliable product portfolio, including numerous formulations to choose from.
The right partner will test solutions to share, create new solutions for you, and have production ready to scale alongside you. From liquid and powder emulsion options to the additions of terpenes and minor cannabinoids such as CBN or Delta-8 THC, the infusion partner should be versatile and equipped to help you innovate.
3. How will I sell this?
Sales should be top of mind from the very beginning, rather than a static consideration that comes after development and production. Before you begin co-manufacturing, make sure you have a clear answer to two additional questions:
1. How will I price my product?
Finding this answer requires an understanding of production costs, margin markups for stores, and yourself and a realistic and researched price for your product. Complete as many competitive assessments as possible, noting statistics such as the list price for similar products, their size, and their price per gram. Even if you are creating a premium product, there are limits to how much you will be able to charge in relation to the existing offerings.
2. How will I get my product in front of consumers?
Regulations make it more challenging to distribute infused products. However, there are still concrete options to choose from, and it is vital to have a clear plan early on.
If your product is infused with THC or another controlled cannabinoid, you may see your sales restricted to licensed dispensaries. You will need to convince dispensaries not only that your product deserves space in their store, but you will need to fight and pay for it to be placed in the best possible location. Stores don’t put a product on the shelf because it’s novel and you ask nicely; they charge a slotting fee. There’s a lot of competition for shelf space, and slotting fees can vary significantly, so it’s best to know what these are in advance and have a budget for them. Even after securing your spot in a dispensary, you’ll need to understand how soon they can begin stocking your product, how frequently they will restock, and how this timeline will interact with production schedules and shelf-life limitations.
If your product is compatible with e-commerce regulations, this opens a new realm of considerations and forethought, including additional regulations, website e-commerce capabilities, shipping operations, and more.
There is no single strategy to guarantee a successful launch of an infused product. Remember that when it comes to marketing and sales, you will never go on autopilot. Even after earning a loyal user base, you will need to innovate and seek new opportunities to consistently sell your product. Today’s entrepreneurs have the benefit of learning from the successes and mistakes of those who came before. Use these three questions as a launchpad for thinking strategically and dynamically about building your brand, from the initial idea to your first sale and beyond.