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CPG Lessons For The CBD Industry

Understanding your consumer goes a long way in identifying your business strategy.

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As a marketer, do you look at today’s wildly popular CBD industry and think about soap, soda or cereal? If not, maybe you should, because it can give an indication of how to truly reach your customers.

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Today’s CBD market is incredibly robust and loaded with competition. Brightfield Group reports 2018 revenues coming in at $620 million, with 2019 sales growth expected to increase 706% in 2019 to $5 billion. Clearly, CBD is this decade’s biggest breakthrough in consumer products.

But this unregulated market is already riddled with questionable execution by many of the players rushing in to put new products on the shelves as quickly as possible. Undoubtedly, as the market matures and competition increases, many of today’s CBD operators will find that simply having shelf space won’t be enough to attract new customers and retain the loyalty of its existing ones.

Fortunately, this emergent industry can learn from the longstanding, large CPG organizations that have come before — and which have learned, over years of refined study, how best to connect with consumers and build sustainable brands. 

The marketing departments at the so-called big CPG companies — such as Unilever, Procter & Gamble, General Mills and hundreds of others — are traditionally trained to consider all elements of the consumer journey, which ensures that there are more product hits than misses in a company’s portfolio. From understanding shopper needs and category white space, to uncovering Jobs-to-be-Done and innovation pathways, to hitting on just the right brand expression and messaging, to pricing products in that sweet spot to drive shopper purchase and company profit; these companies have succeeded in competitive business environments by ensuring their products resonate both rationally — and more importantly, emotionally — with shoppers.

That emotional bond, achieved through a consumer packaged goods marketing mindset, will clearly grow in importance for today’s CBD companies; as well as the ones to follow.

RELATED: Cannabis Is Emerging As an Entirely New CPG Category

What is CPG Marketing?

Though the concept of CPG marketing surfaces in a lot of business circles today, its definition and implementation aren’t always easy to nail down. Generally speaking, though, it’s the idea of deeply understanding your consumer target, putting that consumer first throughout development and activation, and taking a long-term, strategic view of what a company needs to do to retain that consumer and attract newer ones.

Wait, don’t all companies put their consumers first? Ask one hundred business owners to name what drives their company’s decision-making around marketing and innovation, and it would be surprising if the consumer wasn’t at least in their top five.

But if that’s the case, do they really understand their potential consumer? Do they exhaustingly and objectively study his or her preferences on a range of points; everything from the design of the product packaging, to the messages that are communicated across all touch points? Have they even asked consumers what they want?

Understandably, in the green rush of today’s CBD marketplace, digging into shopper needs and market trends is often skipped, especially by the many smaller, and often start-up, companies entering into the space. 

Through the discipline of the CPG marketing lens, the answers to those questions — and infinite more like them — can reveal the how and why of emotional decision-making. And it’s those emotional responses that point to what resonates with the consumer and what does not.

RELATED: Is Your CPG Company on the Right Side of History?

Know Your Consumers

To get to the kind of consumer understanding necessary for success, traditional CPG organizations always have relied on using their No. 1 resource: the potential consumers themselves. Talking to consumers can lead to a plethora of insights throughout all of the stages of marketing and innovation development. Though consumers won’t always give companies the “answer,” they will often point them in the right direction. It's then up to these companies to determine how to best leverage these learnings, blended with other research insights and company priorities, to drive successful initiatives that will resonate with the shopper and turn them into dedicated consumers.

So how does a company get consumer insights, especially if they’re operating with small budgets in a fledgling category such as CBD? Big companies have the liberty of having market and household data, large research study budgets, and time to evaluate and re-imagine along the way. CBD companies? Not so much. These start-up brands are moving fast as they fight to gain market share in an exploding environment. There is still a way, though. There are enough consumers emerging that can be found through social media groups, local organizations, retailer customer bases, digital focus group tools, owned email subscriber lists and so on. The key is knowing when to get insights, how to leverage them, and when to just run with your gut.  

Although it may be challenging to consider taking a CPG approach to brand development in the CBD world, have no doubt that you can not ignore how consumers might react with to what you put into the market.

RELATED: The Coming International CBD Boom and How it Will Disrupt the Marijuana Business

Consider the well-cited Tropicana packaging­ debacle from 2009, one of the foremost examples of what can happen even when a well-established consumer-product company doesn’t put the customer first.

In 2009, the major orange juice brand launched a $35 million undertaking to reinvigorate its brand and, in doing so, substantially changed the design of its juice cartons. It can easily be assumed that the team didn’t consider consumer feedback during development as seriously as they should have. Within only seven weeks, unit sales had fallen 20%, and the company announced that they would revert to their original design. The shoppers had spoken — with their wallets — and Tropicana lost an estimated $137M in sales. Talk about substantial.

Tropicana is just one example that demonstrates the importance of gathering and leveraging consumer insights. It is imperative to understand early and often what shoppers are looking for and how a brand can best resonate. CBD companies have the unique opportunity to learn early and implement strategies that pave the way for success in this new and exciting category. It has been a long time since there has been such an influential time in the consumer goods market, and it would be difficult to question shoppers’ desires to learn and connect with brands during this journey.