Alcohol vs. Cannabis MarketingEdit Post
Contributed by on Aug 20, 2018
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Seth Godin on the Differences Between the Two
I have followed Seth Godin for many years and have found him to be among the most insightful marketers I know. Here’s a bit about him — he’s an author (18 bestselling books), an entrepreneur (founded two companies, one of which was sold to Yahoo), a speaker/teacher, and a member of both the Direct Marketing Hall of Fame and the Marketing Hall of Fame (probably the only person to be in both). Above all, his views and ideas on effective marketing have inspired, motivated, and changed people and ways of looking at things.
One of his blog posts last week dealt with the differences between marijuana and alcohol marketing. Considering the close scrutiny of the pot business by the booze industry, I asked and received his permission to share most of his blog post with you.
Let’s look at Seth’s views followed by my comments.
(By the way, as I write this, it was just announced that Constellation Brands has increased its investment in a Canadian cannabis company by $4 billion.)
US prohibition ended in 1933. After that, there was a gold rush that led to the creation of dozens of billion dollar brands.
80 years later, the prohibition against pot is ending in various places throughout North America and then, probably, worldwide.
The question some professional marketers are asking is: Will there be worldwide profitable brands for pot that are similar to Bacardi, Johnnie Walker and Smirnoff for alcohol?
Both industries are regulated. Both have products that are sold in specialty stores. Both use non-proprietary manufacturing techniques.
Here’s the big difference:
When alcohol marketing became legal, it coincided with the glory days of magazines, radio and then TV. The mass marketing phenomenon happened at exactly the same time as these brands were being rolled out—and along with cigarettes, alcohol brands were major advertisers, particularly in magazines (liquor) and TV (beer). The ads supported the media in a fundamental way (and vice versa–Rick’s Cafe anyone?).
But when cannabis marketing arrives, it’s the internet that’s dominant. And the internet isn’t a mass medium.
It seems like one. It’s used by billions of people.
But it’s a micro medium. A direct marketing medium. There are 3 billion people online, but they’re busy looking at 3,000,000 web pages (that’s only a thousand a page).
The other difference is that there’s a thousand-year tradition of the pub and the bar. And those facilities offer status games, word of mouth and significant margins that created another marketing engine for alcohol that won’t exist for cannabis.
Sure, it’s possible that the huge demand and profit margins will fund a winner-take-all advertising movement for pot. But it’s more likely to be more like local espresso or high-end chocolate or whiskey (word of mouth) and less like vodka.
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My Comments and Observations
- Seth is obviously on target; the overall world of marketing has steadily been moving from macro to micro — away from mass media toward direct to consumer media. To a large extent this is happening in the booze business today. Brand building and communication has left mass approaches (print as well as broadcast) in favor of word-of-mouth, bartender influence, publicity and event marketing.
- Let’s not forget that currently, the cannabis industry is totally on a state by state basis. There are no national brands and there will not be until such time as the federal government approves its sale. Marketing, therefore, is regional, at best.
- The notion that the absence of bars and restaurants for cannabis will inhibit marketing is true now but will it be in the future? In many of the legal recreation use states, weed cafes are springing up and it’s a topic that will grow in the future. Think Bulldog Café in Amsterdam.
- As to branding, that too is emerging. Consider this:
- For many cannabis consumers, the content and type are surrogates for brands. They talk about Indica vs. Sativa. For others, it’s the amount of CBD vs THC that becomes the brand.
- For those introduced to weed medicinally, they think of the brand the same way as branding in prescription drugs — by function.
- In this regard, recreational users have the function/purpose of the cannabis as an identifier, such as “sleep,” “arouse,” “harmony,” “awake,” etc. These are clearly labeled and provide a kind of branding function.
- There are brands like Dompen, LuxLyte and others. But the function/purpose is the main factor.
- At this stage, it’s the retailer that becomes the brand. Check out the list of retailers in Colorado. A company I wrote about recently, MedMen, has stores all over the country, both dispensing medicinal cannabis as well as recreational. The dispensary is the source of quality and other reassurances.
- Interestingly, the beer folks are getting into alcohol infused cannabis, partly leveraging their own brand’s influence. There’s even a brand of wine made with THC.
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As of June, of this year, 30 states have legalized medical marijuana and 9 have approved recreational use. New Jersey and New York are expected to legalize recreational use soon. So, clearly, legalization of cannabis is here to stay and will grow in acceptance.
The key marketing issue will be, as Seth points out, the difficulty in mimicking branding (and reach) of the alcohol world. Perhaps that means that no one brand will predominate; perhaps the function/purpose will be the brand; or the retailer. But, it’s still earlier days for the fledgling legal business.
He’s also correct that the marketing of cannabis, despite other similarities with booze, will have its own model and pattern.
Like the man says, more like whisk(e)y and less like vodka.