In its report on the top 10 cannabis market trends for 2018, BDS Analytics predicted that affluent consumers would support premium brands that year. While we’ve certainly seen a number of premium and luxury brands debut and grow since the report was published, there is still a huge opportunity for cannabis businesses to develop premium brands in this industry.
Why? Because what we’re seeing in the marketplace has yet to close the gap between mass commoditization and premium or luxury brand – and that’s a good thing.
The Path From Mass Brand to Luxury Brand
Before you can understand the opportunity gap that premium and luxury branding present, it’s important to understand how a brand moves from “mass” to “luxury” and all the steps in between:
- Mass: Consider a product brand where the cheapest product with the lowest quality is typically the most accessible in terms of affordability. The masses can afford it.
- Brand: With an increase in quality and a higher price tag to match, the product brand can be differentiated in consumers’ minds and it gains value as a true brand.
- Premium: Improve quality and increase prices more, and it becomes a premium brand.
- Luxury: A luxury brand has the highest price and quality.
But there’s a problem because many brands are marketed as premium or luxury when they’re not actually premium or luxury at all.
If you look outside the cannabis industry, you’ll see a common trend that’s been happening for years – the democratization of luxury. In simplest terms, as the middle class and the economy grow, mass brands imitate luxury. They learn the “rules” of luxury branding, copy them, and create confusion among consumers. As a result, consumers can be tricked into thinking a brand offers a certain level of luxury when it’s actually a high-priced imposter.
As the cannabis industry matures and legalization extends to more states across the country, the need for luxury branding and the threat of the democratization of luxury have become important strategic considerations for cannabis businesses that have aspirations to offer high quality at high prices. At this point, high quality must extend across all consumer touchpoints and become an immersive branded experience.
Distinguishing Premium from Luxury in Branding
If a premium brand is high quality and high price, then a luxury brand takes that concept to a completely different level. That’s because a luxury brand isn’t just “more” of a premium brand. A luxury brand isn’t simply higher quality or higher priced. It’s an experience that consumers can’t get anywhere else. Think of luxury as separating the buyer from everyone else in three distinct ways:
- Socially: The brand represents a social status symbol of some kind that is universally accepted.
- Comparably: The brand symbolizes something that is better than the rest.
- Individually: The brand has special meaning to the buyer, but that meaning might not be universal.
Let’s think about each of these luxury branding factors in more detail.
First, luxury brands are recognized by the world (or at least large audiences that buyers are likely to come into contact with) as elite, special, practically unattainable, and prestigious. They’re also easy to compare to other choices on the market, and they always rank at the top of the comparison list. However, not everyone is willing to pay the high price that a luxury brand demands. Rolex may be a luxury brand, but there are some consumers who would disagree.
Bottom-line, a luxury brand demands more from consumers in terms of price, so it must give more to consumers in return. A successful luxury brand is easily identifiable as better than every other brand, but that position must be believed by a large enough audience or sales will be too limited.
The Premium Branding Opportunity for Cannabis Brands
The key to launching a successful premium brand in the cannabis industry is to create the gap between regular brands and premium brands so consumers understand the “extra” that they get when they buy your branded products. If you’re launching a luxury brand, then you need to create the gap between premium brands and luxury brands in the cannabis market.
Remember, “premium” and “luxury” are about experiences, not just quality and price. Today’s consumers are confused by the democratization of luxury. Product packaging and store designs often lead consumers to believe they’re getting a premium or luxury experience as well as products that match the experience, but the reality often doesn’t live up to the expectations.
Premium and luxury branding not only attract affluent customers with aspirations of self-distinction, but it also helps to remove the stigmas that have surrounded cannabis for so many years. The doors to claim a niche as a premium or luxury cannabis brand are still wide open in the legal cannabis market, and as the success of high-end brands like Beboe, Coda Signature, and Defonce demonstrate, consumers are ready and willing to pay more for the best products and experiences.