Growing a Brand in a Stigmatised Industry
The recreational
cannabis industry holds lessons for building brands in an industry with
negative associations.
A
recent article in Lift, a cannabis news magazine, entitled “Cannabis
Brand Wars” shed
some light on the challenges of building a brand in a stigmatised or
“underground” product category such as recreational cannabis. While
recreational cannabis use may have become legal in several U.S. states (e.g.
Colorado and Washington), and Canada may be considering the legalisation of
recreational cannabis use, the product still carries negative associations and
the image of recreational cannabis users is negative.
As
such, building successful mainstream brands in this category and indeed moving
the whole category mainstream poses special challenges.
This
reminded me of parallels with the country-of-origin effect and a case I wrote
several years ago on building the LG brand in the U.S. – the parallel
between the cannabis industry and the LG brand at the time of its introduction
in the U.S. in 2002 is that both are victims of negative stereotyping – Korean
products were broadly perceived as second rate in the U.S. at the time, and LG,
as a Korean brand, had to overcome this.
One
of the key things that the LG brand did as it entered the U.S. market, aside
from significant product innovations (detailed in “LG
Electronics Inc.: Making Waves in the North American Market for Washing
Machines”),
was to copy key design features of European white goods, as European products
were seen as aspirational and superior quality by consumers in the U.S. LG
introduced front-loading machines which was typical of European washing
machines (the U.S. brands typically featured top-loading machines which
accounted for 90 percent of the washing machine market at the time). The
styling was also deliberately and distinctively European. And, they called the
washing machine line Tromm, a derivative of the German word for drum, trommel. Importantly,
their research showed that the name sounded European.
These
steps helped LG distance itself from its Korean roots and the negative
stereotype associated with the category of “Korean products” at the time, and
aligning with a category with positive associations among local U.S. consumers
– “European products”. LG washing machines, refrigerators, and the like, went
on to become, to quote senior executives at LG with whom I spoke at the time,
the “Mercedes Benz” of the white goods industry, commanding the highest average
selling price and receiving top ratings from both Consumer
Reports and the JD Powers Consumer Satisfaction
Survey in the mid-2000s.
Replacing
negative associations
What
can we learn from this for brands in the cannabis industry? One way to overcome
a negative stereotype is to strengthen the mental connections of the target
category with a category that has positive associations.
In
research I conducted on “part-list cuing”, I showed that consumer memory
retrieval can be affected by such approaches. In my paper “The Effects of Part-List Cuing on Attribute Recall”,
I find that information provided to customers at the time of “retrieval” can
inhibit their recall of well-known product attributes.
Some
players in the cannabis industry are doing this. Thus, consider KIVA Confections,
a brand that sells cannabis-infused confections. To enter
their website one must indicate that one is over 18, drawing
parallels with websites for alcoholic beverages, a mainstream and “legitimate”
product category, in consumers’ minds. Moreover, KIVA’s product form is a
confection and confectionery is a mainstream product category. Consuming
chocolates does not have negative connotations and, if anything, current
thinking suggests that cocoa butter is healthy. The consumption method
itself also differs from the typical ingestion method associated with cannabis
– smoking – which also has a negative connotation today, this further weakens
the ties typically associated with the category.
The
About Us page on their website opens with the sentence “KIVA Confections
creates cannabis infused chocolate products and is one of the most recognised
medical cannabis companies in California”, drawing links to the
pharmaceutical industry, an industry that is both mainstream and important for
consumer health and well-being, the latter being a counterpoint to the negative
associations consumers might typically hold about cannabis and cannabis users.
This association is strengthened with the mention in the last sentence of the
section that KIVA products deliver “certified amounts of medicinal cannabis“.
The verbal components are further strengthened through visual images that
rotate through the top of the page, images that are reminiscent of the
pharmaceutical industry and appear modern and professional.
The
“Products” tab on the website leads to pictures of the products available,
which are shown in exclusive looking packages reminiscent of high quality and
gourmet products; these associations further reinforced by introducing them as
“Artisan Confections”.
Collectively,
such efforts are likely to create strong associations with product categories
that are acceptable, legitimate, and mainstream. As these associations become
stronger over repeated exposure, they are likely to not only be the first
associations that are retrieved by consumers but they are also likely to crowd
out the extant undesirable associations. Over time, as more brands adopt a
similar strategy, albeit in a differentiated way, it would be reasonable to see
a positive shift in consumers’ view of the cannabis category, its users and of
the brands within the category.
Amitava
Chattopadhyay is The GlaxoSmithKline Chaired
Professor of Corporate Innovation at INSEAD. He is co-author of The New
Emerging Market Multinationals: Four Strategies for Disrupting Markets and
Building Brands.
Read more at
http://knowledge.insead.edu/blog/insead-blog/growing-a-brand-in-a-stigmatised-industry-4915?utm_source=INSEAD+Knowledge&utm_campaign=9eb25025eb-15_Sept_mailer9_15_2016&utm_medium=email&utm_term=0_e079141ebb-9eb25025eb-249840429#YR4y1DjqA8kJH04p.99
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