Understanding branding is key to success in cannabis investing. It can be the difference between mediocre returns and life-changing wealth. Here are the 4 keys to successful branding.
Any business that wants to be a leader in its field needs to build a brand, and that’s especially true in the cannabis space. It’s the companies that get their name out there now and build a reputation that will make you the most money.
There’s going to be a Starbucks Corp. (NASDAQ: SBUX), Coca-Cola Co. (NYSE: KO), and Uber of marijuana, and you have the chance to invest in these companies before that happens.
That’s why I wanted to talk to you this week about branding and the four key steps it takes to become successful. It was something I was recently talking to Danny Brody about – you can access what he had to say in this special audio report. Brody is the cannabis IPO expert crucial to the success of The Cannabis IPO Insider.
He is famous for being the “behind-the-scenes” architect for two of the biggest IPOs in cannabis history. The two cannabis firms he’s helped take public have created $2.2 billion in new wealth for shareholders. The fact is, he has the power to open doors in the cannabis industry that only a few can, and he’s learned a thing or two about branding while building those companies.
Branding is one of the themes we will return to again and again at the National Institute for Cannabis Investors. After all, cannabis isn’t going to be much different from other consumer packaged goods industries – it’s just moving from its beginnings to maturity much faster than other products.
But what is the difference between slapping a name on a product and actually running a successful brand?
Understanding branding is key to success in cannabis investing – and in investing in a lot of other sectors, too. It can be the difference between mediocre returns and the kinds of life-changing wealth we’re seeking at the Institute.
That’s why I wanted to share with you today the four keys to building a successful brand…
Building a Brand: Product Differentiation
A company building a brand must clearly show why its products are different from the competition.
That differentiation can be as simple as a lower price point, a different flavoring, or unique packaging. It could also be a larger difference like being organic or removing certain ingredients from its products.
But either way, a company trying to build a brand has to show the customer why they should try something new.
They don’t have the luxury of relying on their reputation alone to sell products.
For example, if Coke launches a new energy drink and you like Coke, you might try the energy drink just because you like and trust the brand.
But for a newer brand, such a buildup of trust is a goal for the future, not a tool currently at its disposal.
Building a Brand: Create Meaning
Even after creating a product differentiation, a brand hoping to be successful over the long term must create a meaning associated with the brand – a meaning that can be connected throughout a product line.
Subway is a good example, telling its customers to “Eat Fresh.”
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Whether you’re getting a turkey breast sub or a salad from Subway, you have been ingrained with the message over the years that what you are ordering is fresh and healthy.
Alternatively, a brand can be associated with a lifestyle.
When you buy a Jaguar car, or a Rolex, or a Gucci bag, you are buying more than a product. You are buying into a lifestyle that projects an image of success.
Building a Brand: Get It Out There
As a brand is created, it has to get in front of its intended audience.
It’s a rare product which can build a brand simply by being on a shelf.
Historically, paying for advertising has been the way to get a brand into the public’s consciousness and reinforce the differentiation and meaning the brand is meant to represent. That meant paying for radio ads, billboards, and television commercials.
But that model has changed.
The emergence of social media has created entirely new ways to get a brand out there. The use of social media and social media “influencers” requires some spending, but often less than traditional advertising campaigns. It can create what I like to call “assisted word of mouth” campaigns, where fans of the brand do its advertising for it in conjunction with those paid influencers.
And word of mouth – even when it’s assisted – is the best way to build a brand.
Not only is it cheaper than other methods, it just comes across as more authentic. People naturally gravitate to what other people are excited about, and if people are excited about a brand and sharing that excitement on social media, it can create a snowball effect that builds a brand’s legitimacy.
Other methods of reinforcing a brand’s meaning include sponsoring events and partnering with already-established brands.
But this has to be done carefully.
Any brand that would sponsor a rock concert has a different audience than one that sponsors the local symphony.
Building a Brand: It All Has to Come Together and Work
Now, just about any aspiring brand tries to achieve all three of those things – creating a differentiation, creating a meaning, and spreading the word.
But in order to succeed as a brand, it all has to come together and work. That may sound like common sense, but you’d be surprised how many companies are never able to make it all come together and make money. An investor should be able to see the results of brand building right in the company’s financial reports.
And a good company should be able to spell out its success for you in increasing market share, in successful new product introductions, and in successful geographic expansions. A company that talks a lot about “engagement” and other jargon without also telling you about its financial results is probably not succeeding in building a successful brand.
At the Institute, we track all of these factors closely as we look for the brands which will lead the cannabis industry’s growth.
The market is developing so quickly and the brand environment is changing so rapidly that it’s not enough to simply pick a market leader and stick with it. This month’s leaders will have to keep up their good work to be on the leaderboard next month, too.
Now, you may have noticed there wasn’t a lot specifically about the cannabis industry in the four keys to building a brand.
That was intentional.
Once again, the cannabis industry isn’t going to look much different from other consumer brands – just bigger and faster.
So I hope you took a tip or two which you can use when evaluating non-cannabis investments, too.
Thank you for being a valuable part of the National Institute for Cannabis Investors,
Executive Director, National Institute for Cannabis Investors
P.S. Danny Brody is famous for being the “behind-the-scenes” architect for two of the biggest IPOs in cannabis history. The two cannabis firms he’s helped take public have created $2.2 billion in new wealth for shareholders. Fact is, he has the power to open doors in the cannabis industry that only a few can. That’s why we wanted to sit down with Danny and extract his wisdom regarding the current market climate for cannabis IPOs. We got him to talk about where the “big money” can be made, the ripple effects of full U.S. legalization and more. He’s even going to reveal which IPOs every cannabis investor should be targeting. All you have to do is click here to get all of Danny’s insights, including where he believes investors should put their money right now.
5 responses to “This Is the Only Way Cannabis Companies Will Become Successful”
February 12 2019