Analytics that go beyond the cannabis space can provide extremely valuable forecasting insight
Data triangulation can empower cannabis operators to move beyond intra-industry data analytics by capturing a more comprehensive picture of consumer behavior.
In the cannabis industry, the term “data analytics” brings to mind cannabis-focused data analytics companies, such as BDS Analytics and New Frontier Data, that collect, analyze and offer quantitative data through a variety of sources, including point-of-sale systems, which track purchases and show what is being sold. Data analytics companies also conduct qualitative cannabis research to investigate consumers’ attitudes and beliefs, which helps answer why people buy what they do.
Such quantitative and qualitative cannabis data can help guide operators by identifying trends and potential reasons for them. But to fully understand any phenomenon in the emerging cannabis market, one needs to expand the field of vision concerning consumer behavior to include more mature vertical markets, specifically by applying the concept of data triangulation.
Data triangulation is traditionally used in the field of qualitative research methods, but it can be applied to investigating any phenomenon. Data triangulation can be defined as, “an attempt to map out, or explain more fully, the richness and complexity of human behavior by studying it from more than one standpoint,” according to the 1986 edition of Research Methods in Education by Louis Cohen and Lawrence Manion. Thus, a good synonym for data triangulation is data validation.
Consider, for example, a cannabis manufacturer who wants to target millennial consumers. The starting point would be using point-of-sales and survey data from cannabis-focused analytics providers. This can explain which products millennials purchase and how they feel about the role of cannabis in their experiences. The next step would be to review consumer reports about millennials from the entire retail market in the U.S., such as those produced by much larger companies like Deloitte and Nielsen. Doing so would allow this cannabis operator to validate findings from inside the industry through multiple sources and then widen the scope of understanding by comparing them with established vertical markets. The advantage is that not only will this explain phenomena surrounding millennials now, but it can also provide insight into how to best meet the needs of millennials in the future.
In suggesting that cannabis operators invest in pursuing more comprehensive data analyses, it is important to illustrate the value of data triangulation. There have been some important cannabis trends over the past few years, many of which are in flux. For example, vape cartridges in 2016 and 2017 almost universally contained one gram of cannabis oil, but today half-gram cartridges are more prevalent (with even lower doses now available, as well); flower remains the top-selling product category, followed by vapes, pre-rolls and gummies as the next three highest-selling products, according to BDS Analytics; and 58% of the average cannabis consumer base uses cannabis weekly, while more than 90% of “frequent” consumers use cannabis at least weekly, according to New Frontier Data.
Consumer data from outside of the cannabis industry can further illuminate these findings. For instance, in a comprehensive consumer report consisting of more than 200 billion credit card transactions, 450 billion unique points of location data and a qualitative survey of 4,000 people, Deloitte states that the top two drivers of consumer purchases are price points and convenience, regardless of age, race/ethnicity or income level. This finding is corroborated by Nielsen, which stated in its “Quest for Convenience Report” of 2019 that consumers want products that make their lives easier and are easy to use, above all else.
Combining cannabis data with data from the entire fast-moving consumer goods (FMCG) sector provides unique insights to cannabis operators. First, the rising popularity of vape cartridges and the lower-dose options of today’s vapes connect directly with lower price points and convenience, the latter of which can be compared to using refillable vape pens or dab rigs. Similarly, pre-rolls require minimal effort or experience on the part of the consumer and have an extremely low price point per unit. Second, lower price points and easy-to-use products also connect by means of practicality with the majority of both average and frequent consumers using cannabis at least once per week. Last, the growing divide in popularity between gummies and chocolates also relates to convenience; gummies are smaller, do not need to be broken up by the consumer and do not melt like chocolate does.
These inter-industry data points not only serve manufacturers but also cultivators and dispensaries. Producers can investigate exactly what the ideal unit sizes and dosages are for their products. Retailers can also utilize these data points. For example, software applications to place and track orders — and where legal to receive product via home delivery — would improve convenience for the consumer and would dictate which products dispensaries should stock on their shelves. For all three segments of the supply chain, inter-industry data analysis via data triangulation helps keep operators competitive over time.
The way forward
Operators looking to fundamentally understand and subsequently leverage cannabis trends are fortunate to have access to both cannabis data and FMCG data, and they can become most empowered by using data triangulation to cross-reference and validate consumer findings.
However, the ability to conduct this type of analysis may be outside of the expertise of some operators. Fortunately, these operators can outsource their data analysis efforts to companies specializing in data analytics, consulting or contract development and manufacturing, and request that these companies provide tailored findings from inter-industry data triangulation. Doing so can arm the cannabis operator with not only insights into current market trends, but also, and perhaps more importantly, the emerging markets and trends of the future, an opportunity upon which surely every operator wants to capitalize.
Tymofey Wowk is the vice president of strategic business development and co-founder of Clean Technique, LLC, a scientific cannabis oil extractor, specializing in quality assurance/quality control and data-driven consultation. He is also a Ph.D. candidate, using quantitative data analysis of federal education datasets and theory from the fields of sociology, psychology and economics.