Case Solution for PBG BioPharma Cannabis Consumer Health Market Entry Preparation

PBG BIOPHARMA: CANNABIS CONSUMER HEALTH MARKET ENTRY
PREPARATION CASE STUDY SOLUTION




e
pl
m
Sa
SYNOPSIS

The cannabis industry in Canada has experienced unprecedented growth since the Cannabis Act came into
effect in 2018. It is widely expected that cannabidiol (CBD) will be classified as a food and natural health
ingredient in Canada, the European Union, and other jurisdictions in the near future, which will open up a
n

significant market.
tio


Given this market opportunity, in February 2023 Dr. Jacqueline Shan, the CEO of PBG BioPharma, made
a long-term strategic decision to enter the cannabis consumer health market by launching a series of CBD
consumer health products, such as over-the-counter (OTC) natural health, skincare, and personal care
lu




products, once the cannabis regulation in Canada was relaxed and CBD was classified as a food and natural
health ingredient. Before launching the new product line, Shan needed to make two related strategic
So




decisions regarding the target market and the distribution strategy: Would a niche or broad target market
be better suited for the new CBD consumer health product line, and what should the corresponding
distribution strategy be?




OBJECTIVES

• Use different criteria to evaluate and choose the suitable target market for a company’s new product.
• Analyze the advantages and disadvantages of various marketing distribution intensity strategies.
• Analyze the advantages and disadvantages of various marketing distribution channels.
• Analyze challenges in supply chain management when launching a new product line.
• Make suitable recommendations regarding distribution intensity strategies and marketing distribution
channels.




The Case Solution Starts From page 5

, e
pl
m
Sa
n

ASSIGNMENT QUESTIONS
tio


1. Which target market should PBG BioPharma choose? Please analyze the advantages and disadvantages
of choosing a niche target market (option 1) versus a broad target market (option 2).
lu



2. What are the different marketing distribution intensity strategies that PBG BioPharma can consider for
its transition? Please analyze the advantages and disadvantages of each strategy.
3. What are the different marketing distribution channels that PBG BioPharma can consider for its
So




transition? Please analyze the advantages and disadvantages of each option.
4. What challenges will PBG BioPharma face in managing its supply chain (e.g., challenges in demand
forecasting, production, warehousing and inventory management, and transportation)?
5. Based on your analyses, which distribution intensity strategies and marketing distribution channels
should PBG BioPharma choose? Why?




The Case Solution Starts From page 5

,ANALYSIS




e
1. Which target market should PBG BioPharma choose? Please analyze the advantages and
disadvantages of choosing a niche target market (option 1) versus a broad target market (option 2).




pl
m
1. Consumers’ want for the product3— Students need to consider whether consumers have different wants
for CBD consumer health products or, in other words, whether consumers are looking for specific benefits.
Sa
2. Size and growth potential—Students need to evaluate the size and growth potential of each target
market segment. A larger market may offer more opportunities, but also more competition. Consider
whether the market segment will expand or shrink in the future.
3. Competitors—Students also need to assess the competitive landscape within each target market
n

segment, including the number of existing and potential competitors, and competitors' strengths,
weaknesses, and target customers.
tio


4. Resources and expertise—Students need to consider PBG BioPharma’s available resources, capabilities,
and expertise in product development, marketing resource, supply, and distribution channels.
5. Accessibility and reach—Students need to assess the accessibility of the target market segment and
lu



consider the restrictions on promoting cannabis products in Canada.
6. Compatibility with brand image—Students need to evaluate how well each target market segment
So




aligns with the brand image, values, and mission.
7. Long-term viability and sustainability—Students need to take the long-term viability and
sustainability of the target market segment into consideration.




The Case Solution Starts From page 5

, EXHIBIT - 1: COMPARATIVE ANALYSIS OF PBG BIOPHARMA TARGET MARKET OPTIONS 1 AND 2

Advantages Disadvantages
Option 1:  Consumers’ wants are differentiated  Smaller market size
An important but small  Less competition and high probability to become the  Uncertain growth potential of the market segment
niche target market market leader in this market segment when entering early
 Compatible with PBG BioPharma’s expertise and current
available resources





e
Alignment with PBG BioPharma’s current brand image
 Easier to reach health-conscious consumers with its




pl
existing health products and sales channels
Option 2:  First-time CBD health product users may not have a strong  More competition with many existing bigger players in this
A general and broad preference market




m
target market  Market size is bigger, with higher growth potential  Requires some resources, such as for manufacturing and
 Alignment with PBG BioPharma’s current brand image. building brand awareness and market reach




Sa
n
tio
lu
So