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Reaching Vaping’s Subsegments

PHILADELPHIA — It’s a brave new world when it comes to e-vapor, something convenience-store retailers and vaping manufacturers know all too well. It seems like every week there’s a new product hitting shelves, albeit not every “next big thing” pans out.

“Innovation for innovation’s sake does not work,” Chris Mitchell, vice president and chief marketing officer for New York-based iSmoke Vaper Technology, said during last week’s CSP Total Nicotine Conference. “Just because we can do something doesn’t mean we should.“

A prime example is the fact that there is now a vaporizer with a Bluetooth, meaning that users can both vape and stream music through the device. An interesting concept sure, but this innovation hardly improves the actual vaping experience.

In order to reach e-vapor consumers, Mitchell believes retailers should focus on the vast subsegments that make up the category.

“Look for meaningful differentiation that resonates with your stores’ demographics … that’s what really matters to your customers,” he said. “Different demographics are looking for different vaping experiences.”

According to Nielsen data and Wells Fargo analysis, e-vapor breaks down into three categories: analog, modern and advanced consumers. Analog consumers go for easier-to-use cig-alike and disposable models. These shoppers account for approximately 10% of the market and tend be longtime smokers age 40 and over. Modern consumers prefer more advanced kits and bridge systems, making up 40% of the industry. At 50% of the market, advanced consumers tend to be younger (21-35) and seek out the latest and greatest vaporizer or tank models available.

“These consumers expect tech disruption,” Mitchell said. “It’s really amazing to see the proliferation of the advanced segment.”

The advanced vaping segment is so vast Mitchell said warrants its own subsegmentation: beginners, evolved and connoisseurs. The beginner subsegment goes for $15-40 intro-level tanks, attracts a broad range of demographics, and makes up 55% of the total vape, tanks and mods (VTM) market. The evolved subsegment includes tanks in the $50-100 range with consumers that enjoy simple technology and account for 15% of the VTM market. Connoisseurs make up 30% of VTM sales, are looking for “the next big thing” and are willing to spend $100-500 on vaping devices.

“The connoisseur may not be for c-stores,” Mitchell admitted. “But there’s a way to round out the category. There are opportunities to dabble in the space with beginners and evolved customers.”

Mitchell pointed to “category management 101” practices to leverage opportunities with beginner and evolved vaping consumers: offering a balanced portfolio of brands covering differentiated consumer segments, giving the category a dedicated space (not a disparate collage of manufacturer displays) and educating store personnel on the topline category dynamics.

“This is a category,” he said. “A category with high margins and should be treated as such.”

Melissa Vonder Haar


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