The e-cigarette market has already seen rapid growth in the United States thanks to increased innovation, better distribution than ever before, and new demand among a growing pool of consumers interested in an alternative smoking option. While the effects have already been noticeable, the e-cig trend is destined to change the market in even more dynamic ways. Increased demand is leading to key changes in:
Historically, the cigarette market has been very stable and slow to change. Products have differed only slightly in terms of nicotine, extra flavor, and additional features. E-cigs have added a new element of diversity to the industry with their many unique options. The permanent e-cig filter can be customized into a variety of styles, making the cigarette more fashionable than its been in years. E-cig flavors may have drawn criticism for being more kid-friendly, but their primary impact has been an increase in options, from chocolate and vanilla to coffee and fruit. Consumers have more choices than they have ever had.
Traditional cigarette purchasing channels were also very limited, due to a combination of regulations and tight industry control. E-cigs do not fall under the same regulations, and have more open distribution channels. This has led to increased trends in buying online, where customers can customize their kits and buy refills months ahead of time. Traditional cigarette companies do not have a strong presence online, which will lead to different forms of increased competition in coming years as purchasing channels evolve.
E-cig cost structures are very different from old-fashioned cigarettes. Old cigarettes followed a steady, stable expense structure that encouraged very frequent purchases. E-cigs have a high start-up cost when first buying a kit, but lower costs for the rest of their lifespans when purchasing cartridges – which are often bought in bulk themselves, This changes not only how customers buy and afford cigarettes, but how sellers make their profit margins.
E-cigarettes make it easier than ever to control the amount of nicotine inhaled. Ultimately, this makes it easier to decrease the amount of nicotine for smokers trying to control their habit. In the beginning, most e-cigs were marketed as potential allies for smokers trying to quit or lower the number of cigarettes they were smoking. By specifying the amount of nicotine each cartridge contains, smokers can lower their intake at their own pace. Traditional cigarettes also allowed for some control over nicotine amounts, but did not offer the same level of customization. E-cigarettes are also widely believed to be “cleaner” and more free of additional contaminants than old cigarettes.
Because of the new purchasing channels and expense models, competition between cigarette brands is forever changing. As the niche e-cig market grows, it will be fueled by the unique marketing aspects that the new flavors and uses of e-cigs allow. The way that traditional companies will respond is still unknown. New features, lower prices, and different marketing tactics are possibilities.
E-cigarettes are surrounded by plenty of contention. Those new marketing tactics that older companies might try? They face serious constraints due to taxes, distribution requirements, and a variety of laws. E-cigs, thus far, do not face the same legal barriers, which gives them a current advantage. As e-cigs began to gain more public attention and, eventually, the notice of lawmakers, the regulations of the cigarette industry will be forever altered. Where can e-cigs be sold? What type of marketing can they use? What online channels will remain acceptable in the future? These questions will frame the evolving market.