Choosing the Right Target Market for Your Specialty Food Product

Almost before you do anything else in creating your business and selling your food products, you need to identify WHO your target market, or your audience, is. Ask ten business people the question "who is your target market?" and eight of them will say something to the effect of "everyone can use my product or service." That answer makes me want to scream because it indicates that either they really don't know what they're offering OR they're (pick one) too lazy, greedy or fearful to create a useful client profile.

Everyone is NOT your target market and you need to choose who IS before you start making a lot of your other business building decisions. This is one of the benefits of running your own company. YOU get to decide with WHOM you want to work and sell to. Pricing, what your packaging will look like, the design of your logo, web site and marketing materials all depend on who your buyer(s) are.

Think, for example, how Mercedes markets its cars vs. how Chevy markets its trucks. Very different target audiences. Your product is no different. Is this an item that you see on your average grocery store shelf or is it a better fit for high-end gourmet specialty markets? Is your product gluten-free, sugar-free, or otherwise a good fit for a group of "special needs" consumers? Nothing is wrong or better about any of the answers you come up with; it's a matter of creating a niche for yourself.

When I started my company, I decided to focus on serving the needs of business clients. Sure, I had a great-tasting cookie, but again, it wasn't my intention to become "the next Mrs. Fields." My goal was to work directly with business people who wanted to show appreciation for their clients or members. My definition of business clients was primarily those in the corporate world, although I also included associations and not-for-profit organizations. I was creating a gifting product, more than a common food item.

With that information, I could choose packaging that fit the needs and would be attractive to that audience. I could create a web site that would speak to them in a language they could relate to. I could write copy for and design marketing materials that made them comfortable with my company and confident that I would serve their needs.

Think what would have happened if I'd made all those decisions BEFORE I knew to whom I was talking! Let's say your favorite colors are pink and purple, so you decide to create packaging in those colors. You use a funky typeface for the logo and wording. You design a cute cartoon character as your "mascot." And you write a brochure highlighting the taste and nutritional benefits of your product. Then you send those brochures out to construction companies to encourage them to buy your product for holiday gifts to their clients. Um, putting all those elements together is not likely to work.

But, if your target audience is moms of toddlers and you're promoting your product as great for birthday parties, then you have a much better match and are more likely to succeed.

Even your pricing will be affected by the target audience, and we'll talk about that in more detail in another article. But suffice it to say that if you want to sell your food product to a grocery store, such as Publix, Kroger or Safeway, your pricing model is going to be different than if you are selling directly to the end user.

Do you see why and how deciding on the target market has to be first?

Now, I hear you, sitting there saying, but EVERYONE loves my hot sauce, granola, green onion chips. I can't narrow it down to one target market. Yes, you can and you must, if you want to succeed. You don't necessarily have to make it as narrow as saying women with blond hair, between the ages of 25-35 who go to spin class three times a week and drive BMWs.

So, think about how you see your product being used. If your product is a steak sauce, then obviously meat-eaters is a good start in the narrowing process. That vegetarians might possibly use it on potatoes is fine, but you are not going to focus on them. Keep going. Do you see men who consider themselves "grill-masters" buying this product? Where would they purchase it - at Wal-Mart or from a Williams-Sonoma catalog?

Confession time! Had I known better, I would have narrowed down my targeting even further and chosen one or two specific industries on which to focus. Doing this would have allowed me to even more specifically customize my marketing efforts for them, which in turn would build the business faster. As it turned out down the road, some of those industries kind of identified themselves when I started seeing more and more clients coming from them. And even then, I didn't start niche marketing to them right away. Geez, I was a slow-learner. Learn from my mistakes, and narrow down your target market!

At the urging of friends and family, Lori Saitz took a family recipe for a butter/sugar cookie, navigated through a maze of confusing regulations and well-intentioned advice, and built the company Zen Rabbit, http://www.ZenRabbit.com. The business is now known worldwide for its all-natural Gratitude Cookies and Zen Crunch. In addition to running Zen Rabbit, Lori coaches, leads mastermind groups and presents seminars for new food product entrepreneurs. As the editor of inbox magazine Food Biz Life, she shares weekly articles on producing, marketing and selling a food product to a grocery store, gourmet specialty store, or other target audience. Sign up for a free subscription at http://www.FoodBizLife.com.

How to Start a Gourmet Food Product Business (Or Any Product) On a Shoestring

The first issue we see nascent entrepreneurs almost universally attempt to address is the perceived need for working capital. When we ask how much investment they believe is required to get their product to market, they never can justify what they identify as their magic number. I have yet to read a business plan that can justify the assumptions that are utilized to support the capital investment being sought, ever, and I read dozens of business plans each month.

My consulting firm reviews hundreds of new product ideas every year. Many have wonderful commercial prospects. However, almost none of the entrepreneurs offering these opportunities for funding have considered all of the possible avenues available to launch their idea. Funding is the "Holy Grail" in the eye of most entrepreneurs, and yet, a capital raise is the single hardest route they can attempt to utilize.

Investors, unless family or friends, demand a very high level of due diligence before they will stage a capital investment. Strong management, a clearly identifiable Unique Selling Proposition (USP), first mover advantage and a 35% return on invested capital kicking in between months 24 and 36 of operation are the basic guidelines typically utilized when underwriting opportunities. These are standards that very few entrepreneurs and inventors can achieve.

There are many ways to "bootstrap" new products or services before seeking a financing round. They are not glamorous, more like the old parable of the tortoise and hare. These strategies require the oldest trait known to inventive man: simple hard work!

Here is an example of a product that we recently "bootstrapped" to a successful market launch, and subsequent funding relationship. I received a call from a gentleman who owned a construction business. After initial platitudes, he advised me that he had created the world's greatest barbecue sauce. We receive a lot of food products for review, and every single one is accompanied by the old bromide, " it's the best in the world". I was wary.

Mr. Barbecue Sauce sent me a box of his three sauces to sample. They were very tasty. I advised him that the taste was surely excellent and potentially commercial but that he would have to utilize more of a "guerilla" marketing strategy than his hoped for investor funding round. We wrangled for several months. He approached other consultants and food industry experts before finally coming back to us and agreeing that he needed to utilize a "plan B".

We contracted to write and execute a business plan for the launch of the sauces. We engaged the services of a dietician, a licensed food product private label source, a graphic designer and a packaging resource. We perfected the label statements and content values of the product. Then we conducted a focus group, obtained testimonials for attribution, and prepared sales collateral.

When the product, packaging and sales materials were market-ready we approached independent and regional purveyors of high-end gourmet food products. These types of retailers are much easier to work with, barriers to obtaining shelf space are small and they are keen to enjoy exclusive distribution of select items. Each door that was initially opened agreed to a schedule of product samplings. We set up a table on an aisle end cap, cooked top quality sausages and asked shoppers to choose which of the three styles of sauce they would prefer on their taste sample. We had an inventory of product on the end cap gondola with a special introductory price.

The results were gratifying and confirmed our assumptions that the barbecue sauces were truly commercial and consumer acceptance would be strong. The samplings lead to strong initial sales, but much more importantly, in subsequent weeks repeat sales began to grow without the aid of sampling.

Geographically, the client fanned out to the nearest markets and repeated the same limited, controlled roll out strategy. The results were always the same, a bit of a cult product was beginning to germinate.

For most of the first year of distribution we utilized the "tortoise and hare" approach. We then identified a gourmet product trade show in Orlando, took a stand and sampled the sauces just as we had in the first local gourmet products stores in the owners hometown. The difference is this instance, was that we were sampling, and taking orders from retailers from all over the United States and internationally, key decision makers in the gourmet product industry. Also, because the product was positioned as a gourmet foodstuff, price points reflected the sauces higher perceived value and the products were not buffeted by mass market discounting.

The entrepreneur had invested some reasonable amount of his own money, but this was mitigated by the go-slow approach we had undertaken. His initial sales funded the controlled rollout of the sauces to additional regional markets. He had not diluted a single percentage of his ownership by taking on investment partners. The growing order book from new retailers and repeat purchase orders were valued by his bank and he was introduced to the merchant bank division to establish a line of working capital.

Mr. Barbecue Sauce came to us with the notion that he needed $350,000 to fund the launch of his enterprise. As we initially quizzed him, he realized that he would really need to raise more like $1.2 million to realize his goal. By being open to alternative ideas, he avoided a huge pitfall that most entrepreneurs fall in too: raising $350,000 and failing is expensive, raising $1.2 million in order to insure success is cheap.

In this case, Mr. Barbecue Sauce was fortunate that there was an alternative strategy readily available to customize for his product. He mitigated risk, limited financial exposure, test marketed the product, extrapolated market potential based on real sales numbers and enjoyed the secure knowledge that the product was commercially viable without being at the mercy of investors demanding strict performance markers be constantly achieved.

Most entrepreneurs with truly commercial projects have many more options available to them than they ever consider. It is amazing how few projects are really fundable, and yet, investor funding is almost always the preferred route they choose to undertake. "Bootstrapping" is almost always the last alternative considered. Successful inventors, entrepreneurs and small businesses will always do whatever is legally necessary to achieve success. Anything less is the equivalent of dreaming.

Geoff Ficke has been a serial entrepreneur for almost 50 years. As a small boy, earning his spending money doing odd jobs in the neighborhood, he learned the value of selling himself, offering service and value for money.

After putting himself through the University of Kentucky (B.A. Broadcast Journalism, 1969) and serving in the United States Marine Corp, Mr. Ficke commenced a career in the cosmetic industry. After rising to National Sales Manager for Vidal Sassoon Hair Care at age 28, he then launched a number of ventures, including Rubigo Cosmetics, Parfums Pierre Wulff Paris, Le Bain Couture and Fashion Fragrance.

Geoff Ficke and his consulting firm, Duquesa Marketing, Inc. (http://www.duquesamarketing.com) has assisted businesses large and small, domestic and international, entrepreneurs, inventors and students in new product development, capital formation, licensing, marketing, sales and business plans and successful implementation of his customized strategies. He is a Senior Fellow at the Page Center for Entrepreneurial Studies, Business School, Miami University, Oxford, Ohio.