March 21, 2011

Finding Your Target Market

Last night I watched another episode of America’s Next Great Restaurant and the main focus of the show centered around changing the names and slogan for many of the restaurant-wanna-be’s.   So everyone sits down at their worktables and tries to come up with names and slogans.   All of the experts – including the judges like Bobby Flay and some top ad executives in the industry – said that they wanted the restaurant names and slogans to tie in with who the owner is and tie in with the flavors.  But what about with the customers – shouldn’t it resonate with them?  And in order to do so shouldn’t they know who their target market is?

This isn’t a problem just on TV, I’m always astounded when I meet a food entrepreneur who has a simply amazing product and when asked who their target market is they look confused.  “Target market,” they say, “everyone loves my product.”

Unfortunately ‘everyone’ is a bit of a gross overgeneralization whether you’re selling a specialty product or are trying to start up the new fast-food restaurant.   You simply can’t make a product that will appeal to everyone.  Even the mega-brands know this which is why many of the mega-brands have different product lines for the same product.  And each of those product lines is marketed to a different segment of the market. 

You have to understand who your targert market is before you can start making big marketing decisions which includes your name and slogan.  Figuring out who makes up your target market is at the core of successful small business marketing strategies.  Truthfully, it’s at the core of every successful marketing strategy for big businesses too and it’s something that the mega-brands excel at.  They have the research and people-power to determine who exactly is interested in their products and can break down their customers into segmented groups such as “Power Shopper,” “Social-Media Mom,” and “After-work coach Dad.”   With this information in hand, the mega-brands are able to create advertising plans that appeal to their segment of the market.

You can do the same thing – albeit on a smaller scale – for your specialty food company.  Determining your target market will help you craft marketing strategies that will give you a high return on investment including which distribution strategies – be it a storefront, a farmers market booth, wholesale accounts, etc – are best for your company.  Equally as important, understanding who your core customers are will help you price your products appropriately.  And, oh yeah, it will also help you create a name and slogan that resonates with  customers.  

So how do you do that on your limited small business budget?  The first step is that you need to understand, at a high level, why people would buy your product.  People typically make purchases based on three broad reasons:

  1. Satisfy basic needs
  2. Solve problems
  3. Make themselves feel good

Let’s take a look at the fictional company Aunt B’s Jams.  The jam solves the problem of jam-less toast for toast and pb&j-lovers but it also makes people feel good about themselves because they are buying organic jam from a jam artisan.  Already you can start to see market segments emerge.  Since it may be hard to identify who the toast and pb& j-lovers are in a market, it makes sense to focus on people who would buy the product to make themselves feel better.  And we’ve already identified some of the reasons people would feel better from buying the product – because it’s made with organic ingredients and/or because they like buying handmade products from local artisans.

Next you need to learn more about your market using demographic information.  For example if you think people will value buying local then you’ll want to know more about your local market including the age, income, and general personality of the people living in your area.  You can get a lot of this information via the US Census reports.  Just a note that the 2010 Census information is currently being released so may not be immediately available. 

Once you have the demographic and behavioral information (some ‘behavioral information’ may simply have to be based on your gut feeling or talking informally to a few potential customers since you may not have access to conducting a complete market analysis), you can write an ideal customer description which includes a focus on benefits that your product offers.  For Aunt B’s Jams, this might read: ‘My target customer is a 30-or-40-something mom who takes pride in feeding her family organic ingredients that are made by someone they trust.’

With this knowledge Aunt B can start to develop a distribution strategy (perhaps farmers markets where Aunt B can interact and share her story with customers), determine the right pricing (since these moms are willing to pay more for organic she can be priced above mass-produced every-day jam but not too high as moms in her locale do watch their shopping budgets), and can determine which products would appeal to that market (strawberry and raspberry ought to be well received whereas kumquat may be a bit too eccentric to make kids happy).  This information also shows that Aunt B’s Jams is a good name for her business since her target market values a human connection with the food they buy.  

It’s impossible to be everything to everyone – especially for a small food business with a limited budget.  But by identifying your target market and learning more about them you can become the go-to product for a group of people who value what you offer.