Foodpreneurs Need to Ask Themselves These 5 Questions
Silicon Valley is infatuated with food. Never mind the fact that entrepreneurs in the food industry now have their own nickname, “foodpreneurs.” CB Insights estimates that 2016 alone saw more than a $1 billion invested in food startups and related projects.
Kauffman Entrepreneurs, which provides online educational resources for entrepreneurs, defines a startup as “a temporary organization designed to search for a repeatable and scaleable business model. . . . The goal of a startup is eventually to be a large company.” The foundation articulates that there are at least four different types of markets for startups: existing markets, new markets, low cost or niche markets, or clone markets outside of the US.
Regardless of stage, size, or location of your food startup’s market, there are a few questions that should be at the forefront of any aspiring food businessperson’s mind. Here are 5 pertinent questions for foodpreneurs to consider.
Am I pursuing a growing market?
The 2016 Food Packaging Trends and Advances report from PMMI, The Association for Packaging and Processing Technologies, projected the U.S. food packaging market will grow at a compound annual growth rate (CAGR) of 2.9 percent through 2022. Clearly, there is opportunity in food. However, it is vital to research consumer behaviors and growth trends within your niche market.
For instance, while it should come as no surprise that traditional soda is going out of style given its well-known link to health problems, perhaps less intuitive is the trend that consumers want insect protein. In other words, it may take research and awareness to keep tabs on markets of greatest opportunity, but doing so is absolutely key to the success of foodpreneurs’ investments.
Do I have a clear picture of my target consumer?
Arguably one of the most important aspects of successfully launching your product is understanding your target audience. Having this knowledge allows you to tailor your brand’s message to the social outlets and vernacular of your consumer. The practice of market segmentation, defined as identifying the right niche consumer, is vital to running any profitable business in the food industry. As Darrel Rigby, Director of Bain & Co., explains, “It is more important to have a loyal group of the right customers than to have lots of the wrong customers.”
Is my product addressing an unmet need?
Not only is knowing the characteristics of your target consumer necessary, but also ensuring that you are addressing an unmet need is fundamental to the success of your business. Identify the need or problem that your target market is facing and vocalize how your product addresses it.
In a recent ChefsBest podcast, Elliot Begoun, who consults emerging food and beverage brands on gaining distribution, explains that the first step in any branding process is clearly identifying your ideal consumer as well as their unmet need. He goes on to say that understanding your consumer and what they want allows you to build effective messaging and strategy.
Seek out feedback from your target market in order to confirm whether your target consumer will actually like – and buy – your product. Tessa Stuart, consultant for UK food entrepreneurs (excuse me – I mean, foodpreneurs), suggests, “Test your product on people other than your family and friends. They’ll be far too polite. Get in front of strangers, on a market stall or pop-up, and see if they’ll buy. If they do, you’re probably onto something.”
Is my brand engaging?
Shoppers don’t want to simply buy food; they want to take part in a great story. That’s because consumers identify with the brands they choose and want to know that their brand choice makes a positive difference. As Phil Lempert articulates, “People are not eating less; they are choosing the brands that mirror their needs and values.” (Although having an altruistic mission can help you stand out on the shelf, remember that your product still needs to taste good.)
Before going to market, prioritize design and packaging in order to build a strong brand. Suzie Walker, founder of food startup Primal Pantry, explains, “Don’t skimp on the design costs when it comes to your branding. Good branding should be viewed as an investment.” Tessa Stuart suggests food entrepreneurs “Invest in punchy branding. You’re up against well-known brands, and you need your product to inspire confidence and look authoritative on shelf.”
Whether your marketing budget is near non-existent or considerable, use the knowledge you have of your target consumer to craft brand messages that will resonate with them. For lower budgets, options such as grassroots and social media campaigns may prove effective. For more flexible marketing budgets, licensing partnerships and paid advertising could yield return. Additionally, competitions and awards can help food brands gain exposure.
Am I learning from others?
Safeway modeled its online grocery business after Tesco’s successful model in the UK. Are you also watching out for what contributes to others’ successes? The vast majority of new businesses fail, so be open to feedback from the more experienced. Immerse yourself in a community of other business owners. Ask for help, whether that be in the form of advice from other entrepreneurs or outsourcing tasks.
So there you have it: five questions foodpreneurs should keep in mind. Whether your product taps into a new or existing market, take the time to identify your market’s growth trends, your target consumer, whether your product addresses an unmet need, your brand, and lessons from the learned.