Who is my Target Market?

Identifying your target market is a crucial step in creating a successful product. Often people producing a product will say that their product is for everyone, but that is a mistake! Many different consumer bases may purchase your product, but you will have a few core target markets that make up the bulk of your purchases. So–how do you figure out who your target market is?

First, you must understand the need your product fills. What are the core benefits your product has? Create a simple definition of your product and its benefits.

Once you have a good idea of your product, research potential target markets. There is a lot of free and available for purchase market research online. Analyze each group’s values, priorities, and the other types of products they purchase. Who are influencers to these groups? Do they value Organic or Kosher certification? How is your product differentiated from the other products they purchase? Although you can research your target market infinitely, spend some time getting a better idea of the groups you want to focus on.

Once you figure out your target market you can use that information to shape your product in a way that highlights the benefits those groups see as priorities. You can use marketing in the areas that most likely to reach those consumer groups. A better understanding of your target market can transform your product from a good idea to a huge success.

Is it Important to be Certified Organic? Kosher?

Both yes and no. Both of these certifications have benefits but are often costly so they are not the best choice for all products.

USDA organic certification shows that your product is grown and processed with approved substances that are USDA verified. The image below outlines what the USDA seal ensures.

Some customers are only interested in organic products or may be willing to pay a premium for organic certification. If you think you will have an increased customer base through organic certification it may be the right choice. However, in many cases, if you provide a high-quality trustworthy product to consumers, organic certification may not be necessary.

This stands true for Kosher certification as well. Using the Kof-K emblem we are able to provide Kosher certification for products. Kosher certification can be beneficial if your consumer base sees Kosher certification as a priority.

In order to get a better idea of the benefit these certifications may provide to your product, you need to understand your target market. Research your potential target markets and their priorities to see if these certifications are the right choice for you.

Where to Start

So you have an incredible product that you want to produce and sell. We would love to help–but before we do, here are some steps to streamline the process:

  1. Know your product–understand the measurements and ingredients needed to make your product. The food products we work often have natural, generally organic ingredients. Understand what your options are for wholesale ingredients and what the most cost-effective way to store and purchase them are. If possible, come prepared with a scheduled process. If you are not able to create one, the OFI provides services to create one for your product.
  2. What equipment will you need? While the Organic Food Incubator has equipment for several needs, you potentially need something we do not currently have. For information about the equipment we have available check here.
  3. How will you package your product? Depending on the product needs packaging may differ. When picking the packaging think about maintaining flavor, freshness, product shape, and if production will affect the package (i.e. heat or freezing product).
  4. Have a timeline of your production expectations. Is this the first time you are producing this product–do you want to run a trial run? Do you expect to product monthly, weekly, etc? Have an idea of where you see your business going.
  5. Make sure you have the licensing and insurance to produce your product. There are accredited programs that offer training and licensing.

If you do not know this information OFI provides consulting services to help you make your product. For consulting services, reach out here.

Margin and costs

Unfortunately, you do not get to take home your retail price. Before you see a profit, the grocers margin is deducted, the distributors margin is deducted and your costs are deducted. The amount that is remaining is your profit.

Grocer’s margins are a percentage of the retail price. sometimes put to 40%.

Distributor’s margins are a percentage of the the grocers cost, sometimes up to 35%

Your profit is the difference between all of your cost and your selling price.

Your costs can include ingredients, packaging, labor (in house or co-packer). These are call cost of goods sold. In addition your costs also include marketing, insurance, social media, website, utilities, sales staff and more.

Proper planning prevents poor performance. Before launch, consider all of the factors that will affect your profit and your margins.

 

Pretend you are bigger than you are

Just like meeting a person for the first time, businesses often make judgments on first impressions.

Other businesses are hesitant to give out information to consumers, so it helps if you can seem like your are a larger established businesses, even if you are just starting out.

Have your business formation information ready. EIN number, LLC documents, prepared W9, website and business email addresses prior to contacting vendors, suppliers, potential clients or distributors.

Product producers will often ask for this information prior to giving out bulk pricing for packaging and ingredients. They prefer that the small guy goes through a distributor. However, it is essential for your business planning to know what the bulk direct from distributor pricing will be…even if you will most likely not order from them for 6 months to 3 years.

Supply the necessary information and maybe even create an account. Get the information you need. Price per pallet, price per truckload, and lastly ask what the minimum order is.

This research will help you greatly in determining if your great hobby will also make a great business.

 

 

Scheduled Process

For most shelf stable fluid products it is necessary to obtain a Scheduled Process prior to processing.

A scheduled process is your recipe and procedure, which has been review and edited by a recognized process authority. With very few exceptions, if you are making a product that is fluid and shelf stable, you will be required to have a scheduled process.

The FDA regulates the production of food and requires that the scheduled process be registered with the FDA.

The links below will take you to some recognized process authorities:

Food Science New England – – Fred Jewett – fred.fsne@gmail.com

NorthEast Labs 

Cornell University

University of Maine

North Carolina State University

 

 

To obtain a scheduled process, you will submit:

  1. Your recipe. Each ingredient must be measured by weight (pounds, ounces, grams, kilograms). Choose one unit of measure stick with it.
  2. Your method. This is the production steps.

The scheduled process is formal document and must be followed exactly, by you or by your co-packer.

You can expect to pay between $95 and $175 per process at the time of this post (February 2016).

It is to your advantage to streamline the process and allow for as many variables as possible.  For example, if you make 5 fl oz bottles, but you think maybe in the future, you want to make half gallons, ask the process authority to write it for “4 fl oz up to 128 fl oz”

You may also ask them to write statements such as “Water maybe added to thin the product to the correct consistency” or “Vinegar maybe added to adjust pH”

If it is not on the document, you are prohibited from making adjustments without permission.

It is also important for you to know how many gallons of product (this is a unit of volume) or unit of product produced by this quantity.

The process authority will make adjustments to your recipe and procedure to insure that it can be safely held at room temperature. This may include the addition of acid, salt, sugar or other additives to create the correct pH or water activity.

Do not be afraid to question the additions if you think that it will change the flavor or texture of the product. There may be other options.

Once you have your scheduled process, you are ready to go into production and can safely make a shelf stable product.

Shelf Stability and Acid

In small food manufacturing pH is a critical factor enabling your product to be shelf stable.

The pH scale is a 14 point reference from 0 to 14, where 0 is the most acidic and 14 is the most alkaline.

It is measured with a pH meter. There are many of types of pH meters, but generally, a digital unit with a separate probe is more accurate. They can range from $250 and up.  A good meter is worth the investment. The meter must be calabrated frequently to give accurate measurements and requires buffering liquid for this procedure. All of which can be purchased at the same tile from a reputable company such as Cole Parmer.

pH is important for food items as pathogenic bacteria cannot grow in a low pH environment.

Each bacteria has a differnet threshold. The most dangerous pathogen as far as shelf stability is concerned is clostridium botulinum (botulism) which cannot grow below a pH of 4.5.

As a reference, vinegar and lemon juice have an approximate pH of 2. Tomatoes have an approximate pH of 4 and most vegetables have a pH between 6 and 7, which is close to neutral. As a contrast, soapy water has a pH of approximately 12, which is alkaline.

To be safely packed, pH must be used in conjunction with temperature to prevent the possibility of mold growth.

When used together and evaluated by a recognized process authority, your product my be held at ambiaent temperatures and will be safe for an extended time for people to eat. This can be done with out the addition of dangerous chemicals. The process authority will write a scheduled process for you, which will outline the manufacturing requirements.

Ingredients with a low pH are sour and any additions of acid – lactic, malic, citric, vinegar, lemon juice or any other acids – will make your product more  tart.

This type of control is essential to insure that your product is safely manufactured and will be safe to eat.

 

Organic Certification

Organic certification is a complicated process for many of our clients. At its simplest explanation, it is a method of tracking organic ingredients from the farm to the consumer. If you can visualize that journey for your ingredients and think about every stop along the way, from the farm to the distributor, manufacturer, through to the customer, it makes it easier to think about your organic plan and organic integrity.

There of course are many other details. Organic certification is the only way to show that there is regulation and documentation concerning the types chemicals applied in the field, and in the processing facility that adhere to the National Organic Standards.

For manufacturers, the key to a successful organic plan is good documentation.

For the consumer, the USDA Organic logo is a clear sign that the product and the manufacturer has been reviewed, complies with the NOP standards which include the prohibition of GMOs.

Here is a link to the USDA Organic bog for more information.

Visit from Children’s Village

The Children’s Village mission is to work in partnership with families to help society’s most vulnerable children so that they become educationally proficient, economically productive, and socially responsible members of their communities.

We hosted a small group last night. They took a tour of the OFI facility and met with some of the community members. Everyone was very interested and had great questions. Each person had the opportunity to ‘work’ in the BAO kitchen and pack  and label a jar of Raw Slaw to take home.

Thanks to Karen from Free Bread, Jim from the OFI and Giuseppe from Alchemy Creamery for taking time to speak with the group. Thanks also to Chloe’s Soft Serve Fruit Co. for providing samples.

 

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Starting your business

Starting your own food manufacturing business can result in a challenging, yet highly rewarding career. To be successful, you`ll need to develop a winning product and you`ll also need to learn how to market it effectively. Added to that are the demands of daily production, including trying to locate the best quality, freshest ingredients at wholesale prices you can afford.

Outside of marketing, branding and distribution, here are some of the basic challenges you`ll meet in the beginning stages of starting your own food manufacturing business:

Coming Up with the Right Idea

The first step to success is coming up with the perfect product, one that will not only have wide appeal, but will also cater to a loyal niche market. Whether you decide to produce flavorful sugar-free foods for diabetics, all-natural organic salsas and dips or home-style southern fried chicken, you need to be realistic about how popular your item will be. For example, you may have a sure-fire recipe for whisky-flavored fudge, but it`s doubtful that you`ll be able to generate much customer enthusiasm for it.

Finding Suppliers

Finding the right suppliers can be one of the most difficult aspects of any food business. You`ll need to find reputable wholesalers that can sell you the best ingredients for your product at the lowest possible prices. Before you begin, your first step will be to get tax exemption status so that you can buy food at wholesale prices. Once you`re allowed to buy wholesale, it`s time to go on a few scouting trips in the wholesale market. By doing a little field research and soliciting opinions from your food industry colleagues, you`re sure to find the right suppliers to fill your needs.

Getting Licensing

You`ll need to get a special license to handle food. In order to obtain this license, it`s necessary to enroll in accredited programs that offer training and licensing. You`ll also need to invest in a liability insurance policy that will offer at least $1 million in coverage.

As part of your food safety requirements, it will be necessary for you to get in touch with a food scientist who can create an accurate nutritional label for your products and advise you on industry regulations. A reputable food scientist can also give you invaluable advice on the success and challenges that other entrepreneurs have had in marketing similar products.

Test Your Market

When you`re first starting out, it`s advisable to test your market before you make a major investment. The best way to do this is to rent a space in a professionally licensed commercial kitchen, make small batches of your product and sell them at a local farmer`s market or co-op. If your product is successful and the demand even exceeds your expectations, you can start considering leasing a manufacturing space of your own.

Before you rent a space, make an estimate of the exact supplies you`ll need to equip your kitchen and then plan your space requirements accordingly.

Search for Equipment Suppliers

As with food suppliers, you`ll want to take your time and find reputable wholesale dealers that can give you the best prices on the items you need. It`s important to prioritize, especially if you`re on a budget. Those silicone holly-shaped ramekins may be a great seasonal item for your products next year, but it`s better to pass them by for something you know you`ll need right away.

Whether you`re looking at <a href=”http://www.cs-catering-equipment.co.uk/“>www.cs-catering-equipment.co.uk</a> or considering other things you`ll need for your start-up business, it`s a good idea not to rush while you`re shopping for supplies. By taking your time and doing some comparison shopping, you can ensure that you`re getting the highest quality equipment at the absolute best wholesale prices. Once you`re fully equipped, it`s time to start doing what you really love and that is creating a fabulously successful food product that will win raves from your customers.