The beginner’s guide to profitability: How identifying your target audience and where they’re shopping puts you on the path to profit

One of the most challenging aspects in the early years in your consumer packaged goods (CPG) business is your limited resources: think time, money, energy, creativity, and bandwidth. You’re likely doing most things in your business by yourself, or maybe you’ve outsourced a few things to your small team, but resources can feel constrained as you try to grow your sales on your own. Plus, there’s the constant challenge of financials – managing your cash flow, protecting your margins and driving revenue so you stay in business. 

Knowing your core target audience, understanding where they shop and prioritizing the channels where they’re looking for products like yours is key to profitability in your business, particularly in the early years. A deep understanding of your audience and their consumer behavior guides your business decision making, your marketing strategies and your growth plan – all while keeping profitability at the forefront.  

In this post, we’ll explore how you can identify your core audience, understand their shopping habits and leverage this information to place your products in the most effective wholesale locations, setting you on the path to sustained profitability.  

First things first

The first step in maximizing your profitability in this framework is understanding your core target audience: that person who purchases your products over and over, tells their friends all about them and feels an emotional connection to your brand. They feel like you really “get them” and you provide something on a deep, emotional level, whether that’s comfort, safety, joy, belonging, ease, confidence, nourishment or anything in between. In other words, your products are filling a need (or as industry insiders like to call it, “white space,”) in their life. 

But how do you learn who your core audience is and why they’re so emotionally invested in your brand? The easiest, cheapest, fastest way to confirm this information is to talk to them directly. Sounds simple, right? But before you go out and post on social media or ask your friends and family why they love your product line so much, you have to realize that your core audience is those who have paid full price for your products – not just your community who cheers for you online. Don’t make a dangerous mistake of trusting your friends, family or social media following when gathering consumer information about your product line – sure, they’re your biggest fans, but as such, they might not give you the straight talk that you need to make informed business decisions. Instead, talk directly to those who have purchased from you in the past. Whether it’s sending an email asking for feedback, building a post-purchase survey that pops up after checkout online, creating a QR code to scan at your farmers market booth or reaching out directly to past customers, it’s best to go direct. Ask non-leading, pre-planned questions around pricing strategy, wholesale placement, marketing preferences and any other inquiries that give you vital information you need to set an impactful sales strategy. 

For example, you may find that your core (fictional) customer, Tasha, loves eating your snack bars on-the-go after workouts. She feels proud of herself when she chooses your brand over the sugary alternatives that she used to eat, and feels nourished, despite her hectic schedule. Your product line helps her feel healthy, more able to keep up her workout routine despite her busy life, and she gives herself a mental high-five, knowing that she’s supporting herself and a woman-owned food business at the same time.  

After you’ve exhausted your paying audience directly, you can utilize other consumer research avenues like paid consumer research, broader surveys to your audience, analyzing your social media and email list demographics, and more – but start with the most accurate, free information available first. 

Once you’ve identified your core target audience, prioritize being in the channels where customers are already looking for products like yours. Why? Again, it goes back to resources, especially in the early start-up years of your business. It’s extremely challenging (and often prohibitively expensive!) to change consumer behavior, so leaning into what your fans are already doing – where they’re shopping, how often they’re purchasing products in your category, where they’re physically looking for you in-store or on the shelf – allows you to get in front of them faster and cheaper, supporting your goals of maximizing profits in the early stage.  

Let’s keep using Tasha as an example – our fictional snack bar fan who appreciates your clean brand on her commute between the gym and her office. Where is she already buying healthy snacks? Remember, you’ve talked to her directly, so there’s no guessing about this information. She likely purchases your bars directly from the gym after her workout, but she told you her dream is that she can buy 12-packs at Target when she’s there doing her errands on weekends. Listen to what your audience tells you. Here, Tasha likely did not tell you that she wants to buy them directly from your website every two weeks, or that she’s looking to purchase them at the farmers market. Let your core audience be your guide and let their current purchasing behaviors dictate your channel strategy in the early years of your business. Simply put, it’s the quickest, cheapest way to get in front of your fans. 

Once you have your channel strategy in place, you should dig even deeper into physical placement within that channel – again, going back to the information that you gleaned from speaking directly with your paying customers. Where do they physically look for you in-store? What aisles are they walking down as they try to find you? If you’re selling on online stores, what keywords are they searching when they’re trying to find you? What categories are they browsing when they spot your product line?  

For example, Tasha might be looking for your snack bars in the breakfast section, near the cereals and granola. Or maybe she’s looking for you in the fridge, with the expectation that “healthy, clean bars” are always refrigerated nowadays. Or maybe she’s picking you up at the cash register, as it’s always a last-minute impulse buy for her when she realizes she’s hungry. Online, she might be looking under the category header of “granola bars,” or “meal replacements” or “gluten-free snacks.” There’s no wrong answer, but you’ve got to put in the consumer analysis to figure out where they’re looking for you. If you skip this step or make assumptions about what your audience is looking for, or which search terms they’re using (if you sell online!) or where they’re physically looking for your product in-store, you’re missing a big opportunity and wasting resources as you try to shift your core audience’s behavior.  

As you grow and have more resources you can consider expanding into additional sales channels, paying for consumer insights pulled from point-of-sale data or paid competitive analysis research, but that isn’t always necessary at the beginning of your growth. In other words, you’ve got to focus on the most profitable sales channels first – the channels that have a magic combination of high volume, repeat sales and profit margin for you – whether that’s direct-to-consumer, specialty retail, conventional grocery, foodservice, club or anything in between. What matters most is that it’s the right fit for your product line. 

Slowing down, talking to your paying consumers and analyzing their words and behaviors to help you create your channel strategy is absolutely key to a profitable CPG business. This direct shopper insight makes every business decision easier – from understanding how to market to them in-person and online, to what price points work for them, to where they’re looking for your products, to why they’re choosing you over other brands and how to keep that connection alive – all of that information can be mined directly from the people who are already purchasing your product line. There’s so much value and priceless information that you can get from your early customers, which helps you prioritize the right actions and sales channels for your business, and ensures you have a strong foundation for profitable growth and sustained success.  

Looking for more tips and tools? Sign up here for our monthly newsletter for more access and insights to resources and stories to help accelerate your business. 

About the author

Alli Ball is the founder & CEO of Food Biz Wiz and the creator of Retail Ready®, an online program providing strategic support, curated curriculum, and values-aligned community for producers of packaged products in the food industry who want to grow their sales sustainably. As a former grocery Buyer-turned-Wholesale consultant, Alli has helped thousands of emerging brands understand what it takes to get on the shelf and have high sales once you’re there. Find her on her website here and through the Food Biz Wiz® podcast, her award-winning podcast about wholesale strategy.