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TF #031: To Niche or Not to Niche: Strategic Audience Targeting for Heat-and-Eat Subscription Services

By January 22, 2024January 30th, 2024The Foodpreneur Newsletter4 min read

The Foodpreneur #031

 

To Niche or Not to Niche: Strategic Audience Targeting for Heat-and-Eat Subscription Services 

With so many meal delivery services launching (and growing), brands are looking for strategic ways to cut through the clutter and activate their target audiences—and for many that means going niche…or going broad. 

The decision to lean into a hyper-targeted market—vegans, diabetics, low-carb eaters, families, athletes, and countless other preferences—versus offering a more broad-appeal menu is one of the most important decisions a heat-and-eat meal delivery service can make. Once you’re known for plant-based, single-portion meals, it can be tough to pivot into large-format, meat-and-cheese dinners. 

That said, how do you determine whether to go niche or go broad—or how to decide when it’s time to branch out or pull back? Focus on these key questions and considerations. 

#1. Focusing on a Niche Audience

There are plenty of reasons to niche down your audience. In particular, this may make your business the one-and-only in a category—so even if the category isn’t massive, you’ll have ample opportunity to capture market share. The challenges? Is that niche audience big enough—and do you know how to effectively engage and convert them?  
 
Pros of going niche:

  • Expertise and Specialization: By targeting a specific group, like athletes or vegans, you can develop specialized expertise, making your brand a go-to solution within that niche.
  • Loyal Customer Base: Niche markets often have communities with strong ties and high levels of engagement, leading to a more loyal and dedicated customer base.  
  • Less Competition: Catering to a specific audience can mean less competition and a clearer path to becoming a market leader in that segment.
  • Targeted Marketing: Marketing becomes more straightforward when you know exactly who your audience is and what they need.

No matter the format, consider allowing customers to tailor their meals, whether it’s choosing the main course or adding a special dessert. This helps people create the perfect night-in with items hand-picked for the people they love most.  

Cons of going niche:

  • Limited Market Size: Niche markets are, by definition, smaller. This limitation can cap the potential growth of your business.
  • Risk of Market Changes: If the niche market trends change or the audience’s preferences evolve, your business could be at risk.
  • Higher Sensitivity to Customer Needs: Specialized audiences often have specific and high expectations, requiring constant innovation and adaptation.

#2. Embracing a Broad Market

Many of the major heat-and-eat meal subscription businesses have opted to go broad—and with good cause. The industry continues to grow, with more and more people opting for the convenience, taste, and countless other benefits that come with a subscription.  
 
Pros of going broad:

  • Larger Potential Customer Base: Targeting a broader audience naturally opens up a larger market, potentially leading to higher sales volumes.
  • Flexibility in Offering: A broad approach allows for a diverse range of products, catering to various tastes and dietary needs.
  • Reduced Market Risk: Diversification in your customer base can provide a buffer against market fluctuations and changing trends.
  • Opportunity for Wider Brand Recognition: A broader approach can enhance brand recognition and appeal to a wider audience.

Cons of going broad:

  • Increased Competition: A broader market means more competitors, making it challenging to stand out.
  • Marketing Challenges: Crafting a marketing message that resonates with a diverse audience can be challenging and less efficient.
  • Complex Operations: Managing a diverse menu to cater to a broad audience can complicate logistics, sourcing, and inventory management.
  • Risk of Diluted Brand Identity: Trying to be everything to everyone can sometimes lead to diluted brand identity, making it harder for customers to understand what you stand for.

Takeaway

Targeting a niche audience or a broad market is a pivotal decision for any heat-and-eat subscription service. Focusing on a niche allows for specialization and a dedicated customer base but comes with the risk of a limited market size and higher sensitivity to market changes. On the other hand, going broad opens up a larger potential market and provides flexibility, but it also brings increased competition and operational complexities.

The right choice depends on your business goals, resources, and market understanding. It’s crucial to conduct thorough market research and understand your strengths and limitations before making this strategic decision. Remember, the success of your heat-and-eat subscription service hinges not just on who you serve but on how well you understand and meet their needs.
 


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