how the cookie crumbles: the case of gluten-free cookies
TRANSCRIPT
![Page 1: How the Cookie Crumbles: The Case of Gluten-free Cookies](https://reader036.vdocuments.us/reader036/viewer/2022062409/56649efb5503460f94c0e7d4/html5/thumbnails/1.jpg)
How the Cookie Crumbles:
The Case of Gluten-free Cookies
![Page 2: How the Cookie Crumbles: The Case of Gluten-free Cookies](https://reader036.vdocuments.us/reader036/viewer/2022062409/56649efb5503460f94c0e7d4/html5/thumbnails/2.jpg)
The Back Story
• Angela Ichwan and her husband Hermanto Hidajat are founders of Arico Natural Foods Company.
• With $500,000 from 14 angel investors, Arico started production in March 2005. Arico set out to produce products that are safe and tasty alternatives for individuals who have a restricted diet.
![Page 3: How the Cookie Crumbles: The Case of Gluten-free Cookies](https://reader036.vdocuments.us/reader036/viewer/2022062409/56649efb5503460f94c0e7d4/html5/thumbnails/3.jpg)
The Question
• How do we best market our products to meet the specific needs of our traditional customers (persons with celiac disease and families with autistic children) and reach new non-traditional customers?
![Page 4: How the Cookie Crumbles: The Case of Gluten-free Cookies](https://reader036.vdocuments.us/reader036/viewer/2022062409/56649efb5503460f94c0e7d4/html5/thumbnails/4.jpg)
The Darling of Natural Products
Gluten-Free Products• have no (or very little) gluten, a protein in
wheat and closely related grains.• are the fastest growing segment of the
natural products channel.• increased in sales to $921 million in 2008,
a 16% increase.
![Page 5: How the Cookie Crumbles: The Case of Gluten-free Cookies](https://reader036.vdocuments.us/reader036/viewer/2022062409/56649efb5503460f94c0e7d4/html5/thumbnails/5.jpg)
The Cookie Market
• The market has been in decline since 2001.• However, the “Good-For-You” segment of the
cookie market is growing.• Low-fat cookies increased by 17.7%.• Gluten-free cookies increased by 30.2%.
• Premium cookies are also on the rise.
![Page 6: How the Cookie Crumbles: The Case of Gluten-free Cookies](https://reader036.vdocuments.us/reader036/viewer/2022062409/56649efb5503460f94c0e7d4/html5/thumbnails/6.jpg)
The Crumble
• Gluten-free cookies are hard to make well.• Gluten-free cookies do not crumble in the
mouth as gluten-containing cookies do.• Removing gluten requires finding other
flours from beans, rice and the “ancient grains” like amaranth, millet, quinoa, sorghum and teff which do not have gluten.
![Page 7: How the Cookie Crumbles: The Case of Gluten-free Cookies](https://reader036.vdocuments.us/reader036/viewer/2022062409/56649efb5503460f94c0e7d4/html5/thumbnails/7.jpg)
The Three Consumers
• The Celiac Disease Consumer• The Self- Diagnosed Consumer• The Autistic Consumer
![Page 8: How the Cookie Crumbles: The Case of Gluten-free Cookies](https://reader036.vdocuments.us/reader036/viewer/2022062409/56649efb5503460f94c0e7d4/html5/thumbnails/8.jpg)
The Model
• What attributes encourage consumers to select the Arico cookie bar over other products?
• In the fall of 2007 and spring of 2008, we conducted a marketing experiment based on a random utility model.
![Page 9: How the Cookie Crumbles: The Case of Gluten-free Cookies](https://reader036.vdocuments.us/reader036/viewer/2022062409/56649efb5503460f94c0e7d4/html5/thumbnails/9.jpg)
The Model
• The probability of the particular ranking is
=
• The population shares the same utility, we can parameterize the model as
![Page 10: How the Cookie Crumbles: The Case of Gluten-free Cookies](https://reader036.vdocuments.us/reader036/viewer/2022062409/56649efb5503460f94c0e7d4/html5/thumbnails/10.jpg)
The Model
• where is the utility of choice j, is a set for product attributes, is a set of unknown parameters, and is the random error.
• The probability of a particular ranking is written as…
+
![Page 11: How the Cookie Crumbles: The Case of Gluten-free Cookies](https://reader036.vdocuments.us/reader036/viewer/2022062409/56649efb5503460f94c0e7d4/html5/thumbnails/11.jpg)
The Model
• where represents the set of attributes of the alternative ranked . This model presentation draws heavily from Calfee, Winston and Stempski (2001).
Pr [𝑈 (𝑟1 )>𝑈 (𝑟 2 )>⋯𝑈 (𝑟 𝑗 ) ]=∏h=1
𝐽 −1 exp 𝛽 ′ 𝑥 (𝑟h )
∑𝑚=h
𝐽
exp 𝛽 ′ 𝑥 (𝑟𝑚 )
![Page 12: How the Cookie Crumbles: The Case of Gluten-free Cookies](https://reader036.vdocuments.us/reader036/viewer/2022062409/56649efb5503460f94c0e7d4/html5/thumbnails/12.jpg)
The Model
• We asked the participants to rank the nine products from most favorite (1) to least favorite (9).
• The products were different types of chocolate chip cookies with one outside product, an apple.
![Page 13: How the Cookie Crumbles: The Case of Gluten-free Cookies](https://reader036.vdocuments.us/reader036/viewer/2022062409/56649efb5503460f94c0e7d4/html5/thumbnails/13.jpg)
The Model
• We ran the experiment at Krogers, Day Spring: The Natural Shoppe, and Auburn University campus,
• We had four treatments: no additional information, information on gluten-free diets, a taste test of the Arico cookie bar, and both additional information and a taste test.
![Page 14: How the Cookie Crumbles: The Case of Gluten-free Cookies](https://reader036.vdocuments.us/reader036/viewer/2022062409/56649efb5503460f94c0e7d4/html5/thumbnails/14.jpg)
The Model
• Each participant had a coupon sheet of the products, which highlighted attributes of the products.
• We also provided posters of the nutritional labels of each product.
• We used an incentive compatibility mechanism ascertain true(r) preferences.
![Page 15: How the Cookie Crumbles: The Case of Gluten-free Cookies](https://reader036.vdocuments.us/reader036/viewer/2022062409/56649efb5503460f94c0e7d4/html5/thumbnails/15.jpg)
The ModelIndependent Variables Model 1 Model 2 Model 3
Base Model Store EffectStore and All Information
Price -0.17***(0.032)
-0.16***(0.036)
-0.16***(0.033)
Fat -0.021*(0.011)
-0.015(0.013)
-0.022*(0.012)
Gluten-Free 0.23***(0.088)
0.16(0.10)
0.18**(0.093)
Organic -0.20*(0.10)
-0.39***(0.12)
-0.30***(0.11)
Partially Hydrogenated Oils -0.39***(0.11)
-0.32***(-0.12)
-0.35***(0.11)
Effect*Price -0.054(0.077)
-0.12(0.11)
Effect*Fat -0.018(0.028)
0.031(0.039)
Effect*Gluten-Free 0.41*(0.22)
0.77**(0.31)
Effect*Organic 0.90***(0.25)
1.13***(0.36)
Effect*Partially Hydrogenated Oils -0.28(0.26)
-0.40(0.39)
![Page 16: How the Cookie Crumbles: The Case of Gluten-free Cookies](https://reader036.vdocuments.us/reader036/viewer/2022062409/56649efb5503460f94c0e7d4/html5/thumbnails/16.jpg)
The ModelIndependent Variables Model 1 Model 2 Model 3
Base Model Store EffectStore and All Information
Price -0.17***(0.032)
-0.16***(0.036)
-0.16***(0.033)
Fat -0.021*(0.011)
-0.015(0.013)
-0.022*(0.012)
Gluten-Free 0.23***(0.088)
0.16(0.10)
0.18**(0.093)
Organic -0.20*(0.10)
-0.39***(0.12)
-0.30***(0.11)
Partially Hydrogenated Oils -0.39***(0.11)
-0.32***(-0.12)
-0.35***(0.11)
Effect*Price -0.054(0.077)
-0.12(0.11)
Effect*Fat -0.018(0.028)
0.031(0.039)
Effect*Gluten-Free 0.41*(0.22)
0.77**(0.31)
Effect*Organic 0.90***(0.25)
1.13***(0.36)
Effect*Partially Hydrogenated Oils -0.28(0.26)
-0.40(0.39)
![Page 17: How the Cookie Crumbles: The Case of Gluten-free Cookies](https://reader036.vdocuments.us/reader036/viewer/2022062409/56649efb5503460f94c0e7d4/html5/thumbnails/17.jpg)
The ModelIndependent Variables Model 1 Model 2 Model 3
Base Model Store EffectStore and All Information
Price -0.17***(0.032)
-0.16***(0.036)
-0.16***(0.033)
Fat -0.021*(0.011)
-0.015(0.013)
-0.022*(0.012)
Gluten-Free 0.23***(0.088)
0.16(0.10)
0.18**(0.093)
Organic -0.20*(0.10)
-0.39***(0.12)
-0.30***(0.11)
Partially Hydrogenated Oils -0.39***(0.11)
-0.32***(-0.12)
-0.35***(0.11)
Effect*Price -0.054(0.077)
-0.12(0.11)
Effect*Fat -0.018(0.028)
0.031(0.039)
Effect*Gluten-Free 0.41*(0.22)
0.77**(0.31)
Effect*Organic 0.90***(0.25)
1.13***(0.36)
Effect*Partially Hydrogenated Oils -0.28(0.26)
-0.40(0.39)
![Page 18: How the Cookie Crumbles: The Case of Gluten-free Cookies](https://reader036.vdocuments.us/reader036/viewer/2022062409/56649efb5503460f94c0e7d4/html5/thumbnails/18.jpg)
The Probability of First Rank
Product BaseDay Spring
EffectDay Spring and All Information Effect
Kroger and All Information Effect
Apple 15.33% 13.82% 9.67% 15.01%
Arico Chocolate Chip 11.85% 20.77% 24.37% 12.77%
Chips Ahoy Chocolate Chip
11.47% 6.09% 4.42% 10.21%
Chips Ahoy Chocolate Chip Reduced Fat
10.29% 5.48% 3.12% 9.42%
Kroger’s Brand Chocolate Chip
6.40% 2.97% 1.58% 6.11%
Lärabar Chocolate 9.46% 14.68% 24.43% 10.07%Newman’s Own Chocolate Chip
13.09% 17.39% 17.74% 13.83%
Odwalla Bar Chocolate Chip and Peanuts
8.69% 10.46% 8.78% 9.62%
Pepperidge Farm Chocolate Chip
13.43% 8.35% 5.88% 12.95%
![Page 19: How the Cookie Crumbles: The Case of Gluten-free Cookies](https://reader036.vdocuments.us/reader036/viewer/2022062409/56649efb5503460f94c0e7d4/html5/thumbnails/19.jpg)
The Case Questions
• What does the ranking exercise tell us about the interest in Arico cookies and the attributes customers want when considering snack foods.
• What are the challenges of this choice experiment?
![Page 20: How the Cookie Crumbles: The Case of Gluten-free Cookies](https://reader036.vdocuments.us/reader036/viewer/2022062409/56649efb5503460f94c0e7d4/html5/thumbnails/20.jpg)
The Case Questions
• Which customers should Arico pursue?• If these consumers are not the traditional
consumers how do you meet the diverging needs of these diverse consumers?