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Running head: MARKET ANALYSIS 1 Market Analysis Section: Nestlé Gluten-Free Cookie Dough Whitney Chadwick, Chris Holle, Erin Howard, & Brittanie Turner California State University, Monterey Bay BUS 306-81

Running&head:&MARKET&ANALYSIS& & 1& - · PDF fileThis marketing plan focuses specifically on the gluten- ... annual sales by 2015. Furthermore, the household purchases of gluten-free

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Running  head:  MARKET  ANALYSIS     1    

Market Analysis Section:

Nestlé Gluten-Free Cookie Dough

Whitney Chadwick, Chris Holle,

Erin Howard, & Brittanie Turner

California State University, Monterey Bay

BUS 306-81

MARKET  ANALYSIS     2    

Table of Contents

SITUATION ANALYSIS 3

MARKET SUMMARY 4

Geographics 4

Demographics 4

Psychographics and Behavioral Factors 5

Market Needs 5

Market Trends 5

Market Growth 6

SWOT ANALYSIS 6

Strengths 6

Weaknesses 7

Opportunities 7

Threats 8

COMPETITION 8

PRODUCT OFFERING 11

Ingredients and Nutritional Factors 11

Different Packaging Types 12

Customer Satisfaction Guarantee 12

KEYS TO SUCCESS 13

Growing Population with Gluten-Intolerance 13

Increasing Level of Health Awareness 13

CRITICAL ISSUES 14

REFERENCES 15

MARKET  ANALYSIS     3    

SITUATION ANALYSIS

In a growing health food trend, the gluten-free movement has been gaining traction. With

the knowledge of celiac disease and many other gluten intolerances, many consumers have an

increasing need and desire for gluten-free products. According to a survey, nearly 18 percent of

Americans prefer gluten-free products (Amidor, 2014). This is a vast market that is virtually

untapped. The plan is for Nestlé to make a gluten-free cookie dough. The current problem with

most gluten-free products is they sacrifice taste to provide a product that many people can eat.

Nestlé can provide the same great quality taste they have always offered, while also providing a

product that offers health benefits to many Americans. Another advantage is that the price will

stay relatively the same as the current Nestlé Tollhouse Products.

On a global scale, Nestlé scored 54th in brand recognition (Ranking The Brands).

Competitors like Pillsbury and Betty Crocker did not even place in the top 100. Nestlé has the

tools to not only infiltrate the gluten-free snack market and have success, but also the ability to

enter the market and dominate it. Nestlé has been known to provide great tasting snacks and

always aims to improve the healthiness of its products. According to the Smart Cookie Dough

Cook, a website that reviews various cookie dough brands, Nestlé’s Tollhouse cookie dough

were not only better tasting than Pillsbury’s cookie dough, but also had better texture. On top of

that, Nestlé has the resources to make these cookie dough happen. According to Nestlé’s official

webpage, it owns 4 corporate locations, 32 manufacturing locations, and 5 distribution centers.

This is sufficient to use existing machinery to produce gluten-free cookie dough. In order to do

so, Nestlé must clean and retool the machinery to make them safe to produce products.

Currently, local companies are the main source of competition. However, there are also

several major brands that are already in the existing market. These brands include Pillsbury and

Betty Crocker, which offer gluten-free cookie dough that is sold in stores.

The product Nestlé would be offering is pre-packaged, gluten-free cookie dough. The current

price of its regular Tollhouse products is approximately five dollars. The goal with the new

gluten-free dough (16.5 oz.) would be to keep it at a consistent price with the regular Tollhouse

products. Nestlé holds vast resources and numerous market connections. Nestlé products are

featured in nearly every chain supermarket in the U.S. This allows them to infiltrate a new

market fairly easily. According to CBS News, Nestlé already holds a 41% market share of the

MARKET  ANALYSIS     4    

prepared cookie dough market. The main distribution channel for the Nestlé gluten-free

Tollhouse cookie dough will be through large chain stores, including: Safeway, Target, Wal-

Mart, Albertsons, Kroger, and many more. This in itself creates a big opportunity for Nestlé. The

gluten-free market is vastly untouched by large corporations, and under the right management

and utilizing the right resources, Nestlé has the ability to make it happen. These attributes can be

used to transition to a gluten-free cookie dough line easier. For sales promotions, it would be

easy for Nestlé to market its gluten-free cookie dough as a healthy choice for everyone, not just

for people with celiac disease.

MARKET SUMMARY

Geographics

For the purpose of the project, the geographic focus will be the United States of America

as a whole. There will be a good testing grounds to see how the product does. If it does well, the

product could expand into Canada and then move into Europe. According to the European Food

Information Council (EUFIC), celiac disease is on the rise. This would be a great investment into

the future as the more people that have celiac disease, the more awareness there will be.

According to Statista (2009), the gluten-free market was worth $2.3 billion globally. This is a

great financial opportunity.

Demographics

As for the demographics, the main focus is on people with celiac disease or other gluten

intolerances, and targeting families. Targeting people with celiac disease (and other gluten

intolerances) is an obvious choice, since this product will allow them to have a healthy and

delicious snack. The second option is seeking a healthier alternative to families. According to

Celiac Central (n.d.), “it is estimated that 83% of Americans who have celiac disease are

undiagnosed or misdiagnosed with other conditions.” An interesting point is that many people

living with Celiac disease either do not know they have it, or they are misdiagnosed. Providing

gluten-free cookie dough will allow families to play it safe and provide a delicious cookie dough

that is healthier than a traditional cookie dough.

MARKET  ANALYSIS     5    

Psychographics and Behavioral Factors

A large portion of the target market is people who are gluten conscious. This consists of

people who have celiac disease, other gluten intolerances, people on gluten-free diets, or families

trying to eat healthier.

Market Needs

Within the food industry, there is a constant struggle between health, flavor, and cost. It

is difficult to create product that fulfills all three criterion; this is especially true for gluten-free

cookie dough. In the current market, there are limited options for gluten-free cookie dough. The

options that are currently available generally consist of local companies with products more

expensive than their mass-produced counterparts. According to the Statistics Portal’s survey

(2012) conducted in 2012, “U.S. Gluten-Free Target Market,“ concluded that nearly 18 percent

of the population in the U.S. prefers and buys gluten-free products. However, there is a huge

need for affordable, healthy, mass-produced gluten-free cookie dough.

Market Trends

As the health trends throughout America continue to grow, the average consumer is

becoming more health conscious and more aware of how their bodies react to the foods they eat.

For example, five years ago, a consumer may not have known that they had Celiac Disease or

had gluten sensitivity. Now, over 3 million Americans have been diagnosed with Celiac Disease

and 18 million suffer from gluten sensitivity (National Foundation for Celiac Awareness: Celiac

Disease: Fast Facts, 2014 & National Foundation for Celiac Awareness: Non-Celiac Gluten

Sensitivity, 2014). Of the 68 persons surveyed, nearly 50 percent responded that they or someone

they know has celiac disease or any other gluten-intolerance (Survey Monkey, 2014). Though

the demand for healthier, and more specifically, gluten-free products increases, the supply has

yet to meet the needs of the consumers. This marketing plan focuses specifically on the gluten-

free cookie dough market, as there are very few affordable, healthy, mass-produced gluten-free

cookie dough options within the market today.

MARKET  ANALYSIS     6    

Market Growth

In the 2000s, terms such as “celiac disease” and “gluten-free” were unfamiliar to those

even in the culinary industry. Today, with an estimated 1 in 133 Americans having celiac

disease, the appearance of allergen-related claims such as “gluten-free” on restaurant menus has

increased by 200 percent (Amidor, 2014). According to market research by Mintel, a market

research firm, the gluten-free food category is expected to generate more than $15 billion in

annual sales by 2015. Furthermore, the household purchases of gluten-free products more than

doubled from 5 percent in 2010 to 11 percent in 2013 (Amidor, 2014).

SWOT ANALYSIS

Strengths

Unmatched Product Offerings and Brand Portfolio

Nestlé upholds supreme brand portfolio and manufacturing capabilities than many

competing firms. The company placed within the top three global food and beverage

manufacturers in the Access to Nutrition Index, March 2013. Nestlé recognizes offering diversity

within their brand portfolio allows them to serve a broad range of demographics. (Nestlé

Global, 2014.)

R&D Capabilities

Nestlé devotes extensive funds - averaging $1.5 million - toward research and

development annually. The company continuously brings to market new and redesigned products

corresponding to market trends, ensuring the firm’s competitive edge. (Nestlé Global, 2014.)

Distribution Potential

Nestlé maintains widespread distribution channels and geographic presence, which

supports its operation globally. Currently, the company operates 14 product categories,

manufacturing more than 2,000 brands worldwide. Moreover, the company operates in 86

countries with employee strength of more than 330,000. (Nestlé Global, 2014.)

MARKET  ANALYSIS     7    

Expansion Aptitude

Over the years Nestlé has been successfully generating increased joint ventures and

acquiring other businesses in order to continue growth over market shares (Nestlé Global, 2014).

The company’s brand is recognized globally with highly regarded customer loyalty (About Us

Nestlé Global, n.d.). APCO Worldwide ranked Nestlé number five in the global survey regarding

The 100 Most Loved Companies (Nestlé’s Brand Ranking, 2014).

Weaknesses

Inconstant Quality

Nestlé has been recalling several goods from the market due to food contamination,

package mislabeling, and/or inability to provide constant quality within supplies (Nestlé Global,

2014). Most recent recall occurred June 2014, regarding unidentified allergy prone ingredients

within Häagen-Dazs® Chocolate Chip Ice Cream (Recalls, Market Withdrawals, & Safety

Alerts, 2014). This does not only decrease the company’s sales but lessens their consumer trust

when presenting new allergen free products, such as gluten-free cookie dough.

Opportunities

Increasing Demand for Healthier Products

Food allergies and health benefits are a rising consumer purchasing concern. As a result

increased demand of customized products meeting distinct dietary requirements are occurring.

Particularly, the market for gluten-free products has begun to skyrocket. Calculated from U.S.

retail sales statistics, by the year 2020 the gluten-free market is estimated to be valued at $23.9

billion. Nestlé now has the opportunity to introduce a gluten-free health-based snack product,

and expand possible consumer demographic. (U.S. Gluten-free Foods Market - Statistic &

Facts|Statista, n.d.)

Acquire Health Based Startups

Several new businesses are generating and introducing products for health conscious

consumer, as well as developing sustainable manufacturing methods. Nestlé is currently

concentrating on providing healthier products with added nutritional value, and acquisitions such

as these are great opportunity to expand the company’s brand portfolio. (Nestlé Global, 2014.)

MARKET  ANALYSIS     8    

Threats

Company Reputation

Due to Nestlé’s continual recalls because of mislabeling and food contamination the

company’s manufacturing reputation has decreased (Nestlé Global, 2014). It is the company’s

responsibility to regulate quality checks to prevent consumer dissatisfaction. Repeated

contamination will lower the company’s ability to successfully enter the allergen free market.

Failure to expand with current market trends will result in losses (Nestlé Global, 2014).

Cost of Raw Materials

The global increase in the cost of raw material is cutting into corporate profits, declining

stocks, and resulting in increased consumer prices (Gandel, 2011). As a result Nestlé’s cost of

production has increased (Nestlé Global, 2014). For example, dairy – key ingredient in chocolate

products – costs have increased by more than 25% this year (Sheets, 2014).

Growth of Private Labels

The expanding number of supermarkets who are generating their own label products that

cost less will increase competition for Nestlé’s product portfolio (Nestlé Global, 2014).

COMPETITION

Within the niche market of gluten-free prepackaged cookie dough products a few

competitors are notable. One of the competing firms, Pillsbury, makes gluten-free chocolate chip

cookie dough, and Betty Crocker also produces a few gluten-free cookie dough dry mixes. Both

organizations are owned by General Mills, but operate independently. Nonetheless, in the

general gluten-free snack market competition would include several gluten-free items: cereals,

pre-baked cookie dough, health bars, and chips etc. Some major competitors in the gluten-free

snack market are companies like Kellogg and Pamela’s Products.

Pillsbury has been providing families’ mealtime specials for nearly 150 years, whether

it’s breakfast, lunch, dinner or dessert (General Mills: Pillsbury). Pillsbury has their brand

recognition in place. The company primarily targets family homes, and distributes products

MARKET  ANALYSIS     9    

throughout major retailers, such as Safeway or Target (General Mills: Pillsbury). The company

launched their first gluten-free products line on August 6, 2013 (Food Business). These products

contain items such as pizza dough, pie and pastry dough, and most importantly, cookie dough

(Food Business). Pillsbury, which is owned by General Mills, has a head start in a market that is

currently dominated by local bakeries.

Betty Crocker has been accepted as a part of families’ food traditions for more than 90

years, providing packaged goods as well as wonderful recipes. Recently, the company had first

hand experience with employees whom could not partake in the company’s products due to

gluten intolerance. The experience drove them to develop great tasting gluten-free items

everyone could enjoy. The company began marketing towards the idea nothing should affect

sweet moments with friends and family. Targeting the modern family home, the company

MARKET  ANALYSIS     10    

distributes their product through several major retailers. (Our Story - Betty Crocker, n.d.)

.

Kellogg is a company of devoted individuals producing quality products for a healthier

world. The company has innovative marketing strategies, governance structures, and corporate

policies that help to implement their social and corporate responsibilities into everyday

operations. Currently, Kellogg’s is capitalizing on the gluten-free cereal market by reformulating

or relabeling in some cases their existing brands. The idea behind this movement is to offer

families healthier options to start their busy mornings. Kellogg’s is taking gluten-free rice/corn

based products and turning them mainstream through distribution in major retail chains. (Cereal:

The Complete Story, n.d.).

Pamela’s Products is primarily an online gluten-free product line with baking mixes,

cookie dough, crackers, chips and snack bars. The company, established in 1988, focuses on

MARKET  ANALYSIS     11    

providing consumers affordable natural and gluten-free options, made from top-quality

ingredients. Pamela’s Products currently remains a top leader within the gluten-free snack

industry, marketing to the preferred gluten-free and natural food consumer. With ongoing

research and development, Pamela’s Products continues to grow and embrace the many

upcoming opportunities this industry is predicted to offer. The company is determined to remain

the top provider of gluten-free snacks. (Pamela's Products: About Us, n.d.).

PRODUCT OFFERING

Ingredients and Nutritional Factors

The Nestlé corporation will offer this product with the currently used ingredients. The

current ingredients include: bleached enriched flour, semi-sweet chocolate, sugar, margarine,

sodium benzoate (preservative), flavor and artificial flavor, citric acid, vitamin A, palmitate,

color, liquid whole eggs, cooking molasses, corn syrup, sodium bicarbonate, flavor, and salt

(Nestlé Professional, 2013). However, the current bleached enriched flour will be replaced by

gluten-free flour substitute. The options for the gluten-free flour substitute include: quinoa flour,

teff flour, and almond flour.

Quinoa flour is a nutritious grain that contains protein, calcium, and iron. The other option, teff

flour, is a gluten-free whole grain. It offers protein, calcium, and iron nutritional factors. Lastly,

almond flour is a low-carb alternative. It offers calcium, iron, and protein as well. All three of

these options are capable of replacing the bleached enriched flour completely (Nuts.com, 2014).

MARKET  ANALYSIS     12    

Price and taste are two factors that must be considered when choosing the gluten-free

flour substitute. Quinoa is the highest priced at $9.99 per pound (Nuts.com: Organic Quinoa

Flour, 2014). It can also hold a bitter taste. Teff flour is the cheapest price offered at $4.99 per

pound. Teff flour has a mild, nutty flavor (Nuts.com: Teff Flour, 2014). Almond flour is

moderately priced at $8.99 per pound. Almond flour is considered to be flavorful with its nutty

taste. Furthermore, it contributes to a light and moist product while baking (Nuts.com: Almond

Flour, 2014). However, the only drawback of almond flour is the need to consider nut allergies.

Of all the flours listed, teff flour would be the most ideal option. Not only is Teff the

cheapest, but it provides the health benefits that Nestlé is striving for. By providing protein,

calcium, and iron, Nestlé is adding more nutritional value than their traditional bleached enriched

flour, which ensures a healthier product to their consumers and keeps the goal of providing a

gluten-free cookie dough product.

Different Packaging Types

Nestlé offers its cookie dough products in a variety of packaging. This variation of

packaging will be transferred to the gluten-free cookie dough product line. There are four types

of packaging: refrigerated cookie bar dough, refrigerated cookie dough in a tube, refrigerated

mini cookie bar dough, and refrigerated cookie dough tub (Nestlé Toll House: Products, n.d.).

The first packaging type is the Nestlé Toll House refrigerated cookie bar dough. This

packaging offers a rectangular sheet of cookie dough that makes 24 cookie dough from pre-cut

bars (Nestlé Toll House: Products, n.d.). The second packaging type offers the product inside a

long, cylinder tube. It makes approximately 16 cookie dough (Nestlé Toll House: Products, n.d.).

The third type of packaging is essentially the same as the first type; however, the dough is cut

into mini bars, which makes smaller cookie dough. This package will make 40 mini cookie

dough (Nestlé Toll House: Products, n.d.). The last packaging type is in a tub. The tub allows the

consumer to scope out the desired amount and size of the cookie dough they wish to bake (Nestlé

Toll House: Products, n.d.).

Customer Satisfaction Guarantee

Nestlé can implement a customer satisfaction guarantee on the new gluten-free cookie

dough product line to further the line’s success. According to U.S. Legal Definitions (2014), a

MARKET  ANALYSIS     13    

customer satisfaction guarantee gives “the buyer…the sole discretion to decide whether or not

the goods or services tendered by the seller are acceptable.” By offering a guarantee on its

product, Nestlé is keeping attune to its consumer’s demands. It can also raise the quality of the

product. Quality is defined as the “characteristics of a product or service that bear on its ability to

satisfy stated or implied customer needs” (Kotler, Armstrong, 2014, pg. 231). This can help

create customer loyalty and adjust the gluten-free cookie dough products accordingly.

KEYS TO SUCCESS

Growing Population with Gluten-Intolerance

The growing population with gluten-intolerances is a major component for Nestlé’s

gluten-free cookie dough’s success in the market place. As previously mentioned, 3 million

people are diagnosed with celiac disease and over 18 million people suffer from a gluten-

intolerance (Celiac Disease: Fast Facts, 2014, Non-Celiac Gluten Sensitivity, 2014).

Additionally, according to Partnership Capital Growth (2010), “one in three (34%) people have a

household member with celiac disease or wheat intolerance.” These populations make up a

significant portion of the United States that will become a critical target market for Nestlé’s

gluten-free cookie dough products.

For this to be successful, the growth of the population with gluten-intolerance must

continue to rise. A statistic from National Foundation for Celiac Awareness estimates that “83%

of Americans who have celiac disease are undiagnosed or misdiagnosed with other conditions.”

This large percentage of undiagnosed or misdiagnosed Americans with celiac disease determines

a continual growth of the gluten-intolerance population. Thus, the future growth is a key to

success for the gluten-free cookie dough product offered by Nestlé.

Increasing Level of Health Awareness

The current nationwide growth of health awareness is a major factor to this product’s

success. Moreover, people are becoming more aware of the health benefits a gluten-free diet can

bring. An article written by Simmons (2013) indicates that “sixty-four percent of consumers

today—up from 57 percent in 2010—agree that it is important to eat healthy and pay attention to

nutrition.” The rise of health conscious Americans entails a greater market demand for healthier

MARKET  ANALYSIS     14    

food options. According to an article written by Kannall (n.d.), changing to a gluten-free diet

contributes a positive effect on digestion, inflammation, neurological, and energy levels within

the human body. This article signifies that a gluten-free diet has additional health benefits. In

order for Nestlé’s gluten-free cookie dough product to reach optimal success, the rise of health

awareness within the United States must continue.

CRITICAL ISSUES

Higher Price for Raw Ingredients of Gluten-Free Products

A critical issue that can be detrimental to the success of Nestlé’s gluten-free cookie

dough products is the high price of raw ingredients. The price of all-purpose flour is significantly

cheaper than its gluten-free alternatives. As previously stated, the gluten-free alternative price

range is approximately $5 to $10 per pound (Nuts.com, 2014). However, typical all-purpose

flour costs approximately 50 cents per pound (Walmart.com, 2014). This will increase the cost of

production; thus, increasing the sell price of the gluten-free cookie dough product to consumers.

According to a CBS news article (2014), a consumer went from spending $90 a week to

spending at least $130 per week on groceries, after being diagnosed with celiac disease.

Furthermore, it is estimated that it is twice as expensive to purchase gluten-free groceries (CBS,

2014). The cost to produce and the market price of gluten-free products can have a negative

effect on Nestlé’s market success.

MARKET  ANALYSIS     15    

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