Akanni had started to produce gluten-free food at home because some of his family had gluten intolerance. Through word of mouth, a number of people started requesting regular orders of Akanni’s products. Akanni decided he would need to move into a small factory to help him increase capacity. His potential customers would buy his products only if they knew they were gluten-free. Consequently Akanni applied to the owner of the ‘gluten-free’ trademark and was granted a licence to use this trademark, in return for a payment of
£2000 per annum.

Akanni enjoyed creating new types of gluten-free food but the contract stated that the health food retailer would have the final decision on which products Akanni should make, as it felt it had a better understanding of the factors that influenced demand in this market.
Akanni then considered Option B. He liked the idea of being independent and making his own decisions. He believed that he could achieve a higher total contribution through
Option B, because he could charge higher prices by selling directly to the consumers of his products, rather than via a retailer. However, his only information on this market niche came from some secondary market research conducted in the USA in 2010.
Akanni decided to use stratified sampling to get consumer opinions. He had sufficient savings to purchase a database of 4000 people in the UK with gluten allergies and intolerance. He used this database to conduct some primary market research of people who fitted into his target age groups and who lived within a 100 mile radius of his house.
The replies showed him that people who were interested in gluten-free products:

Total contribution means the sales incomes.
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This leads to communication