Thursday, August 12, 2010

A Tribute to Consumer Choice. Boardwalk ice cream's 56 flavors

Its summer time and I miss my BCom and MBA students. So tonight, I’m going to start off with a multiple choice question. Here goes:

According to a recent poll, which of the following is the more preferred way Canadians like to cool off on a hot summer day?
a) A dip in a pool or lake
b) Hanging out in an air conditioned mall
c) Having an ice cream

If you answered “c”, you got yourself an “A”. So on this hot summer’s night, I’m going to make a content-light entry on the ice cream cone business – in particular, consumer choice at ice cream scoop shops.

Earlier tonight, I visited The Boardwalk on Clear Lake ice cream scoop shop in Riding Mountain National Park. This independently owned scoop shop is located on lake front property of a touristic town of Wasagaming, Manitoba. The location is indeed picturesque but the offering is a tribute to consumer choice. This scoop shop offers 56 different hard ice cream flavors on top of a bunch of soft ice cream flavors and dips and gelatos. (I always liked Baskin Robbins "31 flavor" offering and its marketing of the offering which is cleverly
infused in the brand's logo.) But to put the Boardwalk's 56 flavors in perspective, let's do some stats. With 56 flavors, there are 3080 unique combinations of regular double scoop cones that can be ordered before having to repeat an order. In other words, you could eat different 2 flavor-scoop-ice-cream-cones every day for 34 years of summer before ever having to eat the same combination of scoops again. Of course, you still wouldn’t have touched the gelato or the soft ice cream flavors (and their many dips). That's a lot of choice.

But this raises an interesting marketing question. Why are there so many flavors of ice cream available at scoop shops? You would be hard-pressed to find another category that has such a plethora of flavors (save for chocolate bar confectionary). But, ice cream distribution is far more complex than distribution for any packaged good. For one, ice cream has to remain within a narrow temperature band for its entire distribution - from manufacturer to transit- to scoop shop. In addition, this distribution has to be done on some of the hottest, humid days of the year. And there are still more complexities. Due to the nature of the frozen good, regional production is required which makes huge scale more challenging. (By contrast, all LifeSavers sold around North America are manufacturer in one Montreal location.) Furthermore, the ice cream business is heavily consolidated by a few large international brands (Nestle, Unilever, Breyers, for example) so we can rule out multiple flavors coming from a bunch of competing brands.

So why are there so many flavors?

A good starting point is to look at the unique set of purchase dynamics at scoop shops. First, almost all scoop purchases are social. Visit a scoop shop and you’ll see couples on dates, young families out for a treat, seniors enjoying an indulgence etc. In other words, the purchases are made by groups, emotional (hedonic in marketing jargon), pleasure-filled, and perhaps even romantic. The more flavors then, reduces the risk of having a bad date for the boy trying to woo a girl, or for Aunt Edna trying to “wow” her nephews. Add on to that the fact that scoop shops are a destination location which means that consumer want selection. (Think of going to a donut store and finding only 2 types of donuts). Furthermore, the consumers of the scoop cones straddle a very broad and diverse market who have widely varying taste preferences. (According to the Boardwalk management, “Tiger Tiger” and “Bubblegum” are among the most preferred flavours for kids, Maple Walnut for seniors, for example.) Finally, since the scoop shop purchases are heavily consumed only in summer months, there is value for the consumer in variety. For example, if a consumer visits the scoop shop 7 times over a month, he will derive extra pleasure in changing up his/her order from time to time. Plus, she will like to take a bite out of her ice-cream partner’s other-flavored cone too. In sum, scoop shops have a unique purchase dynamic that lead to many varieties being offered in spite of distribution challenges.

Of course, the demand side can only be realized if the “supply side” is feasible as well. Here too, ice cream manufacturing seems to lend itself well to flavour diversity. The same production process that works for vanilla ice cream manufacturing seems to work for other flavour production as well(save for some recipe alterations). And, unlike chocolate bars manufacturing which all has different shapes, weights, and unique packaging requirements, ice cream manufacturing for scoop shops can be done in uniform packaging and sizes. In short, the marginal cost of new varieties is essentially the ingredients and stopping the production line to change recipes.

This takes us to brand. When perusing flavors of ice cream, you'll probably notice brand-centric ice creams like: Smarties, Aero, Caramilk, Coffee Crisp, and Rolo (see "The Kids Did What"). Well developed confectionery brands are relevant and easy-to-extend to ice cream flavors. If a chocolate bar is a treat, then even better is a "chocolate bar ice cream" to cool you down on a hot summer's day. The point is this, easy-to-extend chocolate brands help to crank up the variety of ice cream flavors.

So, tonight’s entry is a little bit more content light. I thoroughly enjoyed my visit to the Boardwalk and reviewing its 56 flavor offering. I can see how some would find the choice overwhelming. But I didn’t. Tonight I intentionally ordered a vanilla. 3079 more combinations to go.

Some fun facts on ice cream:
Best selling Boardwalk flavor: Rolo
Best selling ice cream flavors?
What flavour of ice cream are you?
Bacon Ice Cream?
A cute blog post on brand flavor ice cream.

8 comments:

  1. I noticed that all of those flavor extensions are Nestle brands. A smart, easy way to get some licensing revenue for Nestle.

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  2. Ice cream is always a comfort food too... it makes me feel like a kid but you are right, you have to enjoy it. By the way, my finance always orders some low fat flavor and then devours my super fat cone.

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  3. I guess there must be an interesting markup on ice cream sold by the scoop that helps offset the extra inventory carrying costs derived from having so many flavors. I can't help but notice that my single scoop of ice cream costs $2.75 and a whole carton of ice cream costs $3.95

    But the fun and social aspect of visiting the local ice cream parlor is well worth it!

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  4. Donto, how the heck could you have a finance that eats your fat vanilla cone... I think you mean fiancée or perhaps fiancé.

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  5. I don't eat vanilla. Rocky Road is the only one for me. And, I am increasingly finding my FIANCEE (how do you make the fancy squiggle on there?) hard on my FINANCES.

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  6. You're a good egg Donto!

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  7. A multi-linguist should have no trouble with the accents ;-) Try copy and paste...

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  8. The best ice-cream in the Park and the frendliest staff.Way to go Boardwalk!

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