The Hershey Company Marketing Report
The Hershey Company Marketing Report
The report provides an in-depth analysis of the current internal and external factors affecting the Hershey Company. An evaluation of the confectionary market of the United States, which is the chosen country in the manner it affects the company is used in outlining the market size, market leaders, concentration and distribution of industries as well as their growth. The SWOT analysis is adopted in identifying the strengths, weaknesses, opportunities and threats facing the Hershey Company. Findings are analyzed using the SWOT table where the various elements and the way they relate to the business are outlined. The report draws a conclusion that the current market is not sustainable. Various recommendations that include the development of new product, identification of a new target market and the application of the right marketing mix are given.
The paper is a marketing report of the Hershey Company. The report is valuable to the company since it provides information regarding the business environment. It can be used to assess the various conditions either internal or external, including the market demand, supply, quality, quantity and the price of the product and services offered by the company thus aid in the expansion of the market for the commodities.
Background of the company
The Hershey Company was founded on 9th February 1894 as a chocolate business known as Hershey Chocolate Company (Halbert & Ingulli, 2014). Milton S. Hershey was the founder of the company that has grown to become the leading manufacturer of chocolate in Northern America. Formerly known as Hershey Foods Corporation, the headquarters of the company are located in Hershey, Pennsylvania in the United States.
The confectionery market is composed of three components namely the chocolate confectionery, sugar confectionery and gum products. These elements consist of the high amount of sugar and its substitutes, calories and carbohydrates contents and minimal micronutrients (Warren, 2014). The United States confectionery market has been growing in the last few years due to changing consumer trends. The chocolate confectionery previously held a small market share as people were health conscious of the consequences of consuming a large amount of sugar.
In the year 2015, the United States Confectionery the sales in confectionery market amounted to an estimated 34.9 billion dollars (Greenberg et al. 2016). More than 2 billion dollars was also generated through export in the country. The industry directly provides employment for more than 55,000 people in the country and an additional 400,000 job opportunities indirectly. Indirect employment opportunities are provided in such areas as retailing, transportation sector, agricultural and even in related industries that provide raw material and those that consume confectionery products. The market is composed of various segments with chocolate sale making the largest share as it generated 21.1 billion dollars in 2015 (Greenberg et al. 2016).
The United States confectionery market is constituted of more than 400 companies. The two dominant manufacturers are The Hershey Company and Mars who had a combined market share of 65 percent. Other companies include Nestle with a market share of 5 percent and Lindt with a 1 percent of the market share. Other smaller companies take a combines 26 percent of the confectionery market share. The Hershey Company is the leading chocolate manufacturer in the United States with a market share of 44.4 percent in the year 2015 with Mars being the competing manufacturer with a 21 percent of the market share (Greenberg et al. 2016).
Prospects are estimating the industry to generate more than 38.9 billion dollars in the year 2019 (Greenberg et al. 2016). The rise has been due to new trends in the market that have increased consumer interest. An increased innovation has led to the development of products that address health concerns related to confectionery products. Trends in chocolate confectionery include the development of single origin beans, use of cacao contents and gourmet flavors. Trends in the sugar confectionery include higher demand for soft and chewy varieties resulting in growth in demand for chewy products (Mcmahon, 2015). Lack of consumer interest in gum confectionery in the last few years has resulted in the new invention by manufacturers that involve new marketing mix increased the demand for these products in 2015.
Identifying the challenges, risks and opportunities of the Hershey are essential in ensuring the company remains competitive holding a bigger market share as compared to its competitors. The analysis carried out using the SWOT analysis where the initials represent the starting letter of the various elements including Strengths, Weaknesses, Opportunities and Threats (Halbert & Ingulli, 2014).
The Hershey Company is a multinational business that is the most famous in the North America region. It has a great reputation with a strong brand name since it is among the leading chocolate manufacturers in the region retaining the first position in 2015 (Greenberg et al. 2016). With a market share of 44.4 percent in the chocolate industry, the Hershey Company boasts consumer trust and awareness in the United States confectionery market. It produces diversified products with some of the famous chocolate brands produced by Hershey Company include Reese’s Peanut Butter Cups and Kit Kat with over 17 percent of households in the country consuming the latter (Greenberg et al. 2016). It has also created an impressive social and public image through establishing a school for the orphans known as The Milton Hershey School.
It also applies the right marketing mix through it various industry segments that include restaurants, entertainment, and resorts promoting the brand name. The company promotes research by providing a toll-free number to be used by researchers and institutions in the inquiry (Mcmahon, 2015). It has also invested in employee motivation by providing amusement parks, schools and even housing for its employees. It also requires the employees to adhere to specified standards by providing a strict code of conduct that observes such virtues as honesty, respect, and integrity.
Although the company has its operation in over 70 countries, it is mainly dependent on the United States market. It has also accumulated debt that is estimated to be higher than the value of some key competing companies. The large geographical coverage of its operations has also provided some weaknesses such as low authority thus control.it has also increased the list of competitors thus subjecting it to a limited global market share.
The distribution of The Hershey Company provides various opportunities that it can utilize to increase profit. It can improve its products and tastes to increase the demand for its products. That can be achieved by identifying new trends in the market. One such trend is the high demand for healthy products as the consumers are becoming more health conscious. The company can maximize on its dark chocolate and use of natural ingredients such as cocoa for health benefits of consumers (Warren, 2014). The raw materials such as cocoa, whose cost has risen, can be obtained in countries where the production is cheap. E.g. India (Warren, 2014). Globalization has also provided for expansion of operations to untapped markets such as Australia. The reputation of the company can also be enhanced by engaging in production activities that are environmentally friendly.
The biggest threat to the company is fierce competition from other companies such as Mars, Nestle SA and Mondelez International (Greenberg et al. 2016). The change in consumer tastes and preference is also a major threat with an increase in health concern among the consumers, such as obesity and diabetes, is a major factor.
Since the goal of every business is to increase the profit it generates, several strategies can be applied to expand the operations. One such strategy is the expansion of the business operation to a new market that is yet to be untapped. Another one is to develop a new product that may be an improvement to the already existing products or else developing a new product to meet the customer’s needs and satisfaction (Warren, 2014).
The Hershey Company can use the strategies to increase its operations. One such new market that the company can increase its operations in is Australia. The Australian confectionery market has been rapidly changing due to the emergence of new trends in the year 2015 (Mcmahon, 2015). One distinct element influencing the industry is the demand for healthy products as more people become more health conscious. There is a high demand for sugar-free products in the country as people are aware of some of the conditions that can be caused by high concentration of sugar such as diabetes and obesity. A lot of calories in most of the confectionery products is known to be potentially harmful contributing to weight gain.
The demand for healthier nutrition and lifestyle has led to companies focusing on producing non-sugary products as a means to gain competitive advantage (Warren, 2014). The trend is expected to continue determining how the companies in the industry operate driving the demand for sugar-free varieties further higher. The companies are also expected to invest highly in the development of new products that meets the consumer tastes and preferences while focusing on producing innovative flavors.
The leading company in the Australian confectionery market is Haribo which accounted for more than 26 percent of the sugar confectionery market value. Kraft Food Limited, on the other hand, is the leading chocolate manufacturer in the country with the various brands it produces including Cadbury Dairy Milk, Cadbury Bubbly, and Old Gold. Other major market players include Mars, Nestle SA and Mondelez Australia (Greenberg et al. 2016). Estimates are expecting the sales of confectionary products to reduce due to such factors as portion control.
Apart from identifying a new untapped market, another strategy is developing a new product that can meet the consumer needs and preferences. Such a product that the Hershey Company should manufacture in the Australian market is one that provide a healthy nutrition thus healthier lifestyle. The chocolate should have a low concentration of sugar translating to an estimated 120 calories (Griffin & Van Fleet, 2014). It should also not contain gluten protein to adhere to the principles of the company that has been set to meet the consumer’s dietary needs. The chocolate should also be produced using natural ingredients thus generating a natural flavor. The ingredients should be derived from natural sources such as spices, fruits, vegetables, plant and animal materials or their products. The taste of the new product should be set to match with the various consumer demands substituting the need for artificial flavors and ingredients. The chocolate bar should also have some fruits and nuts increasing the concentration of nutrients making it favorable for the health conscious consumer. There should be a variety of products for the consumer to choose from depending on the type of fruit and the distribution of the portions nuts and fruits in the product.
The right marketing mix should be applied when introducing the new product in the target market. One such involves the use of the 4 Ps, also known as product, price, promotion and price. It includes identifying and developing a product to that the meet the target consumers’ needs. The product identified to be developed at achieving the consumers’ demand for chocolate that are nutrition thus healthier. The place where the product is to be offered is also essential in devising a marketing mix. The Hershey Company report identifies Australian confectionery market as the target market where the consumers have a high demand for the new product (Griffin & Van Fleet, 2014). The company can take advantage of its size to provide the product by giving the consumers access to the right distribution channels.
Applying the right marketing mix involve using the appropriate marketing messages through promotion. Some of the advertising strategies that can be used by the Hershey Company is the use of internet marketing. The strong brand name of the Hershey Company also helps in spreading marketing message (Griffin & Van Fleet, 2014).
The product that has been suggested for development fits with the results of the SWOT analysis. It takes advantage of the various strengths of the brand name and opportunities provided by changing consumer trends and preferences.
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Griffin, R. W., & Van Fleet, D. D. (2014). Management skills: assessment and development, South-Western Cengage Learning, Mason.
Halbert, T., & Ingulli, E. (2014). Law and ethics in the business environment, South-Western, Australia.
Mcmahon, J. D. (2015). Hershey, Arcadia Publishing, Charleston.
Warren, C. S. (2014). Survey of accounting, South-Western, Australia.