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Is This The End of Your Favorite Candy? Nestlé CEO Plans to Sell Its US Confectionery Business

Is This The End of Your Favorite Candy? Nestlé CEO Plans to Sell Its US Confectionery Business


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Nestlé candy brands include Butterfinger, BabyRuth, 100 Grand, SkinnyCow, Raisinets, SweeTarts, Laffy Taffy, Nerds, and more

Some notable names in Nestlé’s candy division are Crunch and KitKat.

Nestlé, the parent company of popular candy brands, is making some changes to its portfolio and Americans might not be too happy about it. The company announced that it will be selling its candy division in the U.S., and the deal is expected to close by the end of 2017.

The news is a clear signal that the company aims to focus on growing its healthier brands and expanding on categories including pet care, bottled water, frozen meals, infant food, andice cream, according to the press release.

Ulf Mark Schneider, chief executive officer of Nestlé, has gone against the grain of his predecessor, Paul Bulcke, who hoped to revamp the confectionery business, Bloomberg reported. Although the company plans to part ways with the U.S. candy market, the sale won’t cover the Toll House baking products, which means U.S. customers can keep making those iconic chocolate chip cookies, and will continue to grow the sweets category on a global scale.

Nestlé has also continuously invested in a health-science unit to try to develop healthy food products to help prevent obesity and other health problems, which aligns with Schneider’s vision of a healthier company.

To read more about how the candy industry wants to cut back on sugar, click here.


Grad School Marketing Research Project- Hershey’s Marketing Analysis

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The Hershey Company
External Environmental Analysis
General Environmental Analysis

For Milton S. Hershey, the third time was the charm. After two failed attempts at establishing candy companies, he finally succeeded with the Lancaster Caramel Company. In 1894, Hershey began adding chocolate to his caramels, while perfecting his own recipe for milk chocolate. By 1900, he was mass producing milk chocolate, making it more affordable and readily available for consumers. In the 117 years since, The Hershey Company has not only continued to innovate and offer new products, but it has also acquired other successful candy businesses, and expanded its operations to over 70 countries.

The Hershey Company was incorporated in 1927 under the laws of the State of Delaware. The company’s headquarters is in Hershey, Pennsylvania. Hershey leads the confectionary industry with more than 80 brands, consisting of 58% chocolate, 26% non-chocolate, and 16% refreshment, including gum and mint lines. Annual revenues exceed $7 billion and the company employs more than 20,000 individuals worldwide. At the end of 2016, Hershey’s stock price was valued at $103.43 per share, with a year-to-date range of $83.32 as the low and $113.89 as the high. At the end of the 2017 second quarter, the closing price was $107.37. The Hershey Company is constantly expanding its offerings and global footprint, while maintaining its competitive advantage domestically.
Hershey has several competitors, two of which are Nestlé and Ferrero Rocher. Each company has its different strengths and weaknesses. There are various economic, social, political, and technological factors that play a role in what works and does not work for each brand.
Nestlé is the world’s leading nutrition, health and wellness company. It’s also the largest food and beverage company in the world. The company was founded in 1866 and its headquarters is located in Switzerland. Nestlé sells more than 2,000 different brands out of seven food and beverage categories. The main products the company offers consist of powdered and liquid beverages, milk, ice cream, confectionary and pet care products (Nestlé, 2017).
Ferrero Rocher was founded in Italy in 1946 by Pietro Ferrero (NCA, 2017). Ferrero USA, Inc. was established in 1969 and is known as the Ferrero Group’s fifth largest commercial unit. Ferrero USA headquarters is currently in Somerset, NJ. The products produced by Ferrero Rocher consist of Nutella, Ferrero Rocher, chocolates, Tic-Tac’s, and Kinder. The company employed 220 workers back in 2015 and is constantly increasing at a 10% growth rate. The annual sales for Ferrero Rocher exceed 600 million dollars (NCA, 2017). Approximately 61% of annual sales are made during the last three months of the year. It has been estimated that roughly 3.6 billion Ferrero Rocher candies are sold every year in 53 countries, and its products are sold in more than 160 countries (Ferrero, 2015). In August 2016, Ferrero Rocher employed 33,000 employees (Ferrero, 2016).

Milton Hershey and his wife, Catherine, were philanthropists who established The Hershey Industrial School, which is known today as the Milton Hershey School. Once a boarding school for orphaned boys, today’s school educates thousands of underprivileged children in a family-like environment. Milton Hershey also built a community, enriched by the Cocoa House, High Point Mansion, Hotel Hershey, the Hershey Sports Arena, and the Penn State Milton S. Hershey Medical Center. The Community Building houses an indoor pool, gym, library, hospital, theater, game rooms, and a cafeteria. Hersheypark is an amusement park which includes rides, playgrounds, a swimming pool, entertainment venues, and a zoo. Milton Hershey created several trusts to ensure the longevity of the institutions he created, and the company continues to engage in socially responsible activities. In 2014, J.P. Bilbrey, Chairman, President and CEO was named Responsible CEO of the Year by CR Magazine. That same year, he was also chosen by Penny Pritzker, then U.S. Secretary of Commerce, to participate in President Obama’s Advisory Council on Doing Business in Africa.
The Hershey Company believes in reinvesting in their employees and their purpose. With an eye on economic trends, they continue to innovate and open new channels for distribution and competition. The company also monitors consumer expectations and has responded by increasing transparency, widening nutritional choices, and reformulating to more simple ingredients.
The social factors of Nestlé consist of commitments to help individuals and families to live healthier lives. The company plans to launch more nutritious foods and beverages, especially for mothers-to-be, new mothers and children. It also is aiming to further decrease sugars, sodium, and saturated fat. More vegetables, fiber-rich grains, pulses, nuts and seeds will be incorporated more in the foods and beverages. Nestlé believes in empowering parents, caregivers and teachers to foster healthy behaviors in children. The company is also pushing towards inspiring people to choose water in hopes to live healthier lives. A detailed explanation is even provided on packages as well as online. Nestlé is also a big supporter in breastfeeding and protects it by continuing to implement and industry policy to market breast-milk substitutes responsibly (Nestle USA, 2017).
Ferrero Rocher Company cares deeply for their consumers, and wants to be able to translate their passion into the chocolate. The company’s goal is to create unique products, develop innovative research, and production processes as well as using their own technologies. Ferrero Rocher uses the best and most high-quality products in order to maintain long lasting relationships to their loyal customers. The company also created the Ferrero Foundation to help improve the quality of life of elderly people. The foundation offers a variety of activities that help the elderly to live the ageing process as an occasion to discover new opportunities. It includes an auditorium, gyms, exhibition halls and spaces for medical and clinical conferences. There is also a state-of-the-art nursery for employees’ children. The “Progetto Imprenditorale Michele Ferrero” is another program that was created to help improve the living conditions of the communities of developing countries with more attention to focusing on children (Ferrero USA, Inc., 2017).

In 2012, the Louisiana Municipal Police Employees Retirement Union accused the company of employing illegal child labor at its cocoa farms and this litigation is still pending. The company has also been cited for health and safety violations at its Pennsylvania plant. In 2014, The Hershey Company announced the formation of CocoaAction, where several chocolate companies are working together to ensure cocoa sustainability in West Africa. CocoaAction will also be “addressing child labor through labor monitoring and remediation, making basic education available, ensuring children go to school, and improving gender parity so that women have a greater influence in their communities’ decision making and development (The Hershey Company, 2014).”
There are many political factors that can affect the Nestlé Company. The major factor is regarding whether taxes will increase or decrease. If taxes increase, the will be a decrease in consumers and sales stock. If taxes decrease, there is a chance that consumers will buy more than usual. Another political factor has been that Nestlé started receiving criticism from its high levels or sugar in their chocolate (Nestle USA, 2017). There have even been rumors regarding the price of coffee beans rising which may cause the company to have to increase their prices or alter their products. High interest rates could cause Nestlé to not want to borrow as much money for its expansion with KitKat. Lastly, a tax could be put on sweets to encourage consumers to eat more healthy foods (Jurevicius, 2017).
For Ferrero Rocher, the political factor that was discovered was that Ferrero Rocher’s products is number one in Germany, Italy, and France, but only has a 5% share in Britain. The company is working on raising the percentage of shares in Britain.

Hershey recognizes that factors that could negatively impact the business include “disruptions, failures, or security breaches of our information technology infrastructure (The Hershey Company, 2014).” They are also investing in technology to assist in cocoa farming and to improve the lives of cocoa farmers. A corporate initiative to save 20 million gallons of water is underway with the installation of new technology in its manufacturing plants that will eliminate the use of chemicals for cleaning water.
Nestlé and Samsung are collaborating on digital nutrition and health, and will be announcing their research collaboration to explore the potential of nutrition science and digital sensor technologies. Their goal with this new collaboration is to provide new insights into healthy living. The new digital platform will provide customers with more personalized recommendations in relation to nutrition, lifestyle, and fitness. Nestlé’s reason for creating this project was based upon the idea that today we live in an era where the data from sensors and devices can help society to better understand the company’s nutrition and activity with the hopes of guiding individuals towards a healthier lifestyle (NestleUSA, 2017).
There are several technological factors regarding Ferro Rocher. One is that the company is currently working on new technical solutions to ensure that the packaging can protect the products from extreme temperatures in challenging climates as well as active packaging, anti-tampering packaging, and high oxygen barrier packaging. The company also does an excellent job at maintaining its privacy. No one is allowed to take a smartphone onto the factory floor, and it’s known that only a select few of journalists have been granted the privilege to go inside (Ferrero – A Joy to Discover, 2015).

Hershey’s most popular products are categorized under two business segments. Hershey’s chocolate, Hershey’s Kisses, and Reese’s products are sold under the chocolate business unit. The sweets and refreshments segment carries Twizzlers, Ice Breakers, Bubble Yum, and the like. The Hershey Company has set international growth targets, with a goal of reducing its North American market presence to 75%. They are specifically targeting China and their middle class, but thus far revenues from that market have fallen below forecast. Hershey’s plans to continue with mergers and acquisitions in the coming years, in an effort to gain market share from their competitors. (The Hershey Company, 2017)
Evaluation of the Mission
The Hershey Company was founded by Milton S. Hershey in 1894. It is headquartered in Hershey, Pennsylvania. The company’s mission has been “bringing sweet moments of Hershey happiness to the world every day.” The Hershey company was the first American candy company to produce milk chocolate at reasonable prices, which before was a luxury only affordable to the wealthy class. In addition to developing different candy brands and improving his chocolate formula, Milton Hershey set out to build a strong infrastructure for his company.
The Hershey factory was built in Derry Township, Pennsylvania, but Milton Hershey continued to expand and built a company town, which came to be known as Hershey, Pennsylvania. Today Hershey, Inc. operates in 90 countries, though its presence is largest in the United States. The list of products has been continuously growing since the company’s foundation.
The Hershey Company manufactures, markets, sells, and distributes chocolate and sugar confectionery products, pantry items, toppings and beverages, and gum and mint refreshment products. These products are sold under more than 80 brand names in over 70 countries. The most well-known ones Hershey’s, Reese’s, Hershey’s Kisses, Hershey’s Bliss, Hershey’s Special Dark, Kit Kat, Twizzlers, Jolly Rancher, and Ice Breakers. A full list of products can be found in Hershey’s Factbook, and on either of their websites (mb113608, 2013).
Evaluation of the Objectives
Hershey is a giant for-profit company with shares that are being publicly traded.
As of October 12, 2015, Hershey’s stock had a market cap of $15.3 billion. The company is a component of the S&P 500 Index (SPY) and part of the Consumer Staples Select Sector SPDR ETF (XLP). Hersey and its peer, Mondelez International (MDLZ) together constitute 4.8% of XLP. Hershey’s stock has given annual average returns of 11% and 12.5% in the last 15-years and last 20-years, respectively.
According to Statists, Hershey and Mars are the largest players in the U.S. confectionery market, with market shares of 31.2% and 29.2%, respectively. In Canada, Nestle (NSRGY) was the leader with an 18.6% share, followed by Hershey, Mondelez International (MDLZ), and Mars. In the U.S., Hershey is the leading chocolate company with a 44.4% share in the chocolate market, followed by Mars, which has a 29.5% share.
Hershey operates in two market segments, North American and International. It generates 85% of its total revenues from the North American market. However, Hershey is focused on building its international presence, especially with the significantly growing economies overseas, such as China, India, and Brazil. Hershey has thus set a goal to increase its international footprint to approximately 50% of its total revenues by 2018, by focusing on geographies outside of the U.S. and Canada. Statista estimates that global confectionery sales totaled $198.4 billion in 2014. Western Europe’s contribution to the global confectionery market was nearly 29.5%, followed by the Asia Pacific market with 18.6% share. According to Mondelez, the eight markets driving 70% of the global confectionery market are Brazil, China, Colombia, India, Russia, South Africa, Turkey, and Vietnam.
Hershey’s strategy in the international market relies on partnerships with foreign companies that have knowledge of the local market. The company is thus creating partnerships through mergers, acquisitions, and joint ventures. More specifically, Hershey’s main focus is on the emerging markets of China, Brazil, India, and Mexico. In the international market, Hershey gained a chocolate market share of between 5.8% and 7.2% in the 2011–2014 period. Between 2009 and 2014, Hershey’s chocolate category grew by an estimated CAGR (compound annual growth rate) of 12%, 12%, and 30% in the markets of Brazil, China, and India, respectively (Key, 2015).
Evaluation of the Functional Areas
Marketing
The Hershey Company’s marketing strategy primary focus is on developing strong brand equity, product innovation, and consistently updating product quality. The company’s main strengths consist of brand awareness and brand loyalty. Hershey’s leading brands are Kisses, Twizzlers, Reese’s, Kit-Kat, and the Hershey Bar. The company does 80% of its marketing in North America which can be seen as a weakness. Hershey is also known to operate as a micro-marketing company because they are known to market certain products to their small target audiences just to meet their specific demands (Key, 2015).
Hershey recently created several new marketing initiatives. The company is working on increasing its advertising budget so it can be able to promote its new product innovations to the world. Hershey also uses its strategy of holiday marketing to design special themes for its chocolates and candies for special holidays and occasions. This technique alone has brought in a lot of revenue for the business due to the company being able to charge higher prices for personalization. Hershey has partnered with an advertising agency, North Castle Partners, to gain fully integrated marketing programs for all of its refreshments and sugar confectionery brands. It has also decided to invest 20% of its total media for digital media purposes (Key, 2015).
Hershey is working toward making a few changes regarding its products in the near future. The company intends to consolidate its creative campaign for several of its iconic brands. Hershey is planning to stop using GMO sugar, milk from cows treated with bovine growth hormones, artificial colors and flavors, gluten and high fructose corn syrup. The company also plans to offer information regarding some new initiatives, such as identifying simple, easily understood ingredients on its labels, ingredient transparency, minimally processed ingredients, and sustainably sourced ingredients (The Hershey Company Investors Relations Department, 2017).
Finance
The Hershey Company reported net sales of $7,440,181 at December 31, 2016, an increase of 0.7% over 2105’s reported net sales. Cost of sales for 2016, $4,282,290, increased 7% over 2015, and 4.5% over 2014. Hershey’s gross profit at year-end 2016 was $3,157,891, operating profit was $1,205,783, and net income was $720,044. Total revenues have declined each quarter since October 2016. Cost of goods sold increased fourth quarter, 2016, but declined for both quarters in 2017. Operating income dropped from $374.02 in October 2016 to $191.93 in April 2017, but has risen to $315.34 as of 7/2/2017. Net income also rose in the second quarter of 2017, after experiencing declines in the prior two quarters, and was reported at $203.50. As reported in its 2016 Annual Report, the company anticipated a 2.25%-3.25% growth in net sales in 2017, including a favorable impact resulting from acquisitions, and excluding unfavorable results attributed to foreign exchange rates. Year-to-date net sales for 2017 total $3.54 billion.
The inventory turnover ratio measures how often inventory is turned over in a year. When calculated using sales, Hershey’s inventory turnover rate for 2016 is 9.94, or every 36 days. When calculated using cost of goods sold, which is the standard method used, the inventory turnover rate for the same year is 5.72, or every 63 days. This is less than the industry average of 7.9, or every 46 days, for the confectionary and nut industry, signaling less effective inventory management at Hershey. Hershey’s current ratio of .95 suggests the company may have difficulty paying its obligations over the short-term. The industry average current ratio is 2.1 for the year 2016.
Total revenues have declined each quarter since October 2016. Cost of goods sold increased fourth quarter, 2016, but have also declined for both quarters in 2017. Operating income dropped from $374.02 in October 2016 to $191.93 in April 2017, but has risen to $315.34 as of 7/2/2017. Net income also rose in the second quarter of 2017, after experiencing declines in the prior two quarters, and was reported at $203.50.
Total assets increased in July 2017 as opposed to the prior two quarters, and this is primarily due to an increase in total inventories. Total liabilities have also increased, despite a decrease in accounts payable and long-term debt. The increase is attributable to short-term debt.
Hershey’s (HSY) common stock is listed and traded on the NSYE, however their Class B Common Stock is not publicly traded. At December 31, 2016, the closing price of the common stock was $103.43, which increased to $109.25 at March 31, 2017, and declined to $107.37 at June 30, 2017. On September 15, 2017, The Hershey Company will pay its 351st consecutive quarterly dividend.

Mars Company is a $33 billion business that spreads across the spectrum from candy bars to chewing gum and all the way to dog food. Mars is a global company with headquarters in Belgium, New Jersey, Africa, Virginia, Asia, and even right here in South Carolina. They have made jobs available to people around the world and allows for job advancement as well when it comes to those jobs. When it comes to politics Mars does not provide money as company to presidential candidates but allows their employees to back those candidates with their own money. Most of which in recent years back democratic candidates. Becoming a $33 billion company means you have to have successful products which include the $5 billion brands such as Snickers, M&M’S, Dove, Milky Way, Twix and more. Mars also owns the $15 billion Uncle Ben’s Rice company which has been in existence for over 70 years. As well Mars owns the billion-dollar pet food companies Pedigree and Cesars. Mars also has a symbioscience branch that does extensive research in how to better the process of making their products as well as making the earth more sustainable. “Pioneering some of the most innovative and breakthrough fundamental scientific research, the Mars Symbioscience team has incubated, introduced and transitioned five technology platforms in the areas of food, plant, biomedical and life sciences. From creating sustainable businesses for farmers to tree nurseries, composting and marine culture with seahorse farming, we are committed to developing solutions that have a positive impact on people and the planet (Mars, Incorporated, 2016).”

Even though Hershey’s Corporation is one of the world’s leaders in chocolate candies, they have a bad reputation whenever it comes to their human resources department and how they treat their employees. A major issue is they have been under scrutiny for the use of child labor in third world countries, like West Africa, where their cocoa farms are located. They, along with seven other companies in the chocolate and cocoa industry, pledged $2 million to help combat the child labor issues in cocoa communities with help from the International Labor Office, (“ILO and chocolate and cocoa industry forge new partnership to combat child labor in West Africa,” 2011). Another issue Hershey’s faces is how they treat their employees because, it is viewed as less than fair and less safe than most places. But, it seems as if they are working to make a comeback. According to Business Wire in 2013, The Hershey Company was recognized as one of America’s “100 Best Corporate Citizens,” (The Hershey Company Recognized as One of America’s ‘100 Best Corporate Citizens,’ 2013). However, it does not seem Hershey’s or any of the other leading chocolate and cocoa industries have completely stopped the use of children for labor in their supply chain. This has been going on for 15 years now and it seems it is hard for them to stop since there are not enough people to help with the work, plus the areas in which child labor is employed are poverty-stricken. Another thing, according to Fortune these numbers seem to be increasing instead of decreasing like they should be (O’Keefe, 2016).

Evaluation of Marketing Strategies
Target Market

Identifying a company’s target market is essential for any business to focus its marketing activities on it. Although Hershey’s products are widely distributed and enjoyed by many consumers, if we look closer to its market we see that it has a few segments and one of the most important market breakdown is the segmentation of the family life cycle. Through extensive market research, one of the conclusions was that mothers play a large role in the decisions in the house and introducing brand loyalty. Being aware of this is why they have a variety of commercials of mothers or families bonding over a Hershey product.
Children are of course the targets for the chocolate products but if we pay attention we see that many adults have inclination to consumer Hershey products. This was proven by some research that adults consume over 55% of all the candy sold. Therefore, by demographics they market the bite size chocolates to adults. They started out with the Hershey Kisses that is now loved by all. Recently by adding more bite size chocolates they appeal to those who are trying to be health conscious and feel that a regular chocolate bar is too much. By having bite size versions, they feel as if they aren’t over indulging and are also viewed more portable alternative. The adult target market is very profitable and where most of their business comes from. This is how they have managed to stay ahead of the competition.

Hershey’s is known for offering tons of products for their consumers to choose from. One thing is that they do not target anyone in particular they pretty much market their products towards anyone at any age. Children, teenagers, young adults, adults, and older adults are all a part of Hershey’s target customer. They like to advertise around the holidays, especially Christmas and Valentine’s Day, since those are the two holidays when the most chocolate is bought. The reason they can have such a broad range of customers is because they offer any type of chocolate as well as candy. From their notorious Hershey’s milk chocolate bar to their Twizzlers. Another reason that they can have such a big range of customers is because their products are on the lower end of the pricing spectrum. It normally does not break the bank if someone wants to go to the store and purchase a chocolate bar.
Along with their vast target Hershey’s has also tried to be a little healthier by incorporating sugar free chocolates, catering to those especially with diabetes. They also are committed to using simple ingredients which means no artificial preservatives, no artificial sweeteners, and no artificial flavors (The Hershey Company, 2017). The reason behind this is because Hershey’s wants to be a caring brand they want their customers to realize that they care even about their health. An added bonus to this is that they have made the nutrition labels easier to read so that their customers know exactly what is in their food. This goes back to having more simple ingredients instead of all those additives and substitutes. They even state that 80% of their ingredients are cocoa, nets, milk, and sugar (The Hershey Company, 2017).
Besides the easier to read labels, Hershey’s also has a glossary of ingredients on their website so that people can find what ingredient is found on the nutrition label of a product of their choice. This comes in handy for weirdly named ingredients that no one seems to understand or know what it is. They developed a specific page on their website so there is no more wondering or guessing, you can easily see exactly what it is and why they use it (The Hershey Company, 2017). Another page that can be clicked on from here is their ‘Four Core Ingredients’ page. This explains any question someone might have about their milk, cocoa, nuts, and sugars (The Hershey Company, 2017).
Besides showing that they care about their customer’s health, they also care about helping their customers with recipes. Hershey’s offers a wide range of recipes on their website which is super helpful if someone enjoys baking. This also shows that the company not only offers chocolates to eat but also to use and bake with. Helping customers with finding recipes helps the company interact with the customers on a deeper level. It makes the company more attractive to consumers by showing how much they actually care.

Hershey’s Global Marketing Group is responsible for their pricing strategy. In recent years, Hershey has avoided some price increases by reducing the size of its candy bars. This is in direct opposition to Nestle, who did not change the size, but did increase their price. Hershey’s also employs high-low pricing, with products being offered at higher prices than their competitors’. These prices are then reduced with promotions, coupons, and sales. However, the company is experiencing price issues with their largest distributor, forcing them to price-cut in order to fend off competitors.
In their annual report, Hershey noted that “Future developments related to the investigation by government regulators of alleged pricing practices by members of the confectionary industry could impact our reputation, the regulatory environment under which we operate, and our operating results (The Hershey Company, 2017).” Without disclosing the source of the investigation, the report continues to explain that the company’s costs could increase, as a result of legal fees and potential new government mandates.

Hershey’s distribution strategy is one of many different routes to get products to the customer. Hershey manufactures all of their chocolate with no outside help. There are numerous Hershey products that they have to get to consumers all over the world. Their number one source of distribution is through retail stores such as gas stations and grocery stores. This is the quickest and most simplistic way for Hershey to get their product from production and into the consumers mouth. Retail stores though, only sell to the public and once the product has been bought from the retail store it is not allowed to be resold. As well, you will wind up buying the product at the price made by the retail store that way they make enough to pay Hershey and have enough left over for profit.
If the consumer at the end of the day does not like that route, they have two other alternatives buying directly from the factory in Hershey, Pennsylvania. or buying at wholesale from warehouse stores. Most people that choose this route end up not buying it directly from the factory since it has to be shipped to the consumer and then they have to wait on the product. The wholesale warehouses are usually how a lot of consumers buy them, especially with the wholesale phenomenon booming at this point. This allows the consumer to buy more of the products at one time and pay the same as the retailers do directly from Hershey. These types of places are stores such as Sam’s Club, BJ’s, and Costco. This is how places such as concession stands and small stores do not rely on distributors. This allows them to buy bulk of the item and still be able to resell the products.

Hershey is also an international product that you can find just about everywhere you go in the world. Hershey uses thousands of distribution centers all over the world to get their chocolate products to consumers on every edge of the world. This is helped by ten different global Hershey headquarters in countries such as Canada, China, Japan, Brazil, and more. This allows them to oversee day to day operations in all of the global factories and distribution centers.
Promotional Strategies
Advertising Strategies
Hershey’s current advertising strategy focuses on telling stories and creating memories. The strategy focuses on uniting all of Hershey’s branded treats under one campaign unlike their old advertising strategy that consisted on advertising each of the company’s products separately. The idea behind the present advertising strategy is to create a sense of emotional ties to the brand. Hershey is using the slogan, Hello Happy. Hello Hershey’s as a way to relate the taste of their treats as creating a sense of happiness. Hershey previously used an advertisement called My Dad, that advertised a young girl seeking time with her busy dad that is always working. At the end of the advertisement the young girl and her father can be seen in the kitchen making s’mores together using Hershey’s Syrup and candy bars. Hershey’s new advertising concept is aiming to leverage the power of Hershey into a mega franchise (Schultz, 2016).

Hershey has always focused on allowing their customers time to shop, and not pressuring their customers to make a purchase. The company decided to incorporate the effects of technology and increase impulse buying by installing chocolate dispensers in the self-checkout areas in stores. They also added candy and snack kiosks and vending machines around pick up areas such as nearby gas pumps at gas stations. Hershey Company began using the impulse selling strategy due to proven facts of consumers most of the time end up buying items that aren’t on their shopping lists (Tuttle, 2015).

Public Relations/Publicity Strategies

Hershey’s publicity strategy is currently targeting on making their chocolate treats healthier by eliminating and substituting some of the ingredients in the products with better choices. In 2013, the company launched a public relations campaign called Summer of Sweet Independence to introduce Hershey’s new Simple Pleasures chocolate brand. The goal of the campaign was to stop women from feeling guilty from eating foods that they love. The campaign showcased making women feel independent from guilt of eating the things they enjoy without the burden. This campaign alone caused sales to soar past their forecasts and made the company over 217 million media impressions (Ketchum, 2013).
Sales Promotion Strategies
Hershey’s sales promotion strategy targets the theory of in-store marketing and promotion working better than advertising. The company doesn’t focus on advertising as much as most companies, because they view chocolate as an impulse item. If customers just see their products in the store and are craving chocolate they’re likely to purchase it (Thompson, 2006). Hershey also uses the holidays as a way to sale their candy in bulk and customized to have a personal touch. The company also offer promotional codes to provide discounts on their products online and in the store.

Hershey is one of the most renowned companies worldwide in chocolate manufacturing. It is the leading corporation in its field in North America. Hershey’s headquarter has been in Pennsylvania where it was originally founded in 1894 by Milton Hershey.

Hershey’s contribution of Milton Hershey School for orphans resulted in improvement of the social and public image of Hershey. Additionally, the company provides various social services to its employees such as parks, schools, and housing facility.
The chocolate maker giant has a diversified product menu with well-established brand names. In addition to chocolate manufacturing, Hershey is also well-heeled in pasta production and variety of products in USA. The company is active in promoting its brand name by contributing in various segments of industry like commercial segment, resorts, entertainment and other market areas. Moreover, Hershey believes in the importance of education and research. This is why the company supports education by facilitating teachers and students with dedicated toll-free number.
After all those privileges that Hershey provides, no wonder why its employees follow strict code of conduct laid long time ago by its founder.

Hershey has been running a debt that is higher than the other competing companies. Also, advertisement expenses have been increasing over the previous years. On the other hand, the increasing price of cocoa beans is a matter of concern for the company since its products’ prices are inversely proportional with the sales volume by units.

Opportunities
From a public health perspective, dark chocolate, widely made by Hershey, offers many advantages over other kinds of chocolate. With all the market competition, Hershey still has wide customer base that is very loyal to the company’s brands. In addition to its leadership in the North American market, Hershey still has various untapped markets in China, India Indonesia, Vietnam and other Asian countries. On the other hand, to alleviate the increasing costs of production, Hershey could explore new cocoa-producing areas such as India.


Grad School Marketing Research Project- Hershey’s Marketing Analysis

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The Hershey Company
External Environmental Analysis
General Environmental Analysis

For Milton S. Hershey, the third time was the charm. After two failed attempts at establishing candy companies, he finally succeeded with the Lancaster Caramel Company. In 1894, Hershey began adding chocolate to his caramels, while perfecting his own recipe for milk chocolate. By 1900, he was mass producing milk chocolate, making it more affordable and readily available for consumers. In the 117 years since, The Hershey Company has not only continued to innovate and offer new products, but it has also acquired other successful candy businesses, and expanded its operations to over 70 countries.

The Hershey Company was incorporated in 1927 under the laws of the State of Delaware. The company’s headquarters is in Hershey, Pennsylvania. Hershey leads the confectionary industry with more than 80 brands, consisting of 58% chocolate, 26% non-chocolate, and 16% refreshment, including gum and mint lines. Annual revenues exceed $7 billion and the company employs more than 20,000 individuals worldwide. At the end of 2016, Hershey’s stock price was valued at $103.43 per share, with a year-to-date range of $83.32 as the low and $113.89 as the high. At the end of the 2017 second quarter, the closing price was $107.37. The Hershey Company is constantly expanding its offerings and global footprint, while maintaining its competitive advantage domestically.
Hershey has several competitors, two of which are Nestlé and Ferrero Rocher. Each company has its different strengths and weaknesses. There are various economic, social, political, and technological factors that play a role in what works and does not work for each brand.
Nestlé is the world’s leading nutrition, health and wellness company. It’s also the largest food and beverage company in the world. The company was founded in 1866 and its headquarters is located in Switzerland. Nestlé sells more than 2,000 different brands out of seven food and beverage categories. The main products the company offers consist of powdered and liquid beverages, milk, ice cream, confectionary and pet care products (Nestlé, 2017).
Ferrero Rocher was founded in Italy in 1946 by Pietro Ferrero (NCA, 2017). Ferrero USA, Inc. was established in 1969 and is known as the Ferrero Group’s fifth largest commercial unit. Ferrero USA headquarters is currently in Somerset, NJ. The products produced by Ferrero Rocher consist of Nutella, Ferrero Rocher, chocolates, Tic-Tac’s, and Kinder. The company employed 220 workers back in 2015 and is constantly increasing at a 10% growth rate. The annual sales for Ferrero Rocher exceed 600 million dollars (NCA, 2017). Approximately 61% of annual sales are made during the last three months of the year. It has been estimated that roughly 3.6 billion Ferrero Rocher candies are sold every year in 53 countries, and its products are sold in more than 160 countries (Ferrero, 2015). In August 2016, Ferrero Rocher employed 33,000 employees (Ferrero, 2016).

Milton Hershey and his wife, Catherine, were philanthropists who established The Hershey Industrial School, which is known today as the Milton Hershey School. Once a boarding school for orphaned boys, today’s school educates thousands of underprivileged children in a family-like environment. Milton Hershey also built a community, enriched by the Cocoa House, High Point Mansion, Hotel Hershey, the Hershey Sports Arena, and the Penn State Milton S. Hershey Medical Center. The Community Building houses an indoor pool, gym, library, hospital, theater, game rooms, and a cafeteria. Hersheypark is an amusement park which includes rides, playgrounds, a swimming pool, entertainment venues, and a zoo. Milton Hershey created several trusts to ensure the longevity of the institutions he created, and the company continues to engage in socially responsible activities. In 2014, J.P. Bilbrey, Chairman, President and CEO was named Responsible CEO of the Year by CR Magazine. That same year, he was also chosen by Penny Pritzker, then U.S. Secretary of Commerce, to participate in President Obama’s Advisory Council on Doing Business in Africa.
The Hershey Company believes in reinvesting in their employees and their purpose. With an eye on economic trends, they continue to innovate and open new channels for distribution and competition. The company also monitors consumer expectations and has responded by increasing transparency, widening nutritional choices, and reformulating to more simple ingredients.
The social factors of Nestlé consist of commitments to help individuals and families to live healthier lives. The company plans to launch more nutritious foods and beverages, especially for mothers-to-be, new mothers and children. It also is aiming to further decrease sugars, sodium, and saturated fat. More vegetables, fiber-rich grains, pulses, nuts and seeds will be incorporated more in the foods and beverages. Nestlé believes in empowering parents, caregivers and teachers to foster healthy behaviors in children. The company is also pushing towards inspiring people to choose water in hopes to live healthier lives. A detailed explanation is even provided on packages as well as online. Nestlé is also a big supporter in breastfeeding and protects it by continuing to implement and industry policy to market breast-milk substitutes responsibly (Nestle USA, 2017).
Ferrero Rocher Company cares deeply for their consumers, and wants to be able to translate their passion into the chocolate. The company’s goal is to create unique products, develop innovative research, and production processes as well as using their own technologies. Ferrero Rocher uses the best and most high-quality products in order to maintain long lasting relationships to their loyal customers. The company also created the Ferrero Foundation to help improve the quality of life of elderly people. The foundation offers a variety of activities that help the elderly to live the ageing process as an occasion to discover new opportunities. It includes an auditorium, gyms, exhibition halls and spaces for medical and clinical conferences. There is also a state-of-the-art nursery for employees’ children. The “Progetto Imprenditorale Michele Ferrero” is another program that was created to help improve the living conditions of the communities of developing countries with more attention to focusing on children (Ferrero USA, Inc., 2017).

In 2012, the Louisiana Municipal Police Employees Retirement Union accused the company of employing illegal child labor at its cocoa farms and this litigation is still pending. The company has also been cited for health and safety violations at its Pennsylvania plant. In 2014, The Hershey Company announced the formation of CocoaAction, where several chocolate companies are working together to ensure cocoa sustainability in West Africa. CocoaAction will also be “addressing child labor through labor monitoring and remediation, making basic education available, ensuring children go to school, and improving gender parity so that women have a greater influence in their communities’ decision making and development (The Hershey Company, 2014).”
There are many political factors that can affect the Nestlé Company. The major factor is regarding whether taxes will increase or decrease. If taxes increase, the will be a decrease in consumers and sales stock. If taxes decrease, there is a chance that consumers will buy more than usual. Another political factor has been that Nestlé started receiving criticism from its high levels or sugar in their chocolate (Nestle USA, 2017). There have even been rumors regarding the price of coffee beans rising which may cause the company to have to increase their prices or alter their products. High interest rates could cause Nestlé to not want to borrow as much money for its expansion with KitKat. Lastly, a tax could be put on sweets to encourage consumers to eat more healthy foods (Jurevicius, 2017).
For Ferrero Rocher, the political factor that was discovered was that Ferrero Rocher’s products is number one in Germany, Italy, and France, but only has a 5% share in Britain. The company is working on raising the percentage of shares in Britain.

Hershey recognizes that factors that could negatively impact the business include “disruptions, failures, or security breaches of our information technology infrastructure (The Hershey Company, 2014).” They are also investing in technology to assist in cocoa farming and to improve the lives of cocoa farmers. A corporate initiative to save 20 million gallons of water is underway with the installation of new technology in its manufacturing plants that will eliminate the use of chemicals for cleaning water.
Nestlé and Samsung are collaborating on digital nutrition and health, and will be announcing their research collaboration to explore the potential of nutrition science and digital sensor technologies. Their goal with this new collaboration is to provide new insights into healthy living. The new digital platform will provide customers with more personalized recommendations in relation to nutrition, lifestyle, and fitness. Nestlé’s reason for creating this project was based upon the idea that today we live in an era where the data from sensors and devices can help society to better understand the company’s nutrition and activity with the hopes of guiding individuals towards a healthier lifestyle (NestleUSA, 2017).
There are several technological factors regarding Ferro Rocher. One is that the company is currently working on new technical solutions to ensure that the packaging can protect the products from extreme temperatures in challenging climates as well as active packaging, anti-tampering packaging, and high oxygen barrier packaging. The company also does an excellent job at maintaining its privacy. No one is allowed to take a smartphone onto the factory floor, and it’s known that only a select few of journalists have been granted the privilege to go inside (Ferrero – A Joy to Discover, 2015).

Hershey’s most popular products are categorized under two business segments. Hershey’s chocolate, Hershey’s Kisses, and Reese’s products are sold under the chocolate business unit. The sweets and refreshments segment carries Twizzlers, Ice Breakers, Bubble Yum, and the like. The Hershey Company has set international growth targets, with a goal of reducing its North American market presence to 75%. They are specifically targeting China and their middle class, but thus far revenues from that market have fallen below forecast. Hershey’s plans to continue with mergers and acquisitions in the coming years, in an effort to gain market share from their competitors. (The Hershey Company, 2017)
Evaluation of the Mission
The Hershey Company was founded by Milton S. Hershey in 1894. It is headquartered in Hershey, Pennsylvania. The company’s mission has been “bringing sweet moments of Hershey happiness to the world every day.” The Hershey company was the first American candy company to produce milk chocolate at reasonable prices, which before was a luxury only affordable to the wealthy class. In addition to developing different candy brands and improving his chocolate formula, Milton Hershey set out to build a strong infrastructure for his company.
The Hershey factory was built in Derry Township, Pennsylvania, but Milton Hershey continued to expand and built a company town, which came to be known as Hershey, Pennsylvania. Today Hershey, Inc. operates in 90 countries, though its presence is largest in the United States. The list of products has been continuously growing since the company’s foundation.
The Hershey Company manufactures, markets, sells, and distributes chocolate and sugar confectionery products, pantry items, toppings and beverages, and gum and mint refreshment products. These products are sold under more than 80 brand names in over 70 countries. The most well-known ones Hershey’s, Reese’s, Hershey’s Kisses, Hershey’s Bliss, Hershey’s Special Dark, Kit Kat, Twizzlers, Jolly Rancher, and Ice Breakers. A full list of products can be found in Hershey’s Factbook, and on either of their websites (mb113608, 2013).
Evaluation of the Objectives
Hershey is a giant for-profit company with shares that are being publicly traded.
As of October 12, 2015, Hershey’s stock had a market cap of $15.3 billion. The company is a component of the S&P 500 Index (SPY) and part of the Consumer Staples Select Sector SPDR ETF (XLP). Hersey and its peer, Mondelez International (MDLZ) together constitute 4.8% of XLP. Hershey’s stock has given annual average returns of 11% and 12.5% in the last 15-years and last 20-years, respectively.
According to Statists, Hershey and Mars are the largest players in the U.S. confectionery market, with market shares of 31.2% and 29.2%, respectively. In Canada, Nestle (NSRGY) was the leader with an 18.6% share, followed by Hershey, Mondelez International (MDLZ), and Mars. In the U.S., Hershey is the leading chocolate company with a 44.4% share in the chocolate market, followed by Mars, which has a 29.5% share.
Hershey operates in two market segments, North American and International. It generates 85% of its total revenues from the North American market. However, Hershey is focused on building its international presence, especially with the significantly growing economies overseas, such as China, India, and Brazil. Hershey has thus set a goal to increase its international footprint to approximately 50% of its total revenues by 2018, by focusing on geographies outside of the U.S. and Canada. Statista estimates that global confectionery sales totaled $198.4 billion in 2014. Western Europe’s contribution to the global confectionery market was nearly 29.5%, followed by the Asia Pacific market with 18.6% share. According to Mondelez, the eight markets driving 70% of the global confectionery market are Brazil, China, Colombia, India, Russia, South Africa, Turkey, and Vietnam.
Hershey’s strategy in the international market relies on partnerships with foreign companies that have knowledge of the local market. The company is thus creating partnerships through mergers, acquisitions, and joint ventures. More specifically, Hershey’s main focus is on the emerging markets of China, Brazil, India, and Mexico. In the international market, Hershey gained a chocolate market share of between 5.8% and 7.2% in the 2011–2014 period. Between 2009 and 2014, Hershey’s chocolate category grew by an estimated CAGR (compound annual growth rate) of 12%, 12%, and 30% in the markets of Brazil, China, and India, respectively (Key, 2015).
Evaluation of the Functional Areas
Marketing
The Hershey Company’s marketing strategy primary focus is on developing strong brand equity, product innovation, and consistently updating product quality. The company’s main strengths consist of brand awareness and brand loyalty. Hershey’s leading brands are Kisses, Twizzlers, Reese’s, Kit-Kat, and the Hershey Bar. The company does 80% of its marketing in North America which can be seen as a weakness. Hershey is also known to operate as a micro-marketing company because they are known to market certain products to their small target audiences just to meet their specific demands (Key, 2015).
Hershey recently created several new marketing initiatives. The company is working on increasing its advertising budget so it can be able to promote its new product innovations to the world. Hershey also uses its strategy of holiday marketing to design special themes for its chocolates and candies for special holidays and occasions. This technique alone has brought in a lot of revenue for the business due to the company being able to charge higher prices for personalization. Hershey has partnered with an advertising agency, North Castle Partners, to gain fully integrated marketing programs for all of its refreshments and sugar confectionery brands. It has also decided to invest 20% of its total media for digital media purposes (Key, 2015).
Hershey is working toward making a few changes regarding its products in the near future. The company intends to consolidate its creative campaign for several of its iconic brands. Hershey is planning to stop using GMO sugar, milk from cows treated with bovine growth hormones, artificial colors and flavors, gluten and high fructose corn syrup. The company also plans to offer information regarding some new initiatives, such as identifying simple, easily understood ingredients on its labels, ingredient transparency, minimally processed ingredients, and sustainably sourced ingredients (The Hershey Company Investors Relations Department, 2017).
Finance
The Hershey Company reported net sales of $7,440,181 at December 31, 2016, an increase of 0.7% over 2105’s reported net sales. Cost of sales for 2016, $4,282,290, increased 7% over 2015, and 4.5% over 2014. Hershey’s gross profit at year-end 2016 was $3,157,891, operating profit was $1,205,783, and net income was $720,044. Total revenues have declined each quarter since October 2016. Cost of goods sold increased fourth quarter, 2016, but declined for both quarters in 2017. Operating income dropped from $374.02 in October 2016 to $191.93 in April 2017, but has risen to $315.34 as of 7/2/2017. Net income also rose in the second quarter of 2017, after experiencing declines in the prior two quarters, and was reported at $203.50. As reported in its 2016 Annual Report, the company anticipated a 2.25%-3.25% growth in net sales in 2017, including a favorable impact resulting from acquisitions, and excluding unfavorable results attributed to foreign exchange rates. Year-to-date net sales for 2017 total $3.54 billion.
The inventory turnover ratio measures how often inventory is turned over in a year. When calculated using sales, Hershey’s inventory turnover rate for 2016 is 9.94, or every 36 days. When calculated using cost of goods sold, which is the standard method used, the inventory turnover rate for the same year is 5.72, or every 63 days. This is less than the industry average of 7.9, or every 46 days, for the confectionary and nut industry, signaling less effective inventory management at Hershey. Hershey’s current ratio of .95 suggests the company may have difficulty paying its obligations over the short-term. The industry average current ratio is 2.1 for the year 2016.
Total revenues have declined each quarter since October 2016. Cost of goods sold increased fourth quarter, 2016, but have also declined for both quarters in 2017. Operating income dropped from $374.02 in October 2016 to $191.93 in April 2017, but has risen to $315.34 as of 7/2/2017. Net income also rose in the second quarter of 2017, after experiencing declines in the prior two quarters, and was reported at $203.50.
Total assets increased in July 2017 as opposed to the prior two quarters, and this is primarily due to an increase in total inventories. Total liabilities have also increased, despite a decrease in accounts payable and long-term debt. The increase is attributable to short-term debt.
Hershey’s (HSY) common stock is listed and traded on the NSYE, however their Class B Common Stock is not publicly traded. At December 31, 2016, the closing price of the common stock was $103.43, which increased to $109.25 at March 31, 2017, and declined to $107.37 at June 30, 2017. On September 15, 2017, The Hershey Company will pay its 351st consecutive quarterly dividend.

Mars Company is a $33 billion business that spreads across the spectrum from candy bars to chewing gum and all the way to dog food. Mars is a global company with headquarters in Belgium, New Jersey, Africa, Virginia, Asia, and even right here in South Carolina. They have made jobs available to people around the world and allows for job advancement as well when it comes to those jobs. When it comes to politics Mars does not provide money as company to presidential candidates but allows their employees to back those candidates with their own money. Most of which in recent years back democratic candidates. Becoming a $33 billion company means you have to have successful products which include the $5 billion brands such as Snickers, M&M’S, Dove, Milky Way, Twix and more. Mars also owns the $15 billion Uncle Ben’s Rice company which has been in existence for over 70 years. As well Mars owns the billion-dollar pet food companies Pedigree and Cesars. Mars also has a symbioscience branch that does extensive research in how to better the process of making their products as well as making the earth more sustainable. “Pioneering some of the most innovative and breakthrough fundamental scientific research, the Mars Symbioscience team has incubated, introduced and transitioned five technology platforms in the areas of food, plant, biomedical and life sciences. From creating sustainable businesses for farmers to tree nurseries, composting and marine culture with seahorse farming, we are committed to developing solutions that have a positive impact on people and the planet (Mars, Incorporated, 2016).”

Even though Hershey’s Corporation is one of the world’s leaders in chocolate candies, they have a bad reputation whenever it comes to their human resources department and how they treat their employees. A major issue is they have been under scrutiny for the use of child labor in third world countries, like West Africa, where their cocoa farms are located. They, along with seven other companies in the chocolate and cocoa industry, pledged $2 million to help combat the child labor issues in cocoa communities with help from the International Labor Office, (“ILO and chocolate and cocoa industry forge new partnership to combat child labor in West Africa,” 2011). Another issue Hershey’s faces is how they treat their employees because, it is viewed as less than fair and less safe than most places. But, it seems as if they are working to make a comeback. According to Business Wire in 2013, The Hershey Company was recognized as one of America’s “100 Best Corporate Citizens,” (The Hershey Company Recognized as One of America’s ‘100 Best Corporate Citizens,’ 2013). However, it does not seem Hershey’s or any of the other leading chocolate and cocoa industries have completely stopped the use of children for labor in their supply chain. This has been going on for 15 years now and it seems it is hard for them to stop since there are not enough people to help with the work, plus the areas in which child labor is employed are poverty-stricken. Another thing, according to Fortune these numbers seem to be increasing instead of decreasing like they should be (O’Keefe, 2016).

Evaluation of Marketing Strategies
Target Market

Identifying a company’s target market is essential for any business to focus its marketing activities on it. Although Hershey’s products are widely distributed and enjoyed by many consumers, if we look closer to its market we see that it has a few segments and one of the most important market breakdown is the segmentation of the family life cycle. Through extensive market research, one of the conclusions was that mothers play a large role in the decisions in the house and introducing brand loyalty. Being aware of this is why they have a variety of commercials of mothers or families bonding over a Hershey product.
Children are of course the targets for the chocolate products but if we pay attention we see that many adults have inclination to consumer Hershey products. This was proven by some research that adults consume over 55% of all the candy sold. Therefore, by demographics they market the bite size chocolates to adults. They started out with the Hershey Kisses that is now loved by all. Recently by adding more bite size chocolates they appeal to those who are trying to be health conscious and feel that a regular chocolate bar is too much. By having bite size versions, they feel as if they aren’t over indulging and are also viewed more portable alternative. The adult target market is very profitable and where most of their business comes from. This is how they have managed to stay ahead of the competition.

Hershey’s is known for offering tons of products for their consumers to choose from. One thing is that they do not target anyone in particular they pretty much market their products towards anyone at any age. Children, teenagers, young adults, adults, and older adults are all a part of Hershey’s target customer. They like to advertise around the holidays, especially Christmas and Valentine’s Day, since those are the two holidays when the most chocolate is bought. The reason they can have such a broad range of customers is because they offer any type of chocolate as well as candy. From their notorious Hershey’s milk chocolate bar to their Twizzlers. Another reason that they can have such a big range of customers is because their products are on the lower end of the pricing spectrum. It normally does not break the bank if someone wants to go to the store and purchase a chocolate bar.
Along with their vast target Hershey’s has also tried to be a little healthier by incorporating sugar free chocolates, catering to those especially with diabetes. They also are committed to using simple ingredients which means no artificial preservatives, no artificial sweeteners, and no artificial flavors (The Hershey Company, 2017). The reason behind this is because Hershey’s wants to be a caring brand they want their customers to realize that they care even about their health. An added bonus to this is that they have made the nutrition labels easier to read so that their customers know exactly what is in their food. This goes back to having more simple ingredients instead of all those additives and substitutes. They even state that 80% of their ingredients are cocoa, nets, milk, and sugar (The Hershey Company, 2017).
Besides the easier to read labels, Hershey’s also has a glossary of ingredients on their website so that people can find what ingredient is found on the nutrition label of a product of their choice. This comes in handy for weirdly named ingredients that no one seems to understand or know what it is. They developed a specific page on their website so there is no more wondering or guessing, you can easily see exactly what it is and why they use it (The Hershey Company, 2017). Another page that can be clicked on from here is their ‘Four Core Ingredients’ page. This explains any question someone might have about their milk, cocoa, nuts, and sugars (The Hershey Company, 2017).
Besides showing that they care about their customer’s health, they also care about helping their customers with recipes. Hershey’s offers a wide range of recipes on their website which is super helpful if someone enjoys baking. This also shows that the company not only offers chocolates to eat but also to use and bake with. Helping customers with finding recipes helps the company interact with the customers on a deeper level. It makes the company more attractive to consumers by showing how much they actually care.

Hershey’s Global Marketing Group is responsible for their pricing strategy. In recent years, Hershey has avoided some price increases by reducing the size of its candy bars. This is in direct opposition to Nestle, who did not change the size, but did increase their price. Hershey’s also employs high-low pricing, with products being offered at higher prices than their competitors’. These prices are then reduced with promotions, coupons, and sales. However, the company is experiencing price issues with their largest distributor, forcing them to price-cut in order to fend off competitors.
In their annual report, Hershey noted that “Future developments related to the investigation by government regulators of alleged pricing practices by members of the confectionary industry could impact our reputation, the regulatory environment under which we operate, and our operating results (The Hershey Company, 2017).” Without disclosing the source of the investigation, the report continues to explain that the company’s costs could increase, as a result of legal fees and potential new government mandates.

Hershey’s distribution strategy is one of many different routes to get products to the customer. Hershey manufactures all of their chocolate with no outside help. There are numerous Hershey products that they have to get to consumers all over the world. Their number one source of distribution is through retail stores such as gas stations and grocery stores. This is the quickest and most simplistic way for Hershey to get their product from production and into the consumers mouth. Retail stores though, only sell to the public and once the product has been bought from the retail store it is not allowed to be resold. As well, you will wind up buying the product at the price made by the retail store that way they make enough to pay Hershey and have enough left over for profit.
If the consumer at the end of the day does not like that route, they have two other alternatives buying directly from the factory in Hershey, Pennsylvania. or buying at wholesale from warehouse stores. Most people that choose this route end up not buying it directly from the factory since it has to be shipped to the consumer and then they have to wait on the product. The wholesale warehouses are usually how a lot of consumers buy them, especially with the wholesale phenomenon booming at this point. This allows the consumer to buy more of the products at one time and pay the same as the retailers do directly from Hershey. These types of places are stores such as Sam’s Club, BJ’s, and Costco. This is how places such as concession stands and small stores do not rely on distributors. This allows them to buy bulk of the item and still be able to resell the products.

Hershey is also an international product that you can find just about everywhere you go in the world. Hershey uses thousands of distribution centers all over the world to get their chocolate products to consumers on every edge of the world. This is helped by ten different global Hershey headquarters in countries such as Canada, China, Japan, Brazil, and more. This allows them to oversee day to day operations in all of the global factories and distribution centers.
Promotional Strategies
Advertising Strategies
Hershey’s current advertising strategy focuses on telling stories and creating memories. The strategy focuses on uniting all of Hershey’s branded treats under one campaign unlike their old advertising strategy that consisted on advertising each of the company’s products separately. The idea behind the present advertising strategy is to create a sense of emotional ties to the brand. Hershey is using the slogan, Hello Happy. Hello Hershey’s as a way to relate the taste of their treats as creating a sense of happiness. Hershey previously used an advertisement called My Dad, that advertised a young girl seeking time with her busy dad that is always working. At the end of the advertisement the young girl and her father can be seen in the kitchen making s’mores together using Hershey’s Syrup and candy bars. Hershey’s new advertising concept is aiming to leverage the power of Hershey into a mega franchise (Schultz, 2016).

Hershey has always focused on allowing their customers time to shop, and not pressuring their customers to make a purchase. The company decided to incorporate the effects of technology and increase impulse buying by installing chocolate dispensers in the self-checkout areas in stores. They also added candy and snack kiosks and vending machines around pick up areas such as nearby gas pumps at gas stations. Hershey Company began using the impulse selling strategy due to proven facts of consumers most of the time end up buying items that aren’t on their shopping lists (Tuttle, 2015).

Public Relations/Publicity Strategies

Hershey’s publicity strategy is currently targeting on making their chocolate treats healthier by eliminating and substituting some of the ingredients in the products with better choices. In 2013, the company launched a public relations campaign called Summer of Sweet Independence to introduce Hershey’s new Simple Pleasures chocolate brand. The goal of the campaign was to stop women from feeling guilty from eating foods that they love. The campaign showcased making women feel independent from guilt of eating the things they enjoy without the burden. This campaign alone caused sales to soar past their forecasts and made the company over 217 million media impressions (Ketchum, 2013).
Sales Promotion Strategies
Hershey’s sales promotion strategy targets the theory of in-store marketing and promotion working better than advertising. The company doesn’t focus on advertising as much as most companies, because they view chocolate as an impulse item. If customers just see their products in the store and are craving chocolate they’re likely to purchase it (Thompson, 2006). Hershey also uses the holidays as a way to sale their candy in bulk and customized to have a personal touch. The company also offer promotional codes to provide discounts on their products online and in the store.

Hershey is one of the most renowned companies worldwide in chocolate manufacturing. It is the leading corporation in its field in North America. Hershey’s headquarter has been in Pennsylvania where it was originally founded in 1894 by Milton Hershey.

Hershey’s contribution of Milton Hershey School for orphans resulted in improvement of the social and public image of Hershey. Additionally, the company provides various social services to its employees such as parks, schools, and housing facility.
The chocolate maker giant has a diversified product menu with well-established brand names. In addition to chocolate manufacturing, Hershey is also well-heeled in pasta production and variety of products in USA. The company is active in promoting its brand name by contributing in various segments of industry like commercial segment, resorts, entertainment and other market areas. Moreover, Hershey believes in the importance of education and research. This is why the company supports education by facilitating teachers and students with dedicated toll-free number.
After all those privileges that Hershey provides, no wonder why its employees follow strict code of conduct laid long time ago by its founder.

Hershey has been running a debt that is higher than the other competing companies. Also, advertisement expenses have been increasing over the previous years. On the other hand, the increasing price of cocoa beans is a matter of concern for the company since its products’ prices are inversely proportional with the sales volume by units.

Opportunities
From a public health perspective, dark chocolate, widely made by Hershey, offers many advantages over other kinds of chocolate. With all the market competition, Hershey still has wide customer base that is very loyal to the company’s brands. In addition to its leadership in the North American market, Hershey still has various untapped markets in China, India Indonesia, Vietnam and other Asian countries. On the other hand, to alleviate the increasing costs of production, Hershey could explore new cocoa-producing areas such as India.


Grad School Marketing Research Project- Hershey’s Marketing Analysis

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The Hershey Company
External Environmental Analysis
General Environmental Analysis

For Milton S. Hershey, the third time was the charm. After two failed attempts at establishing candy companies, he finally succeeded with the Lancaster Caramel Company. In 1894, Hershey began adding chocolate to his caramels, while perfecting his own recipe for milk chocolate. By 1900, he was mass producing milk chocolate, making it more affordable and readily available for consumers. In the 117 years since, The Hershey Company has not only continued to innovate and offer new products, but it has also acquired other successful candy businesses, and expanded its operations to over 70 countries.

The Hershey Company was incorporated in 1927 under the laws of the State of Delaware. The company’s headquarters is in Hershey, Pennsylvania. Hershey leads the confectionary industry with more than 80 brands, consisting of 58% chocolate, 26% non-chocolate, and 16% refreshment, including gum and mint lines. Annual revenues exceed $7 billion and the company employs more than 20,000 individuals worldwide. At the end of 2016, Hershey’s stock price was valued at $103.43 per share, with a year-to-date range of $83.32 as the low and $113.89 as the high. At the end of the 2017 second quarter, the closing price was $107.37. The Hershey Company is constantly expanding its offerings and global footprint, while maintaining its competitive advantage domestically.
Hershey has several competitors, two of which are Nestlé and Ferrero Rocher. Each company has its different strengths and weaknesses. There are various economic, social, political, and technological factors that play a role in what works and does not work for each brand.
Nestlé is the world’s leading nutrition, health and wellness company. It’s also the largest food and beverage company in the world. The company was founded in 1866 and its headquarters is located in Switzerland. Nestlé sells more than 2,000 different brands out of seven food and beverage categories. The main products the company offers consist of powdered and liquid beverages, milk, ice cream, confectionary and pet care products (Nestlé, 2017).
Ferrero Rocher was founded in Italy in 1946 by Pietro Ferrero (NCA, 2017). Ferrero USA, Inc. was established in 1969 and is known as the Ferrero Group’s fifth largest commercial unit. Ferrero USA headquarters is currently in Somerset, NJ. The products produced by Ferrero Rocher consist of Nutella, Ferrero Rocher, chocolates, Tic-Tac’s, and Kinder. The company employed 220 workers back in 2015 and is constantly increasing at a 10% growth rate. The annual sales for Ferrero Rocher exceed 600 million dollars (NCA, 2017). Approximately 61% of annual sales are made during the last three months of the year. It has been estimated that roughly 3.6 billion Ferrero Rocher candies are sold every year in 53 countries, and its products are sold in more than 160 countries (Ferrero, 2015). In August 2016, Ferrero Rocher employed 33,000 employees (Ferrero, 2016).

Milton Hershey and his wife, Catherine, were philanthropists who established The Hershey Industrial School, which is known today as the Milton Hershey School. Once a boarding school for orphaned boys, today’s school educates thousands of underprivileged children in a family-like environment. Milton Hershey also built a community, enriched by the Cocoa House, High Point Mansion, Hotel Hershey, the Hershey Sports Arena, and the Penn State Milton S. Hershey Medical Center. The Community Building houses an indoor pool, gym, library, hospital, theater, game rooms, and a cafeteria. Hersheypark is an amusement park which includes rides, playgrounds, a swimming pool, entertainment venues, and a zoo. Milton Hershey created several trusts to ensure the longevity of the institutions he created, and the company continues to engage in socially responsible activities. In 2014, J.P. Bilbrey, Chairman, President and CEO was named Responsible CEO of the Year by CR Magazine. That same year, he was also chosen by Penny Pritzker, then U.S. Secretary of Commerce, to participate in President Obama’s Advisory Council on Doing Business in Africa.
The Hershey Company believes in reinvesting in their employees and their purpose. With an eye on economic trends, they continue to innovate and open new channels for distribution and competition. The company also monitors consumer expectations and has responded by increasing transparency, widening nutritional choices, and reformulating to more simple ingredients.
The social factors of Nestlé consist of commitments to help individuals and families to live healthier lives. The company plans to launch more nutritious foods and beverages, especially for mothers-to-be, new mothers and children. It also is aiming to further decrease sugars, sodium, and saturated fat. More vegetables, fiber-rich grains, pulses, nuts and seeds will be incorporated more in the foods and beverages. Nestlé believes in empowering parents, caregivers and teachers to foster healthy behaviors in children. The company is also pushing towards inspiring people to choose water in hopes to live healthier lives. A detailed explanation is even provided on packages as well as online. Nestlé is also a big supporter in breastfeeding and protects it by continuing to implement and industry policy to market breast-milk substitutes responsibly (Nestle USA, 2017).
Ferrero Rocher Company cares deeply for their consumers, and wants to be able to translate their passion into the chocolate. The company’s goal is to create unique products, develop innovative research, and production processes as well as using their own technologies. Ferrero Rocher uses the best and most high-quality products in order to maintain long lasting relationships to their loyal customers. The company also created the Ferrero Foundation to help improve the quality of life of elderly people. The foundation offers a variety of activities that help the elderly to live the ageing process as an occasion to discover new opportunities. It includes an auditorium, gyms, exhibition halls and spaces for medical and clinical conferences. There is also a state-of-the-art nursery for employees’ children. The “Progetto Imprenditorale Michele Ferrero” is another program that was created to help improve the living conditions of the communities of developing countries with more attention to focusing on children (Ferrero USA, Inc., 2017).

In 2012, the Louisiana Municipal Police Employees Retirement Union accused the company of employing illegal child labor at its cocoa farms and this litigation is still pending. The company has also been cited for health and safety violations at its Pennsylvania plant. In 2014, The Hershey Company announced the formation of CocoaAction, where several chocolate companies are working together to ensure cocoa sustainability in West Africa. CocoaAction will also be “addressing child labor through labor monitoring and remediation, making basic education available, ensuring children go to school, and improving gender parity so that women have a greater influence in their communities’ decision making and development (The Hershey Company, 2014).”
There are many political factors that can affect the Nestlé Company. The major factor is regarding whether taxes will increase or decrease. If taxes increase, the will be a decrease in consumers and sales stock. If taxes decrease, there is a chance that consumers will buy more than usual. Another political factor has been that Nestlé started receiving criticism from its high levels or sugar in their chocolate (Nestle USA, 2017). There have even been rumors regarding the price of coffee beans rising which may cause the company to have to increase their prices or alter their products. High interest rates could cause Nestlé to not want to borrow as much money for its expansion with KitKat. Lastly, a tax could be put on sweets to encourage consumers to eat more healthy foods (Jurevicius, 2017).
For Ferrero Rocher, the political factor that was discovered was that Ferrero Rocher’s products is number one in Germany, Italy, and France, but only has a 5% share in Britain. The company is working on raising the percentage of shares in Britain.

Hershey recognizes that factors that could negatively impact the business include “disruptions, failures, or security breaches of our information technology infrastructure (The Hershey Company, 2014).” They are also investing in technology to assist in cocoa farming and to improve the lives of cocoa farmers. A corporate initiative to save 20 million gallons of water is underway with the installation of new technology in its manufacturing plants that will eliminate the use of chemicals for cleaning water.
Nestlé and Samsung are collaborating on digital nutrition and health, and will be announcing their research collaboration to explore the potential of nutrition science and digital sensor technologies. Their goal with this new collaboration is to provide new insights into healthy living. The new digital platform will provide customers with more personalized recommendations in relation to nutrition, lifestyle, and fitness. Nestlé’s reason for creating this project was based upon the idea that today we live in an era where the data from sensors and devices can help society to better understand the company’s nutrition and activity with the hopes of guiding individuals towards a healthier lifestyle (NestleUSA, 2017).
There are several technological factors regarding Ferro Rocher. One is that the company is currently working on new technical solutions to ensure that the packaging can protect the products from extreme temperatures in challenging climates as well as active packaging, anti-tampering packaging, and high oxygen barrier packaging. The company also does an excellent job at maintaining its privacy. No one is allowed to take a smartphone onto the factory floor, and it’s known that only a select few of journalists have been granted the privilege to go inside (Ferrero – A Joy to Discover, 2015).

Hershey’s most popular products are categorized under two business segments. Hershey’s chocolate, Hershey’s Kisses, and Reese’s products are sold under the chocolate business unit. The sweets and refreshments segment carries Twizzlers, Ice Breakers, Bubble Yum, and the like. The Hershey Company has set international growth targets, with a goal of reducing its North American market presence to 75%. They are specifically targeting China and their middle class, but thus far revenues from that market have fallen below forecast. Hershey’s plans to continue with mergers and acquisitions in the coming years, in an effort to gain market share from their competitors. (The Hershey Company, 2017)
Evaluation of the Mission
The Hershey Company was founded by Milton S. Hershey in 1894. It is headquartered in Hershey, Pennsylvania. The company’s mission has been “bringing sweet moments of Hershey happiness to the world every day.” The Hershey company was the first American candy company to produce milk chocolate at reasonable prices, which before was a luxury only affordable to the wealthy class. In addition to developing different candy brands and improving his chocolate formula, Milton Hershey set out to build a strong infrastructure for his company.
The Hershey factory was built in Derry Township, Pennsylvania, but Milton Hershey continued to expand and built a company town, which came to be known as Hershey, Pennsylvania. Today Hershey, Inc. operates in 90 countries, though its presence is largest in the United States. The list of products has been continuously growing since the company’s foundation.
The Hershey Company manufactures, markets, sells, and distributes chocolate and sugar confectionery products, pantry items, toppings and beverages, and gum and mint refreshment products. These products are sold under more than 80 brand names in over 70 countries. The most well-known ones Hershey’s, Reese’s, Hershey’s Kisses, Hershey’s Bliss, Hershey’s Special Dark, Kit Kat, Twizzlers, Jolly Rancher, and Ice Breakers. A full list of products can be found in Hershey’s Factbook, and on either of their websites (mb113608, 2013).
Evaluation of the Objectives
Hershey is a giant for-profit company with shares that are being publicly traded.
As of October 12, 2015, Hershey’s stock had a market cap of $15.3 billion. The company is a component of the S&P 500 Index (SPY) and part of the Consumer Staples Select Sector SPDR ETF (XLP). Hersey and its peer, Mondelez International (MDLZ) together constitute 4.8% of XLP. Hershey’s stock has given annual average returns of 11% and 12.5% in the last 15-years and last 20-years, respectively.
According to Statists, Hershey and Mars are the largest players in the U.S. confectionery market, with market shares of 31.2% and 29.2%, respectively. In Canada, Nestle (NSRGY) was the leader with an 18.6% share, followed by Hershey, Mondelez International (MDLZ), and Mars. In the U.S., Hershey is the leading chocolate company with a 44.4% share in the chocolate market, followed by Mars, which has a 29.5% share.
Hershey operates in two market segments, North American and International. It generates 85% of its total revenues from the North American market. However, Hershey is focused on building its international presence, especially with the significantly growing economies overseas, such as China, India, and Brazil. Hershey has thus set a goal to increase its international footprint to approximately 50% of its total revenues by 2018, by focusing on geographies outside of the U.S. and Canada. Statista estimates that global confectionery sales totaled $198.4 billion in 2014. Western Europe’s contribution to the global confectionery market was nearly 29.5%, followed by the Asia Pacific market with 18.6% share. According to Mondelez, the eight markets driving 70% of the global confectionery market are Brazil, China, Colombia, India, Russia, South Africa, Turkey, and Vietnam.
Hershey’s strategy in the international market relies on partnerships with foreign companies that have knowledge of the local market. The company is thus creating partnerships through mergers, acquisitions, and joint ventures. More specifically, Hershey’s main focus is on the emerging markets of China, Brazil, India, and Mexico. In the international market, Hershey gained a chocolate market share of between 5.8% and 7.2% in the 2011–2014 period. Between 2009 and 2014, Hershey’s chocolate category grew by an estimated CAGR (compound annual growth rate) of 12%, 12%, and 30% in the markets of Brazil, China, and India, respectively (Key, 2015).
Evaluation of the Functional Areas
Marketing
The Hershey Company’s marketing strategy primary focus is on developing strong brand equity, product innovation, and consistently updating product quality. The company’s main strengths consist of brand awareness and brand loyalty. Hershey’s leading brands are Kisses, Twizzlers, Reese’s, Kit-Kat, and the Hershey Bar. The company does 80% of its marketing in North America which can be seen as a weakness. Hershey is also known to operate as a micro-marketing company because they are known to market certain products to their small target audiences just to meet their specific demands (Key, 2015).
Hershey recently created several new marketing initiatives. The company is working on increasing its advertising budget so it can be able to promote its new product innovations to the world. Hershey also uses its strategy of holiday marketing to design special themes for its chocolates and candies for special holidays and occasions. This technique alone has brought in a lot of revenue for the business due to the company being able to charge higher prices for personalization. Hershey has partnered with an advertising agency, North Castle Partners, to gain fully integrated marketing programs for all of its refreshments and sugar confectionery brands. It has also decided to invest 20% of its total media for digital media purposes (Key, 2015).
Hershey is working toward making a few changes regarding its products in the near future. The company intends to consolidate its creative campaign for several of its iconic brands. Hershey is planning to stop using GMO sugar, milk from cows treated with bovine growth hormones, artificial colors and flavors, gluten and high fructose corn syrup. The company also plans to offer information regarding some new initiatives, such as identifying simple, easily understood ingredients on its labels, ingredient transparency, minimally processed ingredients, and sustainably sourced ingredients (The Hershey Company Investors Relations Department, 2017).
Finance
The Hershey Company reported net sales of $7,440,181 at December 31, 2016, an increase of 0.7% over 2105’s reported net sales. Cost of sales for 2016, $4,282,290, increased 7% over 2015, and 4.5% over 2014. Hershey’s gross profit at year-end 2016 was $3,157,891, operating profit was $1,205,783, and net income was $720,044. Total revenues have declined each quarter since October 2016. Cost of goods sold increased fourth quarter, 2016, but declined for both quarters in 2017. Operating income dropped from $374.02 in October 2016 to $191.93 in April 2017, but has risen to $315.34 as of 7/2/2017. Net income also rose in the second quarter of 2017, after experiencing declines in the prior two quarters, and was reported at $203.50. As reported in its 2016 Annual Report, the company anticipated a 2.25%-3.25% growth in net sales in 2017, including a favorable impact resulting from acquisitions, and excluding unfavorable results attributed to foreign exchange rates. Year-to-date net sales for 2017 total $3.54 billion.
The inventory turnover ratio measures how often inventory is turned over in a year. When calculated using sales, Hershey’s inventory turnover rate for 2016 is 9.94, or every 36 days. When calculated using cost of goods sold, which is the standard method used, the inventory turnover rate for the same year is 5.72, or every 63 days. This is less than the industry average of 7.9, or every 46 days, for the confectionary and nut industry, signaling less effective inventory management at Hershey. Hershey’s current ratio of .95 suggests the company may have difficulty paying its obligations over the short-term. The industry average current ratio is 2.1 for the year 2016.
Total revenues have declined each quarter since October 2016. Cost of goods sold increased fourth quarter, 2016, but have also declined for both quarters in 2017. Operating income dropped from $374.02 in October 2016 to $191.93 in April 2017, but has risen to $315.34 as of 7/2/2017. Net income also rose in the second quarter of 2017, after experiencing declines in the prior two quarters, and was reported at $203.50.
Total assets increased in July 2017 as opposed to the prior two quarters, and this is primarily due to an increase in total inventories. Total liabilities have also increased, despite a decrease in accounts payable and long-term debt. The increase is attributable to short-term debt.
Hershey’s (HSY) common stock is listed and traded on the NSYE, however their Class B Common Stock is not publicly traded. At December 31, 2016, the closing price of the common stock was $103.43, which increased to $109.25 at March 31, 2017, and declined to $107.37 at June 30, 2017. On September 15, 2017, The Hershey Company will pay its 351st consecutive quarterly dividend.

Mars Company is a $33 billion business that spreads across the spectrum from candy bars to chewing gum and all the way to dog food. Mars is a global company with headquarters in Belgium, New Jersey, Africa, Virginia, Asia, and even right here in South Carolina. They have made jobs available to people around the world and allows for job advancement as well when it comes to those jobs. When it comes to politics Mars does not provide money as company to presidential candidates but allows their employees to back those candidates with their own money. Most of which in recent years back democratic candidates. Becoming a $33 billion company means you have to have successful products which include the $5 billion brands such as Snickers, M&M’S, Dove, Milky Way, Twix and more. Mars also owns the $15 billion Uncle Ben’s Rice company which has been in existence for over 70 years. As well Mars owns the billion-dollar pet food companies Pedigree and Cesars. Mars also has a symbioscience branch that does extensive research in how to better the process of making their products as well as making the earth more sustainable. “Pioneering some of the most innovative and breakthrough fundamental scientific research, the Mars Symbioscience team has incubated, introduced and transitioned five technology platforms in the areas of food, plant, biomedical and life sciences. From creating sustainable businesses for farmers to tree nurseries, composting and marine culture with seahorse farming, we are committed to developing solutions that have a positive impact on people and the planet (Mars, Incorporated, 2016).”

Even though Hershey’s Corporation is one of the world’s leaders in chocolate candies, they have a bad reputation whenever it comes to their human resources department and how they treat their employees. A major issue is they have been under scrutiny for the use of child labor in third world countries, like West Africa, where their cocoa farms are located. They, along with seven other companies in the chocolate and cocoa industry, pledged $2 million to help combat the child labor issues in cocoa communities with help from the International Labor Office, (“ILO and chocolate and cocoa industry forge new partnership to combat child labor in West Africa,” 2011). Another issue Hershey’s faces is how they treat their employees because, it is viewed as less than fair and less safe than most places. But, it seems as if they are working to make a comeback. According to Business Wire in 2013, The Hershey Company was recognized as one of America’s “100 Best Corporate Citizens,” (The Hershey Company Recognized as One of America’s ‘100 Best Corporate Citizens,’ 2013). However, it does not seem Hershey’s or any of the other leading chocolate and cocoa industries have completely stopped the use of children for labor in their supply chain. This has been going on for 15 years now and it seems it is hard for them to stop since there are not enough people to help with the work, plus the areas in which child labor is employed are poverty-stricken. Another thing, according to Fortune these numbers seem to be increasing instead of decreasing like they should be (O’Keefe, 2016).

Evaluation of Marketing Strategies
Target Market

Identifying a company’s target market is essential for any business to focus its marketing activities on it. Although Hershey’s products are widely distributed and enjoyed by many consumers, if we look closer to its market we see that it has a few segments and one of the most important market breakdown is the segmentation of the family life cycle. Through extensive market research, one of the conclusions was that mothers play a large role in the decisions in the house and introducing brand loyalty. Being aware of this is why they have a variety of commercials of mothers or families bonding over a Hershey product.
Children are of course the targets for the chocolate products but if we pay attention we see that many adults have inclination to consumer Hershey products. This was proven by some research that adults consume over 55% of all the candy sold. Therefore, by demographics they market the bite size chocolates to adults. They started out with the Hershey Kisses that is now loved by all. Recently by adding more bite size chocolates they appeal to those who are trying to be health conscious and feel that a regular chocolate bar is too much. By having bite size versions, they feel as if they aren’t over indulging and are also viewed more portable alternative. The adult target market is very profitable and where most of their business comes from. This is how they have managed to stay ahead of the competition.

Hershey’s is known for offering tons of products for their consumers to choose from. One thing is that they do not target anyone in particular they pretty much market their products towards anyone at any age. Children, teenagers, young adults, adults, and older adults are all a part of Hershey’s target customer. They like to advertise around the holidays, especially Christmas and Valentine’s Day, since those are the two holidays when the most chocolate is bought. The reason they can have such a broad range of customers is because they offer any type of chocolate as well as candy. From their notorious Hershey’s milk chocolate bar to their Twizzlers. Another reason that they can have such a big range of customers is because their products are on the lower end of the pricing spectrum. It normally does not break the bank if someone wants to go to the store and purchase a chocolate bar.
Along with their vast target Hershey’s has also tried to be a little healthier by incorporating sugar free chocolates, catering to those especially with diabetes. They also are committed to using simple ingredients which means no artificial preservatives, no artificial sweeteners, and no artificial flavors (The Hershey Company, 2017). The reason behind this is because Hershey’s wants to be a caring brand they want their customers to realize that they care even about their health. An added bonus to this is that they have made the nutrition labels easier to read so that their customers know exactly what is in their food. This goes back to having more simple ingredients instead of all those additives and substitutes. They even state that 80% of their ingredients are cocoa, nets, milk, and sugar (The Hershey Company, 2017).
Besides the easier to read labels, Hershey’s also has a glossary of ingredients on their website so that people can find what ingredient is found on the nutrition label of a product of their choice. This comes in handy for weirdly named ingredients that no one seems to understand or know what it is. They developed a specific page on their website so there is no more wondering or guessing, you can easily see exactly what it is and why they use it (The Hershey Company, 2017). Another page that can be clicked on from here is their ‘Four Core Ingredients’ page. This explains any question someone might have about their milk, cocoa, nuts, and sugars (The Hershey Company, 2017).
Besides showing that they care about their customer’s health, they also care about helping their customers with recipes. Hershey’s offers a wide range of recipes on their website which is super helpful if someone enjoys baking. This also shows that the company not only offers chocolates to eat but also to use and bake with. Helping customers with finding recipes helps the company interact with the customers on a deeper level. It makes the company more attractive to consumers by showing how much they actually care.

Hershey’s Global Marketing Group is responsible for their pricing strategy. In recent years, Hershey has avoided some price increases by reducing the size of its candy bars. This is in direct opposition to Nestle, who did not change the size, but did increase their price. Hershey’s also employs high-low pricing, with products being offered at higher prices than their competitors’. These prices are then reduced with promotions, coupons, and sales. However, the company is experiencing price issues with their largest distributor, forcing them to price-cut in order to fend off competitors.
In their annual report, Hershey noted that “Future developments related to the investigation by government regulators of alleged pricing practices by members of the confectionary industry could impact our reputation, the regulatory environment under which we operate, and our operating results (The Hershey Company, 2017).” Without disclosing the source of the investigation, the report continues to explain that the company’s costs could increase, as a result of legal fees and potential new government mandates.

Hershey’s distribution strategy is one of many different routes to get products to the customer. Hershey manufactures all of their chocolate with no outside help. There are numerous Hershey products that they have to get to consumers all over the world. Their number one source of distribution is through retail stores such as gas stations and grocery stores. This is the quickest and most simplistic way for Hershey to get their product from production and into the consumers mouth. Retail stores though, only sell to the public and once the product has been bought from the retail store it is not allowed to be resold. As well, you will wind up buying the product at the price made by the retail store that way they make enough to pay Hershey and have enough left over for profit.
If the consumer at the end of the day does not like that route, they have two other alternatives buying directly from the factory in Hershey, Pennsylvania. or buying at wholesale from warehouse stores. Most people that choose this route end up not buying it directly from the factory since it has to be shipped to the consumer and then they have to wait on the product. The wholesale warehouses are usually how a lot of consumers buy them, especially with the wholesale phenomenon booming at this point. This allows the consumer to buy more of the products at one time and pay the same as the retailers do directly from Hershey. These types of places are stores such as Sam’s Club, BJ’s, and Costco. This is how places such as concession stands and small stores do not rely on distributors. This allows them to buy bulk of the item and still be able to resell the products.

Hershey is also an international product that you can find just about everywhere you go in the world. Hershey uses thousands of distribution centers all over the world to get their chocolate products to consumers on every edge of the world. This is helped by ten different global Hershey headquarters in countries such as Canada, China, Japan, Brazil, and more. This allows them to oversee day to day operations in all of the global factories and distribution centers.
Promotional Strategies
Advertising Strategies
Hershey’s current advertising strategy focuses on telling stories and creating memories. The strategy focuses on uniting all of Hershey’s branded treats under one campaign unlike their old advertising strategy that consisted on advertising each of the company’s products separately. The idea behind the present advertising strategy is to create a sense of emotional ties to the brand. Hershey is using the slogan, Hello Happy. Hello Hershey’s as a way to relate the taste of their treats as creating a sense of happiness. Hershey previously used an advertisement called My Dad, that advertised a young girl seeking time with her busy dad that is always working. At the end of the advertisement the young girl and her father can be seen in the kitchen making s’mores together using Hershey’s Syrup and candy bars. Hershey’s new advertising concept is aiming to leverage the power of Hershey into a mega franchise (Schultz, 2016).

Hershey has always focused on allowing their customers time to shop, and not pressuring their customers to make a purchase. The company decided to incorporate the effects of technology and increase impulse buying by installing chocolate dispensers in the self-checkout areas in stores. They also added candy and snack kiosks and vending machines around pick up areas such as nearby gas pumps at gas stations. Hershey Company began using the impulse selling strategy due to proven facts of consumers most of the time end up buying items that aren’t on their shopping lists (Tuttle, 2015).

Public Relations/Publicity Strategies

Hershey’s publicity strategy is currently targeting on making their chocolate treats healthier by eliminating and substituting some of the ingredients in the products with better choices. In 2013, the company launched a public relations campaign called Summer of Sweet Independence to introduce Hershey’s new Simple Pleasures chocolate brand. The goal of the campaign was to stop women from feeling guilty from eating foods that they love. The campaign showcased making women feel independent from guilt of eating the things they enjoy without the burden. This campaign alone caused sales to soar past their forecasts and made the company over 217 million media impressions (Ketchum, 2013).
Sales Promotion Strategies
Hershey’s sales promotion strategy targets the theory of in-store marketing and promotion working better than advertising. The company doesn’t focus on advertising as much as most companies, because they view chocolate as an impulse item. If customers just see their products in the store and are craving chocolate they’re likely to purchase it (Thompson, 2006). Hershey also uses the holidays as a way to sale their candy in bulk and customized to have a personal touch. The company also offer promotional codes to provide discounts on their products online and in the store.

Hershey is one of the most renowned companies worldwide in chocolate manufacturing. It is the leading corporation in its field in North America. Hershey’s headquarter has been in Pennsylvania where it was originally founded in 1894 by Milton Hershey.

Hershey’s contribution of Milton Hershey School for orphans resulted in improvement of the social and public image of Hershey. Additionally, the company provides various social services to its employees such as parks, schools, and housing facility.
The chocolate maker giant has a diversified product menu with well-established brand names. In addition to chocolate manufacturing, Hershey is also well-heeled in pasta production and variety of products in USA. The company is active in promoting its brand name by contributing in various segments of industry like commercial segment, resorts, entertainment and other market areas. Moreover, Hershey believes in the importance of education and research. This is why the company supports education by facilitating teachers and students with dedicated toll-free number.
After all those privileges that Hershey provides, no wonder why its employees follow strict code of conduct laid long time ago by its founder.

Hershey has been running a debt that is higher than the other competing companies. Also, advertisement expenses have been increasing over the previous years. On the other hand, the increasing price of cocoa beans is a matter of concern for the company since its products’ prices are inversely proportional with the sales volume by units.

Opportunities
From a public health perspective, dark chocolate, widely made by Hershey, offers many advantages over other kinds of chocolate. With all the market competition, Hershey still has wide customer base that is very loyal to the company’s brands. In addition to its leadership in the North American market, Hershey still has various untapped markets in China, India Indonesia, Vietnam and other Asian countries. On the other hand, to alleviate the increasing costs of production, Hershey could explore new cocoa-producing areas such as India.


Grad School Marketing Research Project- Hershey’s Marketing Analysis

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The Hershey Company
External Environmental Analysis
General Environmental Analysis

For Milton S. Hershey, the third time was the charm. After two failed attempts at establishing candy companies, he finally succeeded with the Lancaster Caramel Company. In 1894, Hershey began adding chocolate to his caramels, while perfecting his own recipe for milk chocolate. By 1900, he was mass producing milk chocolate, making it more affordable and readily available for consumers. In the 117 years since, The Hershey Company has not only continued to innovate and offer new products, but it has also acquired other successful candy businesses, and expanded its operations to over 70 countries.

The Hershey Company was incorporated in 1927 under the laws of the State of Delaware. The company’s headquarters is in Hershey, Pennsylvania. Hershey leads the confectionary industry with more than 80 brands, consisting of 58% chocolate, 26% non-chocolate, and 16% refreshment, including gum and mint lines. Annual revenues exceed $7 billion and the company employs more than 20,000 individuals worldwide. At the end of 2016, Hershey’s stock price was valued at $103.43 per share, with a year-to-date range of $83.32 as the low and $113.89 as the high. At the end of the 2017 second quarter, the closing price was $107.37. The Hershey Company is constantly expanding its offerings and global footprint, while maintaining its competitive advantage domestically.
Hershey has several competitors, two of which are Nestlé and Ferrero Rocher. Each company has its different strengths and weaknesses. There are various economic, social, political, and technological factors that play a role in what works and does not work for each brand.
Nestlé is the world’s leading nutrition, health and wellness company. It’s also the largest food and beverage company in the world. The company was founded in 1866 and its headquarters is located in Switzerland. Nestlé sells more than 2,000 different brands out of seven food and beverage categories. The main products the company offers consist of powdered and liquid beverages, milk, ice cream, confectionary and pet care products (Nestlé, 2017).
Ferrero Rocher was founded in Italy in 1946 by Pietro Ferrero (NCA, 2017). Ferrero USA, Inc. was established in 1969 and is known as the Ferrero Group’s fifth largest commercial unit. Ferrero USA headquarters is currently in Somerset, NJ. The products produced by Ferrero Rocher consist of Nutella, Ferrero Rocher, chocolates, Tic-Tac’s, and Kinder. The company employed 220 workers back in 2015 and is constantly increasing at a 10% growth rate. The annual sales for Ferrero Rocher exceed 600 million dollars (NCA, 2017). Approximately 61% of annual sales are made during the last three months of the year. It has been estimated that roughly 3.6 billion Ferrero Rocher candies are sold every year in 53 countries, and its products are sold in more than 160 countries (Ferrero, 2015). In August 2016, Ferrero Rocher employed 33,000 employees (Ferrero, 2016).

Milton Hershey and his wife, Catherine, were philanthropists who established The Hershey Industrial School, which is known today as the Milton Hershey School. Once a boarding school for orphaned boys, today’s school educates thousands of underprivileged children in a family-like environment. Milton Hershey also built a community, enriched by the Cocoa House, High Point Mansion, Hotel Hershey, the Hershey Sports Arena, and the Penn State Milton S. Hershey Medical Center. The Community Building houses an indoor pool, gym, library, hospital, theater, game rooms, and a cafeteria. Hersheypark is an amusement park which includes rides, playgrounds, a swimming pool, entertainment venues, and a zoo. Milton Hershey created several trusts to ensure the longevity of the institutions he created, and the company continues to engage in socially responsible activities. In 2014, J.P. Bilbrey, Chairman, President and CEO was named Responsible CEO of the Year by CR Magazine. That same year, he was also chosen by Penny Pritzker, then U.S. Secretary of Commerce, to participate in President Obama’s Advisory Council on Doing Business in Africa.
The Hershey Company believes in reinvesting in their employees and their purpose. With an eye on economic trends, they continue to innovate and open new channels for distribution and competition. The company also monitors consumer expectations and has responded by increasing transparency, widening nutritional choices, and reformulating to more simple ingredients.
The social factors of Nestlé consist of commitments to help individuals and families to live healthier lives. The company plans to launch more nutritious foods and beverages, especially for mothers-to-be, new mothers and children. It also is aiming to further decrease sugars, sodium, and saturated fat. More vegetables, fiber-rich grains, pulses, nuts and seeds will be incorporated more in the foods and beverages. Nestlé believes in empowering parents, caregivers and teachers to foster healthy behaviors in children. The company is also pushing towards inspiring people to choose water in hopes to live healthier lives. A detailed explanation is even provided on packages as well as online. Nestlé is also a big supporter in breastfeeding and protects it by continuing to implement and industry policy to market breast-milk substitutes responsibly (Nestle USA, 2017).
Ferrero Rocher Company cares deeply for their consumers, and wants to be able to translate their passion into the chocolate. The company’s goal is to create unique products, develop innovative research, and production processes as well as using their own technologies. Ferrero Rocher uses the best and most high-quality products in order to maintain long lasting relationships to their loyal customers. The company also created the Ferrero Foundation to help improve the quality of life of elderly people. The foundation offers a variety of activities that help the elderly to live the ageing process as an occasion to discover new opportunities. It includes an auditorium, gyms, exhibition halls and spaces for medical and clinical conferences. There is also a state-of-the-art nursery for employees’ children. The “Progetto Imprenditorale Michele Ferrero” is another program that was created to help improve the living conditions of the communities of developing countries with more attention to focusing on children (Ferrero USA, Inc., 2017).

In 2012, the Louisiana Municipal Police Employees Retirement Union accused the company of employing illegal child labor at its cocoa farms and this litigation is still pending. The company has also been cited for health and safety violations at its Pennsylvania plant. In 2014, The Hershey Company announced the formation of CocoaAction, where several chocolate companies are working together to ensure cocoa sustainability in West Africa. CocoaAction will also be “addressing child labor through labor monitoring and remediation, making basic education available, ensuring children go to school, and improving gender parity so that women have a greater influence in their communities’ decision making and development (The Hershey Company, 2014).”
There are many political factors that can affect the Nestlé Company. The major factor is regarding whether taxes will increase or decrease. If taxes increase, the will be a decrease in consumers and sales stock. If taxes decrease, there is a chance that consumers will buy more than usual. Another political factor has been that Nestlé started receiving criticism from its high levels or sugar in their chocolate (Nestle USA, 2017). There have even been rumors regarding the price of coffee beans rising which may cause the company to have to increase their prices or alter their products. High interest rates could cause Nestlé to not want to borrow as much money for its expansion with KitKat. Lastly, a tax could be put on sweets to encourage consumers to eat more healthy foods (Jurevicius, 2017).
For Ferrero Rocher, the political factor that was discovered was that Ferrero Rocher’s products is number one in Germany, Italy, and France, but only has a 5% share in Britain. The company is working on raising the percentage of shares in Britain.

Hershey recognizes that factors that could negatively impact the business include “disruptions, failures, or security breaches of our information technology infrastructure (The Hershey Company, 2014).” They are also investing in technology to assist in cocoa farming and to improve the lives of cocoa farmers. A corporate initiative to save 20 million gallons of water is underway with the installation of new technology in its manufacturing plants that will eliminate the use of chemicals for cleaning water.
Nestlé and Samsung are collaborating on digital nutrition and health, and will be announcing their research collaboration to explore the potential of nutrition science and digital sensor technologies. Their goal with this new collaboration is to provide new insights into healthy living. The new digital platform will provide customers with more personalized recommendations in relation to nutrition, lifestyle, and fitness. Nestlé’s reason for creating this project was based upon the idea that today we live in an era where the data from sensors and devices can help society to better understand the company’s nutrition and activity with the hopes of guiding individuals towards a healthier lifestyle (NestleUSA, 2017).
There are several technological factors regarding Ferro Rocher. One is that the company is currently working on new technical solutions to ensure that the packaging can protect the products from extreme temperatures in challenging climates as well as active packaging, anti-tampering packaging, and high oxygen barrier packaging. The company also does an excellent job at maintaining its privacy. No one is allowed to take a smartphone onto the factory floor, and it’s known that only a select few of journalists have been granted the privilege to go inside (Ferrero – A Joy to Discover, 2015).

Hershey’s most popular products are categorized under two business segments. Hershey’s chocolate, Hershey’s Kisses, and Reese’s products are sold under the chocolate business unit. The sweets and refreshments segment carries Twizzlers, Ice Breakers, Bubble Yum, and the like. The Hershey Company has set international growth targets, with a goal of reducing its North American market presence to 75%. They are specifically targeting China and their middle class, but thus far revenues from that market have fallen below forecast. Hershey’s plans to continue with mergers and acquisitions in the coming years, in an effort to gain market share from their competitors. (The Hershey Company, 2017)
Evaluation of the Mission
The Hershey Company was founded by Milton S. Hershey in 1894. It is headquartered in Hershey, Pennsylvania. The company’s mission has been “bringing sweet moments of Hershey happiness to the world every day.” The Hershey company was the first American candy company to produce milk chocolate at reasonable prices, which before was a luxury only affordable to the wealthy class. In addition to developing different candy brands and improving his chocolate formula, Milton Hershey set out to build a strong infrastructure for his company.
The Hershey factory was built in Derry Township, Pennsylvania, but Milton Hershey continued to expand and built a company town, which came to be known as Hershey, Pennsylvania. Today Hershey, Inc. operates in 90 countries, though its presence is largest in the United States. The list of products has been continuously growing since the company’s foundation.
The Hershey Company manufactures, markets, sells, and distributes chocolate and sugar confectionery products, pantry items, toppings and beverages, and gum and mint refreshment products. These products are sold under more than 80 brand names in over 70 countries. The most well-known ones Hershey’s, Reese’s, Hershey’s Kisses, Hershey’s Bliss, Hershey’s Special Dark, Kit Kat, Twizzlers, Jolly Rancher, and Ice Breakers. A full list of products can be found in Hershey’s Factbook, and on either of their websites (mb113608, 2013).
Evaluation of the Objectives
Hershey is a giant for-profit company with shares that are being publicly traded.
As of October 12, 2015, Hershey’s stock had a market cap of $15.3 billion. The company is a component of the S&P 500 Index (SPY) and part of the Consumer Staples Select Sector SPDR ETF (XLP). Hersey and its peer, Mondelez International (MDLZ) together constitute 4.8% of XLP. Hershey’s stock has given annual average returns of 11% and 12.5% in the last 15-years and last 20-years, respectively.
According to Statists, Hershey and Mars are the largest players in the U.S. confectionery market, with market shares of 31.2% and 29.2%, respectively. In Canada, Nestle (NSRGY) was the leader with an 18.6% share, followed by Hershey, Mondelez International (MDLZ), and Mars. In the U.S., Hershey is the leading chocolate company with a 44.4% share in the chocolate market, followed by Mars, which has a 29.5% share.
Hershey operates in two market segments, North American and International. It generates 85% of its total revenues from the North American market. However, Hershey is focused on building its international presence, especially with the significantly growing economies overseas, such as China, India, and Brazil. Hershey has thus set a goal to increase its international footprint to approximately 50% of its total revenues by 2018, by focusing on geographies outside of the U.S. and Canada. Statista estimates that global confectionery sales totaled $198.4 billion in 2014. Western Europe’s contribution to the global confectionery market was nearly 29.5%, followed by the Asia Pacific market with 18.6% share. According to Mondelez, the eight markets driving 70% of the global confectionery market are Brazil, China, Colombia, India, Russia, South Africa, Turkey, and Vietnam.
Hershey’s strategy in the international market relies on partnerships with foreign companies that have knowledge of the local market. The company is thus creating partnerships through mergers, acquisitions, and joint ventures. More specifically, Hershey’s main focus is on the emerging markets of China, Brazil, India, and Mexico. In the international market, Hershey gained a chocolate market share of between 5.8% and 7.2% in the 2011–2014 period. Between 2009 and 2014, Hershey’s chocolate category grew by an estimated CAGR (compound annual growth rate) of 12%, 12%, and 30% in the markets of Brazil, China, and India, respectively (Key, 2015).
Evaluation of the Functional Areas
Marketing
The Hershey Company’s marketing strategy primary focus is on developing strong brand equity, product innovation, and consistently updating product quality. The company’s main strengths consist of brand awareness and brand loyalty. Hershey’s leading brands are Kisses, Twizzlers, Reese’s, Kit-Kat, and the Hershey Bar. The company does 80% of its marketing in North America which can be seen as a weakness. Hershey is also known to operate as a micro-marketing company because they are known to market certain products to their small target audiences just to meet their specific demands (Key, 2015).
Hershey recently created several new marketing initiatives. The company is working on increasing its advertising budget so it can be able to promote its new product innovations to the world. Hershey also uses its strategy of holiday marketing to design special themes for its chocolates and candies for special holidays and occasions. This technique alone has brought in a lot of revenue for the business due to the company being able to charge higher prices for personalization. Hershey has partnered with an advertising agency, North Castle Partners, to gain fully integrated marketing programs for all of its refreshments and sugar confectionery brands. It has also decided to invest 20% of its total media for digital media purposes (Key, 2015).
Hershey is working toward making a few changes regarding its products in the near future. The company intends to consolidate its creative campaign for several of its iconic brands. Hershey is planning to stop using GMO sugar, milk from cows treated with bovine growth hormones, artificial colors and flavors, gluten and high fructose corn syrup. The company also plans to offer information regarding some new initiatives, such as identifying simple, easily understood ingredients on its labels, ingredient transparency, minimally processed ingredients, and sustainably sourced ingredients (The Hershey Company Investors Relations Department, 2017).
Finance
The Hershey Company reported net sales of $7,440,181 at December 31, 2016, an increase of 0.7% over 2105’s reported net sales. Cost of sales for 2016, $4,282,290, increased 7% over 2015, and 4.5% over 2014. Hershey’s gross profit at year-end 2016 was $3,157,891, operating profit was $1,205,783, and net income was $720,044. Total revenues have declined each quarter since October 2016. Cost of goods sold increased fourth quarter, 2016, but declined for both quarters in 2017. Operating income dropped from $374.02 in October 2016 to $191.93 in April 2017, but has risen to $315.34 as of 7/2/2017. Net income also rose in the second quarter of 2017, after experiencing declines in the prior two quarters, and was reported at $203.50. As reported in its 2016 Annual Report, the company anticipated a 2.25%-3.25% growth in net sales in 2017, including a favorable impact resulting from acquisitions, and excluding unfavorable results attributed to foreign exchange rates. Year-to-date net sales for 2017 total $3.54 billion.
The inventory turnover ratio measures how often inventory is turned over in a year. When calculated using sales, Hershey’s inventory turnover rate for 2016 is 9.94, or every 36 days. When calculated using cost of goods sold, which is the standard method used, the inventory turnover rate for the same year is 5.72, or every 63 days. This is less than the industry average of 7.9, or every 46 days, for the confectionary and nut industry, signaling less effective inventory management at Hershey. Hershey’s current ratio of .95 suggests the company may have difficulty paying its obligations over the short-term. The industry average current ratio is 2.1 for the year 2016.
Total revenues have declined each quarter since October 2016. Cost of goods sold increased fourth quarter, 2016, but have also declined for both quarters in 2017. Operating income dropped from $374.02 in October 2016 to $191.93 in April 2017, but has risen to $315.34 as of 7/2/2017. Net income also rose in the second quarter of 2017, after experiencing declines in the prior two quarters, and was reported at $203.50.
Total assets increased in July 2017 as opposed to the prior two quarters, and this is primarily due to an increase in total inventories. Total liabilities have also increased, despite a decrease in accounts payable and long-term debt. The increase is attributable to short-term debt.
Hershey’s (HSY) common stock is listed and traded on the NSYE, however their Class B Common Stock is not publicly traded. At December 31, 2016, the closing price of the common stock was $103.43, which increased to $109.25 at March 31, 2017, and declined to $107.37 at June 30, 2017. On September 15, 2017, The Hershey Company will pay its 351st consecutive quarterly dividend.

Mars Company is a $33 billion business that spreads across the spectrum from candy bars to chewing gum and all the way to dog food. Mars is a global company with headquarters in Belgium, New Jersey, Africa, Virginia, Asia, and even right here in South Carolina. They have made jobs available to people around the world and allows for job advancement as well when it comes to those jobs. When it comes to politics Mars does not provide money as company to presidential candidates but allows their employees to back those candidates with their own money. Most of which in recent years back democratic candidates. Becoming a $33 billion company means you have to have successful products which include the $5 billion brands such as Snickers, M&M’S, Dove, Milky Way, Twix and more. Mars also owns the $15 billion Uncle Ben’s Rice company which has been in existence for over 70 years. As well Mars owns the billion-dollar pet food companies Pedigree and Cesars. Mars also has a symbioscience branch that does extensive research in how to better the process of making their products as well as making the earth more sustainable. “Pioneering some of the most innovative and breakthrough fundamental scientific research, the Mars Symbioscience team has incubated, introduced and transitioned five technology platforms in the areas of food, plant, biomedical and life sciences. From creating sustainable businesses for farmers to tree nurseries, composting and marine culture with seahorse farming, we are committed to developing solutions that have a positive impact on people and the planet (Mars, Incorporated, 2016).”

Even though Hershey’s Corporation is one of the world’s leaders in chocolate candies, they have a bad reputation whenever it comes to their human resources department and how they treat their employees. A major issue is they have been under scrutiny for the use of child labor in third world countries, like West Africa, where their cocoa farms are located. They, along with seven other companies in the chocolate and cocoa industry, pledged $2 million to help combat the child labor issues in cocoa communities with help from the International Labor Office, (“ILO and chocolate and cocoa industry forge new partnership to combat child labor in West Africa,” 2011). Another issue Hershey’s faces is how they treat their employees because, it is viewed as less than fair and less safe than most places. But, it seems as if they are working to make a comeback. According to Business Wire in 2013, The Hershey Company was recognized as one of America’s “100 Best Corporate Citizens,” (The Hershey Company Recognized as One of America’s ‘100 Best Corporate Citizens,’ 2013). However, it does not seem Hershey’s or any of the other leading chocolate and cocoa industries have completely stopped the use of children for labor in their supply chain. This has been going on for 15 years now and it seems it is hard for them to stop since there are not enough people to help with the work, plus the areas in which child labor is employed are poverty-stricken. Another thing, according to Fortune these numbers seem to be increasing instead of decreasing like they should be (O’Keefe, 2016).

Evaluation of Marketing Strategies
Target Market

Identifying a company’s target market is essential for any business to focus its marketing activities on it. Although Hershey’s products are widely distributed and enjoyed by many consumers, if we look closer to its market we see that it has a few segments and one of the most important market breakdown is the segmentation of the family life cycle. Through extensive market research, one of the conclusions was that mothers play a large role in the decisions in the house and introducing brand loyalty. Being aware of this is why they have a variety of commercials of mothers or families bonding over a Hershey product.
Children are of course the targets for the chocolate products but if we pay attention we see that many adults have inclination to consumer Hershey products. This was proven by some research that adults consume over 55% of all the candy sold. Therefore, by demographics they market the bite size chocolates to adults. They started out with the Hershey Kisses that is now loved by all. Recently by adding more bite size chocolates they appeal to those who are trying to be health conscious and feel that a regular chocolate bar is too much. By having bite size versions, they feel as if they aren’t over indulging and are also viewed more portable alternative. The adult target market is very profitable and where most of their business comes from. This is how they have managed to stay ahead of the competition.

Hershey’s is known for offering tons of products for their consumers to choose from. One thing is that they do not target anyone in particular they pretty much market their products towards anyone at any age. Children, teenagers, young adults, adults, and older adults are all a part of Hershey’s target customer. They like to advertise around the holidays, especially Christmas and Valentine’s Day, since those are the two holidays when the most chocolate is bought. The reason they can have such a broad range of customers is because they offer any type of chocolate as well as candy. From their notorious Hershey’s milk chocolate bar to their Twizzlers. Another reason that they can have such a big range of customers is because their products are on the lower end of the pricing spectrum. It normally does not break the bank if someone wants to go to the store and purchase a chocolate bar.
Along with their vast target Hershey’s has also tried to be a little healthier by incorporating sugar free chocolates, catering to those especially with diabetes. They also are committed to using simple ingredients which means no artificial preservatives, no artificial sweeteners, and no artificial flavors (The Hershey Company, 2017). The reason behind this is because Hershey’s wants to be a caring brand they want their customers to realize that they care even about their health. An added bonus to this is that they have made the nutrition labels easier to read so that their customers know exactly what is in their food. This goes back to having more simple ingredients instead of all those additives and substitutes. They even state that 80% of their ingredients are cocoa, nets, milk, and sugar (The Hershey Company, 2017).
Besides the easier to read labels, Hershey’s also has a glossary of ingredients on their website so that people can find what ingredient is found on the nutrition label of a product of their choice. This comes in handy for weirdly named ingredients that no one seems to understand or know what it is. They developed a specific page on their website so there is no more wondering or guessing, you can easily see exactly what it is and why they use it (The Hershey Company, 2017). Another page that can be clicked on from here is their ‘Four Core Ingredients’ page. This explains any question someone might have about their milk, cocoa, nuts, and sugars (The Hershey Company, 2017).
Besides showing that they care about their customer’s health, they also care about helping their customers with recipes. Hershey’s offers a wide range of recipes on their website which is super helpful if someone enjoys baking. This also shows that the company not only offers chocolates to eat but also to use and bake with. Helping customers with finding recipes helps the company interact with the customers on a deeper level. It makes the company more attractive to consumers by showing how much they actually care.

Hershey’s Global Marketing Group is responsible for their pricing strategy. In recent years, Hershey has avoided some price increases by reducing the size of its candy bars. This is in direct opposition to Nestle, who did not change the size, but did increase their price. Hershey’s also employs high-low pricing, with products being offered at higher prices than their competitors’. These prices are then reduced with promotions, coupons, and sales. However, the company is experiencing price issues with their largest distributor, forcing them to price-cut in order to fend off competitors.
In their annual report, Hershey noted that “Future developments related to the investigation by government regulators of alleged pricing practices by members of the confectionary industry could impact our reputation, the regulatory environment under which we operate, and our operating results (The Hershey Company, 2017).” Without disclosing the source of the investigation, the report continues to explain that the company’s costs could increase, as a result of legal fees and potential new government mandates.

Hershey’s distribution strategy is one of many different routes to get products to the customer. Hershey manufactures all of their chocolate with no outside help. There are numerous Hershey products that they have to get to consumers all over the world. Their number one source of distribution is through retail stores such as gas stations and grocery stores. This is the quickest and most simplistic way for Hershey to get their product from production and into the consumers mouth. Retail stores though, only sell to the public and once the product has been bought from the retail store it is not allowed to be resold. As well, you will wind up buying the product at the price made by the retail store that way they make enough to pay Hershey and have enough left over for profit.
If the consumer at the end of the day does not like that route, they have two other alternatives buying directly from the factory in Hershey, Pennsylvania. or buying at wholesale from warehouse stores. Most people that choose this route end up not buying it directly from the factory since it has to be shipped to the consumer and then they have to wait on the product. The wholesale warehouses are usually how a lot of consumers buy them, especially with the wholesale phenomenon booming at this point. This allows the consumer to buy more of the products at one time and pay the same as the retailers do directly from Hershey. These types of places are stores such as Sam’s Club, BJ’s, and Costco. This is how places such as concession stands and small stores do not rely on distributors. This allows them to buy bulk of the item and still be able to resell the products.

Hershey is also an international product that you can find just about everywhere you go in the world. Hershey uses thousands of distribution centers all over the world to get their chocolate products to consumers on every edge of the world. This is helped by ten different global Hershey headquarters in countries such as Canada, China, Japan, Brazil, and more. This allows them to oversee day to day operations in all of the global factories and distribution centers.
Promotional Strategies
Advertising Strategies
Hershey’s current advertising strategy focuses on telling stories and creating memories. The strategy focuses on uniting all of Hershey’s branded treats under one campaign unlike their old advertising strategy that consisted on advertising each of the company’s products separately. The idea behind the present advertising strategy is to create a sense of emotional ties to the brand. Hershey is using the slogan, Hello Happy. Hello Hershey’s as a way to relate the taste of their treats as creating a sense of happiness. Hershey previously used an advertisement called My Dad, that advertised a young girl seeking time with her busy dad that is always working. At the end of the advertisement the young girl and her father can be seen in the kitchen making s’mores together using Hershey’s Syrup and candy bars. Hershey’s new advertising concept is aiming to leverage the power of Hershey into a mega franchise (Schultz, 2016).

Hershey has always focused on allowing their customers time to shop, and not pressuring their customers to make a purchase. The company decided to incorporate the effects of technology and increase impulse buying by installing chocolate dispensers in the self-checkout areas in stores. They also added candy and snack kiosks and vending machines around pick up areas such as nearby gas pumps at gas stations. Hershey Company began using the impulse selling strategy due to proven facts of consumers most of the time end up buying items that aren’t on their shopping lists (Tuttle, 2015).

Public Relations/Publicity Strategies

Hershey’s publicity strategy is currently targeting on making their chocolate treats healthier by eliminating and substituting some of the ingredients in the products with better choices. In 2013, the company launched a public relations campaign called Summer of Sweet Independence to introduce Hershey’s new Simple Pleasures chocolate brand. The goal of the campaign was to stop women from feeling guilty from eating foods that they love. The campaign showcased making women feel independent from guilt of eating the things they enjoy without the burden. This campaign alone caused sales to soar past their forecasts and made the company over 217 million media impressions (Ketchum, 2013).
Sales Promotion Strategies
Hershey’s sales promotion strategy targets the theory of in-store marketing and promotion working better than advertising. The company doesn’t focus on advertising as much as most companies, because they view chocolate as an impulse item. If customers just see their products in the store and are craving chocolate they’re likely to purchase it (Thompson, 2006). Hershey also uses the holidays as a way to sale their candy in bulk and customized to have a personal touch. The company also offer promotional codes to provide discounts on their products online and in the store.

Hershey is one of the most renowned companies worldwide in chocolate manufacturing. It is the leading corporation in its field in North America. Hershey’s headquarter has been in Pennsylvania where it was originally founded in 1894 by Milton Hershey.

Hershey’s contribution of Milton Hershey School for orphans resulted in improvement of the social and public image of Hershey. Additionally, the company provides various social services to its employees such as parks, schools, and housing facility.
The chocolate maker giant has a diversified product menu with well-established brand names. In addition to chocolate manufacturing, Hershey is also well-heeled in pasta production and variety of products in USA. The company is active in promoting its brand name by contributing in various segments of industry like commercial segment, resorts, entertainment and other market areas. Moreover, Hershey believes in the importance of education and research. This is why the company supports education by facilitating teachers and students with dedicated toll-free number.
After all those privileges that Hershey provides, no wonder why its employees follow strict code of conduct laid long time ago by its founder.

Hershey has been running a debt that is higher than the other competing companies. Also, advertisement expenses have been increasing over the previous years. On the other hand, the increasing price of cocoa beans is a matter of concern for the company since its products’ prices are inversely proportional with the sales volume by units.

Opportunities
From a public health perspective, dark chocolate, widely made by Hershey, offers many advantages over other kinds of chocolate. With all the market competition, Hershey still has wide customer base that is very loyal to the company’s brands. In addition to its leadership in the North American market, Hershey still has various untapped markets in China, India Indonesia, Vietnam and other Asian countries. On the other hand, to alleviate the increasing costs of production, Hershey could explore new cocoa-producing areas such as India.


Grad School Marketing Research Project- Hershey’s Marketing Analysis

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The Hershey Company
External Environmental Analysis
General Environmental Analysis

For Milton S. Hershey, the third time was the charm. After two failed attempts at establishing candy companies, he finally succeeded with the Lancaster Caramel Company. In 1894, Hershey began adding chocolate to his caramels, while perfecting his own recipe for milk chocolate. By 1900, he was mass producing milk chocolate, making it more affordable and readily available for consumers. In the 117 years since, The Hershey Company has not only continued to innovate and offer new products, but it has also acquired other successful candy businesses, and expanded its operations to over 70 countries.

The Hershey Company was incorporated in 1927 under the laws of the State of Delaware. The company’s headquarters is in Hershey, Pennsylvania. Hershey leads the confectionary industry with more than 80 brands, consisting of 58% chocolate, 26% non-chocolate, and 16% refreshment, including gum and mint lines. Annual revenues exceed $7 billion and the company employs more than 20,000 individuals worldwide. At the end of 2016, Hershey’s stock price was valued at $103.43 per share, with a year-to-date range of $83.32 as the low and $113.89 as the high. At the end of the 2017 second quarter, the closing price was $107.37. The Hershey Company is constantly expanding its offerings and global footprint, while maintaining its competitive advantage domestically.
Hershey has several competitors, two of which are Nestlé and Ferrero Rocher. Each company has its different strengths and weaknesses. There are various economic, social, political, and technological factors that play a role in what works and does not work for each brand.
Nestlé is the world’s leading nutrition, health and wellness company. It’s also the largest food and beverage company in the world. The company was founded in 1866 and its headquarters is located in Switzerland. Nestlé sells more than 2,000 different brands out of seven food and beverage categories. The main products the company offers consist of powdered and liquid beverages, milk, ice cream, confectionary and pet care products (Nestlé, 2017).
Ferrero Rocher was founded in Italy in 1946 by Pietro Ferrero (NCA, 2017). Ferrero USA, Inc. was established in 1969 and is known as the Ferrero Group’s fifth largest commercial unit. Ferrero USA headquarters is currently in Somerset, NJ. The products produced by Ferrero Rocher consist of Nutella, Ferrero Rocher, chocolates, Tic-Tac’s, and Kinder. The company employed 220 workers back in 2015 and is constantly increasing at a 10% growth rate. The annual sales for Ferrero Rocher exceed 600 million dollars (NCA, 2017). Approximately 61% of annual sales are made during the last three months of the year. It has been estimated that roughly 3.6 billion Ferrero Rocher candies are sold every year in 53 countries, and its products are sold in more than 160 countries (Ferrero, 2015). In August 2016, Ferrero Rocher employed 33,000 employees (Ferrero, 2016).

Milton Hershey and his wife, Catherine, were philanthropists who established The Hershey Industrial School, which is known today as the Milton Hershey School. Once a boarding school for orphaned boys, today’s school educates thousands of underprivileged children in a family-like environment. Milton Hershey also built a community, enriched by the Cocoa House, High Point Mansion, Hotel Hershey, the Hershey Sports Arena, and the Penn State Milton S. Hershey Medical Center. The Community Building houses an indoor pool, gym, library, hospital, theater, game rooms, and a cafeteria. Hersheypark is an amusement park which includes rides, playgrounds, a swimming pool, entertainment venues, and a zoo. Milton Hershey created several trusts to ensure the longevity of the institutions he created, and the company continues to engage in socially responsible activities. In 2014, J.P. Bilbrey, Chairman, President and CEO was named Responsible CEO of the Year by CR Magazine. That same year, he was also chosen by Penny Pritzker, then U.S. Secretary of Commerce, to participate in President Obama’s Advisory Council on Doing Business in Africa.
The Hershey Company believes in reinvesting in their employees and their purpose. With an eye on economic trends, they continue to innovate and open new channels for distribution and competition. The company also monitors consumer expectations and has responded by increasing transparency, widening nutritional choices, and reformulating to more simple ingredients.
The social factors of Nestlé consist of commitments to help individuals and families to live healthier lives. The company plans to launch more nutritious foods and beverages, especially for mothers-to-be, new mothers and children. It also is aiming to further decrease sugars, sodium, and saturated fat. More vegetables, fiber-rich grains, pulses, nuts and seeds will be incorporated more in the foods and beverages. Nestlé believes in empowering parents, caregivers and teachers to foster healthy behaviors in children. The company is also pushing towards inspiring people to choose water in hopes to live healthier lives. A detailed explanation is even provided on packages as well as online. Nestlé is also a big supporter in breastfeeding and protects it by continuing to implement and industry policy to market breast-milk substitutes responsibly (Nestle USA, 2017).
Ferrero Rocher Company cares deeply for their consumers, and wants to be able to translate their passion into the chocolate. The company’s goal is to create unique products, develop innovative research, and production processes as well as using their own technologies. Ferrero Rocher uses the best and most high-quality products in order to maintain long lasting relationships to their loyal customers. The company also created the Ferrero Foundation to help improve the quality of life of elderly people. The foundation offers a variety of activities that help the elderly to live the ageing process as an occasion to discover new opportunities. It includes an auditorium, gyms, exhibition halls and spaces for medical and clinical conferences. There is also a state-of-the-art nursery for employees’ children. The “Progetto Imprenditorale Michele Ferrero” is another program that was created to help improve the living conditions of the communities of developing countries with more attention to focusing on children (Ferrero USA, Inc., 2017).

In 2012, the Louisiana Municipal Police Employees Retirement Union accused the company of employing illegal child labor at its cocoa farms and this litigation is still pending. The company has also been cited for health and safety violations at its Pennsylvania plant. In 2014, The Hershey Company announced the formation of CocoaAction, where several chocolate companies are working together to ensure cocoa sustainability in West Africa. CocoaAction will also be “addressing child labor through labor monitoring and remediation, making basic education available, ensuring children go to school, and improving gender parity so that women have a greater influence in their communities’ decision making and development (The Hershey Company, 2014).”
There are many political factors that can affect the Nestlé Company. The major factor is regarding whether taxes will increase or decrease. If taxes increase, the will be a decrease in consumers and sales stock. If taxes decrease, there is a chance that consumers will buy more than usual. Another political factor has been that Nestlé started receiving criticism from its high levels or sugar in their chocolate (Nestle USA, 2017). There have even been rumors regarding the price of coffee beans rising which may cause the company to have to increase their prices or alter their products. High interest rates could cause Nestlé to not want to borrow as much money for its expansion with KitKat. Lastly, a tax could be put on sweets to encourage consumers to eat more healthy foods (Jurevicius, 2017).
For Ferrero Rocher, the political factor that was discovered was that Ferrero Rocher’s products is number one in Germany, Italy, and France, but only has a 5% share in Britain. The company is working on raising the percentage of shares in Britain.

Hershey recognizes that factors that could negatively impact the business include “disruptions, failures, or security breaches of our information technology infrastructure (The Hershey Company, 2014).” They are also investing in technology to assist in cocoa farming and to improve the lives of cocoa farmers. A corporate initiative to save 20 million gallons of water is underway with the installation of new technology in its manufacturing plants that will eliminate the use of chemicals for cleaning water.
Nestlé and Samsung are collaborating on digital nutrition and health, and will be announcing their research collaboration to explore the potential of nutrition science and digital sensor technologies. Their goal with this new collaboration is to provide new insights into healthy living. The new digital platform will provide customers with more personalized recommendations in relation to nutrition, lifestyle, and fitness. Nestlé’s reason for creating this project was based upon the idea that today we live in an era where the data from sensors and devices can help society to better understand the company’s nutrition and activity with the hopes of guiding individuals towards a healthier lifestyle (NestleUSA, 2017).
There are several technological factors regarding Ferro Rocher. One is that the company is currently working on new technical solutions to ensure that the packaging can protect the products from extreme temperatures in challenging climates as well as active packaging, anti-tampering packaging, and high oxygen barrier packaging. The company also does an excellent job at maintaining its privacy. No one is allowed to take a smartphone onto the factory floor, and it’s known that only a select few of journalists have been granted the privilege to go inside (Ferrero – A Joy to Discover, 2015).

Hershey’s most popular products are categorized under two business segments. Hershey’s chocolate, Hershey’s Kisses, and Reese’s products are sold under the chocolate business unit. The sweets and refreshments segment carries Twizzlers, Ice Breakers, Bubble Yum, and the like. The Hershey Company has set international growth targets, with a goal of reducing its North American market presence to 75%. They are specifically targeting China and their middle class, but thus far revenues from that market have fallen below forecast. Hershey’s plans to continue with mergers and acquisitions in the coming years, in an effort to gain market share from their competitors. (The Hershey Company, 2017)
Evaluation of the Mission
The Hershey Company was founded by Milton S. Hershey in 1894. It is headquartered in Hershey, Pennsylvania. The company’s mission has been “bringing sweet moments of Hershey happiness to the world every day.” The Hershey company was the first American candy company to produce milk chocolate at reasonable prices, which before was a luxury only affordable to the wealthy class. In addition to developing different candy brands and improving his chocolate formula, Milton Hershey set out to build a strong infrastructure for his company.
The Hershey factory was built in Derry Township, Pennsylvania, but Milton Hershey continued to expand and built a company town, which came to be known as Hershey, Pennsylvania. Today Hershey, Inc. operates in 90 countries, though its presence is largest in the United States. The list of products has been continuously growing since the company’s foundation.
The Hershey Company manufactures, markets, sells, and distributes chocolate and sugar confectionery products, pantry items, toppings and beverages, and gum and mint refreshment products. These products are sold under more than 80 brand names in over 70 countries. The most well-known ones Hershey’s, Reese’s, Hershey’s Kisses, Hershey’s Bliss, Hershey’s Special Dark, Kit Kat, Twizzlers, Jolly Rancher, and Ice Breakers. A full list of products can be found in Hershey’s Factbook, and on either of their websites (mb113608, 2013).
Evaluation of the Objectives
Hershey is a giant for-profit company with shares that are being publicly traded.
As of October 12, 2015, Hershey’s stock had a market cap of $15.3 billion. The company is a component of the S&P 500 Index (SPY) and part of the Consumer Staples Select Sector SPDR ETF (XLP). Hersey and its peer, Mondelez International (MDLZ) together constitute 4.8% of XLP. Hershey’s stock has given annual average returns of 11% and 12.5% in the last 15-years and last 20-years, respectively.
According to Statists, Hershey and Mars are the largest players in the U.S. confectionery market, with market shares of 31.2% and 29.2%, respectively. In Canada, Nestle (NSRGY) was the leader with an 18.6% share, followed by Hershey, Mondelez International (MDLZ), and Mars. In the U.S., Hershey is the leading chocolate company with a 44.4% share in the chocolate market, followed by Mars, which has a 29.5% share.
Hershey operates in two market segments, North American and International. It generates 85% of its total revenues from the North American market. However, Hershey is focused on building its international presence, especially with the significantly growing economies overseas, such as China, India, and Brazil. Hershey has thus set a goal to increase its international footprint to approximately 50% of its total revenues by 2018, by focusing on geographies outside of the U.S. and Canada. Statista estimates that global confectionery sales totaled $198.4 billion in 2014. Western Europe’s contribution to the global confectionery market was nearly 29.5%, followed by the Asia Pacific market with 18.6% share. According to Mondelez, the eight markets driving 70% of the global confectionery market are Brazil, China, Colombia, India, Russia, South Africa, Turkey, and Vietnam.
Hershey’s strategy in the international market relies on partnerships with foreign companies that have knowledge of the local market. The company is thus creating partnerships through mergers, acquisitions, and joint ventures. More specifically, Hershey’s main focus is on the emerging markets of China, Brazil, India, and Mexico. In the international market, Hershey gained a chocolate market share of between 5.8% and 7.2% in the 2011–2014 period. Between 2009 and 2014, Hershey’s chocolate category grew by an estimated CAGR (compound annual growth rate) of 12%, 12%, and 30% in the markets of Brazil, China, and India, respectively (Key, 2015).
Evaluation of the Functional Areas
Marketing
The Hershey Company’s marketing strategy primary focus is on developing strong brand equity, product innovation, and consistently updating product quality. The company’s main strengths consist of brand awareness and brand loyalty. Hershey’s leading brands are Kisses, Twizzlers, Reese’s, Kit-Kat, and the Hershey Bar. The company does 80% of its marketing in North America which can be seen as a weakness. Hershey is also known to operate as a micro-marketing company because they are known to market certain products to their small target audiences just to meet their specific demands (Key, 2015).
Hershey recently created several new marketing initiatives. The company is working on increasing its advertising budget so it can be able to promote its new product innovations to the world. Hershey also uses its strategy of holiday marketing to design special themes for its chocolates and candies for special holidays and occasions. This technique alone has brought in a lot of revenue for the business due to the company being able to charge higher prices for personalization. Hershey has partnered with an advertising agency, North Castle Partners, to gain fully integrated marketing programs for all of its refreshments and sugar confectionery brands. It has also decided to invest 20% of its total media for digital media purposes (Key, 2015).
Hershey is working toward making a few changes regarding its products in the near future. The company intends to consolidate its creative campaign for several of its iconic brands. Hershey is planning to stop using GMO sugar, milk from cows treated with bovine growth hormones, artificial colors and flavors, gluten and high fructose corn syrup. The company also plans to offer information regarding some new initiatives, such as identifying simple, easily understood ingredients on its labels, ingredient transparency, minimally processed ingredients, and sustainably sourced ingredients (The Hershey Company Investors Relations Department, 2017).
Finance
The Hershey Company reported net sales of $7,440,181 at December 31, 2016, an increase of 0.7% over 2105’s reported net sales. Cost of sales for 2016, $4,282,290, increased 7% over 2015, and 4.5% over 2014. Hershey’s gross profit at year-end 2016 was $3,157,891, operating profit was $1,205,783, and net income was $720,044. Total revenues have declined each quarter since October 2016. Cost of goods sold increased fourth quarter, 2016, but declined for both quarters in 2017. Operating income dropped from $374.02 in October 2016 to $191.93 in April 2017, but has risen to $315.34 as of 7/2/2017. Net income also rose in the second quarter of 2017, after experiencing declines in the prior two quarters, and was reported at $203.50. As reported in its 2016 Annual Report, the company anticipated a 2.25%-3.25% growth in net sales in 2017, including a favorable impact resulting from acquisitions, and excluding unfavorable results attributed to foreign exchange rates. Year-to-date net sales for 2017 total $3.54 billion.
The inventory turnover ratio measures how often inventory is turned over in a year. When calculated using sales, Hershey’s inventory turnover rate for 2016 is 9.94, or every 36 days. When calculated using cost of goods sold, which is the standard method used, the inventory turnover rate for the same year is 5.72, or every 63 days. This is less than the industry average of 7.9, or every 46 days, for the confectionary and nut industry, signaling less effective inventory management at Hershey. Hershey’s current ratio of .95 suggests the company may have difficulty paying its obligations over the short-term. The industry average current ratio is 2.1 for the year 2016.
Total revenues have declined each quarter since October 2016. Cost of goods sold increased fourth quarter, 2016, but have also declined for both quarters in 2017. Operating income dropped from $374.02 in October 2016 to $191.93 in April 2017, but has risen to $315.34 as of 7/2/2017. Net income also rose in the second quarter of 2017, after experiencing declines in the prior two quarters, and was reported at $203.50.
Total assets increased in July 2017 as opposed to the prior two quarters, and this is primarily due to an increase in total inventories. Total liabilities have also increased, despite a decrease in accounts payable and long-term debt. The increase is attributable to short-term debt.
Hershey’s (HSY) common stock is listed and traded on the NSYE, however their Class B Common Stock is not publicly traded. At December 31, 2016, the closing price of the common stock was $103.43, which increased to $109.25 at March 31, 2017, and declined to $107.37 at June 30, 2017. On September 15, 2017, The Hershey Company will pay its 351st consecutive quarterly dividend.

Mars Company is a $33 billion business that spreads across the spectrum from candy bars to chewing gum and all the way to dog food. Mars is a global company with headquarters in Belgium, New Jersey, Africa, Virginia, Asia, and even right here in South Carolina. They have made jobs available to people around the world and allows for job advancement as well when it comes to those jobs. When it comes to politics Mars does not provide money as company to presidential candidates but allows their employees to back those candidates with their own money. Most of which in recent years back democratic candidates. Becoming a $33 billion company means you have to have successful products which include the $5 billion brands such as Snickers, M&M’S, Dove, Milky Way, Twix and more. Mars also owns the $15 billion Uncle Ben’s Rice company which has been in existence for over 70 years. As well Mars owns the billion-dollar pet food companies Pedigree and Cesars. Mars also has a symbioscience branch that does extensive research in how to better the process of making their products as well as making the earth more sustainable. “Pioneering some of the most innovative and breakthrough fundamental scientific research, the Mars Symbioscience team has incubated, introduced and transitioned five technology platforms in the areas of food, plant, biomedical and life sciences. From creating sustainable businesses for farmers to tree nurseries, composting and marine culture with seahorse farming, we are committed to developing solutions that have a positive impact on people and the planet (Mars, Incorporated, 2016).”

Even though Hershey’s Corporation is one of the world’s leaders in chocolate candies, they have a bad reputation whenever it comes to their human resources department and how they treat their employees. A major issue is they have been under scrutiny for the use of child labor in third world countries, like West Africa, where their cocoa farms are located. They, along with seven other companies in the chocolate and cocoa industry, pledged $2 million to help combat the child labor issues in cocoa communities with help from the International Labor Office, (“ILO and chocolate and cocoa industry forge new partnership to combat child labor in West Africa,” 2011). Another issue Hershey’s faces is how they treat their employees because, it is viewed as less than fair and less safe than most places. But, it seems as if they are working to make a comeback. According to Business Wire in 2013, The Hershey Company was recognized as one of America’s “100 Best Corporate Citizens,” (The Hershey Company Recognized as One of America’s ‘100 Best Corporate Citizens,’ 2013). However, it does not seem Hershey’s or any of the other leading chocolate and cocoa industries have completely stopped the use of children for labor in their supply chain. This has been going on for 15 years now and it seems it is hard for them to stop since there are not enough people to help with the work, plus the areas in which child labor is employed are poverty-stricken. Another thing, according to Fortune these numbers seem to be increasing instead of decreasing like they should be (O’Keefe, 2016).

Evaluation of Marketing Strategies
Target Market

Identifying a company’s target market is essential for any business to focus its marketing activities on it. Although Hershey’s products are widely distributed and enjoyed by many consumers, if we look closer to its market we see that it has a few segments and one of the most important market breakdown is the segmentation of the family life cycle. Through extensive market research, one of the conclusions was that mothers play a large role in the decisions in the house and introducing brand loyalty. Being aware of this is why they have a variety of commercials of mothers or families bonding over a Hershey product.
Children are of course the targets for the chocolate products but if we pay attention we see that many adults have inclination to consumer Hershey products. This was proven by some research that adults consume over 55% of all the candy sold. Therefore, by demographics they market the bite size chocolates to adults. They started out with the Hershey Kisses that is now loved by all. Recently by adding more bite size chocolates they appeal to those who are trying to be health conscious and feel that a regular chocolate bar is too much. By having bite size versions, they feel as if they aren’t over indulging and are also viewed more portable alternative. The adult target market is very profitable and where most of their business comes from. This is how they have managed to stay ahead of the competition.

Hershey’s is known for offering tons of products for their consumers to choose from. One thing is that they do not target anyone in particular they pretty much market their products towards anyone at any age. Children, teenagers, young adults, adults, and older adults are all a part of Hershey’s target customer. They like to advertise around the holidays, especially Christmas and Valentine’s Day, since those are the two holidays when the most chocolate is bought. The reason they can have such a broad range of customers is because they offer any type of chocolate as well as candy. From their notorious Hershey’s milk chocolate bar to their Twizzlers. Another reason that they can have such a big range of customers is because their products are on the lower end of the pricing spectrum. It normally does not break the bank if someone wants to go to the store and purchase a chocolate bar.
Along with their vast target Hershey’s has also tried to be a little healthier by incorporating sugar free chocolates, catering to those especially with diabetes. They also are committed to using simple ingredients which means no artificial preservatives, no artificial sweeteners, and no artificial flavors (The Hershey Company, 2017). The reason behind this is because Hershey’s wants to be a caring brand they want their customers to realize that they care even about their health. An added bonus to this is that they have made the nutrition labels easier to read so that their customers know exactly what is in their food. This goes back to having more simple ingredients instead of all those additives and substitutes. They even state that 80% of their ingredients are cocoa, nets, milk, and sugar (The Hershey Company, 2017).
Besides the easier to read labels, Hershey’s also has a glossary of ingredients on their website so that people can find what ingredient is found on the nutrition label of a product of their choice. This comes in handy for weirdly named ingredients that no one seems to understand or know what it is. They developed a specific page on their website so there is no more wondering or guessing, you can easily see exactly what it is and why they use it (The Hershey Company, 2017). Another page that can be clicked on from here is their ‘Four Core Ingredients’ page. This explains any question someone might have about their milk, cocoa, nuts, and sugars (The Hershey Company, 2017).
Besides showing that they care about their customer’s health, they also care about helping their customers with recipes. Hershey’s offers a wide range of recipes on their website which is super helpful if someone enjoys baking. This also shows that the company not only offers chocolates to eat but also to use and bake with. Helping customers with finding recipes helps the company interact with the customers on a deeper level. It makes the company more attractive to consumers by showing how much they actually care.

Hershey’s Global Marketing Group is responsible for their pricing strategy. In recent years, Hershey has avoided some price increases by reducing the size of its candy bars. This is in direct opposition to Nestle, who did not change the size, but did increase their price. Hershey’s also employs high-low pricing, with products being offered at higher prices than their competitors’. These prices are then reduced with promotions, coupons, and sales. However, the company is experiencing price issues with their largest distributor, forcing them to price-cut in order to fend off competitors.
In their annual report, Hershey noted that “Future developments related to the investigation by government regulators of alleged pricing practices by members of the confectionary industry could impact our reputation, the regulatory environment under which we operate, and our operating results (The Hershey Company, 2017).” Without disclosing the source of the investigation, the report continues to explain that the company’s costs could increase, as a result of legal fees and potential new government mandates.

Hershey’s distribution strategy is one of many different routes to get products to the customer. Hershey manufactures all of their chocolate with no outside help. There are numerous Hershey products that they have to get to consumers all over the world. Their number one source of distribution is through retail stores such as gas stations and grocery stores. This is the quickest and most simplistic way for Hershey to get their product from production and into the consumers mouth. Retail stores though, only sell to the public and once the product has been bought from the retail store it is not allowed to be resold. As well, you will wind up buying the product at the price made by the retail store that way they make enough to pay Hershey and have enough left over for profit.
If the consumer at the end of the day does not like that route, they have two other alternatives buying directly from the factory in Hershey, Pennsylvania. or buying at wholesale from warehouse stores. Most people that choose this route end up not buying it directly from the factory since it has to be shipped to the consumer and then they have to wait on the product. The wholesale warehouses are usually how a lot of consumers buy them, especially with the wholesale phenomenon booming at this point. This allows the consumer to buy more of the products at one time and pay the same as the retailers do directly from Hershey. These types of places are stores such as Sam’s Club, BJ’s, and Costco. This is how places such as concession stands and small stores do not rely on distributors. This allows them to buy bulk of the item and still be able to resell the products.

Hershey is also an international product that you can find just about everywhere you go in the world. Hershey uses thousands of distribution centers all over the world to get their chocolate products to consumers on every edge of the world. This is helped by ten different global Hershey headquarters in countries such as Canada, China, Japan, Brazil, and more. This allows them to oversee day to day operations in all of the global factories and distribution centers.
Promotional Strategies
Advertising Strategies
Hershey’s current advertising strategy focuses on telling stories and creating memories. The strategy focuses on uniting all of Hershey’s branded treats under one campaign unlike their old advertising strategy that consisted on advertising each of the company’s products separately. The idea behind the present advertising strategy is to create a sense of emotional ties to the brand. Hershey is using the slogan, Hello Happy. Hello Hershey’s as a way to relate the taste of their treats as creating a sense of happiness. Hershey previously used an advertisement called My Dad, that advertised a young girl seeking time with her busy dad that is always working. At the end of the advertisement the young girl and her father can be seen in the kitchen making s’mores together using Hershey’s Syrup and candy bars. Hershey’s new advertising concept is aiming to leverage the power of Hershey into a mega franchise (Schultz, 2016).

Hershey has always focused on allowing their customers time to shop, and not pressuring their customers to make a purchase. The company decided to incorporate the effects of technology and increase impulse buying by installing chocolate dispensers in the self-checkout areas in stores. They also added candy and snack kiosks and vending machines around pick up areas such as nearby gas pumps at gas stations. Hershey Company began using the impulse selling strategy due to proven facts of consumers most of the time end up buying items that aren’t on their shopping lists (Tuttle, 2015).

Public Relations/Publicity Strategies

Hershey’s publicity strategy is currently targeting on making their chocolate treats healthier by eliminating and substituting some of the ingredients in the products with better choices. In 2013, the company launched a public relations campaign called Summer of Sweet Independence to introduce Hershey’s new Simple Pleasures chocolate brand. The goal of the campaign was to stop women from feeling guilty from eating foods that they love. The campaign showcased making women feel independent from guilt of eating the things they enjoy without the burden. This campaign alone caused sales to soar past their forecasts and made the company over 217 million media impressions (Ketchum, 2013).
Sales Promotion Strategies
Hershey’s sales promotion strategy targets the theory of in-store marketing and promotion working better than advertising. The company doesn’t focus on advertising as much as most companies, because they view chocolate as an impulse item. If customers just see their products in the store and are craving chocolate they’re likely to purchase it (Thompson, 2006). Hershey also uses the holidays as a way to sale their candy in bulk and customized to have a personal touch. The company also offer promotional codes to provide discounts on their products online and in the store.

Hershey is one of the most renowned companies worldwide in chocolate manufacturing. It is the leading corporation in its field in North America. Hershey’s headquarter has been in Pennsylvania where it was originally founded in 1894 by Milton Hershey.

Hershey’s contribution of Milton Hershey School for orphans resulted in improvement of the social and public image of Hershey. Additionally, the company provides various social services to its employees such as parks, schools, and housing facility.
The chocolate maker giant has a diversified product menu with well-established brand names. In addition to chocolate manufacturing, Hershey is also well-heeled in pasta production and variety of products in USA. The company is active in promoting its brand name by contributing in various segments of industry like commercial segment, resorts, entertainment and other market areas. Moreover, Hershey believes in the importance of education and research. This is why the company supports education by facilitating teachers and students with dedicated toll-free number.
After all those privileges that Hershey provides, no wonder why its employees follow strict code of conduct laid long time ago by its founder.

Hershey has been running a debt that is higher than the other competing companies. Also, advertisement expenses have been increasing over the previous years. On the other hand, the increasing price of cocoa beans is a matter of concern for the company since its products’ prices are inversely proportional with the sales volume by units.

Opportunities
From a public health perspective, dark chocolate, widely made by Hershey, offers many advantages over other kinds of chocolate. With all the market competition, Hershey still has wide customer base that is very loyal to the company’s brands. In addition to its leadership in the North American market, Hershey still has various untapped markets in China, India Indonesia, Vietnam and other Asian countries. On the other hand, to alleviate the increasing costs of production, Hershey could explore new cocoa-producing areas such as India.


Grad School Marketing Research Project- Hershey’s Marketing Analysis

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The Hershey Company
External Environmental Analysis
General Environmental Analysis

For Milton S. Hershey, the third time was the charm. After two failed attempts at establishing candy companies, he finally succeeded with the Lancaster Caramel Company. In 1894, Hershey began adding chocolate to his caramels, while perfecting his own recipe for milk chocolate. By 1900, he was mass producing milk chocolate, making it more affordable and readily available for consumers. In the 117 years since, The Hershey Company has not only continued to innovate and offer new products, but it has also acquired other successful candy businesses, and expanded its operations to over 70 countries.

The Hershey Company was incorporated in 1927 under the laws of the State of Delaware. The company’s headquarters is in Hershey, Pennsylvania. Hershey leads the confectionary industry with more than 80 brands, consisting of 58% chocolate, 26% non-chocolate, and 16% refreshment, including gum and mint lines. Annual revenues exceed $7 billion and the company employs more than 20,000 individuals worldwide. At the end of 2016, Hershey’s stock price was valued at $103.43 per share, with a year-to-date range of $83.32 as the low and $113.89 as the high. At the end of the 2017 second quarter, the closing price was $107.37. The Hershey Company is constantly expanding its offerings and global footprint, while maintaining its competitive advantage domestically.
Hershey has several competitors, two of which are Nestlé and Ferrero Rocher. Each company has its different strengths and weaknesses. There are various economic, social, political, and technological factors that play a role in what works and does not work for each brand.
Nestlé is the world’s leading nutrition, health and wellness company. It’s also the largest food and beverage company in the world. The company was founded in 1866 and its headquarters is located in Switzerland. Nestlé sells more than 2,000 different brands out of seven food and beverage categories. The main products the company offers consist of powdered and liquid beverages, milk, ice cream, confectionary and pet care products (Nestlé, 2017).
Ferrero Rocher was founded in Italy in 1946 by Pietro Ferrero (NCA, 2017). Ferrero USA, Inc. was established in 1969 and is known as the Ferrero Group’s fifth largest commercial unit. Ferrero USA headquarters is currently in Somerset, NJ. The products produced by Ferrero Rocher consist of Nutella, Ferrero Rocher, chocolates, Tic-Tac’s, and Kinder. The company employed 220 workers back in 2015 and is constantly increasing at a 10% growth rate. The annual sales for Ferrero Rocher exceed 600 million dollars (NCA, 2017). Approximately 61% of annual sales are made during the last three months of the year. It has been estimated that roughly 3.6 billion Ferrero Rocher candies are sold every year in 53 countries, and its products are sold in more than 160 countries (Ferrero, 2015). In August 2016, Ferrero Rocher employed 33,000 employees (Ferrero, 2016).

Milton Hershey and his wife, Catherine, were philanthropists who established The Hershey Industrial School, which is known today as the Milton Hershey School. Once a boarding school for orphaned boys, today’s school educates thousands of underprivileged children in a family-like environment. Milton Hershey also built a community, enriched by the Cocoa House, High Point Mansion, Hotel Hershey, the Hershey Sports Arena, and the Penn State Milton S. Hershey Medical Center. The Community Building houses an indoor pool, gym, library, hospital, theater, game rooms, and a cafeteria. Hersheypark is an amusement park which includes rides, playgrounds, a swimming pool, entertainment venues, and a zoo. Milton Hershey created several trusts to ensure the longevity of the institutions he created, and the company continues to engage in socially responsible activities. In 2014, J.P. Bilbrey, Chairman, President and CEO was named Responsible CEO of the Year by CR Magazine. That same year, he was also chosen by Penny Pritzker, then U.S. Secretary of Commerce, to participate in President Obama’s Advisory Council on Doing Business in Africa.
The Hershey Company believes in reinvesting in their employees and their purpose. With an eye on economic trends, they continue to innovate and open new channels for distribution and competition. The company also monitors consumer expectations and has responded by increasing transparency, widening nutritional choices, and reformulating to more simple ingredients.
The social factors of Nestlé consist of commitments to help individuals and families to live healthier lives. The company plans to launch more nutritious foods and beverages, especially for mothers-to-be, new mothers and children. It also is aiming to further decrease sugars, sodium, and saturated fat. More vegetables, fiber-rich grains, pulses, nuts and seeds will be incorporated more in the foods and beverages. Nestlé believes in empowering parents, caregivers and teachers to foster healthy behaviors in children. The company is also pushing towards inspiring people to choose water in hopes to live healthier lives. A detailed explanation is even provided on packages as well as online. Nestlé is also a big supporter in breastfeeding and protects it by continuing to implement and industry policy to market breast-milk substitutes responsibly (Nestle USA, 2017).
Ferrero Rocher Company cares deeply for their consumers, and wants to be able to translate their passion into the chocolate. The company’s goal is to create unique products, develop innovative research, and production processes as well as using their own technologies. Ferrero Rocher uses the best and most high-quality products in order to maintain long lasting relationships to their loyal customers. The company also created the Ferrero Foundation to help improve the quality of life of elderly people. The foundation offers a variety of activities that help the elderly to live the ageing process as an occasion to discover new opportunities. It includes an auditorium, gyms, exhibition halls and spaces for medical and clinical conferences. There is also a state-of-the-art nursery for employees’ children. The “Progetto Imprenditorale Michele Ferrero” is another program that was created to help improve the living conditions of the communities of developing countries with more attention to focusing on children (Ferrero USA, Inc., 2017).

In 2012, the Louisiana Municipal Police Employees Retirement Union accused the company of employing illegal child labor at its cocoa farms and this litigation is still pending. The company has also been cited for health and safety violations at its Pennsylvania plant. In 2014, The Hershey Company announced the formation of CocoaAction, where several chocolate companies are working together to ensure cocoa sustainability in West Africa. CocoaAction will also be “addressing child labor through labor monitoring and remediation, making basic education available, ensuring children go to school, and improving gender parity so that women have a greater influence in their communities’ decision making and development (The Hershey Company, 2014).”
There are many political factors that can affect the Nestlé Company. The major factor is regarding whether taxes will increase or decrease. If taxes increase, the will be a decrease in consumers and sales stock. If taxes decrease, there is a chance that consumers will buy more than usual. Another political factor has been that Nestlé started receiving criticism from its high levels or sugar in their chocolate (Nestle USA, 2017). There have even been rumors regarding the price of coffee beans rising which may cause the company to have to increase their prices or alter their products. High interest rates could cause Nestlé to not want to borrow as much money for its expansion with KitKat. Lastly, a tax could be put on sweets to encourage consumers to eat more healthy foods (Jurevicius, 2017).
For Ferrero Rocher, the political factor that was discovered was that Ferrero Rocher’s products is number one in Germany, Italy, and France, but only has a 5% share in Britain. The company is working on raising the percentage of shares in Britain.

Hershey recognizes that factors that could negatively impact the business include “disruptions, failures, or security breaches of our information technology infrastructure (The Hershey Company, 2014).” They are also investing in technology to assist in cocoa farming and to improve the lives of cocoa farmers. A corporate initiative to save 20 million gallons of water is underway with the installation of new technology in its manufacturing plants that will eliminate the use of chemicals for cleaning water.
Nestlé and Samsung are collaborating on digital nutrition and health, and will be announcing their research collaboration to explore the potential of nutrition science and digital sensor technologies. Their goal with this new collaboration is to provide new insights into healthy living. The new digital platform will provide customers with more personalized recommendations in relation to nutrition, lifestyle, and fitness. Nestlé’s reason for creating this project was based upon the idea that today we live in an era where the data from sensors and devices can help society to better understand the company’s nutrition and activity with the hopes of guiding individuals towards a healthier lifestyle (NestleUSA, 2017).
There are several technological factors regarding Ferro Rocher. One is that the company is currently working on new technical solutions to ensure that the packaging can protect the products from extreme temperatures in challenging climates as well as active packaging, anti-tampering packaging, and high oxygen barrier packaging. The company also does an excellent job at maintaining its privacy. No one is allowed to take a smartphone onto the factory floor, and it’s known that only a select few of journalists have been granted the privilege to go inside (Ferrero – A Joy to Discover, 2015).

Hershey’s most popular products are categorized under two business segments. Hershey’s chocolate, Hershey’s Kisses, and Reese’s products are sold under the chocolate business unit. The sweets and refreshments segment carries Twizzlers, Ice Breakers, Bubble Yum, and the like. The Hershey Company has set international growth targets, with a goal of reducing its North American market presence to 75%. They are specifically targeting China and their middle class, but thus far revenues from that market have fallen below forecast. Hershey’s plans to continue with mergers and acquisitions in the coming years, in an effort to gain market share from their competitors. (The Hershey Company, 2017)
Evaluation of the Mission
The Hershey Company was founded by Milton S. Hershey in 1894. It is headquartered in Hershey, Pennsylvania. The company’s mission has been “bringing sweet moments of Hershey happiness to the world every day.” The Hershey company was the first American candy company to produce milk chocolate at reasonable prices, which before was a luxury only affordable to the wealthy class. In addition to developing different candy brands and improving his chocolate formula, Milton Hershey set out to build a strong infrastructure for his company.
The Hershey factory was built in Derry Township, Pennsylvania, but Milton Hershey continued to expand and built a company town, which came to be known as Hershey, Pennsylvania. Today Hershey, Inc. operates in 90 countries, though its presence is largest in the United States. The list of products has been continuously growing since the company’s foundation.
The Hershey Company manufactures, markets, sells, and distributes chocolate and sugar confectionery products, pantry items, toppings and beverages, and gum and mint refreshment products. These products are sold under more than 80 brand names in over 70 countries. The most well-known ones Hershey’s, Reese’s, Hershey’s Kisses, Hershey’s Bliss, Hershey’s Special Dark, Kit Kat, Twizzlers, Jolly Rancher, and Ice Breakers. A full list of products can be found in Hershey’s Factbook, and on either of their websites (mb113608, 2013).
Evaluation of the Objectives
Hershey is a giant for-profit company with shares that are being publicly traded.
As of October 12, 2015, Hershey’s stock had a market cap of $15.3 billion. The company is a component of the S&P 500 Index (SPY) and part of the Consumer Staples Select Sector SPDR ETF (XLP). Hersey and its peer, Mondelez International (MDLZ) together constitute 4.8% of XLP. Hershey’s stock has given annual average returns of 11% and 12.5% in the last 15-years and last 20-years, respectively.
According to Statists, Hershey and Mars are the largest players in the U.S. confectionery market, with market shares of 31.2% and 29.2%, respectively. In Canada, Nestle (NSRGY) was the leader with an 18.6% share, followed by Hershey, Mondelez International (MDLZ), and Mars. In the U.S., Hershey is the leading chocolate company with a 44.4% share in the chocolate market, followed by Mars, which has a 29.5% share.
Hershey operates in two market segments, North American and International. It generates 85% of its total revenues from the North American market. However, Hershey is focused on building its international presence, especially with the significantly growing economies overseas, such as China, India, and Brazil. Hershey has thus set a goal to increase its international footprint to approximately 50% of its total revenues by 2018, by focusing on geographies outside of the U.S. and Canada. Statista estimates that global confectionery sales totaled $198.4 billion in 2014. Western Europe’s contribution to the global confectionery market was nearly 29.5%, followed by the Asia Pacific market with 18.6% share. According to Mondelez, the eight markets driving 70% of the global confectionery market are Brazil, China, Colombia, India, Russia, South Africa, Turkey, and Vietnam.
Hershey’s strategy in the international market relies on partnerships with foreign companies that have knowledge of the local market. The company is thus creating partnerships through mergers, acquisitions, and joint ventures. More specifically, Hershey’s main focus is on the emerging markets of China, Brazil, India, and Mexico. In the international market, Hershey gained a chocolate market share of between 5.8% and 7.2% in the 2011–2014 period. Between 2009 and 2014, Hershey’s chocolate category grew by an estimated CAGR (compound annual growth rate) of 12%, 12%, and 30% in the markets of Brazil, China, and India, respectively (Key, 2015).
Evaluation of the Functional Areas
Marketing
The Hershey Company’s marketing strategy primary focus is on developing strong brand equity, product innovation, and consistently updating product quality. The company’s main strengths consist of brand awareness and brand loyalty. Hershey’s leading brands are Kisses, Twizzlers, Reese’s, Kit-Kat, and the Hershey Bar. The company does 80% of its marketing in North America which can be seen as a weakness. Hershey is also known to operate as a micro-marketing company because they are known to market certain products to their small target audiences just to meet their specific demands (Key, 2015).
Hershey recently created several new marketing initiatives. The company is working on increasing its advertising budget so it can be able to promote its new product innovations to the world. Hershey also uses its strategy of holiday marketing to design special themes for its chocolates and candies for special holidays and occasions. This technique alone has brought in a lot of revenue for the business due to the company being able to charge higher prices for personalization. Hershey has partnered with an advertising agency, North Castle Partners, to gain fully integrated marketing programs for all of its refreshments and sugar confectionery brands. It has also decided to invest 20% of its total media for digital media purposes (Key, 2015).
Hershey is working toward making a few changes regarding its products in the near future. The company intends to consolidate its creative campaign for several of its iconic brands. Hershey is planning to stop using GMO sugar, milk from cows treated with bovine growth hormones, artificial colors and flavors, gluten and high fructose corn syrup. The company also plans to offer information regarding some new initiatives, such as identifying simple, easily understood ingredients on its labels, ingredient transparency, minimally processed ingredients, and sustainably sourced ingredients (The Hershey Company Investors Relations Department, 2017).
Finance
The Hershey Company reported net sales of $7,440,181 at December 31, 2016, an increase of 0.7% over 2105’s reported net sales. Cost of sales for 2016, $4,282,290, increased 7% over 2015, and 4.5% over 2014. Hershey’s gross profit at year-end 2016 was $3,157,891, operating profit was $1,205,783, and net income was $720,044. Total revenues have declined each quarter since October 2016. Cost of goods sold increased fourth quarter, 2016, but declined for both quarters in 2017. Operating income dropped from $374.02 in October 2016 to $191.93 in April 2017, but has risen to $315.34 as of 7/2/2017. Net income also rose in the second quarter of 2017, after experiencing declines in the prior two quarters, and was reported at $203.50. As reported in its 2016 Annual Report, the company anticipated a 2.25%-3.25% growth in net sales in 2017, including a favorable impact resulting from acquisitions, and excluding unfavorable results attributed to foreign exchange rates. Year-to-date net sales for 2017 total $3.54 billion.
The inventory turnover ratio measures how often inventory is turned over in a year. When calculated using sales, Hershey’s inventory turnover rate for 2016 is 9.94, or every 36 days. When calculated using cost of goods sold, which is the standard method used, the inventory turnover rate for the same year is 5.72, or every 63 days. This is less than the industry average of 7.9, or every 46 days, for the confectionary and nut industry, signaling less effective inventory management at Hershey. Hershey’s current ratio of .95 suggests the company may have difficulty paying its obligations over the short-term. The industry average current ratio is 2.1 for the year 2016.
Total revenues have declined each quarter since October 2016. Cost of goods sold increased fourth quarter, 2016, but have also declined for both quarters in 2017. Operating income dropped from $374.02 in October 2016 to $191.93 in April 2017, but has risen to $315.34 as of 7/2/2017. Net income also rose in the second quarter of 2017, after experiencing declines in the prior two quarters, and was reported at $203.50.
Total assets increased in July 2017 as opposed to the prior two quarters, and this is primarily due to an increase in total inventories. Total liabilities have also increased, despite a decrease in accounts payable and long-term debt. The increase is attributable to short-term debt.
Hershey’s (HSY) common stock is listed and traded on the NSYE, however their Class B Common Stock is not publicly traded. At December 31, 2016, the closing price of the common stock was $103.43, which increased to $109.25 at March 31, 2017, and declined to $107.37 at June 30, 2017. On September 15, 2017, The Hershey Company will pay its 351st consecutive quarterly dividend.

Mars Company is a $33 billion business that spreads across the spectrum from candy bars to chewing gum and all the way to dog food. Mars is a global company with headquarters in Belgium, New Jersey, Africa, Virginia, Asia, and even right here in South Carolina. They have made jobs available to people around the world and allows for job advancement as well when it comes to those jobs. When it comes to politics Mars does not provide money as company to presidential candidates but allows their employees to back those candidates with their own money. Most of which in recent years back democratic candidates. Becoming a $33 billion company means you have to have successful products which include the $5 billion brands such as Snickers, M&M’S, Dove, Milky Way, Twix and more. Mars also owns the $15 billion Uncle Ben’s Rice company which has been in existence for over 70 years. As well Mars owns the billion-dollar pet food companies Pedigree and Cesars. Mars also has a symbioscience branch that does extensive research in how to better the process of making their products as well as making the earth more sustainable. “Pioneering some of the most innovative and breakthrough fundamental scientific research, the Mars Symbioscience team has incubated, introduced and transitioned five technology platforms in the areas of food, plant, biomedical and life sciences. From creating sustainable businesses for farmers to tree nurseries, composting and marine culture with seahorse farming, we are committed to developing solutions that have a positive impact on people and the planet (Mars, Incorporated, 2016).”

Even though Hershey’s Corporation is one of the world’s leaders in chocolate candies, they have a bad reputation whenever it comes to their human resources department and how they treat their employees. A major issue is they have been under scrutiny for the use of child labor in third world countries, like West Africa, where their cocoa farms are located. They, along with seven other companies in the chocolate and cocoa industry, pledged $2 million to help combat the child labor issues in cocoa communities with help from the International Labor Office, (“ILO and chocolate and cocoa industry forge new partnership to combat child labor in West Africa,” 2011). Another issue Hershey’s faces is how they treat their employees because, it is viewed as less than fair and less safe than most places. But, it seems as if they are working to make a comeback. According to Business Wire in 2013, The Hershey Company was recognized as one of America’s “100 Best Corporate Citizens,” (The Hershey Company Recognized as One of America’s ‘100 Best Corporate Citizens,’ 2013). However, it does not seem Hershey’s or any of the other leading chocolate and cocoa industries have completely stopped the use of children for labor in their supply chain. This has been going on for 15 years now and it seems it is hard for them to stop since there are not enough people to help with the work, plus the areas in which child labor is employed are poverty-stricken. Another thing, according to Fortune these numbers seem to be increasing instead of decreasing like they should be (O’Keefe, 2016).

Evaluation of Marketing Strategies
Target Market

Identifying a company’s target market is essential for any business to focus its marketing activities on it. Although Hershey’s products are widely distributed and enjoyed by many consumers, if we look closer to its market we see that it has a few segments and one of the most important market breakdown is the segmentation of the family life cycle. Through extensive market research, one of the conclusions was that mothers play a large role in the decisions in the house and introducing brand loyalty. Being aware of this is why they have a variety of commercials of mothers or families bonding over a Hershey product.
Children are of course the targets for the chocolate products but if we pay attention we see that many adults have inclination to consumer Hershey products. This was proven by some research that adults consume over 55% of all the candy sold. Therefore, by demographics they market the bite size chocolates to adults. They started out with the Hershey Kisses that is now loved by all. Recently by adding more bite size chocolates they appeal to those who are trying to be health conscious and feel that a regular chocolate bar is too much. By having bite size versions, they feel as if they aren’t over indulging and are also viewed more portable alternative. The adult target market is very profitable and where most of their business comes from. This is how they have managed to stay ahead of the competition.

Hershey’s is known for offering tons of products for their consumers to choose from. One thing is that they do not target anyone in particular they pretty much market their products towards anyone at any age. Children, teenagers, young adults, adults, and older adults are all a part of Hershey’s target customer. They like to advertise around the holidays, especially Christmas and Valentine’s Day, since those are the two holidays when the most chocolate is bought. The reason they can have such a broad range of customers is because they offer any type of chocolate as well as candy. From their notorious Hershey’s milk chocolate bar to their Twizzlers. Another reason that they can have such a big range of customers is because their products are on the lower end of the pricing spectrum. It normally does not break the bank if someone wants to go to the store and purchase a chocolate bar.
Along with their vast target Hershey’s has also tried to be a little healthier by incorporating sugar free chocolates, catering to those especially with diabetes. They also are committed to using simple ingredients which means no artificial preservatives, no artificial sweeteners, and no artificial flavors (The Hershey Company, 2017). The reason behind this is because Hershey’s wants to be a caring brand they want their customers to realize that they care even about their health. An added bonus to this is that they have made the nutrition labels easier to read so that their customers know exactly what is in their food. This goes back to having more simple ingredients instead of all those additives and substitutes. They even state that 80% of their ingredients are cocoa, nets, milk, and sugar (The Hershey Company, 2017).
Besides the easier to read labels, Hershey’s also has a glossary of ingredients on their website so that people can find what ingredient is found on the nutrition label of a product of their choice. This comes in handy for weirdly named ingredients that no one seems to understand or know what it is. They developed a specific page on their website so there is no more wondering or guessing, you can easily see exactly what it is and why they use it (The Hershey Company, 2017). Another page that can be clicked on from here is their ‘Four Core Ingredients’ page. This explains any question someone might have about their milk, cocoa, nuts, and sugars (The Hershey Company, 2017).
Besides showing that they care about their customer’s health, they also care about helping their customers with recipes. Hershey’s offers a wide range of recipes on their website which is super helpful if someone enjoys baking. This also shows that the company not only offers chocolates to eat but also to use and bake with. Helping customers with finding recipes helps the company interact with the customers on a deeper level. It makes the company more attractive to consumers by showing how much they actually care.

Hershey’s Global Marketing Group is responsible for their pricing strategy. In recent years, Hershey has avoided some price increases by reducing the size of its candy bars. This is in direct opposition to Nestle, who did not change the size, but did increase their price. Hershey’s also employs high-low pricing, with products being offered at higher prices than their competitors’. These prices are then reduced with promotions, coupons, and sales. However, the company is experiencing price issues with their largest distributor, forcing them to price-cut in order to fend off competitors.
In their annual report, Hershey noted that “Future developments related to the investigation by government regulators of alleged pricing practices by members of the confectionary industry could impact our reputation, the regulatory environment under which we operate, and our operating results (The Hershey Company, 2017).” Without disclosing the source of the investigation, the report continues to explain that the company’s costs could increase, as a result of legal fees and potential new government mandates.

Hershey’s distribution strategy is one of many different routes to get products to the customer. Hershey manufactures all of their chocolate with no outside help. There are numerous Hershey products that they have to get to consumers all over the world. Their number one source of distribution is through retail stores such as gas stations and grocery stores. This is the quickest and most simplistic way for Hershey to get their product from production and into the consumers mouth. Retail stores though, only sell to the public and once the product has been bought from the retail store it is not allowed to be resold. As well, you will wind up buying the product at the price made by the retail store that way they make enough to pay Hershey and have enough left over for profit.
If the consumer at the end of the day does not like that route, they have two other alternatives buying directly from the factory in Hershey, Pennsylvania. or buying at wholesale from warehouse stores. Most people that choose this route end up not buying it directly from the factory since it has to be shipped to the consumer and then they have to wait on the product. The wholesale warehouses are usually how a lot of consumers buy them, especially with the wholesale phenomenon booming at this point. This allows the consumer to buy more of the products at one time and pay the same as the retailers do directly from Hershey. These types of places are stores such as Sam’s Club, BJ’s, and Costco. This is how places such as concession stands and small stores do not rely on distributors. This allows them to buy bulk of the item and still be able to resell the products.

Hershey is also an international product that you can find just about everywhere you go in the world. Hershey uses thousands of distribution centers all over the world to get their chocolate products to consumers on every edge of the world. This is helped by ten different global Hershey headquarters in countries such as Canada, China, Japan, Brazil, and more. This allows them to oversee day to day operations in all of the global factories and distribution centers.
Promotional Strategies
Advertising Strategies
Hershey’s current advertising strategy focuses on telling stories and creating memories. The strategy focuses on uniting all of Hershey’s branded treats under one campaign unlike their old advertising strategy that consisted on advertising each of the company’s products separately. The idea behind the present advertising strategy is to create a sense of emotional ties to the brand. Hershey is using the slogan, Hello Happy. Hello Hershey’s as a way to relate the taste of their treats as creating a sense of happiness. Hershey previously used an advertisement called My Dad, that advertised a young girl seeking time with her busy dad that is always working. At the end of the advertisement the young girl and her father can be seen in the kitchen making s’mores together using Hershey’s Syrup and candy bars. Hershey’s new advertising concept is aiming to leverage the power of Hershey into a mega franchise (Schultz, 2016).

Hershey has always focused on allowing their customers time to shop, and not pressuring their customers to make a purchase. The company decided to incorporate the effects of technology and increase impulse buying by installing chocolate dispensers in the self-checkout areas in stores. They also added candy and snack kiosks and vending machines around pick up areas such as nearby gas pumps at gas stations. Hershey Company began using the impulse selling strategy due to proven facts of consumers most of the time end up buying items that aren’t on their shopping lists (Tuttle, 2015).

Public Relations/Publicity Strategies

Hershey’s publicity strategy is currently targeting on making their chocolate treats healthier by eliminating and substituting some of the ingredients in the products with better choices. In 2013, the company launched a public relations campaign called Summer of Sweet Independence to introduce Hershey’s new Simple Pleasures chocolate brand. The goal of the campaign was to stop women from feeling guilty from eating foods that they love. The campaign showcased making women feel independent from guilt of eating the things they enjoy without the burden. This campaign alone caused sales to soar past their forecasts and made the company over 217 million media impressions (Ketchum, 2013).
Sales Promotion Strategies
Hershey’s sales promotion strategy targets the theory of in-store marketing and promotion working better than advertising. The company doesn’t focus on advertising as much as most companies, because they view chocolate as an impulse item. If customers just see their products in the store and are craving chocolate they’re likely to purchase it (Thompson, 2006). Hershey also uses the holidays as a way to sale their candy in bulk and customized to have a personal touch. The company also offer promotional codes to provide discounts on their products online and in the store.

Hershey is one of the most renowned companies worldwide in chocolate manufacturing. It is the leading corporation in its field in North America. Hershey’s headquarter has been in Pennsylvania where it was originally founded in 1894 by Milton Hershey.

Hershey’s contribution of Milton Hershey School for orphans resulted in improvement of the social and public image of Hershey. Additionally, the company provides various social services to its employees such as parks, schools, and housing facility.
The chocolate maker giant has a diversified product menu with well-established brand names. In addition to chocolate manufacturing, Hershey is also well-heeled in pasta production and variety of products in USA. The company is active in promoting its brand name by contributing in various segments of industry like commercial segment, resorts, entertainment and other market areas. Moreover, Hershey believes in the importance of education and research. This is why the company supports education by facilitating teachers and students with dedicated toll-free number.
After all those privileges that Hershey provides, no wonder why its employees follow strict code of conduct laid long time ago by its founder.

Hershey has been running a debt that is higher than the other competing companies. Also, advertisement expenses have been increasing over the previous years. On the other hand, the increasing price of cocoa beans is a matter of concern for the company since its products’ prices are inversely proportional with the sales volume by units.

Opportunities
From a public health perspective, dark chocolate, widely made by Hershey, offers many advantages over other kinds of chocolate. With all the market competition, Hershey still has wide customer base that is very loyal to the company’s brands. In addition to its leadership in the North American market, Hershey still has various untapped markets in China, India Indonesia, Vietnam and other Asian countries. On the other hand, to alleviate the increasing costs of production, Hershey could explore new cocoa-producing areas such as India.


Grad School Marketing Research Project- Hershey’s Marketing Analysis

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The Hershey Company
External Environmental Analysis
General Environmental Analysis

For Milton S. Hershey, the third time was the charm. After two failed attempts at establishing candy companies, he finally succeeded with the Lancaster Caramel Company. In 1894, Hershey began adding chocolate to his caramels, while perfecting his own recipe for milk chocolate. By 1900, he was mass producing milk chocolate, making it more affordable and readily available for consumers. In the 117 years since, The Hershey Company has not only continued to innovate and offer new products, but it has also acquired other successful candy businesses, and expanded its operations to over 70 countries.

The Hershey Company was incorporated in 1927 under the laws of the State of Delaware. The company’s headquarters is in Hershey, Pennsylvania. Hershey leads the confectionary industry with more than 80 brands, consisting of 58% chocolate, 26% non-chocolate, and 16% refreshment, including gum and mint lines. Annual revenues exceed $7 billion and the company employs more than 20,000 individuals worldwide. At the end of 2016, Hershey’s stock price was valued at $103.43 per share, with a year-to-date range of $83.32 as the low and $113.89 as the high. At the end of the 2017 second quarter, the closing price was $107.37. The Hershey Company is constantly expanding its offerings and global footprint, while maintaining its competitive advantage domestically.
Hershey has several competitors, two of which are Nestlé and Ferrero Rocher. Each company has its different strengths and weaknesses. There are various economic, social, political, and technological factors that play a role in what works and does not work for each brand.
Nestlé is the world’s leading nutrition, health and wellness company. It’s also the largest food and beverage company in the world. The company was founded in 1866 and its headquarters is located in Switzerland. Nestlé sells more than 2,000 different brands out of seven food and beverage categories. The main products the company offers consist of powdered and liquid beverages, milk, ice cream, confectionary and pet care products (Nestlé, 2017).
Ferrero Rocher was founded in Italy in 1946 by Pietro Ferrero (NCA, 2017). Ferrero USA, Inc. was established in 1969 and is known as the Ferrero Group’s fifth largest commercial unit. Ferrero USA headquarters is currently in Somerset, NJ. The products produced by Ferrero Rocher consist of Nutella, Ferrero Rocher, chocolates, Tic-Tac’s, and Kinder. The company employed 220 workers back in 2015 and is constantly increasing at a 10% growth rate. The annual sales for Ferrero Rocher exceed 600 million dollars (NCA, 2017). Approximately 61% of annual sales are made during the last three months of the year. It has been estimated that roughly 3.6 billion Ferrero Rocher candies are sold every year in 53 countries, and its products are sold in more than 160 countries (Ferrero, 2015). In August 2016, Ferrero Rocher employed 33,000 employees (Ferrero, 2016).

Milton Hershey and his wife, Catherine, were philanthropists who established The Hershey Industrial School, which is known today as the Milton Hershey School. Once a boarding school for orphaned boys, today’s school educates thousands of underprivileged children in a family-like environment. Milton Hershey also built a community, enriched by the Cocoa House, High Point Mansion, Hotel Hershey, the Hershey Sports Arena, and the Penn State Milton S. Hershey Medical Center. The Community Building houses an indoor pool, gym, library, hospital, theater, game rooms, and a cafeteria. Hersheypark is an amusement park which includes rides, playgrounds, a swimming pool, entertainment venues, and a zoo. Milton Hershey created several trusts to ensure the longevity of the institutions he created, and the company continues to engage in socially responsible activities. In 2014, J.P. Bilbrey, Chairman, President and CEO was named Responsible CEO of the Year by CR Magazine. That same year, he was also chosen by Penny Pritzker, then U.S. Secretary of Commerce, to participate in President Obama’s Advisory Council on Doing Business in Africa.
The Hershey Company believes in reinvesting in their employees and their purpose. With an eye on economic trends, they continue to innovate and open new channels for distribution and competition. The company also monitors consumer expectations and has responded by increasing transparency, widening nutritional choices, and reformulating to more simple ingredients.
The social factors of Nestlé consist of commitments to help individuals and families to live healthier lives. The company plans to launch more nutritious foods and beverages, especially for mothers-to-be, new mothers and children. It also is aiming to further decrease sugars, sodium, and saturated fat. More vegetables, fiber-rich grains, pulses, nuts and seeds will be incorporated more in the foods and beverages. Nestlé believes in empowering parents, caregivers and teachers to foster healthy behaviors in children. The company is also pushing towards inspiring people to choose water in hopes to live healthier lives. A detailed explanation is even provided on packages as well as online. Nestlé is also a big supporter in breastfeeding and protects it by continuing to implement and industry policy to market breast-milk substitutes responsibly (Nestle USA, 2017).
Ferrero Rocher Company cares deeply for their consumers, and wants to be able to translate their passion into the chocolate. The company’s goal is to create unique products, develop innovative research, and production processes as well as using their own technologies. Ferrero Rocher uses the best and most high-quality products in order to maintain long lasting relationships to their loyal customers. The company also created the Ferrero Foundation to help improve the quality of life of elderly people. The foundation offers a variety of activities that help the elderly to live the ageing process as an occasion to discover new opportunities. It includes an auditorium, gyms, exhibition halls and spaces for medical and clinical conferences. There is also a state-of-the-art nursery for employees’ children. The “Progetto Imprenditorale Michele Ferrero” is another program that was created to help improve the living conditions of the communities of developing countries with more attention to focusing on children (Ferrero USA, Inc., 2017).

In 2012, the Louisiana Municipal Police Employees Retirement Union accused the company of employing illegal child labor at its cocoa farms and this litigation is still pending. The company has also been cited for health and safety violations at its Pennsylvania plant. In 2014, The Hershey Company announced the formation of CocoaAction, where several chocolate companies are working together to ensure cocoa sustainability in West Africa. CocoaAction will also be “addressing child labor through labor monitoring and remediation, making basic education available, ensuring children go to school, and improving gender parity so that women have a greater influence in their communities’ decision making and development (The Hershey Company, 2014).”
There are many political factors that can affect the Nestlé Company. The major factor is regarding whether taxes will increase or decrease. If taxes increase, the will be a decrease in consumers and sales stock. If taxes decrease, there is a chance that consumers will buy more than usual. Another political factor has been that Nestlé started receiving criticism from its high levels or sugar in their chocolate (Nestle USA, 2017). There have even been rumors regarding the price of coffee beans rising which may cause the company to have to increase their prices or alter their products. High interest rates could cause Nestlé to not want to borrow as much money for its expansion with KitKat. Lastly, a tax could be put on sweets to encourage consumers to eat more healthy foods (Jurevicius, 2017).
For Ferrero Rocher, the political factor that was discovered was that Ferrero Rocher’s products is number one in Germany, Italy, and France, but only has a 5% share in Britain. The company is working on raising the percentage of shares in Britain.

Hershey recognizes that factors that could negatively impact the business include “disruptions, failures, or security breaches of our information technology infrastructure (The Hershey Company, 2014).” They are also investing in technology to assist in cocoa farming and to improve the lives of cocoa farmers. A corporate initiative to save 20 million gallons of water is underway with the installation of new technology in its manufacturing plants that will eliminate the use of chemicals for cleaning water.
Nestlé and Samsung are collaborating on digital nutrition and health, and will be announcing their research collaboration to explore the potential of nutrition science and digital sensor technologies. Their goal with this new collaboration is to provide new insights into healthy living. The new digital platform will provide customers with more personalized recommendations in relation to nutrition, lifestyle, and fitness. Nestlé’s reason for creating this project was based upon the idea that today we live in an era where the data from sensors and devices can help society to better understand the company’s nutrition and activity with the hopes of guiding individuals towards a healthier lifestyle (NestleUSA, 2017).
There are several technological factors regarding Ferro Rocher. One is that the company is currently working on new technical solutions to ensure that the packaging can protect the products from extreme temperatures in challenging climates as well as active packaging, anti-tampering packaging, and high oxygen barrier packaging. The company also does an excellent job at maintaining its privacy. No one is allowed to take a smartphone onto the factory floor, and it’s known that only a select few of journalists have been granted the privilege to go inside (Ferrero – A Joy to Discover, 2015).

Hershey’s most popular products are categorized under two business segments. Hershey’s chocolate, Hershey’s Kisses, and Reese’s products are sold under the chocolate business unit. The sweets and refreshments segment carries Twizzlers, Ice Breakers, Bubble Yum, and the like. The Hershey Company has set international growth targets, with a goal of reducing its North American market presence to 75%. They are specifically targeting China and their middle class, but thus far revenues from that market have fallen below forecast. Hershey’s plans to continue with mergers and acquisitions in the coming years, in an effort to gain market share from their competitors. (The Hershey Company, 2017)
Evaluation of the Mission
The Hershey Company was founded by Milton S. Hershey in 1894. It is headquartered in Hershey, Pennsylvania. The company’s mission has been “bringing sweet moments of Hershey happiness to the world every day.” The Hershey company was the first American candy company to produce milk chocolate at reasonable prices, which before was a luxury only affordable to the wealthy class. In addition to developing different candy brands and improving his chocolate formula, Milton Hershey set out to build a strong infrastructure for his company.
The Hershey factory was built in Derry Township, Pennsylvania, but Milton Hershey continued to expand and built a company town, which came to be known as Hershey, Pennsylvania. Today Hershey, Inc. operates in 90 countries, though its presence is largest in the United States. The list of products has been continuously growing since the company’s foundation.
The Hershey Company manufactures, markets, sells, and distributes chocolate and sugar confectionery products, pantry items, toppings and beverages, and gum and mint refreshment products. These products are sold under more than 80 brand names in over 70 countries. The most well-known ones Hershey’s, Reese’s, Hershey’s Kisses, Hershey’s Bliss, Hershey’s Special Dark, Kit Kat, Twizzlers, Jolly Rancher, and Ice Breakers. A full list of products can be found in Hershey’s Factbook, and on either of their websites (mb113608, 2013).
Evaluation of the Objectives
Hershey is a giant for-profit company with shares that are being publicly traded.
As of October 12, 2015, Hershey’s stock had a market cap of $15.3 billion. The company is a component of the S&P 500 Index (SPY) and part of the Consumer Staples Select Sector SPDR ETF (XLP). Hersey and its peer, Mondelez International (MDLZ) together constitute 4.8% of XLP. Hershey’s stock has given annual average returns of 11% and 12.5% in the last 15-years and last 20-years, respectively.
According to Statists, Hershey and Mars are the largest players in the U.S. confectionery market, with market shares of 31.2% and 29.2%, respectively. In Canada, Nestle (NSRGY) was the leader with an 18.6% share, followed by Hershey, Mondelez International (MDLZ), and Mars. In the U.S., Hershey is the leading chocolate company with a 44.4% share in the chocolate market, followed by Mars, which has a 29.5% share.
Hershey operates in two market segments, North American and International. It generates 85% of its total revenues from the North American market. However, Hershey is focused on building its international presence, especially with the significantly growing economies overseas, such as China, India, and Brazil. Hershey has thus set a goal to increase its international footprint to approximately 50% of its total revenues by 2018, by focusing on geographies outside of the U.S. and Canada. Statista estimates that global confectionery sales totaled $198.4 billion in 2014. Western Europe’s contribution to the global confectionery market was nearly 29.5%, followed by the Asia Pacific market with 18.6% share. According to Mondelez, the eight markets driving 70% of the global confectionery market are Brazil, China, Colombia, India, Russia, South Africa, Turkey, and Vietnam.
Hershey’s strategy in the international market relies on partnerships with foreign companies that have knowledge of the local market. The company is thus creating partnerships through mergers, acquisitions, and joint ventures. More specifically, Hershey’s main focus is on the emerging markets of China, Brazil, India, and Mexico. In the international market, Hershey gained a chocolate market share of between 5.8% and 7.2% in the 2011–2014 period. Between 2009 and 2014, Hershey’s chocolate category grew by an estimated CAGR (compound annual growth rate) of 12%, 12%, and 30% in the markets of Brazil, China, and India, respectively (Key, 2015).
Evaluation of the Functional Areas
Marketing
The Hershey Company’s marketing strategy primary focus is on developing strong brand equity, product innovation, and consistently updating product quality. The company’s main strengths consist of brand awareness and brand loyalty. Hershey’s leading brands are Kisses, Twizzlers, Reese’s, Kit-Kat, and the Hershey Bar. The company does 80% of its marketing in North America which can be seen as a weakness. Hershey is also known to operate as a micro-marketing company because they are known to market certain products to their small target audiences just to meet their specific demands (Key, 2015).
Hershey recently created several new marketing initiatives. The company is working on increasing its advertising budget so it can be able to promote its new product innovations to the world. Hershey also uses its strategy of holiday marketing to design special themes for its chocolates and candies for special holidays and occasions. This technique alone has brought in a lot of revenue for the business due to the company being able to charge higher prices for personalization. Hershey has partnered with an advertising agency, North Castle Partners, to gain fully integrated marketing programs for all of its refreshments and sugar confectionery brands. It has also decided to invest 20% of its total media for digital media purposes (Key, 2015).
Hershey is working toward making a few changes regarding its products in the near future. The company intends to consolidate its creative campaign for several of its iconic brands. Hershey is planning to stop using GMO sugar, milk from cows treated with bovine growth hormones, artificial colors and flavors, gluten and high fructose corn syrup. The company also plans to offer information regarding some new initiatives, such as identifying simple, easily understood ingredients on its labels, ingredient transparency, minimally processed ingredients, and sustainably sourced ingredients (The Hershey Company Investors Relations Department, 2017).
Finance
The Hershey Company reported net sales of $7,440,181 at December 31, 2016, an increase of 0.7% over 2105’s reported net sales. Cost of sales for 2016, $4,282,290, increased 7% over 2015, and 4.5% over 2014. Hershey’s gross profit at year-end 2016 was $3,157,891, operating profit was $1,205,783, and net income was $720,044. Total revenues have declined each quarter since October 2016. Cost of goods sold increased fourth quarter, 2016, but declined for both quarters in 2017. Operating income dropped from $374.02 in October 2016 to $191.93 in April 2017, but has risen to $315.34 as of 7/2/2017. Net income also rose in the second quarter of 2017, after experiencing declines in the prior two quarters, and was reported at $203.50. As reported in its 2016 Annual Report, the company anticipated a 2.25%-3.25% growth in net sales in 2017, including a favorable impact resulting from acquisitions, and excluding unfavorable results attributed to foreign exchange rates. Year-to-date net sales for 2017 total $3.54 billion.
The inventory turnover ratio measures how often inventory is turned over in a year. When calculated using sales, Hershey’s inventory turnover rate for 2016 is 9.94, or every 36 days. When calculated using cost of goods sold, which is the standard method used, the inventory turnover rate for the same year is 5.72, or every 63 days. This is less than the industry average of 7.9, or every 46 days, for the confectionary and nut industry, signaling less effective inventory management at Hershey. Hershey’s current ratio of .95 suggests the company may have difficulty paying its obligations over the short-term. The industry average current ratio is 2.1 for the year 2016.
Total revenues have declined each quarter since October 2016. Cost of goods sold increased fourth quarter, 2016, but have also declined for both quarters in 2017. Operating income dropped from $374.02 in October 2016 to $191.93 in April 2017, but has risen to $315.34 as of 7/2/2017. Net income also rose in the second quarter of 2017, after experiencing declines in the prior two quarters, and was reported at $203.50.
Total assets increased in July 2017 as opposed to the prior two quarters, and this is primarily due to an increase in total inventories. Total liabilities have also increased, despite a decrease in accounts payable and long-term debt. The increase is attributable to short-term debt.
Hershey’s (HSY) common stock is listed and traded on the NSYE, however their Class B Common Stock is not publicly traded. At December 31, 2016, the closing price of the common stock was $103.43, which increased to $109.25 at March 31, 2017, and declined to $107.37 at June 30, 2017. On September 15, 2017, The Hershey Company will pay its 351st consecutive quarterly dividend.

Mars Company is a $33 billion business that spreads across the spectrum from candy bars to chewing gum and all the way to dog food. Mars is a global company with headquarters in Belgium, New Jersey, Africa, Virginia, Asia, and even right here in South Carolina. They have made jobs available to people around the world and allows for job advancement as well when it comes to those jobs. When it comes to politics Mars does not provide money as company to presidential candidates but allows their employees to back those candidates with their own money. Most of which in recent years back democratic candidates. Becoming a $33 billion company means you have to have successful products which include the $5 billion brands such as Snickers, M&M’S, Dove, Milky Way, Twix and more. Mars also owns the $15 billion Uncle Ben’s Rice company which has been in existence for over 70 years. As well Mars owns the billion-dollar pet food companies Pedigree and Cesars. Mars also has a symbioscience branch that does extensive research in how to better the process of making their products as well as making the earth more sustainable. “Pioneering some of the most innovative and breakthrough fundamental scientific research, the Mars Symbioscience team has incubated, introduced and transitioned five technology platforms in the areas of food, plant, biomedical and life sciences. From creating sustainable businesses for farmers to tree nurseries, composting and marine culture with seahorse farming, we are committed to developing solutions that have a positive impact on people and the planet (Mars, Incorporated, 2016).”

Even though Hershey’s Corporation is one of the world’s leaders in chocolate candies, they have a bad reputation whenever it comes to their human resources department and how they treat their employees. A major issue is they have been under scrutiny for the use of child labor in third world countries, like West Africa, where their cocoa farms are located. They, along with seven other companies in the chocolate and cocoa industry, pledged $2 million to help combat the child labor issues in cocoa communities with help from the International Labor Office, (“ILO and chocolate and cocoa industry forge new partnership to combat child labor in West Africa,” 2011). Another issue Hershey’s faces is how they treat their employees because, it is viewed as less than fair and less safe than most places. But, it seems as if they are working to make a comeback. According to Business Wire in 2013, The Hershey Company was recognized as one of America’s “100 Best Corporate Citizens,” (The Hershey Company Recognized as One of America’s ‘100 Best Corporate Citizens,’ 2013). However, it does not seem Hershey’s or any of the other leading chocolate and cocoa industries have completely stopped the use of children for labor in their supply chain. This has been going on for 15 years now and it seems it is hard for them to stop since there are not enough people to help with the work, plus the areas in which child labor is employed are poverty-stricken. Another thing, according to Fortune these numbers seem to be increasing instead of decreasing like they should be (O’Keefe, 2016).

Evaluation of Marketing Strategies
Target Market

Identifying a company’s target market is essential for any business to focus its marketing activities on it. Although Hershey’s products are widely distributed and enjoyed by many consumers, if we look closer to its market we see that it has a few segments and one of the most important market breakdown is the segmentation of the family life cycle. Through extensive market research, one of the conclusions was that mothers play a large role in the decisions in the house and introducing brand loyalty. Being aware of this is why they have a variety of commercials of mothers or families bonding over a Hershey product.
Children are of course the targets for the chocolate products but if we pay attention we see that many adults have inclination to consumer Hershey products. This was proven by some research that adults consume over 55% of all the candy sold. Therefore, by demographics they market the bite size chocolates to adults. They started out with the Hershey Kisses that is now loved by all. Recently by adding more bite size chocolates they appeal to those who are trying to be health conscious and feel that a regular chocolate bar is too much. By having bite size versions, they feel as if they aren’t over indulging and are also viewed more portable alternative. The adult target market is very profitable and where most of their business comes from. This is how they have managed to stay ahead of the competition.

Hershey’s is known for offering tons of products for their consumers to choose from. One thing is that they do not target anyone in particular they pretty much market their products towards anyone at any age. Children, teenagers, young adults, adults, and older adults are all a part of Hershey’s target customer. They like to advertise around the holidays, especially Christmas and Valentine’s Day, since those are the two holidays when the most chocolate is bought. The reason they can have such a broad range of customers is because they offer any type of chocolate as well as candy. From their notorious Hershey’s milk chocolate bar to their Twizzlers. Another reason that they can have such a big range of customers is because their products are on the lower end of the pricing spectrum. It normally does not break the bank if someone wants to go to the store and purchase a chocolate bar.
Along with their vast target Hershey’s has also tried to be a little healthier by incorporating sugar free chocolates, catering to those especially with diabetes. They also are committed to using simple ingredients which means no artificial preservatives, no artificial sweeteners, and no artificial flavors (The Hershey Company, 2017). The reason behind this is because Hershey’s wants to be a caring brand they want their customers to realize that they care even about their health. An added bonus to this is that they have made the nutrition labels easier to read so that their customers know exactly what is in their food. This goes back to having more simple ingredients instead of all those additives and substitutes. They even state that 80% of their ingredients are cocoa, nets, milk, and sugar (The Hershey Company, 2017).
Besides the easier to read labels, Hershey’s also has a glossary of ingredients on their website so that people can find what ingredient is found on the nutrition label of a product of their choice. This comes in handy for weirdly named ingredients that no one seems to understand or know what it is. They developed a specific page on their website so there is no more wondering or guessing, you can easily see exactly what it is and why they use it (The Hershey Company, 2017). Another page that can be clicked on from here is their ‘Four Core Ingredients’ page. This explains any question someone might have about their milk, cocoa, nuts, and sugars (The Hershey Company, 2017).
Besides showing that they care about their customer’s health, they also care about helping their customers with recipes. Hershey’s offers a wide range of recipes on their website which is super helpful if someone enjoys baking. This also shows that the company not only offers chocolates to eat but also to use and bake with. Helping customers with finding recipes helps the company interact with the customers on a deeper level. It makes the company more attractive to consumers by showing how much they actually care.

Hershey’s Global Marketing Group is responsible for their pricing strategy. In recent years, Hershey has avoided some price increases by reducing the size of its candy bars. This is in direct opposition to Nestle, who did not change the size, but did increase their price. Hershey’s also employs high-low pricing, with products being offered at higher prices than their competitors’. These prices are then reduced with promotions, coupons, and sales. However, the company is experiencing price issues with their largest distributor, forcing them to price-cut in order to fend off competitors.
In their annual report, Hershey noted that “Future developments related to the investigation by government regulators of alleged pricing practices by members of the confectionary industry could impact our reputation, the regulatory environment under which we operate, and our operating results (The Hershey Company, 2017).” Without disclosing the source of the investigation, the report continues to explain that the company’s costs could increase, as a result of legal fees and potential new government mandates.

Hershey’s distribution strategy is one of many different routes to get products to the customer. Hershey manufactures all of their chocolate with no outside help. There are numerous Hershey products that they have to get to consumers all over the world. Their number one source of distribution is through retail stores such as gas stations and grocery stores. This is the quickest and most simplistic way for Hershey to get their product from production and into the consumers mouth. Retail stores though, only sell to the public and once the product has been bought from the retail store it is not allowed to be resold. As well, you will wind up buying the product at the price made by the retail store that way they make enough to pay Hershey and have enough left over for profit.
If the consumer at the end of the day does not like that route, they have two other alternatives buying directly from the factory in Hershey, Pennsylvania. or buying at wholesale from warehouse stores. Most people that choose this route end up not buying it directly from the factory since it has to be shipped to the consumer and then they have to wait on the product. The wholesale warehouses are usually how a lot of consumers buy them, especially with the wholesale phenomenon booming at this point. This allows the consumer to buy more of the products at one time and pay the same as the retailers do directly from Hershey. These types of places are stores such as Sam’s Club, BJ’s, and Costco. This is how places such as concession stands and small stores do not rely on distributors. This allows them to buy bulk of the item and still be able to resell the products.

Hershey is also an international product that you can find just about everywhere you go in the world. Hershey uses thousands of distribution centers all over the world to get their chocolate products to consumers on every edge of the world. This is helped by ten different global Hershey headquarters in countries such as Canada, China, Japan, Brazil, and more. This allows them to oversee day to day operations in all of the global factories and distribution centers.
Promotional Strategies
Advertising Strategies
Hershey’s current advertising strategy focuses on telling stories and creating memories. The strategy focuses on uniting all of Hershey’s branded treats under one campaign unlike their old advertising strategy that consisted on advertising each of the company’s products separately. The idea behind the present advertising strategy is to create a sense of emotional ties to the brand. Hershey is using the slogan, Hello Happy. Hello Hershey’s as a way to relate the taste of their treats as creating a sense of happiness. Hershey previously used an advertisement called My Dad, that advertised a young girl seeking time with her busy dad that is always working. At the end of the advertisement the young girl and her father can be seen in the kitchen making s’mores together using Hershey’s Syrup and candy bars. Hershey’s new advertising concept is aiming to leverage the power of Hershey into a mega franchise (Schultz, 2016).

Hershey has always focused on allowing their customers time to shop, and not pressuring their customers to make a purchase. The company decided to incorporate the effects of technology and increase impulse buying by installing chocolate dispensers in the self-checkout areas in stores. They also added candy and snack kiosks and vending machines around pick up areas such as nearby gas pumps at gas stations. Hershey Company began using the impulse selling strategy due to proven facts of consumers most of the time end up buying items that aren’t on their shopping lists (Tuttle, 2015).

Public Relations/Publicity Strategies

Hershey’s publicity strategy is currently targeting on making their chocolate treats healthier by eliminating and substituting some of the ingredients in the products with better choices. In 2013, the company launched a public relations campaign called Summer of Sweet Independence to introduce Hershey’s new Simple Pleasures chocolate brand. The goal of the campaign was to stop women from feeling guilty from eating foods that they love. The campaign showcased making women feel independent from guilt of eating the things they enjoy without the burden. This campaign alone caused sales to soar past their forecasts and made the company over 217 million media impressions (Ketchum, 2013).
Sales Promotion Strategies
Hershey’s sales promotion strategy targets the theory of in-store marketing and promotion working better than advertising. The company doesn’t focus on advertising as much as most companies, because they view chocolate as an impulse item. If customers just see their products in the store and are craving chocolate they’re likely to purchase it (Thompson, 2006). Hershey also uses the holidays as a way to sale their candy in bulk and customized to have a personal touch. The company also offer promotional codes to provide discounts on their products online and in the store.

Hershey is one of the most renowned companies worldwide in chocolate manufacturing. It is the leading corporation in its field in North America. Hershey’s headquarter has been in Pennsylvania where it was originally founded in 1894 by Milton Hershey.

Hershey’s contribution of Milton Hershey School for orphans resulted in improvement of the social and public image of Hershey. Additionally, the company provides various social services to its employees such as parks, schools, and housing facility.
The chocolate maker giant has a diversified product menu with well-established brand names. In addition to chocolate manufacturing, Hershey is also well-heeled in pasta production and variety of products in USA. The company is active in promoting its brand name by contributing in various segments of industry like commercial segment, resorts, entertainment and other market areas. Moreover, Hershey believes in the importance of education and research. This is why the company supports education by facilitating teachers and students with dedicated toll-free number.
After all those privileges that Hershey provides, no wonder why its employees follow strict code of conduct laid long time ago by its founder.

Hershey has been running a debt that is higher than the other competing companies. Also, advertisement expenses have been increasing over the previous years. On the other hand, the increasing price of cocoa beans is a matter of concern for the company since its products’ prices are inversely proportional with the sales volume by units.

Opportunities
From a public health perspective, dark chocolate, widely made by Hershey, offers many advantages over other kinds of chocolate. With all the market competition, Hershey still has wide customer base that is very loyal to the company’s brands. In addition to its leadership in the North American market, Hershey still has various untapped markets in China, India Indonesia, Vietnam and other Asian countries. On the other hand, to alleviate the increasing costs of production, Hershey could explore new cocoa-producing areas such as India.


Grad School Marketing Research Project- Hershey’s Marketing Analysis

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The Hershey Company
External Environmental Analysis
General Environmental Analysis

For Milton S. Hershey, the third time was the charm. After two failed attempts at establishing candy companies, he finally succeeded with the Lancaster Caramel Company. In 1894, Hershey began adding chocolate to his caramels, while perfecting his own recipe for milk chocolate. By 1900, he was mass producing milk chocolate, making it more affordable and readily available for consumers. In the 117 years since, The Hershey Company has not only continued to innovate and offer new products, but it has also acquired other successful candy businesses, and expanded its operations to over 70 countries.

The Hershey Company was incorporated in 1927 under the laws of the State of Delaware. The company’s headquarters is in Hershey, Pennsylvania. Hershey leads the confectionary industry with more than 80 brands, consisting of 58% chocolate, 26% non-chocolate, and 16% refreshment, including gum and mint lines. Annual revenues exceed $7 billion and the company employs more than 20,000 individuals worldwide. At the end of 2016, Hershey’s stock price was valued at $103.43 per share, with a year-to-date range of $83.32 as the low and $113.89 as the high. At the end of the 2017 second quarter, the closing price was $107.37. The Hershey Company is constantly expanding its offerings and global footprint, while maintaining its competitive advantage domestically.
Hershey has several competitors, two of which are Nestlé and Ferrero Rocher. Each company has its different strengths and weaknesses. There are various economic, social, political, and technological factors that play a role in what works and does not work for each brand.
Nestlé is the world’s leading nutrition, health and wellness company. It’s also the largest food and beverage company in the world. The company was founded in 1866 and its headquarters is located in Switzerland. Nestlé sells more than 2,000 different brands out of seven food and beverage categories. The main products the company offers consist of powdered and liquid beverages, milk, ice cream, confectionary and pet care products (Nestlé, 2017).
Ferrero Rocher was founded in Italy in 1946 by Pietro Ferrero (NCA, 2017). Ferrero USA, Inc. was established in 1969 and is known as the Ferrero Group’s fifth largest commercial unit. Ferrero USA headquarters is currently in Somerset, NJ. The products produced by Ferrero Rocher consist of Nutella, Ferrero Rocher, chocolates, Tic-Tac’s, and Kinder. The company employed 220 workers back in 2015 and is constantly increasing at a 10% growth rate. The annual sales for Ferrero Rocher exceed 600 million dollars (NCA, 2017). Approximately 61% of annual sales are made during the last three months of the year. It has been estimated that roughly 3.6 billion Ferrero Rocher candies are sold every year in 53 countries, and its products are sold in more than 160 countries (Ferrero, 2015). In August 2016, Ferrero Rocher employed 33,000 employees (Ferrero, 2016).

Milton Hershey and his wife, Catherine, were philanthropists who established The Hershey Industrial School, which is known today as the Milton Hershey School. Once a boarding school for orphaned boys, today’s school educates thousands of underprivileged children in a family-like environment. Milton Hershey also built a community, enriched by the Cocoa House, High Point Mansion, Hotel Hershey, the Hershey Sports Arena, and the Penn State Milton S. Hershey Medical Center. The Community Building houses an indoor pool, gym, library, hospital, theater, game rooms, and a cafeteria. Hersheypark is an amusement park which includes rides, playgrounds, a swimming pool, entertainment venues, and a zoo. Milton Hershey created several trusts to ensure the longevity of the institutions he created, and the company continues to engage in socially responsible activities. In 2014, J.P. Bilbrey, Chairman, President and CEO was named Responsible CEO of the Year by CR Magazine. That same year, he was also chosen by Penny Pritzker, then U.S. Secretary of Commerce, to participate in President Obama’s Advisory Council on Doing Business in Africa.
The Hershey Company believes in reinvesting in their employees and their purpose. With an eye on economic trends, they continue to innovate and open new channels for distribution and competition. The company also monitors consumer expectations and has responded by increasing transparency, widening nutritional choices, and reformulating to more simple ingredients.
The social factors of Nestlé consist of commitments to help individuals and families to live healthier lives. The company plans to launch more nutritious foods and beverages, especially for mothers-to-be, new mothers and children. It also is aiming to further decrease sugars, sodium, and saturated fat. More vegetables, fiber-rich grains, pulses, nuts and seeds will be incorporated more in the foods and beverages. Nestlé believes in empowering parents, caregivers and teachers to foster healthy behaviors in children. The company is also pushing towards inspiring people to choose water in hopes to live healthier lives. A detailed explanation is even provided on packages as well as online. Nestlé is also a big supporter in breastfeeding and protects it by continuing to implement and industry policy to market breast-milk substitutes responsibly (Nestle USA, 2017).
Ferrero Rocher Company cares deeply for their consumers, and wants to be able to translate their passion into the chocolate. The company’s goal is to create unique products, develop innovative research, and production processes as well as using their own technologies. Ferrero Rocher uses the best and most high-quality products in order to maintain long lasting relationships to their loyal customers. The company also created the Ferrero Foundation to help improve the quality of life of elderly people. The foundation offers a variety of activities that help the elderly to live the ageing process as an occasion to discover new opportunities. It includes an auditorium, gyms, exhibition halls and spaces for medical and clinical conferences. There is also a state-of-the-art nursery for employees’ children. The “Progetto Imprenditorale Michele Ferrero” is another program that was created to help improve the living conditions of the communities of developing countries with more attention to focusing on children (Ferrero USA, Inc., 2017).

In 2012, the Louisiana Municipal Police Employees Retirement Union accused the company of employing illegal child labor at its cocoa farms and this litigation is still pending. The company has also been cited for health and safety violations at its Pennsylvania plant. In 2014, The Hershey Company announced the formation of CocoaAction, where several chocolate companies are working together to ensure cocoa sustainability in West Africa. CocoaAction will also be “addressing child labor through labor monitoring and remediation, making basic education available, ensuring children go to school, and improving gender parity so that women have a greater influence in their communities’ decision making and development (The Hershey Company, 2014).”
There are many political factors that can affect the Nestlé Company. The major factor is regarding whether taxes will increase or decrease. If taxes increase, the will be a decrease in consumers and sales stock. If taxes decrease, there is a chance that consumers will buy more than usual. Another political factor has been that Nestlé started receiving criticism from its high levels or sugar in their chocolate (Nestle USA, 2017). There have even been rumors regarding the price of coffee beans rising which may cause the company to have to increase their prices or alter their products. High interest rates could cause Nestlé to not want to borrow as much money for its expansion with KitKat. Lastly, a tax could be put on sweets to encourage consumers to eat more healthy foods (Jurevicius, 2017).
For Ferrero Rocher, the political factor that was discovered was that Ferrero Rocher’s products is number one in Germany, Italy, and France, but only has a 5% share in Britain. The company is working on raising the percentage of shares in Britain.

Hershey recognizes that factors that could negatively impact the business include “disruptions, failures, or security breaches of our information technology infrastructure (The Hershey Company, 2014).” They are also investing in technology to assist in cocoa farming and to improve the lives of cocoa farmers. A corporate initiative to save 20 million gallons of water is underway with the installation of new technology in its manufacturing plants that will eliminate the use of chemicals for cleaning water.
Nestlé and Samsung are collaborating on digital nutrition and health, and will be announcing their research collaboration to explore the potential of nutrition science and digital sensor technologies. Their goal with this new collaboration is to provide new insights into healthy living. The new digital platform will provide customers with more personalized recommendations in relation to nutrition, lifestyle, and fitness. Nestlé’s reason for creating this project was based upon the idea that today we live in an era where the data from sensors and devices can help society to better understand the company’s nutrition and activity with the hopes of guiding individuals towards a healthier lifestyle (NestleUSA, 2017).
There are several technological factors regarding Ferro Rocher. One is that the company is currently working on new technical solutions to ensure that the packaging can protect the products from extreme temperatures in challenging climates as well as active packaging, anti-tampering packaging, and high oxygen barrier packaging. The company also does an excellent job at maintaining its privacy. No one is allowed to take a smartphone onto the factory floor, and it’s known that only a select few of journalists have been granted the privilege to go inside (Ferrero – A Joy to Discover, 2015).

Hershey’s most popular products are categorized under two business segments. Hershey’s chocolate, Hershey’s Kisses, and Reese’s products are sold under the chocolate business unit. The sweets and refreshments segment carries Twizzlers, Ice Breakers, Bubble Yum, and the like. The Hershey Company has set international growth targets, with a goal of reducing its North American market presence to 75%. They are specifically targeting China and their middle class, but thus far revenues from that market have fallen below forecast. Hershey’s plans to continue with mergers and acquisitions in the coming years, in an effort to gain market share from their competitors. (The Hershey Company, 2017)
Evaluation of the Mission
The Hershey Company was founded by Milton S. Hershey in 1894. It is headquartered in Hershey, Pennsylvania. The company’s mission has been “bringing sweet moments of Hershey happiness to the world every day.” The Hershey company was the first American candy company to produce milk chocolate at reasonable prices, which before was a luxury only affordable to the wealthy class. In addition to developing different candy brands and improving his chocolate formula, Milton Hershey set out to build a strong infrastructure for his company.
The Hershey factory was built in Derry Township, Pennsylvania, but Milton Hershey continued to expand and built a company town, which came to be known as Hershey, Pennsylvania. Today Hershey, Inc. operates in 90 countries, though its presence is largest in the United States. The list of products has been continuously growing since the company’s foundation.
The Hershey Company manufactures, markets, sells, and distributes chocolate and sugar confectionery products, pantry items, toppings and beverages, and gum and mint refreshment products. These products are sold under more than 80 brand names in over 70 countries. The most well-known ones Hershey’s, Reese’s, Hershey’s Kisses, Hershey’s Bliss, Hershey’s Special Dark, Kit Kat, Twizzlers, Jolly Rancher, and Ice Breakers. A full list of products can be found in Hershey’s Factbook, and on either of their websites (mb113608, 2013).
Evaluation of the Objectives
Hershey is a giant for-profit company with shares that are being publicly traded.
As of October 12, 2015, Hershey’s stock had a market cap of $15.3 billion. The company is a component of the S&P 500 Index (SPY) and part of the Consumer Staples Select Sector SPDR ETF (XLP). Hersey and its peer, Mondelez International (MDLZ) together constitute 4.8% of XLP. Hershey’s stock has given annual average returns of 11% and 12.5% in the last 15-years and last 20-years, respectively.
According to Statists, Hershey and Mars are the largest players in the U.S. confectionery market, with market shares of 31.2% and 29.2%, respectively. In Canada, Nestle (NSRGY) was the leader with an 18.6% share, followed by Hershey, Mondelez International (MDLZ), and Mars. In the U.S., Hershey is the leading chocolate company with a 44.4% share in the chocolate market, followed by Mars, which has a 29.5% share.
Hershey operates in two market segments, North American and International. It generates 85% of its total revenues from the North American market. However, Hershey is focused on building its international presence, especially with the significantly growing economies overseas, such as China, India, and Brazil. Hershey has thus set a goal to increase its international footprint to approximately 50% of its total revenues by 2018, by focusing on geographies outside of the U.S. and Canada. Statista estimates that global confectionery sales totaled $198.4 billion in 2014. Western Europe’s contribution to the global confectionery market was nearly 29.5%, followed by the Asia Pacific market with 18.6% share. According to Mondelez, the eight markets driving 70% of the global confectionery market are Brazil, China, Colombia, India, Russia, South Africa, Turkey, and Vietnam.
Hershey’s strategy in the international market relies on partnerships with foreign companies that have knowledge of the local market. The company is thus creating partnerships through mergers, acquisitions, and joint ventures. More specifically, Hershey’s main focus is on the emerging markets of China, Brazil, India, and Mexico. In the international market, Hershey gained a chocolate market share of between 5.8% and 7.2% in the 2011–2014 period. Between 2009 and 2014, Hershey’s chocolate category grew by an estimated CAGR (compound annual growth rate) of 12%, 12%, and 30% in the markets of Brazil, China, and India, respectively (Key, 2015).
Evaluation of the Functional Areas
Marketing
The Hershey Company’s marketing strategy primary focus is on developing strong brand equity, product innovation, and consistently updating product quality. The company’s main strengths consist of brand awareness and brand loyalty. Hershey’s leading brands are Kisses, Twizzlers, Reese’s, Kit-Kat, and the Hershey Bar. The company does 80% of its marketing in North America which can be seen as a weakness. Hershey is also known to operate as a micro-marketing company because they are known to market certain products to their small target audiences just to meet their specific demands (Key, 2015).
Hershey recently created several new marketing initiatives. The company is working on increasing its advertising budget so it can be able to promote its new product innovations to the world. Hershey also uses its strategy of holiday marketing to design special themes for its chocolates and candies for special holidays and occasions. This technique alone has brought in a lot of revenue for the business due to the company being able to charge higher prices for personalization. Hershey has partnered with an advertising agency, North Castle Partners, to gain fully integrated marketing programs for all of its refreshments and sugar confectionery brands. It has also decided to invest 20% of its total media for digital media purposes (Key, 2015).
Hershey is working toward making a few changes regarding its products in the near future. The company intends to consolidate its creative campaign for several of its iconic brands. Hershey is planning to stop using GMO sugar, milk from cows treated with bovine growth hormones, artificial colors and flavors, gluten and high fructose corn syrup. The company also plans to offer information regarding some new initiatives, such as identifying simple, easily understood ingredients on its labels, ingredient transparency, minimally processed ingredients, and sustainably sourced ingredients (The Hershey Company Investors Relations Department, 2017).
Finance
The Hershey Company reported net sales of $7,440,181 at December 31, 2016, an increase of 0.7% over 2105’s reported net sales. Cost of sales for 2016, $4,282,290, increased 7% over 2015, and 4.5% over 2014. Hershey’s gross profit at year-end 2016 was $3,157,891, operating profit was $1,205,783, and net income was $720,044. Total revenues have declined each quarter since October 2016. Cost of goods sold increased fourth quarter, 2016, but declined for both quarters in 2017. Operating income dropped from $374.02 in October 2016 to $191.93 in April 2017, but has risen to $315.34 as of 7/2/2017. Net income also rose in the second quarter of 2017, after experiencing declines in the prior two quarters, and was reported at $203.50. As reported in its 2016 Annual Report, the company anticipated a 2.25%-3.25% growth in net sales in 2017, including a favorable impact resulting from acquisitions, and excluding unfavorable results attributed to foreign exchange rates. Year-to-date net sales for 2017 total $3.54 billion.
The inventory turnover ratio measures how often inventory is turned over in a year. When calculated using sales, Hershey’s inventory turnover rate for 2016 is 9.94, or every 36 days. When calculated using cost of goods sold, which is the standard method used, the inventory turnover rate for the same year is 5.72, or every 63 days. This is less than the industry average of 7.9, or every 46 days, for the confectionary and nut industry, signaling less effective inventory management at Hershey. Hershey’s current ratio of .95 suggests the company may have difficulty paying its obligations over the short-term. The industry average current ratio is 2.1 for the year 2016.
Total revenues have declined each quarter since October 2016. Cost of goods sold increased fourth quarter, 2016, but have also declined for both quarters in 2017. Operating income dropped from $374.02 in October 2016 to $191.93 in April 2017, but has risen to $315.34 as of 7/2/2017. Net income also rose in the second quarter of 2017, after experiencing declines in the prior two quarters, and was reported at $203.50.
Total assets increased in July 2017 as opposed to the prior two quarters, and this is primarily due to an increase in total inventories. Total liabilities have also increased, despite a decrease in accounts payable and long-term debt. The increase is attributable to short-term debt.
Hershey’s (HSY) common stock is listed and traded on the NSYE, however their Class B Common Stock is not publicly traded. At December 31, 2016, the closing price of the common stock was $103.43, which increased to $109.25 at March 31, 2017, and declined to $107.37 at June 30, 2017. On September 15, 2017, The Hershey Company will pay its 351st consecutive quarterly dividend.

Mars Company is a $33 billion business that spreads across the spectrum from candy bars to chewing gum and all the way to dog food. Mars is a global company with headquarters in Belgium, New Jersey, Africa, Virginia, Asia, and even right here in South Carolina. They have made jobs available to people around the world and allows for job advancement as well when it comes to those jobs. When it comes to politics Mars does not provide money as company to presidential candidates but allows their employees to back those candidates with their own money. Most of which in recent years back democratic candidates. Becoming a $33 billion company means you have to have successful products which include the $5 billion brands such as Snickers, M&M’S, Dove, Milky Way, Twix and more. Mars also owns the $15 billion Uncle Ben’s Rice company which has been in existence for over 70 years. As well Mars owns the billion-dollar pet food companies Pedigree and Cesars. Mars also has a symbioscience branch that does extensive research in how to better the process of making their products as well as making the earth more sustainable. “Pioneering some of the most innovative and breakthrough fundamental scientific research, the Mars Symbioscience team has incubated, introduced and transitioned five technology platforms in the areas of food, plant, biomedical and life sciences. From creating sustainable businesses for farmers to tree nurseries, composting and marine culture with seahorse farming, we are committed to developing solutions that have a positive impact on people and the planet (Mars, Incorporated, 2016).”

Even though Hershey’s Corporation is one of the world’s leaders in chocolate candies, they have a bad reputation whenever it comes to their human resources department and how they treat their employees. A major issue is they have been under scrutiny for the use of child labor in third world countries, like West Africa, where their cocoa farms are located. They, along with seven other companies in the chocolate and cocoa industry, pledged $2 million to help combat the child labor issues in cocoa communities with help from the International Labor Office, (“ILO and chocolate and cocoa industry forge new partnership to combat child labor in West Africa,” 2011). Another issue Hershey’s faces is how they treat their employees because, it is viewed as less than fair and less safe than most places. But, it seems as if they are working to make a comeback. According to Business Wire in 2013, The Hershey Company was recognized as one of America’s “100 Best Corporate Citizens,” (The Hershey Company Recognized as One of America’s ‘100 Best Corporate Citizens,’ 2013). However, it does not seem Hershey’s or any of the other leading chocolate and cocoa industries have completely stopped the use of children for labor in their supply chain. This has been going on for 15 years now and it seems it is hard for them to stop since there are not enough people to help with the work, plus the areas in which child labor is employed are poverty-stricken. Another thing, according to Fortune these numbers seem to be increasing instead of decreasing like they should be (O’Keefe, 2016).

Evaluation of Marketing Strategies
Target Market

Identifying a company’s target market is essential for any business to focus its marketing activities on it. Although Hershey’s products are widely distributed and enjoyed by many consumers, if we look closer to its market we see that it has a few segments and one of the most important market breakdown is the segmentation of the family life cycle. Through extensive market research, one of the conclusions was that mothers play a large role in the decisions in the house and introducing brand loyalty. Being aware of this is why they have a variety of commercials of mothers or families bonding over a Hershey product.
Children are of course the targets for the chocolate products but if we pay attention we see that many adults have inclination to consumer Hershey products. This was proven by some research that adults consume over 55% of all the candy sold. Therefore, by demographics they market the bite size chocolates to adults. They started out with the Hershey Kisses that is now loved by all. Recently by adding more bite size chocolates they appeal to those who are trying to be health conscious and feel that a regular chocolate bar is too much. By having bite size versions, they feel as if they aren’t over indulging and are also viewed more portable alternative. The adult target market is very profitable and where most of their business comes from. This is how they have managed to stay ahead of the competition.

Hershey’s is known for offering tons of products for their consumers to choose from. One thing is that they do not target anyone in particular they pretty much market their products towards anyone at any age. Children, teenagers, young adults, adults, and older adults are all a part of Hershey’s target customer. They like to advertise around the holidays, especially Christmas and Valentine’s Day, since those are the two holidays when the most chocolate is bought. The reason they can have such a broad range of customers is because they offer any type of chocolate as well as candy. From their notorious Hershey’s milk chocolate bar to their Twizzlers. Another reason that they can have such a big range of customers is because their products are on the lower end of the pricing spectrum. It normally does not break the bank if someone wants to go to the store and purchase a chocolate bar.
Along with their vast target Hershey’s has also tried to be a little healthier by incorporating sugar free chocolates, catering to those especially with diabetes. They also are committed to using simple ingredients which means no artificial preservatives, no artificial sweeteners, and no artificial flavors (The Hershey Company, 2017). The reason behind this is because Hershey’s wants to be a caring brand they want their customers to realize that they care even about their health. An added bonus to this is that they have made the nutrition labels easier to read so that their customers know exactly what is in their food. This goes back to having more simple ingredients instead of all those additives and substitutes. They even state that 80% of their ingredients are cocoa, nets, milk, and sugar (The Hershey Company, 2017).
Besides the easier to read labels, Hershey’s also has a glossary of ingredients on their website so that people can find what ingredient is found on the nutrition label of a product of their choice. This comes in handy for weirdly named ingredients that no one seems to understand or know what it is. They developed a specific page on their website so there is no more wondering or guessing, you can easily see exactly what it is and why they use it (The Hershey Company, 2017). Another page that can be clicked on from here is their ‘Four Core Ingredients’ page. This explains any question someone might have about their milk, cocoa, nuts, and sugars (The Hershey Company, 2017).
Besides showing that they care about their customer’s health, they also care about helping their customers with recipes. Hershey’s offers a wide range of recipes on their website which is super helpful if someone enjoys baking. This also shows that the company not only offers chocolates to eat but also to use and bake with. Helping customers with finding recipes helps the company interact with the customers on a deeper level. It makes the company more attractive to consumers by showing how much they actually care.

Hershey’s Global Marketing Group is responsible for their pricing strategy. In recent years, Hershey has avoided some price increases by reducing the size of its candy bars. This is in direct opposition to Nestle, who did not change the size, but did increase their price. Hershey’s also employs high-low pricing, with products being offered at higher prices than their competitors’. These prices are then reduced with promotions, coupons, and sales. However, the company is experiencing price issues with their largest distributor, forcing them to price-cut in order to fend off competitors.
In their annual report, Hershey noted that “Future developments related to the investigation by government regulators of alleged pricing practices by members of the confectionary industry could impact our reputation, the regulatory environment under which we operate, and our operating results (The Hershey Company, 2017).” Without disclosing the source of the investigation, the report continues to explain that the company’s costs could increase, as a result of legal fees and potential new government mandates.

Hershey’s distribution strategy is one of many different routes to get products to the customer. Hershey manufactures all of their chocolate with no outside help. There are numerous Hershey products that they have to get to consumers all over the world. Their number one source of distribution is through retail stores such as gas stations and grocery stores. This is the quickest and most simplistic way for Hershey to get their product from production and into the consumers mouth. Retail stores though, only sell to the public and once the product has been bought from the retail store it is not allowed to be resold. As well, you will wind up buying the product at the price made by the retail store that way they make enough to pay Hershey and have enough left over for profit.
If the consumer at the end of the day does not like that route, they have two other alternatives buying directly from the factory in Hershey, Pennsylvania. or buying at wholesale from warehouse stores. Most people that choose this route end up not buying it directly from the factory since it has to be shipped to the consumer and then they have to wait on the product. The wholesale warehouses are usually how a lot of consumers buy them, especially with the wholesale phenomenon booming at this point. This allows the consumer to buy more of the products at one time and pay the same as the retailers do directly from Hershey. These types of places are stores such as Sam’s Club, BJ’s, and Costco. This is how places such as concession stands and small stores do not rely on distributors. This allows them to buy bulk of the item and still be able to resell the products.

Hershey is also an international product that you can find just about everywhere you go in the world. Hershey uses thousands of distribution centers all over the world to get their chocolate products to consumers on every edge of the world. This is helped by ten different global Hershey headquarters in countries such as Canada, China, Japan, Brazil, and more. This allows them to oversee day to day operations in all of the global factories and distribution centers.
Promotional Strategies
Advertising Strategies
Hershey’s current advertising strategy focuses on telling stories and creating memories. The strategy focuses on uniting all of Hershey’s branded treats under one campaign unlike their old advertising strategy that consisted on advertising each of the company’s products separately. The idea behind the present advertising strategy is to create a sense of emotional ties to the brand. Hershey is using the slogan, Hello Happy. Hello Hershey’s as a way to relate the taste of their treats as creating a sense of happiness. Hershey previously used an advertisement called My Dad, that advertised a young girl seeking time with her busy dad that is always working. At the end of the advertisement the young girl and her father can be seen in the kitchen making s’mores together using Hershey’s Syrup and candy bars. Hershey’s new advertising concept is aiming to leverage the power of Hershey into a mega franchise (Schultz, 2016).

Hershey has always focused on allowing their customers time to shop, and not pressuring their customers to make a purchase. The company decided to incorporate the effects of technology and increase impulse buying by installing chocolate dispensers in the self-checkout areas in stores. They also added candy and snack kiosks and vending machines around pick up areas such as nearby gas pumps at gas stations. Hershey Company began using the impulse selling strategy due to proven facts of consumers most of the time end up buying items that aren’t on their shopping lists (Tuttle, 2015).

Public Relations/Publicity Strategies

Hershey’s publicity strategy is currently targeting on making their chocolate treats healthier by eliminating and substituting some of the ingredients in the products with better choices. In 2013, the company launched a public relations campaign called Summer of Sweet Independence to introduce Hershey’s new Simple Pleasures chocolate brand. The goal of the campaign was to stop women from feeling guilty from eating foods that they love. The campaign showcased making women feel independent from guilt of eating the things they enjoy without the burden. This campaign alone caused sales to soar past their forecasts and made the company over 217 million media impressions (Ketchum, 2013).
Sales Promotion Strategies
Hershey’s sales promotion strategy targets the theory of in-store marketing and promotion working better than advertising. The company doesn’t focus on advertising as much as most companies, because they view chocolate as an impulse item. If customers just see their products in the store and are craving chocolate they’re likely to purchase it (Thompson, 2006). Hershey also uses the holidays as a way to sale their candy in bulk and customized to have a personal touch. The company also offer promotional codes to provide discounts on their products online and in the store.

Hershey is one of the most renowned companies worldwide in chocolate manufacturing. It is the leading corporation in its field in North America. Hershey’s headquarter has been in Pennsylvania where it was originally founded in 1894 by Milton Hershey.

Hershey’s contribution of Milton Hershey School for orphans resulted in improvement of the social and public image of Hershey. Additionally, the company provides various social services to its employees such as parks, schools, and housing facility.
The chocolate maker giant has a diversified product menu with well-established brand names. In addition to chocolate manufacturing, Hershey is also well-heeled in pasta production and variety of products in USA. The company is active in promoting its brand name by contributing in various segments of industry like commercial segment, resorts, entertainment and other market areas. Moreover, Hershey believes in the importance of education and research. This is why the company supports education by facilitating teachers and students with dedicated toll-free number.
After all those privileges that Hershey provides, no wonder why its employees follow strict code of conduct laid long time ago by its founder.

Hershey has been running a debt that is higher than the other competing companies. Also, advertisement expenses have been increasing over the previous years. On the other hand, the increasing price of cocoa beans is a matter of concern for the company since its products’ prices are inversely proportional with the sales volume by units.

Opportunities
From a public health perspective, dark chocolate, widely made by Hershey, offers many advantages over other kinds of chocolate. With all the market competition, Hershey still has wide customer base that is very loyal to the company’s brands. In addition to its leadership in the North American market, Hershey still has various untapped markets in China, India Indonesia, Vietnam and other Asian countries. On the other hand, to alleviate the increasing costs of production, Hershey could explore new cocoa-producing areas such as India.


Grad School Marketing Research Project- Hershey’s Marketing Analysis

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The Hershey Company
External Environmental Analysis
General Environmental Analysis

For Milton S. Hershey, the third time was the charm. After two failed attempts at establishing candy companies, he finally succeeded with the Lancaster Caramel Company. In 1894, Hershey began adding chocolate to his caramels, while perfecting his own recipe for milk chocolate. By 1900, he was mass producing milk chocolate, making it more affordable and readily available for consumers. In the 117 years since, The Hershey Company has not only continued to innovate and offer new products, but it has also acquired other successful candy businesses, and expanded its operations to over 70 countries.

The Hershey Company was incorporated in 1927 under the laws of the State of Delaware. The company’s headquarters is in Hershey, Pennsylvania. Hershey leads the confectionary industry with more than 80 brands, consisting of 58% chocolate, 26% non-chocolate, and 16% refreshment, including gum and mint lines. Annual revenues exceed $7 billion and the company employs more than 20,000 individuals worldwide. At the end of 2016, Hershey’s stock price was valued at $103.43 per share, with a year-to-date range of $83.32 as the low and $113.89 as the high. At the end of the 2017 second quarter, the closing price was $107.37. The Hershey Company is constantly expanding its offerings and global footprint, while maintaining its competitive advantage domestically.
Hershey has several competitors, two of which are Nestlé and Ferrero Rocher. Each company has its different strengths and weaknesses. There are various economic, social, political, and technological factors that play a role in what works and does not work for each brand.
Nestlé is the world’s leading nutrition, health and wellness company. It’s also the largest food and beverage company in the world. The company was founded in 1866 and its headquarters is located in Switzerland. Nestlé sells more than 2,000 different brands out of seven food and beverage categories. The main products the company offers consist of powdered and liquid beverages, milk, ice cream, confectionary and pet care products (Nestlé, 2017).
Ferrero Rocher was founded in Italy in 1946 by Pietro Ferrero (NCA, 2017). Ferrero USA, Inc. was established in 1969 and is known as the Ferrero Group’s fifth largest commercial unit. Ferrero USA headquarters is currently in Somerset, NJ. The products produced by Ferrero Rocher consist of Nutella, Ferrero Rocher, chocolates, Tic-Tac’s, and Kinder. The company employed 220 workers back in 2015 and is constantly increasing at a 10% growth rate. The annual sales for Ferrero Rocher exceed 600 million dollars (NCA, 2017). Approximately 61% of annual sales are made during the last three months of the year. It has been estimated that roughly 3.6 billion Ferrero Rocher candies are sold every year in 53 countries, and its products are sold in more than 160 countries (Ferrero, 2015). In August 2016, Ferrero Rocher employed 33,000 employees (Ferrero, 2016).

Milton Hershey and his wife, Catherine, were philanthropists who established The Hershey Industrial School, which is known today as the Milton Hershey School. Once a boarding school for orphaned boys, today’s school educates thousands of underprivileged children in a family-like environment. Milton Hershey also built a community, enriched by the Cocoa House, High Point Mansion, Hotel Hershey, the Hershey Sports Arena, and the Penn State Milton S. Hershey Medical Center. The Community Building houses an indoor pool, gym, library, hospital, theater, game rooms, and a cafeteria. Hersheypark is an amusement park which includes rides, playgrounds, a swimming pool, entertainment venues, and a zoo. Milton Hershey created several trusts to ensure the longevity of the institutions he created, and the company continues to engage in socially responsible activities. In 2014, J.P. Bilbrey, Chairman, President and CEO was named Responsible CEO of the Year by CR Magazine. That same year, he was also chosen by Penny Pritzker, then U.S. Secretary of Commerce, to participate in President Obama’s Advisory Council on Doing Business in Africa.
The Hershey Company believes in reinvesting in their employees and their purpose. With an eye on economic trends, they continue to innovate and open new channels for distribution and competition. The company also monitors consumer expectations and has responded by increasing transparency, widening nutritional choices, and reformulating to more simple ingredients.
The social factors of Nestlé consist of commitments to help individuals and families to live healthier lives. The company plans to launch more nutritious foods and beverages, especially for mothers-to-be, new mothers and children. It also is aiming to further decrease sugars, sodium, and saturated fat. More vegetables, fiber-rich grains, pulses, nuts and seeds will be incorporated more in the foods and beverages. Nestlé believes in empowering parents, caregivers and teachers to foster healthy behaviors in children. The company is also pushing towards inspiring people to choose water in hopes to live healthier lives. A detailed explanation is even provided on packages as well as online. Nestlé is also a big supporter in breastfeeding and protects it by continuing to implement and industry policy to market breast-milk substitutes responsibly (Nestle USA, 2017).
Ferrero Rocher Company cares deeply for their consumers, and wants to be able to translate their passion into the chocolate. The company’s goal is to create unique products, develop innovative research, and production processes as well as using their own technologies. Ferrero Rocher uses the best and most high-quality products in order to maintain long lasting relationships to their loyal customers. The company also created the Ferrero Foundation to help improve the quality of life of elderly people. The foundation offers a variety of activities that help the elderly to live the ageing process as an occasion to discover new opportunities. It includes an auditorium, gyms, exhibition halls and spaces for medical and clinical conferences. There is also a state-of-the-art nursery for employees’ children. The “Progetto Imprenditorale Michele Ferrero” is another program that was created to help improve the living conditions of the communities of developing countries with more attention to focusing on children (Ferrero USA, Inc., 2017).

In 2012, the Louisiana Municipal Police Employees Retirement Union accused the company of employing illegal child labor at its cocoa farms and this litigation is still pending. The company has also been cited for health and safety violations at its Pennsylvania plant. In 2014, The Hershey Company announced the formation of CocoaAction, where several chocolate companies are working together to ensure cocoa sustainability in West Africa. CocoaAction will also be “addressing child labor through labor monitoring and remediation, making basic education available, ensuring children go to school, and improving gender parity so that women have a greater influence in their communities’ decision making and development (The Hershey Company, 2014).”
There are many political factors that can affect the Nestlé Company. The major factor is regarding whether taxes will increase or decrease. If taxes increase, the will be a decrease in consumers and sales stock. If taxes decrease, there is a chance that consumers will buy more than usual. Another political factor has been that Nestlé started receiving criticism from its high levels or sugar in their chocolate (Nestle USA, 2017). There have even been rumors regarding the price of coffee beans rising which may cause the company to have to increase their prices or alter their products. High interest rates could cause Nestlé to not want to borrow as much money for its expansion with KitKat. Lastly, a tax could be put on sweets to encourage consumers to eat more healthy foods (Jurevicius, 2017).
For Ferrero Rocher, the political factor that was discovered was that Ferrero Rocher’s products is number one in Germany, Italy, and France, but only has a 5% share in Britain. The company is working on raising the percentage of shares in Britain.

Hershey recognizes that factors that could negatively impact the business include “disruptions, failures, or security breaches of our information technology infrastructure (The Hershey Company, 2014).” They are also investing in technology to assist in cocoa farming and to improve the lives of cocoa farmers. A corporate initiative to save 20 million gallons of water is underway with the installation of new technology in its manufacturing plants that will eliminate the use of chemicals for cleaning water.
Nestlé and Samsung are collaborating on digital nutrition and health, and will be announcing their research collaboration to explore the potential of nutrition science and digital sensor technologies. Their goal with this new collaboration is to provide new insights into healthy living. The new digital platform will provide customers with more personalized recommendations in relation to nutrition, lifestyle, and fitness. Nestlé’s reason for creating this project was based upon the idea that today we live in an era where the data from sensors and devices can help society to better understand the company’s nutrition and activity with the hopes of guiding individuals towards a healthier lifestyle (NestleUSA, 2017).
There are several technological factors regarding Ferro Rocher. One is that the company is currently working on new technical solutions to ensure that the packaging can protect the products from extreme temperatures in challenging climates as well as active packaging, anti-tampering packaging, and high oxygen barrier packaging. The company also does an excellent job at maintaining its privacy. No one is allowed to take a smartphone onto the factory floor, and it’s known that only a select few of journalists have been granted the privilege to go inside (Ferrero – A Joy to Discover, 2015).

Hershey’s most popular products are categorized under two business segments. Hershey’s chocolate, Hershey’s Kisses, and Reese’s products are sold under the chocolate business unit. The sweets and refreshments segment carries Twizzlers, Ice Breakers, Bubble Yum, and the like. The Hershey Company has set international growth targets, with a goal of reducing its North American market presence to 75%. They are specifically targeting China and their middle class, but thus far revenues from that market have fallen below forecast. Hershey’s plans to continue with mergers and acquisitions in the coming years, in an effort to gain market share from their competitors. (The Hershey Company, 2017)
Evaluation of the Mission
The Hershey Company was founded by Milton S. Hershey in 1894. It is headquartered in Hershey, Pennsylvania. The company’s mission has been “bringing sweet moments of Hershey happiness to the world every day.” The Hershey company was the first American candy company to produce milk chocolate at reasonable prices, which before was a luxury only affordable to the wealthy class. In addition to developing different candy brands and improving his chocolate formula, Milton Hershey set out to build a strong infrastructure for his company.
The Hershey factory was built in Derry Township, Pennsylvania, but Milton Hershey continued to expand and built a company town, which came to be known as Hershey, Pennsylvania. Today Hershey, Inc. operates in 90 countries, though its presence is largest in the United States. The list of products has been continuously growing since the company’s foundation.
The Hershey Company manufactures, markets, sells, and distributes chocolate and sugar confectionery products, pantry items, toppings and beverages, and gum and mint refreshment products. These products are sold under more than 80 brand names in over 70 countries. The most well-known ones Hershey’s, Reese’s, Hershey’s Kisses, Hershey’s Bliss, Hershey’s Special Dark, Kit Kat, Twizzlers, Jolly Rancher, and Ice Breakers. A full list of products can be found in Hershey’s Factbook, and on either of their websites (mb113608, 2013).
Evaluation of the Objectives
Hershey is a giant for-profit company with shares that are being publicly traded.
As of October 12, 2015, Hershey’s stock had a market cap of $15.3 billion. The company is a component of the S&P 500 Index (SPY) and part of the Consumer Staples Select Sector SPDR ETF (XLP). Hersey and its peer, Mondelez International (MDLZ) together constitute 4.8% of XLP. Hershey’s stock has given annual average returns of 11% and 12.5% in the last 15-years and last 20-years, respectively.
According to Statists, Hershey and Mars are the largest players in the U.S. confectionery market, with market shares of 31.2% and 29.2%, respectively. In Canada, Nestle (NSRGY) was the leader with an 18.6% share, followed by Hershey, Mondelez International (MDLZ), and Mars. In the U.S., Hershey is the leading chocolate company with a 44.4% share in the chocolate market, followed by Mars, which has a 29.5% share.
Hershey operates in two market segments, North American and International. It generates 85% of its total revenues from the North American market. However, Hershey is focused on building its international presence, especially with the significantly growing economies overseas, such as China, India, and Brazil. Hershey has thus set a goal to increase its international footprint to approximately 50% of its total revenues by 2018, by focusing on geographies outside of the U.S. and Canada. Statista estimates that global confectionery sales totaled $198.4 billion in 2014. Western Europe’s contribution to the global confectionery market was nearly 29.5%, followed by the Asia Pacific market with 18.6% share. According to Mondelez, the eight markets driving 70% of the global confectionery market are Brazil, China, Colombia, India, Russia, South Africa, Turkey, and Vietnam.
Hershey’s strategy in the international market relies on partnerships with foreign companies that have knowledge of the local market. The company is thus creating partnerships through mergers, acquisitions, and joint ventures. More specifically, Hershey’s main focus is on the emerging markets of China, Brazil, India, and Mexico. In the international market, Hershey gained a chocolate market share of between 5.8% and 7.2% in the 2011–2014 period. Between 2009 and 2014, Hershey’s chocolate category grew by an estimated CAGR (compound annual growth rate) of 12%, 12%, and 30% in the markets of Brazil, China, and India, respectively (Key, 2015).
Evaluation of the Functional Areas
Marketing
The Hershey Company’s marketing strategy primary focus is on developing strong brand equity, product innovation, and consistently updating product quality. The company’s main strengths consist of brand awareness and brand loyalty. Hershey’s leading brands are Kisses, Twizzlers, Reese’s, Kit-Kat, and the Hershey Bar. The company does 80% of its marketing in North America which can be seen as a weakness. Hershey is also known to operate as a micro-marketing company because they are known to market certain products to their small target audiences just to meet their specific demands (Key, 2015).
Hershey recently created several new marketing initiatives. The company is working on increasing its advertising budget so it can be able to promote its new product innovations to the world. Hershey also uses its strategy of holiday marketing to design special themes for its chocolates and candies for special holidays and occasions. This technique alone has brought in a lot of revenue for the business due to the company being able to charge higher prices for personalization. Hershey has partnered with an advertising agency, North Castle Partners, to gain fully integrated marketing programs for all of its refreshments and sugar confectionery brands. It has also decided to invest 20% of its total media for digital media purposes (Key, 2015).
Hershey is working toward making a few changes regarding its products in the near future. The company intends to consolidate its creative campaign for several of its iconic brands. Hershey is planning to stop using GMO sugar, milk from cows treated with bovine growth hormones, artificial colors and flavors, gluten and high fructose corn syrup. The company also plans to offer information regarding some new initiatives, such as identifying simple, easily understood ingredients on its labels, ingredient transparency, minimally processed ingredients, and sustainably sourced ingredients (The Hershey Company Investors Relations Department, 2017).
Finance
The Hershey Company reported net sales of $7,440,181 at December 31, 2016, an increase of 0.7% over 2105’s reported net sales. Cost of sales for 2016, $4,282,290, increased 7% over 2015, and 4.5% over 2014. Hershey’s gross profit at year-end 2016 was $3,157,891, operating profit was $1,205,783, and net income was $720,044. Total revenues have declined each quarter since October 2016. Cost of goods sold increased fourth quarter, 2016, but declined for both quarters in 2017. Operating income dropped from $374.02 in October 2016 to $191.93 in April 2017, but has risen to $315.34 as of 7/2/2017. Net income also rose in the second quarter of 2017, after experiencing declines in the prior two quarters, and was reported at $203.50. As reported in its 2016 Annual Report, the company anticipated a 2.25%-3.25% growth in net sales in 2017, including a favorable impact resulting from acquisitions, and excluding unfavorable results attributed to foreign exchange rates. Year-to-date net sales for 2017 total $3.54 billion.
The inventory turnover ratio measures how often inventory is turned over in a year. When calculated using sales, Hershey’s inventory turnover rate for 2016 is 9.94, or every 36 days. When calculated using cost of goods sold, which is the standard method used, the inventory turnover rate for the same year is 5.72, or every 63 days. This is less than the industry average of 7.9, or every 46 days, for the confectionary and nut industry, signaling less effective inventory management at Hershey. Hershey’s current ratio of .95 suggests the company may have difficulty paying its obligations over the short-term. The industry average current ratio is 2.1 for the year 2016.
Total revenues have declined each quarter since October 2016. Cost of goods sold increased fourth quarter, 2016, but have also declined for both quarters in 2017. Operating income dropped from $374.02 in October 2016 to $191.93 in April 2017, but has risen to $315.34 as of 7/2/2017. Net income also rose in the second quarter of 2017, after experiencing declines in the prior two quarters, and was reported at $203.50.
Total assets increased in July 2017 as opposed to the prior two quarters, and this is primarily due to an increase in total inventories. Total liabilities have also increased, despite a decrease in accounts payable and long-term debt. The increase is attributable to short-term debt.
Hershey’s (HSY) common stock is listed and traded on the NSYE, however their Class B Common Stock is not publicly traded. At December 31, 2016, the closing price of the common stock was $103.43, which increased to $109.25 at March 31, 2017, and declined to $107.37 at June 30, 2017. On September 15, 2017, The Hershey Company will pay its 351st consecutive quarterly dividend.

Mars Company is a $33 billion business that spreads across the spectrum from candy bars to chewing gum and all the way to dog food. Mars is a global company with headquarters in Belgium, New Jersey, Africa, Virginia, Asia, and even right here in South Carolina. They have made jobs available to people around the world and allows for job advancement as well when it comes to those jobs. When it comes to politics Mars does not provide money as company to presidential candidates but allows their employees to back those candidates with their own money. Most of which in recent years back democratic candidates. Becoming a $33 billion company means you have to have successful products which include the $5 billion brands such as Snickers, M&M’S, Dove, Milky Way, Twix and more. Mars also owns the $15 billion Uncle Ben’s Rice company which has been in existence for over 70 years. As well Mars owns the billion-dollar pet food companies Pedigree and Cesars. Mars also has a symbioscience branch that does extensive research in how to better the process of making their products as well as making the earth more sustainable. “Pioneering some of the most innovative and breakthrough fundamental scientific research, the Mars Symbioscience team has incubated, introduced and transitioned five technology platforms in the areas of food, plant, biomedical and life sciences. From creating sustainable businesses for farmers to tree nurseries, composting and marine culture with seahorse farming, we are committed to developing solutions that have a positive impact on people and the planet (Mars, Incorporated, 2016).”

Even though Hershey’s Corporation is one of the world’s leaders in chocolate candies, they have a bad reputation whenever it comes to their human resources department and how they treat their employees. A major issue is they have been under scrutiny for the use of child labor in third world countries, like West Africa, where their cocoa farms are located. They, along with seven other companies in the chocolate and cocoa industry, pledged $2 million to help combat the child labor issues in cocoa communities with help from the International Labor Office, (“ILO and chocolate and cocoa industry forge new partnership to combat child labor in West Africa,” 2011). Another issue Hershey’s faces is how they treat their employees because, it is viewed as less than fair and less safe than most places. But, it seems as if they are working to make a comeback. According to Business Wire in 2013, The Hershey Company was recognized as one of America’s “100 Best Corporate Citizens,” (The Hershey Company Recognized as One of America’s ‘100 Best Corporate Citizens,’ 2013). However, it does not seem Hershey’s or any of the other leading chocolate and cocoa industries have completely stopped the use of children for labor in their supply chain. This has been going on for 15 years now and it seems it is hard for them to stop since there are not enough people to help with the work, plus the areas in which child labor is employed are poverty-stricken. Another thing, according to Fortune these numbers seem to be increasing instead of decreasing like they should be (O’Keefe, 2016).

Evaluation of Marketing Strategies
Target Market

Identifying a company’s target market is essential for any business to focus its marketing activities on it. Although Hershey’s products are widely distributed and enjoyed by many consumers, if we look closer to its market we see that it has a few segments and one of the most important market breakdown is the segmentation of the family life cycle. Through extensive market research, one of the conclusions was that mothers play a large role in the decisions in the house and introducing brand loyalty. Being aware of this is why they have a variety of commercials of mothers or families bonding over a Hershey product.
Children are of course the targets for the chocolate products but if we pay attention we see that many adults have inclination to consumer Hershey products. This was proven by some research that adults consume over 55% of all the candy sold. Therefore, by demographics they market the bite size chocolates to adults. They started out with the Hershey Kisses that is now loved by all. Recently by adding more bite size chocolates they appeal to those who are trying to be health conscious and feel that a regular chocolate bar is too much. By having bite size versions, they feel as if they aren’t over indulging and are also viewed more portable alternative. The adult target market is very profitable and where most of their business comes from. This is how they have managed to stay ahead of the competition.

Hershey’s is known for offering tons of products for their consumers to choose from. One thing is that they do not target anyone in particular they pretty much market their products towards anyone at any age. Children, teenagers, young adults, adults, and older adults are all a part of Hershey’s target customer. They like to advertise around the holidays, especially Christmas and Valentine’s Day, since those are the two holidays when the most chocolate is bought. The reason they can have such a broad range of customers is because they offer any type of chocolate as well as candy. From their notorious Hershey’s milk chocolate bar to their Twizzlers. Another reason that they can have such a big range of customers is because their products are on the lower end of the pricing spectrum. It normally does not break the bank if someone wants to go to the store and purchase a chocolate bar.
Along with their vast target Hershey’s has also tried to be a little healthier by incorporating sugar free chocolates, catering to those especially with diabetes. They also are committed to using simple ingredients which means no artificial preservatives, no artificial sweeteners, and no artificial flavors (The Hershey Company, 2017). The reason behind this is because Hershey’s wants to be a caring brand they want their customers to realize that they care even about their health. An added bonus to this is that they have made the nutrition labels easier to read so that their customers know exactly what is in their food. This goes back to having more simple ingredients instead of all those additives and substitutes. They even state that 80% of their ingredients are cocoa, nets, milk, and sugar (The Hershey Company, 2017).
Besides the easier to read labels, Hershey’s also has a glossary of ingredients on their website so that people can find what ingredient is found on the nutrition label of a product of their choice. This comes in handy for weirdly named ingredients that no one seems to understand or know what it is. They developed a specific page on their website so there is no more wondering or guessing, you can easily see exactly what it is and why they use it (The Hershey Company, 2017). Another page that can be clicked on from here is their ‘Four Core Ingredients’ page. This explains any question someone might have about their milk, cocoa, nuts, and sugars (The Hershey Company, 2017).
Besides showing that they care about their customer’s health, they also care about helping their customers with recipes. Hershey’s offers a wide range of recipes on their website which is super helpful if someone enjoys baking. This also shows that the company not only offers chocolates to eat but also to use and bake with. Helping customers with finding recipes helps the company interact with the customers on a deeper level. It makes the company more attractive to consumers by showing how much they actually care.

Hershey’s Global Marketing Group is responsible for their pricing strategy. In recent years, Hershey has avoided some price increases by reducing the size of its candy bars. This is in direct opposition to Nestle, who did not change the size, but did increase their price. Hershey’s also employs high-low pricing, with products being offered at higher prices than their competitors’. These prices are then reduced with promotions, coupons, and sales. However, the company is experiencing price issues with their largest distributor, forcing them to price-cut in order to fend off competitors.
In their annual report, Hershey noted that “Future developments related to the investigation by government regulators of alleged pricing practices by members of the confectionary industry could impact our reputation, the regulatory environment under which we operate, and our operating results (The Hershey Company, 2017).” Without disclosing the source of the investigation, the report continues to explain that the company’s costs could increase, as a result of legal fees and potential new government mandates.

Hershey’s distribution strategy is one of many different routes to get products to the customer. Hershey manufactures all of their chocolate with no outside help. There are numerous Hershey products that they have to get to consumers all over the world. Their number one source of distribution is through retail stores such as gas stations and grocery stores. This is the quickest and most simplistic way for Hershey to get their product from production and into the consumers mouth. Retail stores though, only sell to the public and once the product has been bought from the retail store it is not allowed to be resold. As well, you will wind up buying the product at the price made by the retail store that way they make enough to pay Hershey and have enough left over for profit.
If the consumer at the end of the day does not like that route, they have two other alternatives buying directly from the factory in Hershey, Pennsylvania. or buying at wholesale from warehouse stores. Most people that choose this route end up not buying it directly from the factory since it has to be shipped to the consumer and then they have to wait on the product. The wholesale warehouses are usually how a lot of consumers buy them, especially with the wholesale phenomenon booming at this point. This allows the consumer to buy more of the products at one time and pay the same as the retailers do directly from Hershey. These types of places are stores such as Sam’s Club, BJ’s, and Costco. This is how places such as concession stands and small stores do not rely on distributors. This allows them to buy bulk of the item and still be able to resell the products.

Hershey is also an international product that you can find just about everywhere you go in the world. Hershey uses thousands of distribution centers all over the world to get their chocolate products to consumers on every edge of the world. This is helped by ten different global Hershey headquarters in countries such as Canada, China, Japan, Brazil, and more. This allows them to oversee day to day operations in all of the global factories and distribution centers.
Promotional Strategies
Advertising Strategies
Hershey’s current advertising strategy focuses on telling stories and creating memories. The strategy focuses on uniting all of Hershey’s branded treats under one campaign unlike their old advertising strategy that consisted on advertising each of the company’s products separately. The idea behind the present advertising strategy is to create a sense of emotional ties to the brand. Hershey is using the slogan, Hello Happy. Hello Hershey’s as a way to relate the taste of their treats as creating a sense of happiness. Hershey previously used an advertisement called My Dad, that advertised a young girl seeking time with her busy dad that is always working. At the end of the advertisement the young girl and her father can be seen in the kitchen making s’mores together using Hershey’s Syrup and candy bars. Hershey’s new advertising concept is aiming to leverage the power of Hershey into a mega franchise (Schultz, 2016).

Hershey has always focused on allowing their customers time to shop, and not pressuring their customers to make a purchase. The company decided to incorporate the effects of technology and increase impulse buying by installing chocolate dispensers in the self-checkout areas in stores. They also added candy and snack kiosks and vending machines around pick up areas such as nearby gas pumps at gas stations. Hershey Company began using the impulse selling strategy due to proven facts of consumers most of the time end up buying items that aren’t on their shopping lists (Tuttle, 2015).

Public Relations/Publicity Strategies

Hershey’s publicity strategy is currently targeting on making their chocolate treats healthier by eliminating and substituting some of the ingredients in the products with better choices. In 2013, the company launched a public relations campaign called Summer of Sweet Independence to introduce Hershey’s new Simple Pleasures chocolate brand. The goal of the campaign was to stop women from feeling guilty from eating foods that they love. The campaign showcased making women feel independent from guilt of eating the things they enjoy without the burden. This campaign alone caused sales to soar past their forecasts and made the company over 217 million media impressions (Ketchum, 2013).
Sales Promotion Strategies
Hershey’s sales promotion strategy targets the theory of in-store marketing and promotion working better than advertising. The company doesn’t focus on advertising as much as most companies, because they view chocolate as an impulse item. If customers just see their products in the store and are craving chocolate they’re likely to purchase it (Thompson, 2006). Hershey also uses the holidays as a way to sale their candy in bulk and customized to have a personal touch. The company also offer promotional codes to provide discounts on their products online and in the store.

Hershey is one of the most renowned companies worldwide in chocolate manufacturing. It is the leading corporation in its field in North America. Hershey’s headquarter has been in Pennsylvania where it was originally founded in 1894 by Milton Hershey.

Hershey’s contribution of Milton Hershey School for orphans resulted in improvement of the social and public image of Hershey. Additionally, the company provides various social services to its employees such as parks, schools, and housing facility.
The chocolate maker giant has a diversified product menu with well-established brand names. In addition to chocolate manufacturing, Hershey is also well-heeled in pasta production and variety of products in USA. The company is active in promoting its brand name by contributing in various segments of industry like commercial segment, resorts, entertainment and other market areas. Moreover, Hershey believes in the importance of education and research. This is why the company supports education by facilitating teachers and students with dedicated toll-free number.
After all those privileges that Hershey provides, no wonder why its employees follow strict code of conduct laid long time ago by its founder.

Hershey has been running a debt that is higher than the other competing companies. Also, advertisement expenses have been increasing over the previous years. On the other hand, the increasing price of cocoa beans is a matter of concern for the company since its products’ prices are inversely proportional with the sales volume by units.

Opportunities
From a public health perspective, dark chocolate, widely made by Hershey, offers many advantages over other kinds of chocolate. With all the market competition, Hershey still has wide customer base that is very loyal to the company’s brands. In addition to its leadership in the North American market, Hershey still has various untapped markets in China, India Indonesia, Vietnam and other Asian countries. On the other hand, to alleviate the increasing costs of production, Hershey could explore new cocoa-producing areas such as India.


Grad School Marketing Research Project- Hershey’s Marketing Analysis

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The Hershey Company
External Environmental Analysis
General Environmental Analysis

For Milton S. Hershey, the third time was the charm. After two failed attempts at establishing candy companies, he finally succeeded with the Lancaster Caramel Company. In 1894, Hershey began adding chocolate to his caramels, while perfecting his own recipe for milk chocolate. By 1900, he was mass producing milk chocolate, making it more affordable and readily available for consumers. In the 117 years since, The Hershey Company has not only continued to innovate and offer new products, but it has also acquired other successful candy businesses, and expanded its operations to over 70 countries.

The Hershey Company was incorporated in 1927 under the laws of the State of Delaware. The company’s headquarters is in Hershey, Pennsylvania. Hershey leads the confectionary industry with more than 80 brands, consisting of 58% chocolate, 26% non-chocolate, and 16% refreshment, including gum and mint lines. Annual revenues exceed $7 billion and the company employs more than 20,000 individuals worldwide. At the end of 2016, Hershey’s stock price was valued at $103.43 per share, with a year-to-date range of $83.32 as the low and $113.89 as the high. At the end of the 2017 second quarter, the closing price was $107.37. The Hershey Company is constantly expanding its offerings and global footprint, while maintaining its competitive advantage domestically.
Hershey has several competitors, two of which are Nestlé and Ferrero Rocher. Each company has its different strengths and weaknesses. There are various economic, social, political, and technological factors that play a role in what works and does not work for each brand.
Nestlé is the world’s leading nutrition, health and wellness company. It’s also the largest food and beverage company in the world. The company was founded in 1866 and its headquarters is located in Switzerland. Nestlé sells more than 2,000 different brands out of seven food and beverage categories. The main products the company offers consist of powdered and liquid beverages, milk, ice cream, confectionary and pet care products (Nestlé, 2017).
Ferrero Rocher was founded in Italy in 1946 by Pietro Ferrero (NCA, 2017). Ferrero USA, Inc. was established in 1969 and is known as the Ferrero Group’s fifth largest commercial unit. Ferrero USA headquarters is currently in Somerset, NJ. The products produced by Ferrero Rocher consist of Nutella, Ferrero Rocher, chocolates, Tic-Tac’s, and Kinder. The company employed 220 workers back in 2015 and is constantly increasing at a 10% growth rate. The annual sales for Ferrero Rocher exceed 600 million dollars (NCA, 2017). Approximately 61% of annual sales are made during the last three months of the year. It has been estimated that roughly 3.6 billion Ferrero Rocher candies are sold every year in 53 countries, and its products are sold in more than 160 countries (Ferrero, 2015). In August 2016, Ferrero Rocher employed 33,000 employees (Ferrero, 2016).

Milton Hershey and his wife, Catherine, were philanthropists who established The Hershey Industrial School, which is known today as the Milton Hershey School. Once a boarding school for orphaned boys, today’s school educates thousands of underprivileged children in a family-like environment. Milton Hershey also built a community, enriched by the Cocoa House, High Point Mansion, Hotel Hershey, the Hershey Sports Arena, and the Penn State Milton S. Hershey Medical Center. The Community Building houses an indoor pool, gym, library, hospital, theater, game rooms, and a cafeteria. Hersheypark is an amusement park which includes rides, playgrounds, a swimming pool, entertainment venues, and a zoo. Milton Hershey created several trusts to ensure the longevity of the institutions he created, and the company continues to engage in socially responsible activities. In 2014, J.P. Bilbrey, Chairman, President and CEO was named Responsible CEO of the Year by CR Magazine. That same year, he was also chosen by Penny Pritzker, then U.S. Secretary of Commerce, to participate in President Obama’s Advisory Council on Doing Business in Africa.
The Hershey Company believes in reinvesting in their employees and their purpose. With an eye on economic trends, they continue to innovate and open new channels for distribution and competition. The company also monitors consumer expectations and has responded by increasing transparency, widening nutritional choices, and reformulating to more simple ingredients.
The social factors of Nestlé consist of commitments to help individuals and families to live healthier lives. The company plans to launch more nutritious foods and beverages, especially for mothers-to-be, new mothers and children. It also is aiming to further decrease sugars, sodium, and saturated fat. More vegetables, fiber-rich grains, pulses, nuts and seeds will be incorporated more in the foods and beverages. Nestlé believes in empowering parents, caregivers and teachers to foster healthy behaviors in children. The company is also pushing towards inspiring people to choose water in hopes to live healthier lives. A detailed explanation is even provided on packages as well as online. Nestlé is also a big supporter in breastfeeding and protects it by continuing to implement and industry policy to market breast-milk substitutes responsibly (Nestle USA, 2017).
Ferrero Rocher Company cares deeply for their consumers, and wants to be able to translate their passion into the chocolate. The company’s goal is to create unique products, develop innovative research, and production processes as well as using their own technologies. Ferrero Rocher uses the best and most high-quality products in order to maintain long lasting relationships to their loyal customers. The company also created the Ferrero Foundation to help improve the quality of life of elderly people. The foundation offers a variety of activities that help the elderly to live the ageing process as an occasion to discover new opportunities. It includes an auditorium, gyms, exhibition halls and spaces for medical and clinical conferences. There is also a state-of-the-art nursery for employees’ children. The “Progetto Imprenditorale Michele Ferrero” is another program that was created to help improve the living conditions of the communities of developing countries with more attention to focusing on children (Ferrero USA, Inc., 2017).

In 2012, the Louisiana Municipal Police Employees Retirement Union accused the company of employing illegal child labor at its cocoa farms and this litigation is still pending. The company has also been cited for health and safety violations at its Pennsylvania plant. In 2014, The Hershey Company announced the formation of CocoaAction, where several chocolate companies are working together to ensure cocoa sustainability in West Africa. CocoaAction will also be “addressing child labor through labor monitoring and remediation, making basic education available, ensuring children go to school, and improving gender parity so that women have a greater influence in their communities’ decision making and development (The Hershey Company, 2014).”
There are many political factors that can affect the Nestlé Company. The major factor is regarding whether taxes will increase or decrease. If taxes increase, the will be a decrease in consumers and sales stock. If taxes decrease, there is a chance that consumers will buy more than usual. Another political factor has been that Nestlé started receiving criticism from its high levels or sugar in their chocolate (Nestle USA, 2017). There have even been rumors regarding the price of coffee beans rising which may cause the company to have to increase their prices or alter their products. High interest rates could cause Nestlé to not want to borrow as much money for its expansion with KitKat. Lastly, a tax could be put on sweets to encourage consumers to eat more healthy foods (Jurevicius, 2017).
For Ferrero Rocher, the political factor that was discovered was that Ferrero Rocher’s products is number one in Germany, Italy, and France, but only has a 5% share in Britain. The company is working on raising the percentage of shares in Britain.

Hershey recognizes that factors that could negatively impact the business include “disruptions, failures, or security breaches of our information technology infrastructure (The Hershey Company, 2014).” They are also investing in technology to assist in cocoa farming and to improve the lives of cocoa farmers. A corporate initiative to save 20 million gallons of water is underway with the installation of new technology in its manufacturing plants that will eliminate the use of chemicals for cleaning water.
Nestlé and Samsung are collaborating on digital nutrition and health, and will be announcing their research collaboration to explore the potential of nutrition science and digital sensor technologies. Their goal with this new collaboration is to provide new insights into healthy living. The new digital platform will provide customers with more personalized recommendations in relation to nutrition, lifestyle, and fitness. Nestlé’s reason for creating this project was based upon the idea that today we live in an era where the data from sensors and devices can help society to better understand the company’s nutrition and activity with the hopes of guiding individuals towards a healthier lifestyle (NestleUSA, 2017).
There are several technological factors regarding Ferro Rocher. One is that the company is currently working on new technical solutions to ensure that the packaging can protect the products from extreme temperatures in challenging climates as well as active packaging, anti-tampering packaging, and high oxygen barrier packaging. The company also does an excellent job at maintaining its privacy. No one is allowed to take a smartphone onto the factory floor, and it’s known that only a select few of journalists have been granted the privilege to go inside (Ferrero – A Joy to Discover, 2015).

Hershey’s most popular products are categorized under two business segments. Hershey’s chocolate, Hershey’s Kisses, and Reese’s products are sold under the chocolate business unit. The sweets and refreshments segment carries Twizzlers, Ice Breakers, Bubble Yum, and the like. The Hershey Company has set international growth targets, with a goal of reducing its North American market presence to 75%. They are specifically targeting China and their middle class, but thus far revenues from that market have fallen below forecast. Hershey’s plans to continue with mergers and acquisitions in the coming years, in an effort to gain market share from their competitors. (The Hershey Company, 2017)
Evaluation of the Mission
The Hershey Company was founded by Milton S. Hershey in 1894. It is headquartered in Hershey, Pennsylvania. The company’s mission has been “bringing sweet moments of Hershey happiness to the world every day.” The Hershey company was the first American candy company to produce milk chocolate at reasonable prices, which before was a luxury only affordable to the wealthy class. In addition to developing different candy brands and improving his chocolate formula, Milton Hershey set out to build a strong infrastructure for his company.
The Hershey factory was built in Derry Township, Pennsylvania, but Milton Hershey continued to expand and built a company town, which came to be known as Hershey, Pennsylvania. Today Hershey, Inc. operates in 90 countries, though its presence is largest in the United States. The list of products has been continuously growing since the company’s foundation.
The Hershey Company manufactures, markets, sells, and distributes chocolate and sugar confectionery products, pantry items, toppings and beverages, and gum and mint refreshment products. These products are sold under more than 80 brand names in over 70 countries. The most well-known ones Hershey’s, Reese’s, Hershey’s Kisses, Hershey’s Bliss, Hershey’s Special Dark, Kit Kat, Twizzlers, Jolly Rancher, and Ice Breakers. A full list of products can be found in Hershey’s Factbook, and on either of their websites (mb113608, 2013).
Evaluation of the Objectives
Hershey is a giant for-profit company with shares that are being publicly traded.
As of October 12, 2015, Hershey’s stock had a market cap of $15.3 billion. The company is a component of the S&P 500 Index (SPY) and part of the Consumer Staples Select Sector SPDR ETF (XLP). Hersey and its peer, Mondelez International (MDLZ) together constitute 4.8% of XLP. Hershey’s stock has given annual average returns of 11% and 12.5% in the last 15-years and last 20-years, respectively.
According to Statists, Hershey and Mars are the largest players in the U.S. confectionery market, with market shares of 31.2% and 29.2%, respectively. In Canada, Nestle (NSRGY) was the leader with an 18.6% share, followed by Hershey, Mondelez International (MDLZ), and Mars. In the U.S., Hershey is the leading chocolate company with a 44.4% share in the chocolate market, followed by Mars, which has a 29.5% share.
Hershey operates in two market segments, North American and International. It generates 85% of its total revenues from the North American market. However, Hershey is focused on building its international presence, especially with the significantly growing economies overseas, such as China, India, and Brazil. Hershey has thus set a goal to increase its international footprint to approximately 50% of its total revenues by 2018, by focusing on geographies outside of the U.S. and Canada. Statista estimates that global confectionery sales totaled $198.4 billion in 2014. Western Europe’s contribution to the global confectionery market was nearly 29.5%, followed by the Asia Pacific market with 18.6% share. According to Mondelez, the eight markets driving 70% of the global confectionery market are Brazil, China, Colombia, India, Russia, South Africa, Turkey, and Vietnam.
Hershey’s strategy in the international market relies on partnerships with foreign companies that have knowledge of the local market. The company is thus creating partnerships through mergers, acquisitions, and joint ventures. More specifically, Hershey’s main focus is on the emerging markets of China, Brazil, India, and Mexico. In the international market, Hershey gained a chocolate market share of between 5.8% and 7.2% in the 2011–2014 period. Between 2009 and 2014, Hershey’s chocolate category grew by an estimated CAGR (compound annual growth rate) of 12%, 12%, and 30% in the markets of Brazil, China, and India, respectively (Key, 2015).
Evaluation of the Functional Areas
Marketing
The Hershey Company’s marketing strategy primary focus is on developing strong brand equity, product innovation, and consistently updating product quality. The company’s main strengths consist of brand awareness and brand loyalty. Hershey’s leading brands are Kisses, Twizzlers, Reese’s, Kit-Kat, and the Hershey Bar. The company does 80% of its marketing in North America which can be seen as a weakness. Hershey is also known to operate as a micro-marketing company because they are known to market certain products to their small target audiences just to meet their specific demands (Key, 2015).
Hershey recently created several new marketing initiatives. The company is working on increasing its advertising budget so it can be able to promote its new product innovations to the world. Hershey also uses its strategy of holiday marketing to design special themes for its chocolates and candies for special holidays and occasions. This technique alone has brought in a lot of revenue for the business due to the company being able to charge higher prices for personalization. Hershey has partnered with an advertising agency, North Castle Partners, to gain fully integrated marketing programs for all of its refreshments and sugar confectionery brands. It has also decided to invest 20% of its total media for digital media purposes (Key, 2015).
Hershey is working toward making a few changes regarding its products in the near future. The company intends to consolidate its creative campaign for several of its iconic brands. Hershey is planning to stop using GMO sugar, milk from cows treated with bovine growth hormones, artificial colors and flavors, gluten and high fructose corn syrup. The company also plans to offer information regarding some new initiatives, such as identifying simple, easily understood ingredients on its labels, ingredient transparency, minimally processed ingredients, and sustainably sourced ingredients (The Hershey Company Investors Relations Department, 2017).
Finance
The Hershey Company reported net sales of $7,440,181 at December 31, 2016, an increase of 0.7% over 2105’s reported net sales. Cost of sales for 2016, $4,282,290, increased 7% over 2015, and 4.5% over 2014. Hershey’s gross profit at year-end 2016 was $3,157,891, operating profit was $1,205,783, and net income was $720,044. Total revenues have declined each quarter since October 2016. Cost of goods sold increased fourth quarter, 2016, but declined for both quarters in 2017. Operating income dropped from $374.02 in October 2016 to $191.93 in April 2017, but has risen to $315.34 as of 7/2/2017. Net income also rose in the second quarter of 2017, after experiencing declines in the prior two quarters, and was reported at $203.50. As reported in its 2016 Annual Report, the company anticipated a 2.25%-3.25% growth in net sales in 2017, including a favorable impact resulting from acquisitions, and excluding unfavorable results attributed to foreign exchange rates. Year-to-date net sales for 2017 total $3.54 billion.
The inventory turnover ratio measures how often inventory is turned over in a year. When calculated using sales, Hershey’s inventory turnover rate for 2016 is 9.94, or every 36 days. When calculated using cost of goods sold, which is the standard method used, the inventory turnover rate for the same year is 5.72, or every 63 days. This is less than the industry average of 7.9, or every 46 days, for the confectionary and nut industry, signaling less effective inventory management at Hershey. Hershey’s current ratio of .95 suggests the company may have difficulty paying its obligations over the short-term. The industry average current ratio is 2.1 for the year 2016.
Total revenues have declined each quarter since October 2016. Cost of goods sold increased fourth quarter, 2016, but have also declined for both quarters in 2017. Operating income dropped from $374.02 in October 2016 to $191.93 in April 2017, but has risen to $315.34 as of 7/2/2017. Net income also rose in the second quarter of 2017, after experiencing declines in the prior two quarters, and was reported at $203.50.
Total assets increased in July 2017 as opposed to the prior two quarters, and this is primarily due to an increase in total inventories. Total liabilities have also increased, despite a decrease in accounts payable and long-term debt. The increase is attributable to short-term debt.
Hershey’s (HSY) common stock is listed and traded on the NSYE, however their Class B Common Stock is not publicly traded. At December 31, 2016, the closing price of the common stock was $103.43, which increased to $109.25 at March 31, 2017, and declined to $107.37 at June 30, 2017. On September 15, 2017, The Hershey Company will pay its 351st consecutive quarterly dividend.

Mars Company is a $33 billion business that spreads across the spectrum from candy bars to chewing gum and all the way to dog food. Mars is a global company with headquarters in Belgium, New Jersey, Africa, Virginia, Asia, and even right here in South Carolina. They have made jobs available to people around the world and allows for job advancement as well when it comes to those jobs. When it comes to politics Mars does not provide money as company to presidential candidates but allows their employees to back those candidates with their own money. Most of which in recent years back democratic candidates. Becoming a $33 billion company means you have to have successful products which include the $5 billion brands such as Snickers, M&M’S, Dove, Milky Way, Twix and more. Mars also owns the $15 billion Uncle Ben’s Rice company which has been in existence for over 70 years. As well Mars owns the billion-dollar pet food companies Pedigree and Cesars. Mars also has a symbioscience branch that does extensive research in how to better the process of making their products as well as making the earth more sustainable. “Pioneering some of the most innovative and breakthrough fundamental scientific research, the Mars Symbioscience team has incubated, introduced and transitioned five technology platforms in the areas of food, plant, biomedical and life sciences. From creating sustainable businesses for farmers to tree nurseries, composting and marine culture with seahorse farming, we are committed to developing solutions that have a positive impact on people and the planet (Mars, Incorporated, 2016).”

Even though Hershey’s Corporation is one of the world’s leaders in chocolate candies, they have a bad reputation whenever it comes to their human resources department and how they treat their employees. A major issue is they have been under scrutiny for the use of child labor in third world countries, like West Africa, where their cocoa farms are located. They, along with seven other companies in the chocolate and cocoa industry, pledged $2 million to help combat the child labor issues in cocoa communities with help from the International Labor Office, (“ILO and chocolate and cocoa industry forge new partnership to combat child labor in West Africa,” 2011). Another issue Hershey’s faces is how they treat their employees because, it is viewed as less than fair and less safe than most places. But, it seems as if they are working to make a comeback. According to Business Wire in 2013, The Hershey Company was recognized as one of America’s “100 Best Corporate Citizens,” (The Hershey Company Recognized as One of America’s ‘100 Best Corporate Citizens,’ 2013). However, it does not seem Hershey’s or any of the other leading chocolate and cocoa industries have completely stopped the use of children for labor in their supply chain. This has been going on for 15 years now and it seems it is hard for them to stop since there are not enough people to help with the work, plus the areas in which child labor is employed are poverty-stricken. Another thing, according to Fortune these numbers seem to be increasing instead of decreasing like they should be (O’Keefe, 2016).

Evaluation of Marketing Strategies
Target Market

Identifying a company’s target market is essential for any business to focus its marketing activities on it. Although Hershey’s products are widely distributed and enjoyed by many consumers, if we look closer to its market we see that it has a few segments and one of the most important market breakdown is the segmentation of the family life cycle. Through extensive market research, one of the conclusions was that mothers play a large role in the decisions in the house and introducing brand loyalty. Being aware of this is why they have a variety of commercials of mothers or families bonding over a Hershey product.
Children are of course the targets for the chocolate products but if we pay attention we see that many adults have inclination to consumer Hershey products. This was proven by some research that adults consume over 55% of all the candy sold. Therefore, by demographics they market the bite size chocolates to adults. They started out with the Hershey Kisses that is now loved by all. Recently by adding more bite size chocolates they appeal to those who are trying to be health conscious and feel that a regular chocolate bar is too much. By having bite size versions, they feel as if they aren’t over indulging and are also viewed more portable alternative. The adult target market is very profitable and where most of their business comes from. This is how they have managed to stay ahead of the competition.

Hershey’s is known for offering tons of products for their consumers to choose from. One thing is that they do not target anyone in particular they pretty much market their products towards anyone at any age. Children, teenagers, young adults, adults, and older adults are all a part of Hershey’s target customer. They like to advertise around the holidays, especially Christmas and Valentine’s Day, since those are the two holidays when the most chocolate is bought. The reason they can have such a broad range of customers is because they offer any type of chocolate as well as candy. From their notorious Hershey’s milk chocolate bar to their Twizzlers. Another reason that they can have such a big range of customers is because their products are on the lower end of the pricing spectrum. It normally does not break the bank if someone wants to go to the store and purchase a chocolate bar.
Along with their vast target Hershey’s has also tried to be a little healthier by incorporating sugar free chocolates, catering to those especially with diabetes. They also are committed to using simple ingredients which means no artificial preservatives, no artificial sweeteners, and no artificial flavors (The Hershey Company, 2017). The reason behind this is because Hershey’s wants to be a caring brand they want their customers to realize that they care even about their health. An added bonus to this is that they have made the nutrition labels easier to read so that their customers know exactly what is in their food. This goes back to having more simple ingredients instead of all those additives and substitutes. They even state that 80% of their ingredients are cocoa, nets, milk, and sugar (The Hershey Company, 2017).
Besides the easier to read labels, Hershey’s also has a glossary of ingredients on their website so that people can find what ingredient is found on the nutrition label of a product of their choice. This comes in handy for weirdly named ingredients that no one seems to understand or know what it is. They developed a specific page on their website so there is no more wondering or guessing, you can easily see exactly what it is and why they use it (The Hershey Company, 2017). Another page that can be clicked on from here is their ‘Four Core Ingredients’ page. This explains any question someone might have about their milk, cocoa, nuts, and sugars (The Hershey Company, 2017).
Besides showing that they care about their customer’s health, they also care about helping their customers with recipes. Hershey’s offers a wide range of recipes on their website which is super helpful if someone enjoys baking. This also shows that the company not only offers chocolates to eat but also to use and bake with. Helping customers with finding recipes helps the company interact with the customers on a deeper level. It makes the company more attractive to consumers by showing how much they actually care.

Hershey’s Global Marketing Group is responsible for their pricing strategy. In recent years, Hershey has avoided some price increases by reducing the size of its candy bars. This is in direct opposition to Nestle, who did not change the size, but did increase their price. Hershey’s also employs high-low pricing, with products being offered at higher prices than their competitors’. These prices are then reduced with promotions, coupons, and sales. However, the company is experiencing price issues with their largest distributor, forcing them to price-cut in order to fend off competitors.
In their annual report, Hershey noted that “Future developments related to the investigation by government regulators of alleged pricing practices by members of the confectionary industry could impact our reputation, the regulatory environment under which we operate, and our operating results (The Hershey Company, 2017).” Without disclosing the source of the investigation, the report continues to explain that the company’s costs could increase, as a result of legal fees and potential new government mandates.

Hershey’s distribution strategy is one of many different routes to get products to the customer. Hershey manufactures all of their chocolate with no outside help. There are numerous Hershey products that they have to get to consumers all over the world. Their number one source of distribution is through retail stores such as gas stations and grocery stores. This is the quickest and most simplistic way for Hershey to get their product from production and into the consumers mouth. Retail stores though, only sell to the public and once the product has been bought from the retail store it is not allowed to be resold. As well, you will wind up buying the product at the price made by the retail store that way they make enough to pay Hershey and have enough left over for profit.
If the consumer at the end of the day does not like that route, they have two other alternatives buying directly from the factory in Hershey, Pennsylvania. or buying at wholesale from warehouse stores. Most people that choose this route end up not buying it directly from the factory since it has to be shipped to the consumer and then they have to wait on the product. The wholesale warehouses are usually how a lot of consumers buy them, especially with the wholesale phenomenon booming at this point. This allows the consumer to buy more of the products at one time and pay the same as the retailers do directly from Hershey. These types of places are stores such as Sam’s Club, BJ’s, and Costco. This is how places such as concession stands and small stores do not rely on distributors. This allows them to buy bulk of the item and still be able to resell the products.

Hershey is also an international product that you can find just about everywhere you go in the world. Hershey uses thousands of distribution centers all over the world to get their chocolate products to consumers on every edge of the world. This is helped by ten different global Hershey headquarters in countries such as Canada, China, Japan, Brazil, and more. This allows them to oversee day to day operations in all of the global factories and distribution centers.
Promotional Strategies
Advertising Strategies
Hershey’s current advertising strategy focuses on telling stories and creating memories. The strategy focuses on uniting all of Hershey’s branded treats under one campaign unlike their old advertising strategy that consisted on advertising each of the company’s products separately. The idea behind the present advertising strategy is to create a sense of emotional ties to the brand. Hershey is using the slogan, Hello Happy. Hello Hershey’s as a way to relate the taste of their treats as creating a sense of happiness. Hershey previously used an advertisement called My Dad, that advertised a young girl seeking time with her busy dad that is always working. At the end of the advertisement the young girl and her father can be seen in the kitchen making s’mores together using Hershey’s Syrup and candy bars. Hershey’s new advertising concept is aiming to leverage the power of Hershey into a mega franchise (Schultz, 2016).

Hershey has always focused on allowing their customers time to shop, and not pressuring their customers to make a purchase. The company decided to incorporate the effects of technology and increase impulse buying by installing chocolate dispensers in the self-checkout areas in stores. They also added candy and snack kiosks and vending machines around pick up areas such as nearby gas pumps at gas stations. Hershey Company began using the impulse selling strategy due to proven facts of consumers most of the time end up buying items that aren’t on their shopping lists (Tuttle, 2015).

Public Relations/Publicity Strategies

Hershey’s publicity strategy is currently targeting on making their chocolate treats healthier by eliminating and substituting some of the ingredients in the products with better choices. In 2013, the company launched a public relations campaign called Summer of Sweet Independence to introduce Hershey’s new Simple Pleasures chocolate brand. The goal of the campaign was to stop women from feeling guilty from eating foods that they love. The campaign showcased making women feel independent from guilt of eating the things they enjoy without the burden. This campaign alone caused sales to soar past their forecasts and made the company over 217 million media impressions (Ketchum, 2013).
Sales Promotion Strategies
Hershey’s sales promotion strategy targets the theory of in-store marketing and promotion working better than advertising. The company doesn’t focus on advertising as much as most companies, because they view chocolate as an impulse item. If customers just see their products in the store and are craving chocolate they’re likely to purchase it (Thompson, 2006). Hershey also uses the holidays as a way to sale their candy in bulk and customized to have a personal touch. The company also offer promotional codes to provide discounts on their products online and in the store.

Hershey is one of the most renowned companies worldwide in chocolate manufacturing. It is the leading corporation in its field in North America. Hershey’s headquarter has been in Pennsylvania where it was originally founded in 1894 by Milton Hershey.

Hershey’s contribution of Milton Hershey School for orphans resulted in improvement of the social and public image of Hershey. Additionally, the company provides various social services to its employees such as parks, schools, and housing facility.
The chocolate maker giant has a diversified product menu with well-established brand names. In addition to chocolate manufacturing, Hershey is also well-heeled in pasta production and variety of products in USA. The company is active in promoting its brand name by contributing in various segments of industry like commercial segment, resorts, entertainment and other market areas. Moreover, Hershey believes in the importance of education and research. This is why the company supports education by facilitating teachers and students with dedicated toll-free number.
After all those privileges that Hershey provides, no wonder why its employees follow strict code of conduct laid long time ago by its founder.

Hershey has been running a debt that is higher than the other competing companies. Also, advertisement expenses have been increasing over the previous years. On the other hand, the increasing price of cocoa beans is a matter of concern for the company since its products’ prices are inversely proportional with the sales volume by units.

Opportunities
From a public health perspective, dark chocolate, widely made by Hershey, offers many advantages over other kinds of chocolate. With all the market competition, Hershey still has wide customer base that is very loyal to the company’s brands. In addition to its leadership in the North American market, Hershey still has various untapped markets in China, India Indonesia, Vietnam and other Asian countries. On the other hand, to alleviate the increasing costs of production, Hershey could explore new cocoa-producing areas such as India.


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