SWOT Analysis And Marketing Mix Strategies For Hershey

Product

Discuss about the Macro And Micro Environmental Factors Of Hershey Company.

Founded in the year 1984, by Milton S. Hershey, the company is now one of the leading companies in the field of Confectioners and is the largest chocolate manufacturers in North America (Patalinghug 2016). This report will elaborate on this company, analyzing its macro and micro environmental factors using SWOT analysis tools and marketing mix. It will also shed light on the sustainable marketing initiatives taken by this company and will suggest few strategies and principles that it could be used by it in order to improve its strategies.

Product

Hershey is very popular for its chocolates and other different sweet chocolate syrups and sauces. There are a wide range of products of it available in different shapes and sizes. The conical shape of the Hershey kisses and new hand rolled packaging is few products add to the appeal. A consistent and continuous product innovation strategy of the company in its marketing mix has aided the company to grow all through these years. Hersheys products are positioned as something that is both healthy and delicious for the growing children. In chocolates, it has Reese’s, Hersheys, Kisses, Brookside, Almond Joy, Take5, Kit Kat, Mounds and York (McCabe 2015). In candies, it has offered its customers with Twizzlers, Allan Candy and Jolly Rancher. Ice Breakers, Breath Savers and Bubble Yum are the products that falls under the category of ‘Hersheys Mint and Gums’. Furthermore, it has also launched Lancaster, Rolo, Payday, Symphony, Drops, Pot of Gold, York Peppermint Pattie, Nuggets and many more (Alcaraz 2016).

Promotion

Hershey promotions are done through television and magazine advertisements and billboards (Kalotra 2015). It is also to be noted that the wrapper cash codes are sometimes marked by the companies on the especially market wrappers from the most popular snack bars, single serve candy bars and cookies. Its mission is to create a range of delicious chocolates which would be enjoyed by each and everyone in the market. The Hershey milk booster advertisement tries to position the product as the healthy one for the growing children and also positions itself as a substitute for the traditional milk powders. (McLennan, Ulijaszek and Eli, 2014). The My Dad advertising campaign of the company also shows how the Hersheys chocolate could be used for strengthening the bonds in between a son and his father and how it could spread happiness within a family. There are also several promotional activities such as the 4D chocolate mystery and trolley tours etc that depicts the story of the chocolate to everyone. The company also provides Cakes and Cupcakes recipe, Cookies, Breads and Muffins, Brownies and Bars, Candles and Snacks etc.

Promotion

Pricing strategy

As Hershey is one of the premium brands, it has set higher prices for its products as compared to the rest other standard chocolates that are available in the market. The target customers of Hersheys are the people belonging from upper middleclass unban families and the international tourists (Schlereth et al. 2013). The product price of Hershey varies from 10dollars to 50dollars.

Distribution strategy

The products of Hershey are available internationally at all the grocery stores, wholesale clubs, vending machines, drug stores, malls, department stores, hospitals, gas stations etc (Wang 2014). It can also be bought from the online stores such as Big basket, eBay and Amazon. It has a very strong distribution network and it also has the potential to reach the international markets as well (Morganti and Gonzalez-Feliu 2015). It has distributed all its products internationally. All the major cities are covered by the distribution channels of the company.

Strengths-

• Being founded in the year 1849, Hershey is the largest chocolate manufacturer in the world. The below market share of Hershey in United States as compared to the other chocolate manufacturers. It shows that Hershey is leading the market share by about more than 15% than its counter company Mars.

Graph 1: Market Share of Harshi in United States.

• The brand is distributed around more than fifty international countries.
• It is also widely popular as a creative and innovative chocolate brand. Some of these innovative initiatives include the Hershey’s chocolate world, different types of created chocolates and the type of packaging used by the brand.
• Has a partnership with Nestle
• The license of KitKat also drives huge revenue for the brand (Pai and Subramaniam 2014)
• It has a huge product portfolio and is present in more than fifty product variants
• It sales about a billion dollar every year. As of 2017, Hershey has earned a total sale of 7.5 billion dollars.
• It is positioned as number 249 in the list of highest regarded companies of Forbes. With the same, it has also ranked 269^th position in the list of best employers. These figures suggest that the brand has earned a good amount of respect.
• It spends about 520million dollars on marketing and advertising per year.

Weaknesses-

• Its expansion is quite limited. Though it falls under the FMCG segment, the company is expected to expand its business to more than sixty countries, covering more areas
• It is often criticized for not purchasing in an organized way. It does not make use of fair trade practice, which is expected from big companies such as Hershey.
• The segment of Hershey is in such a way that there is a presence of several small players who are cutting the market shares in different regions.
• One of the major weaknesses of Hershey that it is very easy to get copied. This problem is being faced by the developing countries where the counterfeit Heshey’s is found.

Opportunities-

• Hershey can expand its business further in other nations as well. It has a very less footprints in countries like India, where there is a large scope for Hershey to get expanded because of the good amount of population
• Besides chocolates, the company can also add snacks segment which will help it create diversification.

Threats-

• There is a high competition in the field of chocolate segment in the current business market. Mars, M&M, Cadbury are its major competitors that really have a strong brand reputation in the market (Kizil et al. 2013).
• The cost of all the products is rising along with increase in distribution cost, fuel cost, labor cost and everything else. This is leading to decrease in the margins of the brand.
• People now-a-days are becoming more health conscious than ever before (Mirza et al. 2013). This is preventing people from consuming sugar and sugar based products and chocolates too fall under them.

Among the other chocolate manufacturing companies like Barry Callebaut, Mondelez and Cargill Hershey is in the top most position. 

Hershey focuses on building and maintaining a long lasting customer relationship (McMurrian and Matulich 2016). In order to let its customer know the ingredients used for making their food, Hershey has planned to offer the information opening via the following initiatives:

• Added a simple and understandable list of ingredients on its product label
• Minimally processed ingredients
• Ingredient transparency
• Sustainably sourced ingredients

The company has taken a lot of initiatives towards promoting education. It has its own schools with good facilities for the students. Much recently, in the association with the Clinton initiative, the company has also pledged to take care of the Basic Nutrition for Ghana.

Conclusions and Recommendations

The evolution of chocolate industry presents several interesting information. The list of chocolate industries in the global scale is really huge. One among the top most chocolate manufacturing companies is Hershey Food Corporation. However, based on the above analysis the following recommendation is made:

• The operational and production management of the company should be streamlined in such a way that it must enhance the process of Hershey
• The corporate governance of the company must held by an authority body which is designated for taking decisions and dismantle the complex problems in an organized manner
• It must bring into variance effective leadership.

References:

Alcaraz, R., 2016. Intuitive analytics: The same as analytic guessing?. Applied Marketing Analytics, 2(1), pp.6-11.

Kalotra, A., 2015. Advertising Research. International Journal, 5(9).

Kizil, C., Eddy, V., Clary, L. and Crowell, K., 2013. Hershey’s Entry to the Australian Market with a New Brand: An Accounting and Marketing Perspective. Emerging Markets Journal, 3(2), p.97.

McCabe, M., 2015. Fine chocolate, resistance, and political morality in the marketplace. Journal of Business Anthropology, 4(1), pp.54-81.

McLennan, A.K., Ulijaszek, S.J. and Eli, K., 2014. Social aspects of dietary sugars. Dietary Sugars Health, 1, p.1.

McMurrian, R.C. and Matulich, E., 2016. Building customer value and profitability with business ethics. Journal of Business & Economics Research (Online), 14(3), p.83.

Mirza, A., Razi, A., Sikander, M.U., Shams, U.B., Ullah, Q.R. and Suh, F., 2013. Addiction of SMS & leading to health problems in youth. Global Journal of Management And Business Research.

Morganti, E. and Gonzalez-Feliu, J., 2015. City logistics for perishable products. The case of the Parma’s Food Hub. Case Studies on Transport Policy, 3(2), pp.120-128.

Pai, V.S. and Subramanian, R., 2014. Kraft Foods, Inc. in India—The Cadbury Acquisition. Asian Case Research Journal, 18(02), pp.371-399.

Patalinghug, J.C., 2016. A Case Study of Organizational Form: Hershey versus Mars. E-Journal of Social & Behavioural Research in Business, 7(2), p.29.

Schlereth, C., Barrot, C., Skiera, B. and Takac, C., 2013. Optimal product-sampling strategies in social networks: how many and whom to target?. International Journal of Electronic Commerce, 18(1), pp.45-72.

Wang, G., 2014. Stochastic Logistics Network Design with Deadlines. In Encyclopedia of Business Analytics and Optimization (pp. 2277-2287). IGI Global.