Advertising Strategy and Campaign for Hershey Kisses

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Table of Contents

Introduction
Background
Situational Analysis
Creative Strategy
References

Introduction

Advertising campaign strategies can significantly increase sales and profits of a company if the management implements the process successfully. In developing an ad strategy firms have to know their target audience, their preferences, and likes, in order to design their strategies that fascinate or attract their desires and emotions.

The report takes a case study of Hershey Company intent to advertise the Hershey Kisses to a specific target population. This company manufactures chocolate in large-scale in North America, and distributes the products in over sixty nations globally.

The giant chocolate company is among the dominant chocolate firms in the US, and is well known for its chocolate bar. The company aims at ‘bringing sweet moments of Hershey happiness to the world over’ with proactive advertising objectives (Hershey Kisses, n.d.).

Understanding customers’ prior knowledgebase on the product, their media preferences, the competitors, and what they do worse or better than Hershey, enables the company to design advertisement strategies that are inclusive in attracting and maintaining customers’ in buying its products.

Background

Founded in 1894 by Milton Hershey, the company has its headquarters in Hershey in Pennsylvania, and deals in chocolate and candy products. Since its establishment, the vibrant management has steered it to a world-class business entity. Milton Hershey used milk from nearby dairy farms to make delicious milk chocolate, and added coatings of chocolate to caramels.

Hershey Company produces many chocolate brands, such as categories of bars, packaged candy, baking, syrup and toppings, beverages, seasonal, and sugar-free varieties. Taking a chronological analysis on the performance of the company, some of its products, like the Not-So-Sweet bar and the mint-flavored chewing gum, have not been successful in the marketplace.

The two brands enjoyed brief popularity at the time of their introduction into the market, only to be discontinued. With the introduction of the low-cost, high-quality milk chocolate, the company went on to increase its production facilities in South-Central Pennsylvania in Derry Township.

The newly established chocolate factory received raw materials and competent labor force from the surrounding regions of Philadelphia and New York. On advertisement of its products, Hershey Company used billboard and TV campaign to reach its customers in Canada in 1964 (Hershey Kisses, n.d.).

However, in 1970 with the renaming of the company to Hershey Foods Corporation, plans were put in place to conduct national product campaigns through supplements on Sunday newspapers, as well as radio and television commercials.

Situational Analysis

Company Analysis: Hershey

Currently, the company is well positioned in the US market with an experienced management team and talented employees under the direction of a right strategy and vision. The company has over 13,000 employees, with over 80 brand names like Hershey’s Kisses, Kit Kat, Ice Breakers, Jolly Rancher, Twizzlers, and Reese (Hershey Kisses, n.d.).

Moreover, it has great focus in expanding it services in international markets like Brazil, Mexico, and China, and, at the same time, gain solid competitive advantage in the Canadian and United States’ market. With revenues of over $6.6 billion, Hershey Company has engaged in numerous Corporate Social Responsibilities within the local communities like setting up of Milton Hershey School in 1909.

Even with the death of Milton Hershey in 1945, the corporation went on to introduce different products in order to maintain market dominance in the line of refreshments, sweets, and chocolates. Additionally, it expanded its services by purchasing H.B. Reese Candy Company in 1963, and went on to acquire Delmonico Foods, Inc. and San Giorgio Macaroni, Inc (Hershey Kisses, n.d.).

Notably, the strong capital base from variety of brands and company branches made it possible for the company to practice price cuts on its products. The company has competent management that is focused in achieving its strategic objectives.

For example, in May this year, the Hershey Company enhanced the management leadership to extend it international presence in regions outside Canada and the US. Here, Humberto P. Alfonso who had been serving as the corporation’s Chief Administrative and Financial Officer was to become President in the international front.

With high rates of technological developments and globalization, Hershey had hired Waheed Zaman from Procter and Gamble to join the IT department to optimize global shared roles of the firm, thereby expanding the company’s presence in the international level (Hershey Kisses, n.d.).

After acquiring 49% interest in Tri-Us in 2011, Hershey went on to acquire all the outstanding stock of Brookside. These companies used to produce, advertise, and vend nutritional beverages under the brand name of mix 1.

With a market capitalization of $18.25 billion and sales of $6.64 billion, Hershey remains as one of the highly innovative companies in the 21^st century. For instance, in 2010, the beverage company recorded net revenues of $5.67 billion, as well as $510 million net income; this is after producing 42.5% of chocolate in the US market (Wismer, 2013).

As a way of minimizing foreign competition, Hershey had licensing agreements with Kraft Foods (KFT) and Nestle (NSRGY). As a way of expanding its presence into the international platform, Hershey moved to Singapore and acquired Van Houten. Hershey expects the Chinese firm to manufacture and sell chocolate products, similar to the ones in Hershey branches.

Its US geographical location makes it gain access to wide market than other firms, coupled with its expansion strength, the firm is able to acquire customers’ feedbacks on different brands, hence being able to inculcate the needs of their customers when manufacturing and delivering the new brands. The company has been recording double-digit adjustments between 2008 and 2012.

With strong leadership position in the firm, it expects a growth of 5% to 7% in net sales. The Hershey Company leadership believes in a bright future, full of opportunities, which they are also creating. The Hershey’s stock (HSY) has moved from $39 in 2009 to $80 in 2013 (Wismer, 2013).

This drastic and unexpected augment has seen HSY surpass earning estimates six times. John P. Bilbrey, President and Chief Executive Officer of Hershey reiterated that the solid volumes of sales across core brands like Kisses has resulted in a good start for the first quarter results.

With the rise in prices of key raw materials like peanuts, sugar, milk, and cocoa after the 2009 economic recession, Hershey opted to raise domestic wholesale prices and lower weights of its products.

Crop plagues in Indonesia and Ghana, as well as the Ivory Coast’s political turmoil in 2010 saw the prices of chocolate ingredients, especially cocoa beans rise by over 15%, thus forcing Hershey to apply price adjustments on its brands. A cost saving plan helped in increasing advertisements for the firm’s key brands, which also saw the firm record a net profit of up to 47% in 2008 (Wismer, 2013).

The restructuring plan involved overall transformations of the Global Supply Chain. This further helped in reducing production lines through outsourcing of low value-added items; therefore, it enabled the company to access new markets.

In its expansion overseas, Hershey capitalizes on huge markets in key developing nations. With these expansions, there still exist numerous opportunities in further international expansion to the Middle East countries.

Consumer Analysis

Developing successful ad programs requires adoption of different approaches by consumer insight managers. This is due to the variations in consumer behaviors, involvement, knowledge of products, and purchase objectives. For Hershey, targeting the grown ups instead of children in Hershey Kisses campaign will continue giving it a competitive advantage over a competitor like Mars within the candy industry.

As consumers form the cornerstone of marketing, it is vital for businesses to define whom their customers are and what they understand about them (Reynolds & Olson, 2000). To collect, analyze, and report data in a systematic manner to help in enhancing decision-making constitutes market research. In order to advertise Hershey Kisses, The Hershey Company will have to answer the following questions:

What do consumers want from Hershey Kisses, and their perception on the product?
When and where do customers register for programs?
What is their frequency of participation in the programs?
In which locations or programs do consumers hear about Hershey Kisses?

With the current era of internet, the company will rely on internet surveys as the main source of primary data. At the same time, the firm can rely on customers’ loyalty cards in tracking purchases in order to gain demographic profile of Hershey Kisses and purchasers.

As part of consumer analysis, market research collects data that aid decision-making in marketing. It will be a ‘suicidal’ move for the company to make marketing decisions without data on customers, as this out rightly result in misuse of resources. Carrying out market research helps in identifying a target group, instead of relying on mass marketing data.

With clear market segmentation, Hershey has to define its target audience, which it expects to consume Hershey Kisses. A population can be grouped according to level of education, family income, race, and age, amongst others.

In the demographic line, Hershey will talk to a population between 25 and 35 years, as this is the age group where people start to bring up families (Reynolds & Olson, 2000). Therefore, the consumption of this chocolate product will be high if the ad successfully touches their feelings.

A second segmentation base that Hershey will have to use in promoting Hershey Kisses is psychographics. Consumers’ lifestyle defines their behavior, in terms of opinions, interests, and activities. The company will focus on shoppers and those in social events, as these are two main psychographics that provide opportunities for consumption of Hershey Kisses ad other fast foods.

In geo-demographics, Hershey will use the United States’ PRIZM lifestyle segmentation system to understand the spatial distribution of consumers in the US market. For instance, the Urban Gold Coast Cluster who has few children will not offer potential markets as compared to American Dreams Cluster that is composed of married couples, mixed age, as well as multilingual neighborhoods.

This is because people of the age of 45 to 64 without children are less likely to think about bringing up children, thus giving preference to other activities that keep them busy and affluent.

The mixture of different age among American Dreams provides a potential ground for meeting the 25 to 35 age group who have young children to consume Hershey Kisses. Notably, adults, especially mother do determine early tastes of their children, thus influencing them to consume Hershey Kisses (Reynolds & Olson, 2000).

Here, the target audience becomes the American Dream Cluster. Geo-demographics believe that people of same income level and cultures tend to gravitate towards each other, thus acquiring same behavior. From this aspect, proper utilization of a marketing mix after selecting the best market will enable the company to design an effective advertising strategy and campaign to reach the target audience.

Proper market segmentation helps firms to understand consumer behavior, as they are able to know the decision-making process that consumers follow. Markedly, consumers usually perform a cost-benefit analysis to determine their satisfaction or dissatisfaction with the product. The Hershey Company will have to convince consumers that there is need to consume Hershey Kisses with citation on its nutrition content.

Consumer analysis is all about understanding who the customer is and how they behave. This will help Hershey to design ads that influences their behaviors and overall decision-making process in purchasing the company’s product. The company will also have to follow the following steps in its quest to segment the market:

Explore the relationship that exist between consumers and Hershey Kisses.
Examine segmentation bases.
Develop how to position its Hershey Kisses in the market.
Choose a segmentation strategy.
Design marketing mix strategy.

Market Analysis

In designing an effective advertising campaign strategy, Hershey will have to analyze the target market in which their consumers operate in to improve profitability of the advertised brand.

The size, profitability, trends, and growth rate of a market are key factors that Hershey has to evaluate in order to understand the evolving opportunities and threats that the market presents vis-a-vis the company’s strengths and weaknesses (Parente, 2006).

In using an effective adverting strategy and campaign, Hershey intends to more of a market share to make more profits.

Since the product had already been tested in the market, the campaigns intend to analyze perception of Hershey Kisses among consumers and the levels of customers’ loyalty in order to augment its own share by coming up with an ad plan that draws market share away from contenders like Nestle, palmer, Mars, and Russell Stover (Green, 2012).

By being able to gain access to key distribution channels, Hershey will be able to achieve its marketing objectives given that it will reach the intended consumers with ease. In getting Hershey Kisses to the people who need it, the company should use the wholesale approach to distribute the products.

This approach eliminates involvement of intermediaries and retailers who increases the cost of products to make huge profits from the sales. Even though other distribution channels may be applied in the process, the company has to ensure that the end users of the product do not pay high prices irrespective of the used channel.

Using simple, but multiple distribution channels will enable Hershey to zero in to the needs of Hershey kisses’ consumers. Apart from delivering Hershey Kisses at discounted prices to customers, eliminating several intermediaries in the distribution channel will ensure timely delivery of the products (Parente, 2006).

Direct sales also give Hershey full responsibility to handle feedbacks from customers, as there is a direct channel of communication and marketing with the clients.

Product Analysis: Hershey Kisses

As an element of market mix, product promotion enables companies to make known their products, brands, or services to customers, stakeholders and the entire public. For Hershey, communication and promotional tools like internet ads, social media, and telemarketing will form main aspects of creating brand exposure. Brand analysis presents the status of Hershey Kisses.

Founded in 1907, Hershey Kisses has enjoyed market dominance among generation after generation. In the US, it is ranked 21 among the 25 favorite Candies, with annual sales of $100.2 million. The delicious creamy milk chocolate makes larger percentage of this brand. The sub-constituents of the milk chocolate include artificial flavor, vanillin, milk fat, cocoa butter, sugar, lecithin, and milk.

In the US and Canada, there are many flavor varieties that Hershey had introduced by the beginning of 2013; some of the examples, include truffle, coconut crème, milk chocolate, crunchy cookie, hugs, milk chocolate with almond and macadamia nuts. Before 1962, Hershey wrapped these flavors in silver-colored foils; however, the company introduced other colors.

Currently, there are camouflage wrappers, as well as Halloween themed kisses imitating the Candy Com (Green, 2012). With numerous debates on safer environment, the company has been on the search to use environmentally friendly packaging to eliminate the aluminum wrapping.

Unmistakably, with the severe consequences of climate change evident in the 21^st century, companies are working towards zero rating environmental pollution by avoiding non-biodegradable materials at all cost.

The Hershey Company has also modified seasonal brands wrappers to serve the purposes of the seasons. For instance, pastel green, pink, and blue wrappers are used during the Christmas Eve, and silver and red wrappers for Valentine Days.

Some of the information content on the content of Hershey Kisses based on a 2,000 calorie diet include, 100 calories of fat, 200 calories overall, 8% calcium, 0% vitamin A and C, and 2% iron (Hershey’s kisses brand recipes, 2009). Taking an example of Hershey Kisses Chocolate Candy Trees, after preparation, they are refrigerated until the actual serving to the final users to prevent peeling off the thick royal icing.

Purchases of raw materials are done through brokers or direct purchase. Upon reaching the factory, beans are processed to chocolate liquor for manufacturing syrup and cocoa. The manufacturing process begins with heating, shelling, and crushing of cocoa beans to produce unsweetened liquid.

Cocoa butter and sugar are added to the liquor to produce chocolate, and for milk chocolate, milk solids will be required. Hershey Kisses meet the dietary needs of consumers, as they are gluten-free foods. With health matters taking center-stage in the life of people, Hershey have strived to create other brands that are sugar-free to help in fighting diabetes.

Milk chocolate of Kisses brand is of grade D and has 200 calories, with a percentage Daily Value of 35% saturated fat (7g), 1% sodium (35mg), as well as 3% cholesterol (10mg). Just like from the aforementioned values, all the measurements are based on a 2,000-calorie diet (Green, 2012).

This brand of Hershey Kisses has low amount of cholesterol and sodium, with sizeable amount of calcium, thus making it fit for health matters. However, the amount of sugar content and saturated fat pose negative effects to the lives of consumers; therefore, the company ought to address such cases.

Hershey Kisses are portable and small bite size making them admired by many since they can consume it not only in the house, but also when on a journey. The slogan ‘everyday deserve a kiss’ has become fashionable among consumers, and with different varieties of brands to choose from, Hershey Kisses have found large market options (Hershey Kisses, n.d.).

In terms of availability, Hershey Kisses can be found in vending machines, connivance stores, supermarkets, and drug stores across the three common points in the US: New York, Niagara Falls, and Chicago. These outlets have variety of Hershey Kisses at relatively low prices compared to those of the competitors.

Powerful brands require constant analysis of emotions and collection of data, as intelligent and effective decisions can only be made from such data. From the vivid analysis of Hershey Kisses, the company can make aesthetic and economic decisions on how to approach consumers with the right manufacturing content (Hershey’s kisses brand recipes, 2009).

As a way of designing an all-round advertising campaign strategy, determining prior market performance of the company, especially under the Kisses brand franchise is essential. The manufacturing process of the product shows that producing it in large volumes within a short time is easy. Currently, company machines can foil-wrap 1,300 Kisses in 60 seconds. Since they are not brittle like other brands, transportation and storage is easy.

Competitive analysis

In order to analyze Hershey’s competitive edge successfully, it is imperative to discuss the competitor analysis, in which the firm gets to know more information about key competitors, and use such data to foresee the behaviors of the competitors. A competitor analysis framework will take a view of the objectives, assumptions, strategy, and capabilities of competitors.

In addition, the competition structure, marketing skills and wherewithal, production skills and wherewithal, financial wherewithal, managerial wherewithal, and competitive strategies form the context of competitive characteristics. Hershey Kisses has market presence in large markets through segmentation; therefore, identifying the competitors also relies mostly on the specific market fragment, which the competitors operate.

Apart from The Coca-Cola Company, Hershey is the best known beverage company in the US. Mars Incorporated Company manufactures the Mars bar, Snickers, and M&M’s; the brands have a global appeal. Dove, Twix, and 3 Musketeers adds to the Flavia and Klix beverage systems (Madihashkh, 2009).

Markedly, in owning the world’s largest chewing gum manufacturer, Wm. Wrigley Jr. Company, Mars has strong market strength to advertise its products to customers using huge revenues from the operations. With its fame in manufacturing of Candy and Chocolate, it ranks third among privately owned firms in the US.

Mars, Inc. had $30 billion annual sales given its large network not only in the US, but also in the UK and Belgium. Clearly, Mars, Inc. is capable of designing and implementing strategies that will enable it sell more of its products to consumers. The company has the financial strength to support any investment initiative, even in marketing of its goods to increase profitability.

Comparing Hershey to Mars, Inc. reveals that the latter has more networks and financial power to control their target market. However, since Hershey remains among the best 15 packaged food companies globally, it can apply differentiation strategies in branding the Kisses to the targeted market.

Headquartered in Vevey, Switzerland, Nestle is another large food company that compete the Hershey Company; it remains the largest food company in the world with market capitalization of $233 billion, an employment base of 325,000, and $92.18 billion revenue in 2012.

These two firms, Nestle and Mars Inc. have higher operating revenues individually compared to the paltry $905 million; therefore, Hershey has to adopt a wining strategy that will enable it compete with the giants in the industry. With clear knowledge of competitors’ objectives, Hershey can design effective advertising strategy and campaign that will automatically influence the behaviors and emotions of consumers (Madihashkh, 2009).

Markedly, understanding the marketing strategies that the two competitors apply help Hershey to modify its strategies to reach its clients. At the same time, Hershey can learn from the mistakes that the two firms make in their availing their products to customers.

In rebranding Hershey Kisses, the company after analyzing the strengths and weaknesses of its competitors will determine whether its prices had been high or low. Further, it is prudent to identify indirect competitors, as they form good marketing partners.

SWOT Analysis

Even though the company has tried to expand its services to other locations through acquisitions, untapped market for Hershey Kisses still exist in India, Thailand, Indonesia, Malaysia, China, and Vietnam (SWOT Analysis, 2012).

The Hershey Company has to move quickly to set foot in these ‘virgin’ regions. As a way of reaching the target market using the advertising campaign strategy, the company will steer clear the nutrition content of Hershey Kisses brands. This will helps in clarifying the misunderstanding among consumers on the repercussions of consuming sugary products, as well as those with high fat and sodium content.

The campaign strategy will enable consumers to know the health issues related to consumption of the advertised brands. At the same time, the campaign will help to distinguish between other competitors’ brands and Hershey Kisses brands.

For example, Mars, Inc. confectionery items like Mars bars and Milky Way may cause confusion to consumers, and it is only through thorough analysis of their content that customers come to avoid misunderstanding. In addition, the company has the opportunity of saving on cost by using biodegradable wrappers, and even of developing environmentally friendly products.

A strategy to reduce waste disposal to landfills and emissions increases overall benefits to a company. Again, in using advertising strategy to reach consumers, Hershey attempts to use Mars’ frequent strategy, as Hershey has mostly relied on brand innovation. The ad, however, tends to increase market share on Hershey Kisses given that it has been in the market.

From the opportunities and threats, the report looks at strengths and weaknesses of the company. This company had managed to move from a one-product plant to a $4.5 billion enterprise, with the largest chocolate factory world over. It remains the largest candy maker in the US with 30.7% market share, as well as pasta manufacturer (SWOT Analysis, 2012).

The Hershey Company reliance on value creation as had been put forward by the founder has made it maintain excellence in integrity, fairness, quality, and honesty. From these strengths, Hershey will be able to get market attention even with strong dominance by competitors. It can ensure constant production of Hershey Kisses using the 2 million square feet factory.

On the other hand, the company, if compared to its competitors in the chocolate confectionary line has only 10% global market share. Further, reluctance to address safer environmental practices in manufacturing Hershey Kisses can give the competitors the winning edge. The cost of cocoa beans, which is the major raw material, has kept rising since 1994; this affects the prices and delivery sizes of Hershey Kisses.

Creative Strategy

Consumer reservations to purchase the brands have been due to three main reasons. First, the dominance by competitors, as well of availability of different varieties has made it difficult for consumers to create one-on-one identification with the exact product.

The high prices of raw materials have made Hershey to adjust prices, yet its competitors have maintained the prices since they enjoy economies of scale. In addition, lack of information on the brands has made consumers to be more reserved in their purchases.

From the analysis, the campaign intends to make consumers in the 25 to 35 age group to develop unrelenting like for Hershey Kisses in order to continue purchasing the brand. Since personality counts in branding of products, the ad strategy on Hershey Kisses will have to connect with the target audience by fixing in their mind that going without consuming the product is like missing the best fast food ever.

In this state, the ad will have to include distribution channels that are efficient, reliable, and cost-effective to both the company and wholesalers. The advertising strategy will have to link consumers’ health aspects in consuming Hershey Kisses given the content of calcium and low sugar level.

In addition, the campaign will take a persuading tone to influence consumers’ decision-making on purchase of chocolate products. In sum, the campaign will intend to remove the communication problems that have existed due to lack of consumers’ direct link with the company.

Direct channels carry out bulk distribution of Hershey Kisses brands, and in the end, maintain low prices to consumers. In order to increase sales and maintain the competitive nature of Hershey Kisses, the company can start a blog or create a Twitter account for the product will bring excellent returns on investment. In addition, the campaign strategy can take the form of exchanging of links with food and beverage companies.

These links can be in promotional posts and blog-rolls form, and target the age between 25 and 35, hence making Hershey Kisses gain great exposure. In all activities businesses tends to cut on cost of operations and maximize on sales. The approach of using affiliate marketing can help Hershey advertise its brands by uploading product feeds for bloggers to use in promotion.

Apart from Twitter and even Facebook, advertising of Hershey Kisses can be done in Pinterest. Here, the company will pin images to visual boards with key messages targeting the specified market. Besides, the advertisement team can include the company’s link to its website in Pinterest in order to create traffic to the site.

This will enable many potential customers to gain access to the company’s product information (Madihashkh, 2009). A new creative theme line for the brand that can easily attract the attention of consumers, and give them the eager to taste the product is “Hershey Kisses Reloaded.”

This slogan is easily memorable, simple, stays consistent with the product’s name, creates positive feeling among consumers, and original, differentiating itself from others. Notably, the ad slogan leaves consumers insinuating on what is in the new Hershey Kisses brands, hence driving their emotions and behavior towards purchasing them.

References

Green, M. (2012). Target marketing strategy examined: An analysis of Hershey and Mars (The Kings of Candy). HubPages. Web.

Hershey Kisses. (n.d.). The Hershey Company. Web.

Hershey’s kisses brand recipes. (2009). Lincolnwood, IL: Publications International, Ltd.

Madihashkh, H. (2009). Case Study on the Hershey Company. Scribd. Web.

Parente, D. (2006). Advertising campaign strategy: a guide to marketing communication plans (4th ed.). Mason, Ohio: Thomson/South-Western.

Reynolds, T. J., & Olson, J. C. (2000). Understanding consumer decision making the means-end approach to marketing and advertising strategy. Mahwah, N.J.: Lawrence Erlbaum.

SWOT Analysis. (2012). Hershey company. Web.

Wismer, D. (2013). Hershey’s: ‘One Of The Sweetest Stocks On Earth’ This Valentine’s Day?. Forbes. Web.

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