Category: Hershey

Hershey

Traditionally, the Companys key resource of economics has been cash created from transactions. The Companys profits and, therefore, cash offered from transactions throughout the year are exaggerated by regular sales molds, the timing of new production offerings, business attainments and divestitures, and price modifications. Vendings have naturally been greatest during the third and fourth quarters of the year, corresponding to regular and holiday-related sales outlines. Over the past three years, cash offered from operating actions comprised $2.0 billion, net of cash payments to annuity plans of $436.4 million.

Cash from processes united with short-term borrowings was adequate to ground share repurchases, principal expenses, capitalized software adding, bonus compensations and commerce achievements which totaled $2.3 billion. Total debt augmented during the epoch by $428.0 million, reproducing amplified short-term borrowings, as described above, moreover to an augment in long-term debt outlining from the consolidation of Special Purpose Trusts (SPTs) connected with convinced lease conformities in 2003, offset rather by the reimbursement of long-term debt. Cash and cash comparables reduced by $79.3 million during the period.

As of December 31, 2004, the fair value of the Companys annuity plan assets surpassed benefits responsibilities. Payments in total are $8.0 million, $120.3 million and $308.1 million were made to the 18 annuity agendas during 2004, 2003 and 2002, correspondingly, principally to advance the funded position as a result of pessimistic returns on allowance agenda advantages during 2002.

Providing performances included capital calculations, benefited from software addings, and numerous commercial achievements and divestitures. Financial addings during the past three years included the purchase of manufacturing equipment, and development and innovation of obtainable facilities. Software additions over the past three years were related mainly with the ongoing improvement of data systems.

In December 2004, the Company obtained Mauna Loa, an important mainframe and dealer of macadamia snacks, for $127.8 million and in October 2004, the Companys Mexican supplementary, Hershey Mexico, acquired Grupo Lorena, one of Mexicos top confectionery corporations, for $39.0 million. In July 2004, the Company attained 11,281,589 splits of its Common Stock from the Milton Hershey School Trust in a confidentially discussed contract. The Company paid $44.32 per share, or approximately $500.0 million, for the shares and fees of $1.4 million associated within the obligations of the contract.

As for the gross profit rage, it involves the data over four quarters:

Tootsie Roll

Sales in 2004 augmented to $420 million contrasted to 2003 sales of $392 million. This symbolizes a new record rank of sales for the corporation.

Net earnings in 2004 were $64 million as evaluated to $65 million in 2003. On a per share grounds, incomes increased from $1.22 in 2003 to $1.23 in 2004. The augment in incomes per share outlines from fewer shares exceptional in 2004 due to reserve repurchases.

In 2004 Company again offered concentrated advertising strategies such as extra bags, transporters and combo collections to high quantity classes of trade. These programs strengthen the features of superiority and value that customers expect and create high-turn, gainful use of shelf and floor space that merchants command. Company also productively persisted its sales proposals in the mounting dollar store group of operate. Consumers who recurrent these outlets tend to be worth adjusted in their acquiring resolutions, and find that companys brands deliver outstanding quality at reasonable price.

The powerful monetary circumstance in which characterized companys year 2004, joined with gainful transactions during the year, allowed management make the greatest acquirement in the companys history without acquiring excessive influence or insertion the corporation at monetary risk. Working funds ended the year at $110,376, down from $180,818 at the start of the year. The reduce of $70,442 is due to lower cash and short-term speculations and higher existing debt used to economics the Concord acquisition, partly offset by the operational resources obtained.

Interest manner debt was $99,500 at year end, $62,000 lesser than the peak of $161,500 on August 31, 2004 instantly following the attainment. Debt was paid down through a amalgamation of cash flow offered by working movements and asset ripeness.

Investors fairness augmented to $570,179 in 2004 from $536,581 chiefly due to net incomes during the year, net of cash payments and share repurchases. The corporation has paid cash bonuses for sixty two successive years and has allocated a stock dividend for forty successive years.

Management is fundamental human resource in an organization which indulges in giving the directions to the organizations operations. Management is classified into three main classes for effective administration and efficient production in the company. The classes are top level management, middle level management and first level management also known as first line management.

The most interesting and appropriate level of entry in Hershey Foods is as an operations supervisor which is a first line level management. This will give me an opportunity for progressive lineage motion along the managerial ladder to the top level management over time.

As an operation manager I will have the first touch with the workers involved in operations of the company and therefore the daily operations of the company is one of the key responsibilities. The maintenance of discipline among the operations employees will be my task at this level in conjunction with the middle level management.

The companys objectives and goals are spearheaded by operations manager though they are not actively involved in setting the goals. Motivation of the operation workers is also another key responsibility of operations supervisor. This is the first line management because it is the lowest level of management where the employees are linked with the companys management.

Having worked in the company as an operation supervisor for considerable duration and gained enough skills on the companys operations, I can then successfully join the middle level management as an operation manager.

At this level I will be able to take charge of all the companies operations and thus have all the operations supervisors report to me on the activities of the operations. The goals and the objectives of the operations department is also a key responsibility. I will also act as a link between the first line management to the top level management.

I will also be involved in the decision making for the company since I will be equipped with the information of the companys daily operations. This position qualifies to be the middle level management since the scope of management is greater and at the same time there is direct communication to the top level and first line management.

Middle level management will prepare me for the executive position of the vice president, Chief Operating Officer which is at the apex of management. I will be able to participate in making decisions affecting the all company in conjunction with other top level management team members. The task of employment and promotions particularly senior managers will be yet another crucial role.

The overall performance of the company will be an ultimate responsibility since the roles are clearly visible at this level. The direction of the company is dictated by the team although we will not interact directly with the day to day activities of the company.

At this level I can then enjoy the highest salary and live in a nice environment. It is also possible that I can move from one company to another and still maintain the same echelon of management or even start a new company as a chief executive officer.

In conclusion the managerial ladder is a systematic organisational structure through which an individual climbs in many occasions so as to reach the highest level of management.

Irrespective of the level of management, there are common roles which apply to all managers, which include; decisional functions where decisions involving the resources of the company are made, informational roles which is obtaining and communicating information appropriately and finally management skills which greatly sit on the individuals personal character.

Pricing

The difference between value-based pricing and cost-based pricing

Pricing is one of the main components of doing business. There are different approaches to how a product or service should be priced. Two main and principally different methods are cost-based pricing and value-based pricing. Cost-based pricing primarily considers the cost of manufacturing a product or providing a service as a reference point in setting the price. Value-based pricing considers what value is offered to customers and certain products and services and examines how much customers are willing to pay for this value. Cost-based pricing focuses on the company and the costs it incurs; value-based pricing focuses on customers.

The strength of the cost-based pricing is that it establishes competitive prices that are usually lower than those set by value-based pricing. However, a weakness is that companies that employ cost-based pricing are highly affected by competition, continuously have to spend resources to strengthen their competitive advantage, and generally depend more on market forces and conditions that they cannot control. The strength of value-based pricing is that it relieves companies of aggressive competition and generates higher profits. A weakness, however, is that value-based pricing can only be employed when a company deals with a relatively narrow customer group, usually, high-income people who can afford more expensive products and services, i.e., the number of potential customers for products and services priced based on value may be limited.

Hersheys current prices for its main products or services

Hersheys is a company with an established reputation, and it is recognized as one of the largest, oldest, and most reputable chocolate manufacturers in North America. Its international reach is also extensive. Despite several controversies (for example, the company was accused of the lack of ethics as it purchased cocoa beans from suppliers who might have exploited child labor), Hersheys remains a famous brand and has a broad audience. This is why it can employ value-based pricing, especially for its iconic products, such as Hersheys Kisses. Value-based pricing is justified by the fact that, when buying chocolates from the company, customers do not merely buy sweet snacksthey buy Hersheys. However, the company is also most affected by competition, as many manufacturers produce similar products, which is why Hersheys is forced to use cost-based pricing. Hersheys is not a luxury brand; one of its competitors, Ferrero Rocher, is much more of a luxury brand. It positions its products as more exclusive, so it uses value-based pricing and high prices to a more considerable extent. In using the combination of value-based and cost-based pricing, Hersheys demonstrates a wise strategy, as it allows the company to effectively address competition and strengthen the recognition of their brand at the same time.

The traditional approaches of skimming and penetrating

Market-skimming pricing is the practice of initially setting high prices for a new product to skim the cream of high-value customers. Market-penetration pricing, on the contrary, is setting low prices to reach more customer groups. When introducing shareables, which is the product of interest, Hersheys did not have to resort to penetration pricing because it is already established and recognized. Skimming allowed obtaining larger profits; further, the price can be lowered over time.

Distribution

The difference between a vertical marketing system and a horizontal marketing system

The concepts of a vertical approach and a horizontal approach can apply to different contexts in business. As to distribution, vertical and horizontal systems differ in terms oh how companies treat their products or services, their customers, and how goals are defined. A horizontal marketing system is applied when needed to deliver as many products and services as possible to larger and wider customer groups. A vertical marketing system focuses on a particular product or service and a specific customer group or several groups. It can be said that the horizontal approach is about spreading goods, while the vertical approach is about targeting and conveying goods.

The Hershey companys distribution approach

Vertical and horizontal systems are theoretical concepts used to differentiate between two major approaches to distribution. Like all theoretical concepts, they rarely can be observed in a pure form in the real world. In large corporations, distribution is a complex process, and it often features combinations of approaches. For Hersheys, a horizontal marketing system can be beneficial because it reaches broad audiences, as eating chocolates is something that people with highly diverse backgrounds can do. On the other hand, Hersheys uses targeting and positioning. One of the customer groups the company tries to address consists of young, mostly urban people, which is why a vertical marketing system can be applied to convey certain products to particular groups in a targeted manner.

Primary marketing channels strengths and weaknesses

Hersheys primary marketing channels strengths and weaknesses

Hersheys uses several different marketing channels, including agents, wholesalers, retailers, and online sales. It should also be noted for online sales that distribution occurs in two ways: direct (via Hersheys web store) and indirect (via retailers websites). Retailers remain the companys primary distribution and marketing channel. One of this channels main strengths is customer convenience: the products are made available and easy to access in various places. Also, customers may receive financial support from retailers when buying various products, including Hersheys, which makes this distribution channel more attractive. The channels weakness is that a part of revenues is lost through including intermediaries in the distribution process. Also, the manufacturers control, i.e., Hersheys, over its products and communication, is reduced.

Cutting costs while providing more value

In distribution management, it is crucial to understand that distribution channels are more than just channels. Instead of regarding them as simple connections between businesses and customers, it has been suggested to consider them as separate businesses having their operation and goals. Their primary purpose is not different from the conventional goal of all businesses: to maximize value for customers and maximize profit for themselves at the same time. This perspective is more comprehensive and insightful in determining where costs can be cut and the increasing value. For Hersheys, disintermediation, i.e., eliminating some intermediaries and some distribution components, can bring these benefits. For example, by reinforcing and promoting online sales, the company will be able to reduce costs. The value for customers will be increased because customers will be able to buy any of Hersheys products, which is not always possible in a store.

Promotion

The promotion mix of Hersheys

The five elements of the promotion mix, also called the marketing communication mix, are sales promotion, personal sales, advertising, public relations, and direct marketing. Efforts in these five areas need to be combined to successfully promote products and services in the modern world. Hersheys is engaged in all five processes. The company encourages higher sales by continually offering new products along with classic ones. It employs direct distribution channels along with indirect ones and heavily advertises what it produces. It maintains a dialog with audiences by showing such initiatives as reducing environmental impact and adopting more sustainable practices. This can build a more favorable image among existing and potential customers. Hersheys can also benefit from the leveraged sales approach because this approach is designed to focus on activities by integrating distribution channels. This is relevant for the company because it currently employs different channels. The approach can increase productivity and profitability by focusing on profitable accounts.

Hersheys brand vision, brand personality and brand positioning

The brand vision is what a company wants to represent to customers. Brand personality is the appeal to the customers preferences and emotional characteristics. Brand positioning is distinguishing the company from its competitors. To ensure its businesss growth and success, Hersheys has established a vision of a company that produces classical treats and new and diverse goods for people who may come from different backgrounds and have different lifestyles but are connected by the liking for chocolate goods. Brand personality is, therefore, not regulated by social factors but factors of personal preferences. Finally, Hersheys brand positioning, especially in terms of its shareables, is based on providing target audiences with high-quality chocolate goods in various forms and flavors for anyone who would like to indulge in a sweet snack.

Building brand with PR and advertising

In his book Contagious: Why things catch on, Berger explores how things become popular and go viral and argue that there are no inherent characteristics of goods and services that can make them automatically catch on; instead, virality is made, i.e., the efforts of marketers, public relations practitioners, and similar professionals are what can make things catch on. This emphasizes the importance of building brands through public relations when launching them. Advertising is thus seen as product support: it maintains brands, while public relations is what creates them.

Global Marketplace

Levitts assertions on the nature of the global firm

In his 1983 article, Levitt discusses the differences between multinational and global corporations and explores the global market features. His ideas can be applied to Hersheys case to test their validity and reliability in todays world.

The worlds needs and desires have been irrevocably homogenized. This makes the multinational corporation obsolete and the global corporation absolute.

Hersheys international operation does confirm that there is, in a way, universal demand for the companys products everywhere, i.e., Hersheys can treat the world as a single market rather than a combination of national markets with specific characteristics. From this perspective, it can be considered that Levitt was right, and some needs and desires across countries have been homogenized indeed.

Technology drives consumers relentlessly toward the same common goals  alleviation of lifes burdens and expansion of discretionary time and spending power.

Concerning the technological aspect of life today, Levitt correctly identified the vector toward alleviating lifes burdens and expanding discretionary time and spending power. In Hersheys, enhanced availability of wide varieties of its goods is the result of technological advancement that allowed such wide production. Indulging in sweet snacks qualifies for alleviating lifes burdens, which means that the example of Hersheys confirms Levitts statement.

Cultural preferences follow one of two paths: they eventually lose relevance to economic decision making, or they diffuse to other groups and become the substance of global trends.

What essentially distinguishes multinational corporations from global ones is that the latter do not overestimate the importance of cultural preferences and sell the same products or provide the same services the same way everywhere. Levitt argues that cultural preferences either no longer matter at some point or spread and grow into global trends. The Hersheys case seems to support this idea, as the company deals with universal demand without primarily relying on cultural preferences in its international sales.

The main globalization opportunity of Hersheys

In their article, Holt, Quelch, and Taylor argue that maximizing the value of global reach requires companies to manage both excellence and obligations. The authors claim that consumers associate international brands with three characteristics: quality signal, global myth, and social responsibility. The latter is the area where Hersheys has growth opportunities. Unethical operation accusations are what mainly undermined the companys position, which is why addressing this issue through public relations and social responsibility can provide Hershey with a competitive advantage in the global market.

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:

1. What do consumers want from Hershey Kisses, and their perception on the product?
2. When and where do customers register for programs?
3. What is their frequency of participation in the programs?
4. 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:

1. Explore the relationship that exist between consumers and Hershey Kisses.
2. Examine segmentation bases.
3. Develop how to position its Hershey Kisses in the market.
4. Choose a segmentation strategy.
5. 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.

The brand to be examined in this essay is the Hershey Chocolate Company. This company, venerable by U.S. standards, was founded in the 1800s, and produces products are beloved and, now, iconic. If not wildly cutting-edge in its introduction of new items, this firm has on the other hand remained consistent in quality.

It is now a global confectionery business, and represents a consumer product that lies somewhere between a commodity staple and a luxury item. As such, it fills an important spot in a portfolio that aims to cover industry sectors. Its business performance has shown stability and generally positive trends, and thus represents a sound, albeit non-flashy, investment.

This brand is admirable to this consumer and scholar because it provides products that nearly everyone has enjoyed in one form or another. From little kids’ chocolate milk, to the Kisses that adults exchange on Valentine’s Day, Hershey’s products are ubiquitous. They are widely available, at an attainable price point, to virtually all US consumers. Their quality is predictable and satisfying, although other brands seem to have picked up the gourmet end of the market.

This particular scholar has enjoyed wonderful Hershey’s chocolate bars. They have been a pleasure as portable energy on trips, as shared pick-me-ups in between classes, and in the form of that odd American summer and outdoor dessert, s’mores. It has been reassuring to this student that the chocolate bars are readily available and reliable in taste. Hershey’s products have been an affordable little luxury.

The company’s founder, Milton Snaveley Hershey, was born in rural Pennsylvania, and grew up in a farming community about 1.5 hours from Philadelphia. His grandfather was a Mennonite minister, and his mother, who raised him largely by herself, conveyed a fierce work ethic. He worked in several candy businesses in several cities including Philadelphia, and New York.

He eventually settled in Lancaster County, founding the Lancaster Caramel Company. This location took advantage of the readily available butter and milk produced by the local dairy farmers on some of the nation’s richest grazing land. Caramels include a mere handful of ingredients, but depend for their taste on good ingredients and careful technique, which he emphasized.

He became aware of chocolate manufacturing equipment in the late 1800s, when chocolate was still a very high-end, luxury item (Biography.com, 2015). While attending the Columbia Exposition in 1893, he acquired specialized chocolate-making equipment, and used the use of milk in making coatings for his Lancaster caramels. The sale of excess chocolate formed the basis of a whole separate business, which was called the Hershey Chocolate Company, which eventually became the main business.

One thing that makes Hershey such an unusual firm is the way that its founder contributed so powerfully to the education, housing, and health of the community created by his factories. He founded a school, and eventually endowed it with the bulk of his fortune. Today, there is a school, a medical school, a resort, and a theme park, all carrying the Hershey name.

The product that Hershey began with was a chocolate bar. This eventually was followed by Hershey’s Kisses. During World War II, the emergency rations of US soldiers were augmented with chocolate bars, which solidified Hershey’s role as almost a staple of life, despite the unattractive, uncooked potato taste of that formulation (it was intended to discourage instant consumption) (Chocolate Exhibit, 2015).

Today the product line also includes Reese’s, Twizzlers, Mounds, York, and Kit Kat, as well as gum, cookies, nuts in small serving packs, and mints, as well as syrup, baking chocolate, and cocoa mix (the Hershey Ice Cream company is unrelated). Lancaster Caramel, the name of Milton Hershey’s original company, is being revived in a roll-out to both the US and China (Anderson, 2013). The firm has just expanded into the meat snack business under the name of ‘Krave’ (McGrath, 2015).

However, in general, Hershey has been sparing and conservative in the introduction of truly new items (as opposed to new shapes), for example, the fairly recent addition of Cookies and Cream. Other firms are attempting either exoticism (e.g., chocolate/pomegranate) or supposed Mayan authenticity (e.g., purity of cacao/combined with chili peppers) (Coe, 2006) .

This apparent slowness to be at the forefront of new product innovation may be seen by some as a drawback. Some scholars note that market pioneers can benefit for decades after the introduction of a novel product (Robinson, Kalyanaram, & Urban, 1994). However, Hershey has managed to succeed anyway.

Viewed exclusively as a corporation, Hershey’s appears to be a sound firm financially, ranking at 366^th nationally amongst the S&P 500 and the Fortune 1000. Its stock price has increased at least six-fold over the last two decades. Its sales volume has more than doubled in the same time period (Morningstar, 2015).

It commands a 43 per cent share of the American market (Singh, 2013). Its main competitors include Mars, Inc., Nestlé S.A., and Mondelez, International, Inc., and it is arguably more recognizable as a brand name than any of these, certainly in the USA (The Hershey Compamy, 2015). After its merger with Reese’s, it has become stronger and, according to the Reese heirs, more competently managed (Singh, 2013).

Thus, this brand, which has become an American icon, offers a range of products, with the central and most recognizable ones being among this student’s personal favorites. The company has made their consistent taste and familiar format available across the country, and also has global reach.

Their product line includes a variety of other brands, and recent mergers and roll-outs promise to continue their long term success. Their financial numbers are sound, and managerial improvements suggest a bright future. This brand has a definite place in a diversified portfolio.

Reference List

Anderson, M. (2013). ‘Lancaster’ Soft Caramels, New Hershey Candy Brand, Hit Shelves 2014. Web.

Chocolate: The Exhibit. (2015). Academy of Natural Sciences. Web.

Coe, M. (2006). The True History of Chocolate. Web.

McGrath, M. (2015). Hershey Jerky: 120 Chocolate enters the meat snack business. Web.

Milton S. Hershey. (2015). Biography. Web.

Robinson, W., Kalyanaram, G., & Urban, G. L. (1994). First-Mover Advantages from Pioneering New Markets: A Survey of Empirical Evidence. Review of Industrial Organization, 9(1), 1-23. Web.

Singh, V. (2013). Why Hershey Looks Like a Sweet Investment. Web.

The Hershey Compamy. (2015). Web.

Executive Summary

Hershey’s, one of the largest chocolate manufacturers in the world, has a product line of shareables, i.e., sweet goods sold in packages of several bite-sized morsels meant to be shared in a company. Upon analyzing the current market situation and addressing the company’s strengths, weaknesses, opportunities, and threats, it is suggested how new products can be launched to promote the line and attract new customer groups. Two significant marketing recommendations are proposed: introducing healthier products (to reach more audiences) and enhancing public relations activities (to improve the brand image and the company’s overall reputation that has been undermined within recent years).

Current Market Situation

Five-Year Financial Overview

Table 1. Five-Year Overview of the Financial Performance of Hershey’s.

Current ratio: 0.83 (current assets / current liabilities; $ 1.847 B / $ 2.218 B). Asset turnover: 1.02 (revenue / average total assets; $ 5.469 B / $ 5.344 B). Return on assets: 9.6 % (net income / average total assets; $ 512.951 M / $ 5.344 B) (“HSY company financials,” 2017).

Market Description

Hershey’s operates in the sweet goods industry, producing mostly chocolate-based products. For such an industry, it is particularly challenging to define its customers in terms of demographic, social, cultural, or other characteristics because virtually anyone, regardless of his or her background, may be a sweet tooth or, on the contrary, not a big fan of sweets and candies. At the same time, the industry is intensive and involves a non-decreasing degree of competition. The reason is that, despite the advancement of technologies and the changes in various markets, many people are still likely to enjoy a candy bar or a bar of chocolate. From this perspective, the 20th century has not essentially changed the business in which Hershey’s has been for more than 120 years. Hershey’s has a competitive advantage due to its well-established image and the fame of some of its products, such as Hershey’s Kisses. The company satisfies its customers’ needs by offering a wide variety of goods, classic and new ones, with different flavors but a recognizable taste of Hershey’s chocolate.

An essential aspect of the market description is the segmentation-targeting-positioning (STP) marketing analysis. Segmentation means dividing potential consumers into groups based on specific relevant characteristics, such as demographic, geographic, behavioral, etc. Targeting means determining how certain identified segments can be reached, attracted, and satisfied. Positioning means marketing specific products or services to customers in a way that is aimed at targeted segments (Gbadamosi, Bathgate, & Nwankwo, 2013). As indicated above, Hershey’s products can be demanded by customers from significantly different backgrounds and segments. However, it does not mean that the company does not employ STP. For example, Hershey’s tends to target younger audiences, which is seen in its marketing activities.

Hershey’s products chosen for the STP analysis are so-called shareables, i.e., sweet goods sold in packages of several bite-sized morsels meant to be shared in a company. The market segments that the products are aimed at are constituted by mostly young urban people who plan for the day spending it together and stop at a store to get a snack. This segmentation is based on demographical and behavioral characteristics. Income is also a factor here: Hershey’s shareables are significantly more affordable than similar products of some competitors, such as Ferrero Rocher, but also somewhat less affordable than such alternatives as M&M’s (see Competitive Review). Hersey’s thus mostly targets the second and the third quarters of the income range. Concerning positioning, Hershey’s established position is that of an old, reputable chocolate manufacturer that is to be turned to when one looks for good and relatively affordable chocolate goods. The company has iconic products, such as Hershey’s Kisses, and constantly introduces new ones to keep up with the customers’ need for novelty and diversity. To address the selected segment more effectively, i.e., young people, Hershey’s strives to obtain an image of a modern company with a wide range of business interests and an understanding of current societal issues. The company pursues being seen as “cool” and responsible and dedicated to the customers’ needs.

Product positioning is also associated with product branding and its three components: brand vision, brand personality, and brand positioning. The brand vision is what a company wants to represent to customers. Brand personality is the appeal to the customers’ preferences and emotional characteristics. Brand positioning is distinguishing the company from its competitors. To ensure its business’s growth and success, Hershey’s has established a vision of a company that produces classical treats and new and diverse goods for people who may come from different backgrounds and have different lifestyles but are connected by the liking for chocolate goods. Brand personality is, therefore, not regulated by social factors but factors of personal preferences. Finally, Hershey’s brand positioning, especially in terms of its shareables, is based on providing target audiences with high-quality chocolate goods in various forms and flavors for anyone who would like to indulge in a sweet snack.

Product Review

The product line selected for this marketing plan is Hershey’s shareables, i.e., sweet goods sold in packages of several bite-sized morsels meant to be shared in a company (“Hershey’s shareables,” n.d.).

Table 2. Shareables review.

Competitive Review

Table 3. Competitive Review.

An essential aspect of a competitive review is referring to the 5Ps marketing analysis of competitors. It includes five components: product, price, place, promotion, and positioning (Khan, 2014). The product component is to examine what exactly is being sold to customers. From this perspective, all products presented above are sweet shareable chocolate snacks.

The price perspective reveals significant competitive differences. The price ranges of all presented products are comparable. However, Ferrero Rocher can be considered as a more expensive solution to the same or similar needs of customers as those pursued by Hershey’s. In contrast, M&M’s can be considered as a cheaper solution.

The place component of the marketing analysis refers to distribution. All presented goods can be bought in the same places, i.e., customers may find themselves in a store choosing among Hershey’s and its four competitors listed above. Indirect online sales imply mixing these products, too, unlike direct online sales where customers are supposed to go to the Hershey’s website to purchase a particular product from the company or to a competitor’s websites to buy a different product.

Concerning promotion, all presented goods are successfully marketed through various media, including the Internet. Similar to Hershey’s, some of them appeal to customers through charity and corporate social responsibility activities. Public relations constitute a significant portion of this industry’s promotion efforts. All competitors try to build favorable images of themselves because they deal with a market that has already been explored and addressed for decades, which is why the competition is rather intensive.

Finally, in terms of positioning, there are significant differences among competitors. For example, Ferrero Rocher positions its products as elegant and mainly suitable for being given to someone as gifts. In contrast to this, M&M’s positions its product as a quick snack for urban youths. Hershey’s should consider these and other examples of its competitors’ positioning to develop an adequate strategy to address a broader range of audiences. Having both a reputable image and appeal to young people, Hershey’s can address the needs of diverse customer groups, thus successfully competing with all the companies listed in Table 3. However, they are quite different in terms of positioning.

Channels and Logistics Review

Hershey’s goods, including the products selected for this marketing plan, are delivered to customers via the following channels: agents, wholesalers, retailers, and online channels. The latter category features two options: direct, i.e., via Hershey’s web store, and indirect, i.e., via retailers’ websites. Distribution channels are currently considered sufficient; however, there are still opportunities for making distribution more effective and efficient (see Distribution Strategy), thus contributing to improving the company’s entire operation and achieving identified business goals (see Objectives and Issues).

SWOT Analysis

Table 4. Strengths, Weaknesses, Opportunities, and Threats.

Objectives and Issues

First Year Objectives

The current sales volume is 7.44 billion USD (see Five-Year Financial Overview). Within the last three years, this indicator has not been demonstrating increases or decreases of more than 0.7 percent. Based on the SWOT analysis above (Table 4), it is suggested that growth is possible. The objective is to increase the sales volume to 7.45 billion USD and prepare for further growth.

Among chocolate manufacturers in the United States, Hershey’s market share of 32.2 percent makes it the largest chocolate company. However, based on the strengths and opportunities described above, it is suggested the company can increase its market share. The objective is to enhance the presence in the market and prepare a technological basis and reach that will allow increasing the market share.

Second Year Objectives

The sales volume objective is to hit the point of 7.5 billion USD. The market share objective is to achieve the point where Hershey’s will have a third of the market (33.3 percent).

Issues

A major identified issue is accusations of unethical behavior (Manza, 2014). It is a threat to reaching new audiences and a weakness of the company’s public image. A way to overcome it is to pay more attention to Hershey’s corporate social responsibility and charity efforts. Also, initiatives associated with increasing environmental friendliness and sustainability of production and operation should be promoted by the company’s leadership and management. An essential aspect of addressing the issues is effective communication. Messages about these initiatives and activities should be delivered to loyal, occasional, and potential customers. Increasing the market share and the sales volume is possible within the next two years if more people believe that Hershey’s not only makes high-quality chocolate but also cares about the environment, labor conditions of its employees and suppliers, and the well-being of the society within which it operates.

Marketing Strategy

Positioning

Positioning statement: For anyone who would like to enjoy a sweet snack in a company of friends, Hershey’s offers a line of affordable shareables that features convenient packaging, good nutrition indicators, and a range of different flavors for different tastes.

Product Strategy

Product strategy describes how a company plans to sell a product in an identified market. One of the components of a product strategy is the description of target markets. As shown, in the case of shareables, targeting is challenging because the liking for sweet snacks may not correlate with demographic characteristics. However, the product strategy for shareables should mainly target young urban people whose lifestyles create more opportunities for them to enjoy shareables. They may often spend leisure time in a company of friends. It should also be explored what can be changed about the product to enable better market positioning. Based on the identified opportunities (see Table 4), Hershey’s should address wider audiences by offering healthier shareables in the product line (Falguera, Aliguer, & Falguera, 2012). An option with a lower level of saturated fat and sugar and a higher level of proteins (also, with fruit perhaps) could attract more customers. Moreover, implementing this recommendation could attract people who never buy any Hershey’s products because they think those products are unhealthy.

Pricing

Two major and principally different pricing approaches are cost-based pricing and value-based pricing (Hollensen, 2015). Cost-based pricing primarily considers the cost of manufacturing a product or providing a service as a reference point in setting the price. Value-based pricing considers what value is provided to customers and specific products and services and examines how much customers are willing to pay for this value. Cost-based pricing focuses on the company and the costs it incurs; value-based pricing focuses on customers.

Since Hershey’s has an established reputation, recognition as one of the largest, oldest, and most reputable chocolate manufacturers in North America, and extensive international reach, it can employ value-based pricing, especially for its iconic products as Hershey’s Kisses. However, the company is also largely affected by competition, as many manufacturers produce similar products, which is why Hershey’s is forced to use cost-based pricing. Hershey’s is not a luxury brand; one of its competitors, Ferrero Rocher, is much more of a luxury brand. It positions its products as more exclusive, so it uses value-based pricing and high prices to a larger extent. In using the combination of value-based and cost-based pricing, Hershey’s demonstrates a wise strategy, as it allows the company to effectively address competition and strengthen the recognition of their brand at the same time.

Market-skimming pricing is the practice of initially setting high prices for a new product to skim the “cream” of high-value customers. Market-penetration pricing, on the contrary, is setting low prices to reach more customer groups. When introducing shareables, which is the product of interest, Hershey’s did not have to resort to penetration pricing because the brand is already established and recognized. Skimming allowed obtaining larger profits; further, the price can be lowered over time.

Distribution Strategy

Hershey’s uses several different marketing channels (See Channels and Logistics Review). Retailers remain the company’s primary distribution and marketing channel. One of this channel’s main strengths is customer convenience: the products are made available and easy to access in various places. Also, customers may receive financial support from retailers when buying various products, including Hershey’s, which makes this distribution channel potentially more attractive. The channel’s weakness is that a part of revenues is lost through including intermediaries in the distribution process. Also, the manufacturer’s control, i.e., Hershey’s, over its products and communication, is reduced.

In distribution management, it is important to understand that distribution channels are more than just channels: instead of regarding them as simply connections between businesses and customers, it has been suggested to regard them as separate businesses having their operation and goals (Rosenbloom, 2012). Their primary goal is not different from the conventional goal of all businesses: to maximize value for customers and maximize profit for themselves at the same time. This perspective is more comprehensive and insightful in determining where costs can be cut and the increasing value. For Hershey’s, disintermediation, i.e., eliminating some intermediaries and some distribution components, can bring these benefits. For example, by reinforcing and promoting online sales, the company will be able to reduce costs. The value for customers will be increased because customers will be able to buy any of Hershey’s products, which is not always possible in a store.

Marketing Communication Strategy

The five elements of the promotion mix, also called marketing communication mix, are sales promotion, personal sales, advertising, public relations, and direct marketing (Armstrong, Kotler, Harker, & Brennan, 2012). Efforts in these five areas need to be combined to successfully promote products and services in the modern world. Hershey’s is engaged in all five processes, as the company encourages higher sales by constantly offering new products along with classic ones, employs direct distribution channels along with indirect ones, heavily advertises what it produces, and maintains a dialog with audiences through showing such initiatives as reducing environmental impact and adopting more sustainable practices, which can build a more favorable image among existing and potential customers. It is recommended to emphasize the public relations element of the marketing communication strategy. It is the area where the company’s most important threats (accusations of unethical behaviors) can be addressed.

Marketing Research

Marketing research is conducted to design methods, collect data, and report findings to a company’s marketing team to ensure that marketing objectives can be met and recommend how it can be accomplished (Babin & Zikmund, 2015). Normally, methods employed for these purposes include surveys, focus groups, interviews, and observations. Under this marketing plan, it is suggested to Hershey’s to explore and examine the market to justify the proposed recommendations, such as including healthier products in the shareables line. It is important to acknowledge that market research activities are not occasional and linked to events like launching a new product. Instead, they should be ongoing, which ensures that constantly arising challenges are properly addressed, and new needs of the market are identified.

Action Programs

Action programs should be designed based on identified objectives to describe particular measures a company should take to meet the objectives. A conventional way of designing action programs is by describing necessary actions month by month. For Hershey’, the proposed action program is as follows:

• First month: A study is designed by employees responsible for marketing research, i.e., methods are determined, and tools are prepared (e.g., questionnaires). The study’s audience will include (but will not be limited to) Hershey’s followers and subscribers in social networking services, i.e., people who regularly receive content generated by the company.
• Second month: The study is conducted to identify the needs and desires of loyal, occasional, and potential customers. Data is processed, and the results are reported to the top management.
• Third month: The decision is made to introduce new healthier products and maybe other products, the need for which is revealed by market research. The product is designed, and the technological basis for manufacturing it is prepared.
• Fourth month: The new product or products are launched, which should be extensively covered by the company’s advertisers, marketers, and public relations practitioners. New customer groups are attracted.
• Fifth month: By continuing its efforts in reaching emerging markets, Hershey’s markets the new product or products to those markets, too, to address potentially uncontested demand.
• Sixth month: A portion of revenues is spent to continue the market research with the primary goal to reveal what additional customer groups can be reached by including new products in the existing lines. With established tools, marketing research specialists gather more data and generate new recommendations.

Budgets

One of the approaches to budgeting is the break-even volume (BEV) analysis. It uses such indicators as fixed costs and variable costs to identify the necessary volume of production (Kaplan & Atkinson, 2015). A company incurs both costs that depend on the number of products it produces (e.g., raw materials) and costs that do not (e.g., advertising or operating and maintaining such facilities as plants). BEV analysis identifies what a minimal number of products should be sold to cover all the costs. As Hershey’s is a large international corporation with many products and many suppliers, BEV analysis is important and complicated because it involves complex calculations with many factors. However, the BEV analysis approach should consider that the company already has an established network of production, distribution, and marketing, which is why it can afford to launch a new product because variable costs are already largely covered.

Controls

A crucial consideration in launching a new product is control: what should be controlled and how? Controlling processes involves appointing people who will execute approved actions, match them to the strategy, and report results. The proposed action program should be primarily controlled in the product quality and brand image (Amini, Darani, Afshani, & Amini, 2012). As it is recommended to launch a healthier product, while healthy food is not the area in which Hershey’s specializes, enhanced control is needed to ensure that the new product complies with healthiness requirements. The brand image needs to be controlled because creating a more favorable image is one of the main reasons for implementing the actions proposed in this marketing plan. To control quality, healthiness standards need to be adopted and followed in production. To control brand image, it is necessary to enhance public relations efforts to communicate to existing and potential customers how Hershey’s is changing for the better while remaining classically good.

Hershey

Traditionally, the Company’s key resource of economics has been cash created from transactions. The Company’s profits and, therefore, cash offered from transactions throughout the year are exaggerated by regular sales molds, the timing of new production offerings, business attainments and divestitures, and price modifications. Vendings have naturally been greatest during the third and fourth quarters of the year, corresponding to regular and holiday-related sales outlines. Over the past three years, cash offered from operating actions comprised $2.0 billion, net of cash payments to annuity plans of $436.4 million.

Cash from processes united with short-term borrowings was adequate to ground share repurchases, principal expenses, capitalized software adding, bonus compensations and commerce achievements which totaled $2.3 billion. Total debt augmented during the epoch by $428.0 million, reproducing amplified short-term borrowings, as described above, moreover to an augment in long-term debt outlining from the consolidation of Special Purpose Trusts (“SPTs”) connected with convinced lease conformities in 2003, offset rather by the reimbursement of long-term debt. Cash and cash comparables reduced by $79.3 million during the period.

As of December 31, 2004, the fair value of the Company’s annuity plan assets surpassed benefits responsibilities. Payments in total are $8.0 million, $120.3 million and $308.1 million were made to the 18 annuity agendas during 2004, 2003 and 2002, correspondingly, principally to advance the funded position as a result of pessimistic returns on allowance agenda advantages during 2002.

Providing performances included capital calculations, benefited from software addings, and numerous commercial achievements and divestitures. Financial addings during the past three years included the purchase of manufacturing equipment, and development and innovation of obtainable facilities. Software additions over the past three years were related mainly with the ongoing improvement of data systems.

In December 2004, the Company obtained Mauna Loa, an important mainframe and dealer of macadamia snacks, for $127.8 million and in October 2004, the Company’s Mexican supplementary, Hershey Mexico, acquired Grupo Lorena, one of Mexico’s top confectionery corporations, for $39.0 million. In July 2004, the Company attained 11,281,589 splits of its Common Stock from the Milton Hershey School Trust in a confidentially discussed contract. The Company paid $44.32 per share, or approximately $500.0 million, for the shares and fees of $1.4 million associated within the obligations of the contract.

As for the gross profit rage, it involves the data over four quarters:

Tootsie Roll

Sales in 2004 augmented to $420 million contrasted to 2003 sales of $392 million. This symbolizes a new record rank of sales for the corporation.

Net earnings in 2004 were $64 million as evaluated to $65 million in 2003. On a per share grounds, incomes increased from $1.22 in 2003 to $1.23 in 2004. The augment in incomes per share outlines from fewer shares exceptional in 2004 due to reserve repurchases.

In 2004 Company again offered concentrated advertising strategies such as extra bags, transporters and combo collections to high quantity classes of trade. These programs strengthen the features of superiority and value that customers expect and create high-turn, gainful use of shelf and floor space that merchants command. Company also productively persisted its sales proposals in the mounting dollar store group of operate. Consumers who recurrent these outlets tend to be worth adjusted in their acquiring resolutions, and find that company’s brands deliver outstanding quality at reasonable price.

The powerful monetary circumstance in which characterized company’s year 2004, joined with gainful transactions during the year, allowed management make the greatest acquirement in the company’s history without acquiring excessive influence or insertion the corporation at monetary risk. Working funds ended the year at $110,376, down from $180,818 at the start of the year. The reduce of $70,442 is due to lower cash and short-term speculations and higher existing debt used to economics the Concord acquisition, partly offset by the operational resources obtained.

Interest manner debt was $99,500 at year end, $62,000 lesser than the peak of $161,500 on August 31, 2004 instantly following the attainment. Debt was paid down through a amalgamation of cash flow offered by working movements and asset ripeness.

Investor’s fairness augmented to $570,179 in 2004 from $536,581 chiefly due to net incomes during the year, net of cash payments and share repurchases. The corporation has paid cash bonuses for sixty two successive years and has allocated a stock dividend for forty successive years.

Company Profile

The Hershey Company, commonly known as Hershey’s, is a chocolate manufacturer established in 1894. It started as a candy shop in Philadelphia, Pennsylvania, where the founder, Milton S. Hershey, spent several years running the shop and partnering with different confectioners to perfect his culinary skills and invent new recipes. After several failed attempts to create a chain, Hershey returned to his hometown in Pennsylvania, which is named after him today, and invented Hershey’s Kisses—the product that became a hit and made its creator successful.

Today, Hershey’s is a market giant. It is currently ranked number 362 on the Fortune 500 List with 7.387 billion USD of revenues. The company employs about 15,000 people, operates ten plants in the United States, Mexico, and Brazil, and sells its chocolate goods in more than 60 countries across the globe. Hershey’s performance has been a reason for concerns from analysts within recent years, but currently, the company is expected to perform normally without dramatic declines in upcoming years. Hershey’s is involved in various kinds of charity, which contributes to its positive image on the market. However, some criticism has been faced; particularly, from human rights activists who protested against Hershey’s alleged purchasing of cocoa from vendors who had not guaranteed the labor exploitation-free origin of beans.

5-Year Financial Overview

Current Ratio: 0.83 (Current Assets / Current Liabilities; $ 1.847 B / $ 2.218 B)

Asset Turnover: 1.02 (Revenue / Average Total Assets; $ 5.469 B / $ 5.344 B)

ROA: 9.6 % (Net Income / Average Total Assets; $ 512.951 M / $ 5.344 B)

Current Market Situation: Market Description

Hershey’s operates in the sweet goods industry, producing mostly chocolate-based products. For such an industry, it is particularly challenging to define its customers in terms of demographic, social, cultural, or other characteristics because virtually anyone, regardless of his or her background, maybe a sweet tooth or, on the contrary, not a big fan of sweets and candies. At the same time, the industry is intensive and involves a nondecreasing degree of competition. The reason is that, despite the advancement of technologies and the changes in many markets, many people are still likely to enjoy a candy bar or chocolate. From this perspective, the 20th century has not essentially changed the business in which Hershey’s has been for more than 120 years. Hershey’s has a competitive advantage due to its well-established image and the fame of some of its products, such as Hershey’s Kisses. The company satisfies the needs of its customers by offering a wide variety of goods, classic and new ones, with different flavors but a recognizable taste of Hershey’s chocolate.

An important aspect of the market description is the segmentation-targeting-positioning (STP) marketing analysis. Segmentation means dividing potential consumers into groups based on certain relevant characteristics, such as demographic, geographic, behavioral, and so on. Targeting means determining how certain identified segments can be reached, attracted, and satisfied. Positioning means marketing certain products or services to customers in a way that is aimed at targeted segments. As indicated above, Hershey’s products are such that they can be demanded by customers from significantly different backgrounds and segments. However, it does not mean that the company does not employ STP. For example, Hershey’s tends to target younger audiences, which is seen in its marketing activities.

Product Review

The product line selected for this marketing plan is Hershey’s shareable, i.e., sweet goods sold in packages of several bite-sized morsels meant to be shared in a company. These include:

• Hershey’s Nuggets Milk Chocolates
  • 12-ounce bag
  • 4 pieces
  • 210 calories
  • 8 g saturated fat
  • 23 g sugar
  • 3 g proteins
• Hershey’s Nuggets Special Dark Chocolates with Almonds
  • 12-ounce bag
  • 4 pieces
  • 190 calories
  • 6 g saturated fat
  • 17 g sugar
  • 3 g proteins
• Hershey’s Milk Chocolate Drops
  • 8-ounce pouch
  • 13 pieces
  • 200 calories
  • 8 g saturated fat
  • 22 g sugar
  • 3 g proteins
• Hershey’s Cookies ‘n’ Crème Drops
  • 8-ounce pouch
  • 14 pieces
  • 210 calories
  • 7 g saturated fat
  • 20 g sugar
  • 2 g proteins
• Hershey’s Miniatures Assortment
  • 12-ounce bag
  • 5 pieces
  • 210 calories
  • 7 g saturated fat
  • 22 g sugar
  • 3 g proteins
• Hershey’s Caramels in Dark Chocolate
  • 7.2-ounce stand-up bad
  • 3 pieces
  • 210 calories
  • 6 g saturated fat
  • 24 g sugar
  • 1 g proteins

Competitive Review

5Ps marketing analysis of competitors:

• Product: All presented products are sweet shareable chocolate snacks.
• Price: Price ranges of all presented products are comparable, although Ferrero Rocher can be considered as a more expensive solution to the same needs of customers as those pursued by Hershey’s, while M&M’s can be considered as a cheaper one.
• Place: All presented goods can be bought in the same places, i.e., customers may find themselves in a store choosing among Hershey’s and its four competitors listed above.
• Promotion: All presented goods are successfully marketed through various media, including the Internet. Similar to Hershey’s, some of them appeal to customers through charity and corporate social responsibility activities.
• Positioning: There are significant differences in positioning among the competitors. For example, Ferrero positions its products as elegant and mainly suitable for being given to someone as gifts. In contrast to this, M&M’s positions its product as a quick snack for urban youths. Hershey’s should take into consideration these and other examples of its competitors’ positioning.

Channels and Logistics Review

Hershey’s goods, including the products selected for this marketing plan, are delivered to customers via the following channels:

• agents,
• wholesalers,
• retailers.
• online
• direct (via Hershey’s web store)
• indirect (via retailers’ websites).

Distribution channels are currently considered sufficient.

Introduction

Hershey Company is a US food company which was incorporated in 1894 and based in Hershey, Pennsylvania. The company specializes in production, distribution, sale and marketing of various confectionaries including chocolate, snacks, beverage enhancers, and other refreshments (Bilbrey, 2011).

The company enjoys a good market share in the United States and internationally. Its distribution channels include food brokers, sales representatives, wholesalers, and grocery stores, vending companies, departmental stores and convenient stores.

The initial company’s strategy was production and sale of cheap, high quality products. This has been the company’s reputation for decades and has been its distinguishing factor. The founders of the company believed in quality products as a sales strategy instead of advertising.

Hershey Company has grown to become a global market leader in confectionaries. Unlike many of its competitors, who have diversified to other products, Hershey Company has decided to concentrate and specialize in chocolate. This has enabled the company to create a specific strategy; focus on the significance of flow of materials for their products and generation of high profits.

Many of Hershey competitors, like Cadbury and ConAgra, concentrate on wide product portfolios. The companies have diversified their production but have a weak return on assets. On the contrary, Hershey Company has a strong return on assets; this implies that its assets have a better potential and produces higher revenues than its competitors (Alfonso, 2011).

Hershey has appreciated the significance of downstream material process flow as an international supply chain. The initial location of its factories was close to local ports. This made it convenient for the company to buy and transport raw materials from overseas farmers and distributors (Bilbrey, 2011).

Goods, services, and operations management

Hershey ensures that it has products on-hand to ensure that it meets the demand of its clients. The company ensures that the volume of sales is high because the profit margin for its products is low. In order to cope with these requirements, the company continues to develop its supply chain management.

The company also continues to develop its flow of materials to realize high profits. The integral part of the new supply chain design is 111,480M² distribution centre, near the organization’s head office. This centre was predicted to handle over 713 million kilos of products annually (Bilbrey, 2011).

Hershey’s product distribution network includes the sales and marketing department that helps the company to maintain high sales throughout the year. The product distribution network provides superior services to the customers. The distribution network works closely with customers to ensure deliveries are timely and reasonable.

The network is coupled with an effective transport from the production lines to distribution centers. Common carriers are used to deliver products from distribution centers to customer’s locations (Reiman, 2006).

Hershey changes the quantity weights and subsequent prices of goods as necessary to accommodate the changes in market. The company changes the prices to sustain its competitive environment and its profitability. Change in prices and quantities maintain the consumer values.

The company increases the prices to counterbalance the input costs, changes in raw materials, and increase in fuel prices. Other factors include changes in the price of raw materials, transport, employee benefits and other utilities. The company deigns a time lag between the change of price and the effective date of the changed prices (Alfonso, 2011).

Forecasting and demand planning style

Hershey has a tactical forecasting and demand and planning style. The data that is used for planning is accurate and timely. The accountability for managing forecasting and demand planning is left to employees in close contact with customers. The company’s style is advanced; Hershey has made the process to be integrated and comprises of a wide range of information. The forecast is made timely and in short and timely schedules (Reiman, 2006).

The process is strategic; the company has brought together sales forecasting and demand forecasting. The company focuses on accuracy of the information. The style is innovative; Hershey has a two-way sales forecasting and demand planning procedure. The employees involved are well equipped to plan and manage the process.

Accurate focusing of demand allows Hershey to reduce the requirements for emergency plans and associated costs. Hershey experiences efficient operations, improved customer connections and decreased money tied in inventories (Hockley & Ali, 2008).

Hershey has a monthly plan for balancing supply and demand by ensuring there is a cross-functional relationship of operations. The company has set the platform for sales and operations planning. The company aligns its expectations across the entire operations in the organization. Hershey settles its operation plans with financial plans to ensure it satisfies the demands of the company in a financially feasible manner.

The company’s marketing strategy is a strong brand, superior quality and product innovation. Hershey devotes significant resources to development and marketing of new products. The company has initiated several advertising promotional strategies for clients. The company’s sales are particularly high in the last three months of the year; this is the holiday season.

Value chains management

Hershey noticed the need for a more manageable design in value chains. In the current chain, products are obtained from producers and shifted to a more central place where customer purchases are managed and satisfied.

The first step to restructuring movement of materials was to carefully evaluate the client demands information obtained. Hershey started with their biggest clients like Target and Wal-Mart. The organization checked out carefully the historical information and objectives in areas such as distribution time, quantity, and how the items should be distributed.

This procedure also included a more fully developed incorporation into client personalized software. Since chocolate has a periodic need based on vacations, huge purchase amounts during the year had to be included and expected. This data was essential to understand what the client required and then how best to create their new distribution structure (Bilbrey, 2011).

To achieve the anticipated profits, the company determines the true costs of products. By applying good analysis, the company is able to evaluate the costs associated with business; this maintains the company’s competitive advantage and profit margins. Hershey concentrates on pricing its products and evaluating the costs associated with raw materials and labor (Bilbrey, 2011).

Hershey’s ability to generate high profitability compared to its competitors is directly associated with supply chains and performance in production of its products. Margin gains counterbalance the high costs of labor and raw materials. Hershey’s inventory and accounts payable continue to decrease and therefore, the net trading capital continues to reduce. Hershey expects to continue maintaining low inventories. Hershey’s business model is based on seasons; pre-holiday and holiday seasons are accompanied by huge volumes of orders.

Measurement of performance in operations

Hershey Company introduced an improved performance management system in 2009. This system is used by the company to measure its annual operations performance. Hershey measures the performance of all its employees. The system is designed to support engagement and accountability of employees. Employees are appreciated and rewarded for their maintaining the corporate vales of the company (Bilbrey, 2011).

Hershey Company collects data periodically and prepares reports regarding individual, departmental and organizational performance. Information used to measure performance includes production process data, organizational strategies, and employees’ performance. The collected information is analyzed against the set standards and corporate strategies.

The capability of Hershey to prevail is determined by its performance. The investments and operation parameters are analyzed to determine if they reach the desired targets. Hershey applies a statistical model to measure the performance of its operations.

Employees are assessed on their ability to meet the company’s goals. Performance assessments are carried out and the employees are rewarded for their individual contributions to success of the company. Individual development plans are included in the performance management plans to enable workers to identify their professional and individual goals. Surveys are conducted occasionally to assess the performance of the employees, individually and professionally.

From the beginning, Hershey has appreciated the significance of downstream material process flow as an international supply chain. The initial location of its factories was close to local ports. This made it convenient for the company to buy and transport raw materials from overseas farmers and distributors. Raw materials imported from outside the US included cocoa beans and sugar. However, milk was supplied by local farmers and distributors (Bilbrey, 2011).

Operation strategy

Hershey’s operation strategy is having a profound understanding of the needs of the company’s customers and stakeholders. The company ensures that the stakeholders develop a desire to work with the company and understand all the operations. Good understanding between the company and the stakeholders creates a good environment for business.

Good understanding between the company and the consumers makes it easier to understand the consumer’s needs and change in preferences. Hershey’s efforts to understand and improve the social and environmental performance of operations are in line with the company’s corporate strategy; the company’s consideration of stakeholder’s interests ensures its long term profitability (Bilbrey, 2011).

The major operational strategies for Hershey Company include creating a sustainable and a competitive business model. The company continues to emphasize on cost profile management to avail margin structure and resources for business investment. The company drives inexorable emphasis on conventional and profitable development in the US by ongoing investment in Hershey’s brands and capabilities.

The company delivers consumer driven and economically feasible innovations. Product innovations are created in consultation with stakeholders and consumer’s preferences. This improves the company’s position in the major development areas in confectionary industry.

The key growth areas emphasized by the company include a strong and competitive global position in sugar confections, and production of healthy products. The company aims at improving its market presence in Mexico, Canada, China and other available international markets.

The company seeks to have a more aggressive approach to acquisition and mergers in the US and globally. The company continues to provide a superior value propositions to its employees; the company focuses on training, talent retention and motivations (Alfonso, 2011).

Inventories management

Hershey Company has a department of inventory management where finished products inventories are managed and controlled. Inventories are managed in relation to marketing of products across all stock keeping. The department analyzes the sudden alteration in available inventory in an appropriate manner. The bases of changes are found and appropriate actions are taken. The department identifies the items to sustain the surge strategy and provides its feedback to all stakeholders (Bilbrey, 2011).

Inventory management monitors the changing items to ensure a proficient physical and systematic flow of products and in the system. The inventory management ensures its accessibility and supportability issues are availed to all suitable areas. The inventory management accommodates periodic builds properly by using system settings and disengages settings when the period is over.

The company has overcome the challenge of rising prices of raw materials including milk, sugar and cocoa. Hershey’s global supply chain transformation program which commenced in 2007 has helped the company to increase in productivity and to improve in performance. The objective of the program was to extensively augment production capacity utilization. This was achieved by reducing the total number of production lines (Hockley & Ali, 2008).

A flexible production operation was constructed in Mexico; the facility is improving production. Hershey has closed some of its facilities and is focusing on the few improving the supply chain efficiency. The company has invested in inventory optimization tools; this has enabled Hersey to achieve inventory reduction in procurement and product distribution. Closing of some facilities has enabled the company to concentrate on the existing facilities; this has enabled the company to perform well in productivity within the supply chain.

References

Alfonso, H. (2011). The Hershey Company. United Sates Securities and Exchange Commission. Web.

Bilbrey, J. (2011). Corporate Social Responsibility Progress Report. Retrieved from The Hershey Company. Web.

Hockley, H., & Ali, A. (2008). Hershey Foods: Sweet Results with SAP Demand Planning. Web.

Reiman, J. (2006). Sales and Operations Planning at The Hershey Company. Logistics Quarterly Magazine. Web.

Management is fundamental human resource in an organization which indulges in giving the directions to the organizations operations. Management is classified into three main classes for effective administration and efficient production in the company. The classes are top level management, middle level management and first level management also known as first line management.

The most interesting and appropriate level of entry in Hershey Foods is as an operations supervisor which is a first line level management. This will give me an opportunity for progressive lineage motion along the managerial ladder to the top level management over time.

As an operation manager I will have the first touch with the workers involved in operations of the company and therefore the daily operations of the company is one of the key responsibilities. The maintenance of discipline among the operations employees will be my task at this level in conjunction with the middle level management.

The company’s objectives and goals are spearheaded by operations manager though they are not actively involved in setting the goals. Motivation of the operation workers is also another key responsibility of operations supervisor. This is the first line management because it is the lowest level of management where the employees are linked with the company’s management.

Having worked in the company as an operation supervisor for considerable duration and gained enough skills on the company’s operations, I can then successfully join the middle level management as an operation manager.

At this level I will be able to take charge of all the companies operations and thus have all the operations supervisors report to me on the activities of the operations. The goals and the objectives of the operations department is also a key responsibility. I will also act as a link between the first line management to the top level management.

I will also be involved in the decision making for the company since I will be equipped with the information of the company’s daily operations. This position qualifies to be the middle level management since the scope of management is greater and at the same time there is direct communication to the top level and first line management.

Middle level management will prepare me for the executive position of the vice president, Chief Operating Officer which is at the apex of management. I will be able to participate in making decisions affecting the all company in conjunction with other top level management team members. The task of employment and promotions particularly senior managers will be yet another crucial role.

The overall performance of the company will be an ultimate responsibility since the roles are clearly visible at this level. The direction of the company is dictated by the team although we will not interact directly with the day to day activities of the company.

At this level I can then enjoy the highest salary and live in a nice environment. It is also possible that I can move from one company to another and still maintain the same echelon of management or even start a new company as a chief executive officer.

In conclusion the managerial ladder is a systematic organisational structure through which an individual climbs in many occasions so as to reach the highest level of management.

Irrespective of the level of management, there are common roles which apply to all managers, which include; decisional functions where decisions involving the resources of the company are made, informational roles which is obtaining and communicating information appropriately and finally management skills which greatly sit on the individual’s personal character.