Principle of Marketing Management – FINAL ASIGNMENT

MKT3040

Student’s name: Tran Yen Trang Lecturer: Ngo Hoang Quynh Anh
Class: F-UON-M3D UON’s ID: 23853854
FTU’s ID: 2005293110 FTUbdhbhdsb
[Company name] | [Company address]
Contents
Executive Summary...........................................................................................................2

1.0 Introduction..................................................................................................................3

2.0. Company Background................................................................................................3

2.1 Current Market Analysis............................................................................................4

3. Macro Analysis (PEST).................................................................................................4

3.1 Political Factors.........................................................................................................4

3.2 Economic Factors.......................................................................................................5

3.3 Social Factors.............................................................................................................5

3.4 Technological Factors................................................................................................6

4. Micro Analysis................................................................................................................6

4.1 The company...............................................................................................................6

4.2 Customers...................................................................................................................7

4.3 Suppliers.....................................................................................................................7

4.4 Marketing Intermediaries...........................................................................................8

5. Competitive analysis......................................................................................................8

5.1 Perceptual Map..........................................................................................................8

5.2 Competitor evaluations..............................................................................................9

6. SWOT............................................................................................................................11

7.0 Strategic Priorities.....................................................................................................13

7.1 Short-term Marketing Strategies (Coming Year).....................................................13

7.2 Long-term Marketing Strategies (Coming Years)....................................................13

References:.......................................................................................................................14

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Executive Summary

This report analyzes Hershey's role in the US confectionery and snack market, aiming to
identify key focus areas for the upcoming fiscal year. Using a PEST framework, we
examine external factors such as the economic landscape and health-conscious consumer
trends influencing Hershey's strategies. Internally, we explore Hershey's success factors
through Kotler's framework, considering product innovation and supply chain
efficiencies. The competitive landscape, including rivals like Mars and Mondelez, is
highlighted through a SWOT analysis, leading to strategic recommendations. These
include investments in R&D for innovative products, emphasis on health-conscious
choices, and leveraging digital channels for marketing and sales.

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1.0 Introduction

This marketing assessment focuses on Hershey, a leading player in the US confectionery

and snack market. Our examination centers on Hershey's unique position in the dynamic
realm of confectionery, encompassing a diverse range of products from chocolates to
snacks. Throughout this document, a variety of theories, models, and frameworks will be
utilized to uncover the intricate factors that shape and direct Hershey's operations within
the continually evolving landscape of the United States' confectionery and snack sector.

2.0. Company Background

Hershey, founded by Milton S. Hershey in 1894, has become a stalwart in the US

confectionery and snack market. Originating as a small chocolate enterprise in
Pennsylvania, Hershey has grown into a renowned multinational company, offering a
diverse range of beloved chocolate, candy, and snack products. With a rich history
spanning over a century, Hershey has ingrained itself in American culture as a provider of
sweet indulgences (Lewis, 2023). The company's commitment to crafting high-quality,
accessible treats is complemented by its dedication to community engagement and
sustainable practices, reflecting Hershey's enduring influence and significance in the US
confectionery landscape.

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2.1 Current Market Analysis
Hershey continues to maintain a strong presence in the US confectionery market.
According to market research, Hershey held a significant market share of approximately
31.2% in the US chocolate confectionery segment in 2022 (Statista, 2023a). The
company's strategic focus on product innovation and consumer preferences has
contributed to its sustained success, with a reported annual revenue of $8.8 billion in the
fiscal year 2022 (The Hershey Company Annual Report, 2022). In response to evolving
consumer trends, Hershey has also made noteworthy strides in e-commerce, leveraging
digital channels to enhance its market reach. With a legacy dating back over a century,
Hershey's ability to adapt to changing market dynamics while upholding its commitment
to quality has solidified its position as a leader in the contemporary US confectionery
market.

3. Macro Analysis (PEST)

3.1 Political Factors

Political factors significantly influence Hershey's business environment, particularly in
the confectionery industry subject to stringent regulations. Changes in food safety
regulations and labeling requirements, exemplified by new 2022 US government
mandates (Center for Food Safety and Applied Nutrition [CFSAN], FDA, 2023), impact
Hershey's manufacturing and marketing strategies. Additionally, global political factors
pose challenges, with potential escalations in conflicts like Russia-Ukraine disrupting the
supply chain and impacting commodity prices, including those crucial to Hershey's
production. Geopolitical tensions contribute to increased volatility in commodity
markets. Furthermore, alterations in international trade policies and tariffs, stemming
from trade disputes such as those between the US and China, pose risks to Hershey's
efficient import-export processes, potentially leading to increased costs. Navigating these
global political dynamics is vital for Hershey to mitigate risks and maintain
competitiveness in the interconnected global market.

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3.2 Economic Factors
Economic factors play a crucial role in shaping the macro environment for Hershey. Key
indicators such as GDP and inflation significantly impact the confectionery industry and,
consequently, Hershey's operations. For instance, the overall economic health of a region,
reflected in its GDP growth, can influence consumer spending patterns. According to the
World Bank, the global GDP growth rate was 3.6% in 2022, signaling post-pandemic
recovery (World Bank, 2022). A robust GDP often correlates with increased consumer
purchasing power, positively affecting Hershey's sales.

Inflation is another economic factor that bears relevance to Hershey's business. Inflation
rates can impact production costs, including raw materials and distribution expenses. For
example, rising inflation may result in increased prices for commodities like cocoa, a key
ingredient for Hershey's products. Monitoring and adapting to inflation trends are critical
for Hershey to maintain profit margins and competitiveness. In 2022, the United States
experienced an inflation rate of 6.5%, impacting various industries, including food and
beverage (US Inflation Calculator, 2022).

3.3 Social Factors

Social factors significantly shape Hershey's macro environment, impacting consumer
behaviors and preferences in the confectionery market. The demographic makeup, with
the aging population of more than 55.7 million people 65 years old and above,
emphasizing on health and wellness (Searing, 2023), has driven a surge in demand for
healthier snacks, potentially altering traditional chocolate consumption patterns.
Concurrently, the younger generation's inclination toward innovative and ethically
sourced products has spurred Hershey to prioritize sustainability through initiatives like
the Cocoa for Good program (The Hershey Company, 2022). These shifts highlight the
need for Hershey to adapt to evolving consumer expectations. Cultural factors, including
the heightened awareness of the environmental impact of food production, have fueled a

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demand for sustainably sourced products, aligning with Hershey's commitment to
sustainability.

3.4 Technological Factors

The adoption of advanced technologies has enhanced Hershey's production processes,
supply chain management, and customer engagement. For instance, the integration of
automation and artificial intelligence in manufacturing has contributed to operational
efficiency and product quality. According to a report by PwC, the food and beverage
industry, including confectionery, is increasingly leveraging technologies like AI to
optimize production and meet rising consumer demands (PwC, 2023). Additionally,
technology has revolutionized Hershey's marketing strategies, with digital platforms and
e-commerce becoming integral to reaching and engaging consumers. Online sales of
confectionery products have experienced substantial growth, with a projected global
market value of $26.5 billion by 2025 (Statista, 2023b). Hershey's proactive adoption of
digital technologies, including e-commerce platforms and data analytics, positions the
company to capitalize on evolving consumer shopping habits and preferences.

4. Micro Analysis
4.1 The company
In the micro analysis of Hershey, the company exhibits a robust position in the
confectionery industry. Hershey's annual revenue for the fiscal year 2021 was reported at
$8.8 billion, showcasing the company's substantial market presence (The Hershey
Company Annual Report, 2022). Hershey's mission centers on providing delightful
moments to consumers through the creation of high-quality, indulgent treats at accessible
prices. The company's commitment to this mission is reflected in its diversified product
portfolio, including iconic chocolate bars, candies, and snacks, catering to a broad
consumer base. Hershey's vision emphasizes a focus on global growth and expansion,
leveraging innovation and strategic acquisitions. The company's strategic initiatives, such
as the Cocoa for Good program, underscore Hershey's dedication to sustainability and
ethical sourcing in its supply chain (The Hershey Company, 2022). Hershey's consistent

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financial performance, coupled with a mission and vision aligned with evolving
consumer values, positions the company as a key player in the confectionery market,
poised for sustained growth and adaptation to industry trends.

4.2 Customers
Hershey's customer persona encompasses a diverse demographic, catering to both young
and mature consumers with a range of products. According to market research, Hershey
holds a substantial market share in the US chocolate confectionery segment, amounting
to approximately 25% in 2021 (Statista, 2023c). The customer avatar for Hershey spans
various preferences, including those seeking classic indulgences, health-conscious
individuals gravitating towards better-for-you options, and environmentally conscious
consumers interested in sustainably sourced products. The company's strategic response
to evolving consumer needs is evident in its product innovation, with an emphasis on
introducing healthier alternatives and sustainable practices. This customer-centric
approach aligns with contemporary market trends, contributing to Hershey's resilience
and prominence in the confectionery industry. The diversified customer persona
underscores Hershey's adaptability to changing consumer preferences and positions the
company for continued success in capturing a broad market share.

4.3 Suppliers
Hershey collaborates with a network of suppliers globally to source key ingredients, with
cocoa being a primary focus. These collaborations are further demonstrated in The Cocoa
for Good program, launched by Hershey, reflects the company's commitment to
sustainable and responsible sourcing practices. The Hershey Company has made a
dedicated pledge to procure cocoa for its chocolate products from certified and
sustainable sources, aiming to reach 100 percent compliance by the year 2020. By the
close of 2018, Hershey successfully attained 80 percent cocoa sourced through certified
and sustainable means, staying on track to fulfill its commitment of reaching 100 percent
by 2020 (The Hershey Company, 2022). This initiative aims to address social and
environmental issues within the cocoa supply chain, showcasing Hershey's dedication to

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ethical supplier relationships. As of 2022, Hershey reported working directly with over
37,000 cocoa farmers globally to enhance productivity and promote sustainable farming
practices (The Hershey Company Annual Report, 2022). The company's emphasis on
supplier diversity and responsible sourcing aligns with evolving consumer expectations
for ethical and transparent business practices. This strategic approach to supplier
relationships contributes to Hershey's ability to maintain a consistent supply of high-
quality ingredients while addressing broader industry challenges related to sustainability
and social responsibility.

4.4 Marketing Intermediaries

The company has forged robust partnerships with retailers, wholesalers, and e-commerce
platforms, contributing to a diverse and extensive distribution network. According to
Hershey's 2022 Annual Report, global net sales experienced a 12% growth, propelled by
strong performance across various retail channels. Notably, Hershey strategically
emphasizes e-commerce, with online sales significantly boosting overall revenue. The
confectionery giant leverages multiple online channels, including its official website,
major platforms like Amazon, and collaborations with various online retailers like
Walmart and Target. Hershey's proactive engagement with social media platforms further
enhances its digital presence, facilitating marketing and direct-to-consumer sales. The
$13.1 billion valuation of the global confectionery e-commerce market in 2022
underscores the pivotal role of digital channels, validating Hershey's adept adaptation to
the evolving retail landscape, ensuring accessibility, and fostering sustained market
growth.

5. Competitive analysis

5.1 Perceptual Map

On a perceptual map, Hershey strategically positions itself by maintaining a delicate
balance between quality and price. When comparing Hershey to Mars, both brands are
esteemed for delivering dependable quality in their chocolate products. However,

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Hershey tends to be perceived as more affordably priced than Mars, presenting an
enticing option for consumers seeking both quality and cost-effectiveness. Ferrero,
renowned for its premium offerings such as Ferrero Rocher, often adopts a higher price
point, targeting consumers seeking a more luxurious chocolate experience. In
comparison, Hershey appeals to a broader demographic by offering a balanced
combination of quality and affordability, catering to both discerning and budget-
conscious consumers. This nuanced pricing strategy enables Hershey to maintain a
favorable position in the confectionery market, capturing a diverse and wide-ranging
consumer base.

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5.2 Competitor evaluations

Criteria Mars Ferrero Rocher

Strengths

Extensive product portfolio with Premium selection of chocolates

Product Variety global reach with a focus on luxury

Brand Globally recognized brand with Known for premium and luxurious
Recognition broad appeal chocolate offerings

Market Share Leading market share globally High-end market positioning

Strategic Strong partnerships in diverse Global distribution network and

Partnerships markets strategic collaborations

Innovations in various chocolate Emphasis on high-quality and

Innovation categories unique product innovation

Weaknesses

Health-
Conscious Some products may be seen as Premium positioning may limit
Trend high in sugar mass-market appeal

International Regional variations in market Limited global presence compared

Presence dominance to competitors

Dependency on Similar dependence on cocoa Premium ingredients may impact

Cocoa market dynamics production costs

Price Varied pricing models for High-end pricing may limit

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Criteria Mars Ferrero Rocher

Sensitivity different markets affordability for some consumers

In conclusion, the competitive analysis of Hershey reveals a strategic positioning that

leverages a delicate balance between quality and affordability. With a diverse range of
iconic chocolates and snacks, Hershey has established a strong brand presence in the
U.S., capturing a significant market share. The company's continual innovation, strategic
partnerships, and a focus on competitive pricing contribute to its success in appealing to a
broad consumer base. While facing competition from global giants like Mars, Hershey's
emphasis on meeting consumer demands for both quality and cost-effectiveness positions
it as a formidable player in the confectionery industry.

6. SWOT

Strengths Weaknesses

Strong Brand Recognition: Hershey's Dependency on Cocoa Prices: Hershey's

strong brand recognition is a significant dependence on cocoa exposes the company
strength, fostering consumer trust and to price volatility. For instance, cocoa prices
loyalty. According to Brand Directory have shown fluctuations, reaching $2,756
2023, Hershey's brand value is estimated per metric ton in 2021 (Trading Economics,

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at $3.9 billion, showcasing its robust 2021). Managing this dependency is crucial
market presence. for cost stability and sustained profitability.

Diverse Product Portfolio: For instance, Perceived as Less Healthy by Some:

the introduction of innovative products According to a survey conducted by Statista,
like Hershey's Gold and Reese's Thins 40% of U.S. consumers reported concerns
reflects Hershey's commitment to staying about the health impact of consuming
relevant in a dynamic market. The ability chocolate since it contains cadmium and lead
to offer a diverse array of products (USA TODAY,2023). This perception may
positions Hershey as a versatile player in impact Hershey's ability to attract health-
the confectionery industry, catering to a conscious consumers who prioritize products
broad spectrum of consumer tastes. perceived as healthier alternatives.

Opportunities Threats

Growing Demand for Healthy Snacks:

According to a market report by Statista, Fluctuations in Cocoa Prices: As of recent
the global healthy snacks market reached data, cocoa prices have shown volatility,
$85.6 billion in 2021, reflecting a reaching $2,756 per metric ton in 2021 and
compound annual growth rate (CAGR) of experiencing fluctuations due to various
4.7% during the forecast period (Statista, factors such as weather conditions and
2023d). global demand (Trading Economics, 2021).

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7.0 Strategic Priorities

7.1 Short-term Marketing Strategies (Coming Year)

In the short term, Hershey should focus on maximizing its online presence and
capitalizing on current market trends. Leveraging data-driven insights, Hershey can
enhance its digital marketing efforts to engage with a wider audience. A targeted
promotional campaign, backed by exclusive online offers, can boost e-commerce sales.
With the e-commerce confectionery market expected to reach $15.2 billion by 2025
(Statista, 2023b), Hershey should prioritize seamless online experiences and expedited
delivery services to capture a significant share of this growing market.

7.2 Long-term Marketing Strategies (Coming Years)

Looking ahead, Hershey's long-term marketing strategies should center around
sustainability and health-conscious consumer trends. The rising demand for healthier
snacks presents an opportunity for Hershey to innovate and introduce products aligned
with these preferences. Investing in sustainable sourcing practices and reducing
environmental impact can resonate with the increasing number of eco-conscious
consumers.

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References:

1. BrandDirectory. (n.d.). Food & Drink 2023 | The Annual Brand Value Ranking.
Retrieved from https://brandirectory.com/rankings/food/. [2023, December 11].

2. Center for Food Safety and Applied Nutrition (CFSAN), FDA. (2023, January
19). Summary of changes in the 2022 FDA Food Code. Retrieved from
https://www.fda.gov/food/fda-food-code/summary-changes-2022-fda-food-code.
[2023, December 12].

3. Lewis, R. (2023, October 28). Hershey Company | Description, History, Products,

& Facts. Retrieved from https://www.britannica.com/topic/Hershey-Chocolate-
Corporation. [2023, December 11].

4. PricewaterhouseCoopers. (2023). Global Consumer Insights Pulse Survey June

2023. Retrieved from
https://www.pwc.com/gx/en/industries/consumer-markets/consumer-insights-
survey.html. [2023, December 11].

5. Searing, L. (2023, February 10). Washington Post. More than 1 in 6 Americans

now 65 or older as U.S. continues graying. Retrieved from
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6. Statista. (2023). Revenue growth of chocolate confectionery in the U.S. 2019-

2028. Retrieved from https://www.statista.com/forecasts/1236067/chocolate-
confectionery-serving-formats-revenue-growth-united-states-us. [2023, December
11].

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7. Statista. (2023b, June 27). Offline/online revenue share in the U.S. confectionery
market by channel 2017-2025. Retrieved from
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by-channel-in-the-us. [2023, December 11].

8. Statista. (2023c). Chocolate market share of U.S. companies 2021. Retrieved from
https://www.statista.com/statistics/238794/market-share-of-the-leading-chocolate-
companies-in-the-us/#:~:text=The%20Hershey%20Company%20was
%20the,Mars%20as%20a%20significant%20competitor. [2023, December 11].

9. Statista. (2023d, September 19). Healthy snacks: market value worldwide 2021-
2030. Retrieved from https://www.statista.com/statistics/1317251/healthy-snacks-
market-value-worldwide/#:~:text=The%20global%20healthy%20snacks
%20market,annually%20between%202022%20and%202030. [2023, December
11].

10. The Hershey Company. (2022). 2022 annual report. Retrieved from
https://investors.thehersheycompany.com/en_us/home/reports-and-filings/annual-
reports.html. [2023, December 12].

11. The Hershey Company. (2022). Visible progress: Hershey’s Cocoa for good
strategy. Retrieved from
https://www.thehersheycompany.com/en_us/home/newsroom/blog/going-beyond-
fair-trade-with-hersheys-sustainable-cocoa-strategy.html. [2023, December 11].

12. Trading Economics. (2021). Cocoa - price - chart - historical data - news.
Retrieved from https://tradingeconomics.com/commodity/cocoa. [2023, December
11].

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13. USA TODAY. (2023, October 26). Halloween alert: Test finds many chocolates
contain concerning levels of metals. Retrieved from https://www.usatoday.com.
[2023, December 11].

14. US Inflation Calculator. (2023, December 12). Current US inflation rates: 2000-
2023. Retrieved from https://www.usinflationcalculator.com/inflation/current-
inflation-rates/. [2023, December 12].

15. World Bank. (2022). GDP growth (annual %). Retrieved from
https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG. [2023, December
12].

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