I- Company

The Hershey Company, known until April 2005 as the Hershey Foods Corporation[2] and commonly called Hershey's, is the largest manufacturer in North America.[3] Its headquarters are in Hershey, , which is also home to Hershey's Chocolate World. It was founded byMilton S. Hershey in 1894 as the Hershey Chocolate Company, a subsidiary of his Lancaster Caramel Company. Hershey's products are sold in about sixty countries worldwide.[3][4]

History

After completing an apprenticeship to a confectioner in 1873, Milton S. Hershey founded a candy shop in , which failed six years later.[5]After trying unsuccessfully to manufacture candy in New York, Hershey returned to Pennsylvania, where he founded the Lancaster Caramel Company, whose use of fresh milk in caramels proved successful.[5] In 1900, after seeing chocolate making machines for the first time, Hershey sold his caramel company for $1,000,000[5] (equal to $27,596,000 today) and began to concentrate on chocolate manufacturing. He stated to people who questioned him, "Caramels are just a fad, but chocolate is a permanent thing."

In 1903, Hershey began construction of a chocolate plant in his hometown, Derry Church, Pennsylvania, which later came to be known as Hershey, Pennsylvania.[5] The town was an inexpensive place for the workers and their families to live. Milton treated the people well and provided leisure activities to make sure the citizens enjoyed themselves. The bars manufactured at this plant proved successful, and the company grew rapidly.

Milton built a milk-processing plant in the year 1896, so he could create and refine a recipe for milk chocolate candies. In 1899, three years later, he developed the Hershey process which is less sensitive to milk quality than traditional methods.

In 1907, Hershey introduced a new candy, small flat-bottomed conical-shaped pieces of chocolate that he named "Hershey's Kiss". Initially they were individually wrapped by hand in squares of foil, and the introduction of machine wrapping in 1921 simplified the process while adding the small paper ribbon to the top of the package to indicate that it was a genuine Hershey product.[5] Now, 80 million of the candies are produced each day. Other products introduced included Mr. Goodbar, containing peanuts in chocolate, in 1925, Hershey's Syrup in 1926, semi-sweet dark chocolate chips in 1928, and the bar containing crisped rice in 1938.

Harry Burnett Reese worked at Hershey, beginning in 1917, as a dairyman for the Hershey Farms. In 1921 he went to work in the factory. By 1925, he had developed an assortment of candies which he was able to sell to department stores in Lancaster, advertised as "made in Hershey." In 1926 he built his own factory and then in 1941 with the wartime rationing of sugar, Reese focused all of his production resources on his own confectionery masterpiece, the peanut butter cup, which required less sugar than most other confections of the time. In 1956, Reese died, leaving the company to his six sons. In June 1963, Hershey Chocolate Corporation acquired Reese's company for $23.3 million at a time when Reese's sales were $14 million annually.[6]

Labor unrest came to Hershey in the late 1930s as a CIO-backed union attempted to organize the factory workers. A failed sit-down strike in 1937 ended in violence, as loyalist workers and local dairy farmers beat many of the strikers as they attempted to leave the plant. By 1940, an affiliate of theAmerican Federation of Labor had successfully organized Hershey's workers under the leadership of John Shearer, who became the first President of Local Chapter Number 464 of the Bakery, Confectionery, Tobacco Workers, and Grain Millers Union. Local 464 still represents the Hershey workforce.

Shortly before World War II, Bruce Murrie, son of long-term president of Hershey's, William F.R. Murrie, struck a deal with Forrest Mars to create a hard sugar-coated chocolate that would be called M&M's (for Mars and Murrie). Murrie had 20 percent interest in the confection. The new confection would use Hershey chocolate during the rationing era during World War II. In 1948 Mars bought out Murrie's interest and would become one of Hershey's primary competitors.[7]

In 2007, the Chocolate Manufacturers Association in the , whose members include Hershey, Nestlé, and Archer Daniels Midland, lobbiedthe Food and Drug Administration to change the legal definition of chocolate to let them substitute partially hydrogenated vegetable oils for in addition to using artificial sweeteners and milk substitutes.[8] Currently, the Food and Drug Administration does not allow a product to be called "chocolate" if the product contains any of these ingredients.[9][10]

In December 2007, Philadelphia city councilman Juan Ramos called for Hershey's to stop marketing "Ice Breakers Pacs", a kind of mint, due to the resemblance of its packaging to a kind that was used for illegal street drugs.[11]

In September 2008, MSNBC reported that several Hershey chocolate products were reformulated to replace cocoa butter with vegetable oil as anemulsifier. According to the company, this change was made to reduce the costs of producing the products instead of raising their prices or decreasing the sizes. Some consumers complained that the taste was different, but the company stated that in the company-sponsored blind taste tests, approximately half of consumers preferred the new versions. As the new versions no longer met the Food and Drug Administration's official definition of "milk chocolate", the changed items were relabeled from stating they were "milk chocolate" and "made with chocolate" to "chocolate candy" and "chocolaty."[12] Initial Struggle

• Milton was apprenticed at a every early age in a publication & then in a confectionery shop.

• He established his first business venture in Philadelphia & soon he became bankrupt .

• Milton joined his father in Denver, Colorado where his father had hopes of striking it rich in the silver mines but again this proved to be failure.

• Milton launched a second venture into the candy business in ,but again with little capital, and much competition his business collapsed.

External Challenges

1. Hershey’s most important retailers and competitors had entered a phase of significant consolidation that was changing influence within the category. The era of small, independent stores was over- the power now lay with retail chains.

2. Consumers were not embracing the increased flavor varieties from Hershey’s Brands.

3. Hershey’s emphasis on pack type was being trumped by competitors’ emphasis on brands.

Vision & Mission

Vision statement:

 Hershey Company’s vision is to be ‘the world’s first choice for chocolate everywhere, every time’.

Mission Statement:

’s mission is to produce different chocolate flavors with best price for target markets.

SWOT ANALYSIS

Strengths:

• Hershey Foods has grown from a one-product, one plant operation to a $4 billion company .

• Hershey entered 1996 as the largest candy maker in the United States with 30.7% market share.

• Hershey is the largest pasta manufacturer in the United States with 28.4 % market share.

• Hershey Foods Corporation has committed the highest standard of quality, honesty, fairness, integrity, and respect.

Weaknesses:

• Hershey’s global market share in the chocolate confectionary industry is only 7 percent, lowest among its competitors.

• Hershey has a major problem that a small price increase at the retail level severely restricts consumer buying.

• Some analysts contend that Hershey International as a separate division producing and selling diverse products is an ineffective organizational design.

Opportunities:

• China and are huge untapped markets. Malaysia, Indonesia, Vietnam, and Thailand also are untapped, So, Hershey has the opportunity to gain a foothold in those Countries.

• Hershey has an opportunity to develop environmentally safe products and packages, reducing industrial waste, & recycling.

• Hershey can diversify more into non-chocolate candies because that segment is growing more rapidly in foreign countries like U.S & U.K.

Threats:

• The main competitors of Hershey Foods are Mars and Nestle. Mars is already a threat for Hershey, because Mars has a stronger presence than Hershey in Europe, Asia, Mexico, and Japan.

• Hershey, Mars has historically relied upon extensive marketing and expenditures to gain market share, rather than on product innovation.

• Nestle plans to continue to play to its strengths, international markets outside the United States, to combat Hershey.

Sales Objectives-

Marketing Objectives

1. Company provide better customer service than competitors. 2. Company can come up with variety of Gum product and chocolate to increase the market share. 3. Increased marketplace competition has significantly impacted Hershey’s business and as a result, The Hershey Company has been required to increase expenditures for promotions and advertising and continue to introduce and establish new products. The foundation of the Hershey marketing strategy is their strong brand equities, product innovation, and superior quality of the products, manufacturing expertise, and mass distribution capabilities. Hershey stimulates sales of certain products with promotional programs at various times throughout the year.

Marketing Strategy Marketing strategy

Place:

Hershey Corporation uses producer to wholesaler to consumer channel for distributing within a short distance whereas they use producer to wholesaler to retailer to consumer where the distance is long. Channels for Distribution:

Supermarket

School canteens

Department Stores

Commercial areas (7- Eleven, Mini Stop)

Pharmacies

Amusement Areas

Convenience Stores

Duty Free Outlets

Groceries

Product:

From early on the company built its brand and its product lines on cultural ideals that resonate with Americans. There really was a Mr. Hershey – Milton – and his rags-to-riches story is an American built on a mountain of candy. Building on Milton Hershey's legacy of commitment to consumers, community and children, we provide high-quality Hershey products while conducting our business in a socially responsible and environmentally sustainable manner.

To increase its product variety Hershey built partnerships/joint ventures with:

Duty Free

Selecta (Selecta’s Hershey’s Collection)

Red Ribbon Olympics

E-Bay

Starbucks

Coca-cola

Price:

Hershey Company wants to make sure that the price for its product is reasonable for customers, competitive and makes profit.

Promotion:

"There is a smile in every " that is one of the slogans that was used in a promotional campaign by Hershey. Some amount of money for the promotion has to be announced in the budget and spent during the year. Promotion is one of the reasons that keep companies make money.

Competitor and issues analysis

Hershey’s enjoys the largest share of the US Chocolate market and is the leader in both single-serve and bulk (boxes/large bars/bags) Chocolate products. Mars is Hershey's closest rival, owning well-known brands such as Mars, Snickers, M&M's, Milky Way and Twix.

The threat of competition in North America from powerful global confectionery companies such as Nestle and Schweppes (now part of Kraft Foods is effectively mitigated through Hershey’s licensing agreements. In the case of Néstle, Hershey's owns exclusive US licensing rights to – one of Nestle's strongest brands. Hershey’s also owns the US licensing rights to all the Cadbury Schweppes brands, thus preventing Cadbury Schweppes from entering the US market. On January 19, 2010, Kraft Foods bought Cadbury outdoing Hershey to create the largest chocolate and confectionery company in the world. The merger hurts Hershey's international growth prospects as the company had been hoping Cadbury would greatly expand Hershey's brands beyond their current domestic marketplace.

II- Product

The Hershey's Milk (most commonly called simply the "Hershey Bar") is the flagship chocolate bar manufactured by the Hershey Company. It is often referred to by Hershey as "The Great American Chocolate Bar". The Hershey Milk Chocolate Bar was first sold in 1900 with the Hershey's Milk Chocolate with Almonds variety beginning produced in 1908. A circular version of the milk chocolate bar called Hershey's Drops was released in 2010.

In addition to the standard Milk Chocolate and Milk Chocolate with Almonds varieties Hershey's also produces several other chocolate bars in various flavors: Special Dark chocolate, Cookies 'N' Creme, (both Milk Chocolate and Almond Toffee), Mr. Goodbar(with peanuts), and Krackel (with crisped rice). There were also six limited flavors: Double Chocolate, Nut Lovers, Twosomes Reese's Pieces, Cookies 'N' Chocolate, Twosomes Heath, and Twosomes .

Global Market Share as of 2011