Hershey`s marketing plan report
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The document provides an overview of Hershey's Kisses chocolates. It discusses the origin and history of the product, including how it was first introduced in 1907 and gets its name from the machine that produces it. Over time, the company introduced different colored wrappers to coincide with holidays like Christmas, Easter and Valentine's Day. Now there are various seasonal flavors available as well. The document also gives background information on the overall Hershey company, outlining its stages of development from the late 1800s to present day. It establishes Hershey as the largest chocolate producer in North America with a wide range of iconic brands that are known globally.
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- 1. Bil. Table of contents Page 1. List of content 2 2. 1.0 Introduction 3-4 3. 2.0 Background of the company 5-8 4. 3.0 Products 9-12 5. 4.0 price 13-14 6. 5.0Promotion 15-17 7. 6.0 Place 18 8. 7.0Marketing environment 19-31 i) Microenvironment ii) Macro environment 9. 8.0 Future planning 32 10. 9.0 conclusion 33 11. 10.0Awards 34 12. 11.0 references 35 13. 12.0 appendixes 36- 40
- 2. 1.0 Introduction Hershey`s kisses were introduced to the market in 1907 and manufactured by The Hershey`s Company. These chocolates got its name by the machine that makes them. This is due to the machine which made kiss sounds and appeared to kiss the conveyer belt onto which the chocolate is dispensed. Kisses appears to be one of the most popular candies in the world since 1989 when Hershey`s kisses were the fifth most famous chocolate in 1989 in United States and the sales topped to $ 400 million. Now, about 60 million to 80 million kisses are produced every each day at their factories. Actually, a Pennsylvania chocolatier , H.O. Wilbur & Sons Chocolates Company, had been making about the same product that named Wilbur Buds in 1984. The shape and size of those chocolates had inspired the Hershey`s company to make a new brand named as Hershey`s Kisses chocolates. At the beginning the Hershey`s Kisses were wrapped by hand. The automated wrapping the packaging began in 1921. The machine also introduced a little slip of paper inside the chocolates for the packaging which is still been used until now. The purpose of introducing the slip because to make sure that customers get the genuine Hershey`s products and more likely the trademarks of the company. However, the strip became a register trademark for the Hershey`s in 1924. These products have been produced continuously from 1907 to now except the years between 1942 and 1949. This is because the aluminum for the wrapping became insufficient due to World War II. The only available wrapper for the Hershey`s Kisses is in silver wrappings until 1962. But in 1962, few colour of wrappers were introduced such as green and red for Christmas. Then, Easter wrappings were made in 1968 and during 1986, Valentine`s Day wrappers began being manufactured.
- 3. Originally, Hershey`s Kisses chocolates were wrapped with the silver color foil and long-lasting for few decades. Until 1962, Kisses chocolates were marked with different colour foiled wrappers such as green, red and silver coincidently with the Merry Christmas season. Then, pastel blue, pink and green wrappers were introduced for Easter Day in 1968 and Valentine`s Day themed wrappers were introduced in 1986 with pink, red wrappers as well with little heart on it. Nowadays, there are varieties of color wrappers introduced by Hershey`s company that depend on the seasonal events. However, there was controversy within the organization regarding aluminum wrappers since people demand and requested to replace it with more environmentally- friendly packaging which is biodegradable materials. Hershey`s kisses had introduced seven its main product lines which is kisse milk chocolates, kisses hugs, kisses dark chocolates, kisses with caramel, kisses meltaway centre, kisses with almonds and kisses air delight. In addition, they also had introduced several products that are available during seasonal day only. For example Hershey`s Kisses Halloween with pumpkin flavor, Hershey`s Kisses Valentine`s Day and Easter Day.
- 4. 2.0 Background of the company Hershey`s company have four stages for the development of their company and line of products. At the first stage, it was called as getting started stage and duration takes for this stage were from 1984 to 1916. It all started with a decision Its all started with a decision that was made by candy-manufacturer named Milton Hershey`s in 1894. His aim was to produced sweet chocolate as a coating for his caramels. The company is located in Lancaster, Pennsylvania and were named as Hershey`s Chocolate Company. The company began to produce milk chocolate in bars, wafers and other shapes of chocolates in 1900. Hershey`s was able to lower the per unit cost and make milk chocolate with the mass production. Hershey`s also managed to make once a luxury item for the white collars and affordable for all people. One early advertising slogan described this new products as “ a palatable confection and a most nourishing food.” (http://www.hersheys.com/ ) A company on the move Due to immediate success gained by Hershey`s company, caused the owner to consider in increasing his production facilities and he decided to build a new chocolate factory in the middle of farmland in south-central Pennsylvania in Derry Township, where he had born. The location of the new factory was perfect since it was surrounded with dairy farms that can provided the milk required yet also it was closed to the ports of new York and Philadelphia that supplied the imported sugar and cocoa needed. Besides, the local labor that were honest and hardworking people. The new factory was well established by the summer of 1905. The second stage for the Hershey`s development was between 1917 and 1938 and this stage was called as expanding & innovating stage.
- 5. A kiss for the whole world In 1907, the company decided add a new line of products by producing a conical milk chocolate candy with a flat-bottomed that named as Hershey`s Kisses chocolates. At the beginning, the chocolates were wrapped with silver foil by hand made. However, the automated machine wrapping was introduced in 1921. The technology also started to add a paper strip at the top of the kisses to signify the customers that was a genuine Hershey`s products. In 1924, the strip had became a register trademarked for the Hershey`s Kisses. New products, hard times Within two decades, Hershey`s were added even more products to the company`s offerings. Some of the products included Mr. Goodbar Candy Bar in 1925, Hershey`s syrup (1926), Hershey`s chocolate chips in 1928 and the Krackel Bar in 1938. These new products had helped the company to maintain its profitability and avoided from any worker layoff during the Great Depression in 1930s. nevertheless, a group of workers staged a six-day strike that were supported by the CIO labor union that ended being forcibly removed by the local farmers and loyal workers. From 1939 to 1948, this was the stage where the world War II had began and this stage was named as going to war. Hershey`s chocolate goes to war The Hershey`s Chocolate Corporation were going to start producing s survival ration bar for the military use since they were also provided milk chocolate bars to the American doughboys in the first war. By the end of the war, more than a billion Ration D bars had been produced and the company also earned awards for the exceptional contributions to the war effort. In fact, the company machine shop also turned out to be parts of the Navy`s antiaircraft guns.
- 6. Reese`s Candy Company had been collaborated with Hershey`s chocolate company since 1928. Hershey`s helped them by supplying the coating for Reese`s penny cups since Reese`s had been involved in the making chocolate –covered peanut butter. In 1968, Hershey`s had renamed the company with Hershey`s Foods Corporation and expanding its product lines and had diversified related companies into other food products. For example, San Giorgio Macaroni and Delmonico (1966), Y&S Candies, Makers of Twizzlers licorice (1977), Dietrich Corp. confectionery operations (1986), Peter Paul/ Cadbury`s U.S. confectionery operations (1988) and Ronzoni Foods (1990). And today, The Hershey`s Chocolate Company is the leading manufacturer of chocolate and non-chocolate confectionery and grocery products in North America. The Hershey`s Company also continues to produce new products regularly and take advantage of economic growth in the millennium era. Hershey`s products are well known all over the world and enjoyed by every people. The Hershey Company (NYSE: HSY) is the largest producer of quality chocolate in North America and a global leader in chocolate and sugar confectionery. Headquartered in Hershey, Pa., The Hershey Company has operations throughout the world and approximately 14,000 employees. With revenues of more than $6 billion, Hershey offers confectionery products under more than 80 brand names, including such iconic brands as HERSHEY'S, REESE'S, HERSHEY'S KISSES, HERSHEY'S BLISS, HERSHEY'S SPECIAL DARK, KIT KAT, TWIZZLERS, JOLLY RANCHER and ICE BREAKERS. Hershey also offers premium and artisan chocolate products under such brands as SCHARFFEN BERGER and DAGOBA through the Artisan Confections Company, a wholly owned subsidiary. The company is focused on growing its presence in key international markets such as China and Mexico while continuing to build its competitive advantage in the United States and Canada.
- 7. For more than 100 years, The Hershey Company has been a leader in making a positive difference in the communities where its employees live, work and do business. Corporate Social Responsibility is an integral part of the company’s global business strategy, which includes goals and priorities focused on fair and ethical business dealings, environmental stewardship, fostering a desirable workplace for employees, and positively impacting society and local communities. Milton Hershey School, established in 1909 by the company's founder and administered by Hershey Trust Company, provides a quality education, housing, and medical care at no cost to children in social and financial need. Students of Milton Hershey School are direct beneficiaries of The Hershey Company's success. (http://www.hersheys.com/)
- 8. 3.0 Products Hershey`s had developed many products such as chocolate bar, cookies, chocolate syrup , kisses, nuggets, cocoa, baking pieces, candy bar, baking chocolates, milk & milkshakes and dessert topping. But for this assignment, the products that I choose is Hershey`s Kisses. Hershey`s kisses had produced seven main types of its brands such as kisses AIR DELIGHT , kisses milk chocolate, kisses milk chocolates with almonds , kisses meltaway centre milk chocolates , kisses milk chocolates with caramel, kisses special dark chocolates, and kisses hugs. kisses AIR DELIGHT feel each bubble melt smoothly in the mouth as the air delight aerated milk chocolate. The wrapper has polka dot on it. kisses milk chocolates with almonds these type of Hershey`s Kisses brand milk chocolate with almonds were introduced in 1990. It became an instant success and was the first permanent brand to Hershey`s kisses brand family.
- 9. Kisses milk chocolates with caramel Taste creamy caramel and milk chocolate melt in your mouth that you want to experience again and again. Kisses hugs Kisses Hugs were introduced to the Hershey`s family in 1993 with the combination of Hershey`s milk chocolate hugged by sweet white cream. It had been everybody favorite ever since. kisses meltaway centre milk chocolates Hershey`s Kisses Meltaway Milk Chocolates feature with smooth meltaway center surrounded by a creamy milk chocolates shell. It is perfect for those looking for an extra creamy indulgence. These are available at retail and wrapped with silver and amber colored foil topped with a meltaway center inscribed plume. . kisses milk chocolate the original Hershey`s Kisses brand milk chocolates have been a favourite American since 1907. It is made of creamy milk chocolate and had been enjoyed after generation. Everyday deserves a kiss.
- 10. kisses special dark chocolates originally introduced as a Limited Edition flavor but it was really a hit among chocolate lovers. Hershey`s Kisses brand special dark chocolates is a natural source of cocoa falvanol antioxidants. Other flavors for occasionally such as Valentine`s day, Easter Day , Halloween Day and holiday.
- 11. Packaging the brands Timeline of the packaging brands 1907-1921 • the packaging originally in silver foil wrapper by hand made with milk chocolates • 1921 - automated machine wrapping were introduced with strip paper which marketed as genuine Hershey`s products 1962 • kisses chocolates marked with different colour of foil such as green, red and silver for Christmas season. • pastel blue, pink and green wrappers were introduced for Easter Day in 1968 and Valentine`s Day themed wrappers were introduced in 1986 with pink, red wrappers as well with little heart on it 1968 - until now • varieties of wrappers were introduced for seasonal events. but there are seven main products that had specified wrappers for it. • replace it with more environmentally- friendly packaging which is biodegradable materials.
- 12. 4.0 Price Price is used as the market tools of the marketing objectives. Hershey`s company changes the prices and weights when it is necessary to accommodate the changes in costs, competitive environment and profit objectives. But, at the same time maintain the consumer value. The prices increases and weight changes helped to offset increases in the company input costs including raw materials, packaging materials, fuel, utilities, transportation and employee benefits. In March 2011, the company had announced a weighted-average increase in wholesale prices of approximately 9.7 % across the majority of United States, Puerto Rico and export portfolio. The price increases were applied to the instant consumable, multi-pack, packaged candy (including Kisses) and grocery lines. Generally there is a time lag between the effective date of list price increases and the impact of the price increases on the net sales. This is because the company prefer to serve previous commitments to planned customer and consumers promotions and this had caused the impact of price increase is always been delayed. Since the Hershey`s Kisses are well known product, the price is still affordable and reasonable to everyone. These Hershey`s kisses brand have high quality of milk chocolates therefore the prices for the brand is quite reasonable. The price for this product is not expensive as compare to Van Houten, Tudor Go. In addition, Hershey`s promote their prices (especially for Hershey`s Kisses ) so that the regular customer will stick to them and even can increases the number of the customers. Since Hershey`s Kisses are worldwide product, all the prices are not the same depending on the economics of one’s country. For prices example are shown below in the table 4.1
- 13. Bil. Product line Prices (US Dollar) 1. Hershey`s Kisses milk chocolates 56-ounce bag $ 19.50 2. Hershey`s Kisses milk chocolates with almonds $ 10.00 (100 pieces) 3. Sweet Love Candy Jar with Hershey`s Kisses $ 24.95 (30 o.z.) 4. Merry Christmas Treat jar (31 o.z.) 5. Hershey`s Kisses milk chocolates with caramel (100 $ 10.00 $ 19.99 pieces) 6. Hershey`s Kisses with peanut butter $ 10.00 (100 pieces) 7. Hershey`s Kisses Hugs (340 g) 8. Hershey`s Kisses Pumpkin Spice Candy Holiday $ 13.00 $ 9.99 Halloween holiday ( 10.07 o.z) 9. Hershey`s Kisses Chocolate truffle (11.0 o.z.) $ 27.90 10. Hershey`s Kisses meltaway centre (100 pieces ) $ 10.00 11. Hershey`s Kisses Cherry Cordial Crème Filled Milk $ 6.00 Chocolate (60 pieces) 12. Hershey`s Kisses treat jar (31 o.z.) *Based on the 2012 market prices table 4.1 $ 19.99
- 14. 5.0 Promotion A promotion strategy consists of the specific blend of promotion tools that the company uses to persuasively communicate customer value and build customer relationships. (Principle of Marketing by Philip Kotler, Gary Armstrong, 14th edition, (2012), Pearson education, U.S.) There are several ways of how Hershey`s Kisses promoting their products in order to achieve objective for their sales targets. For example through the advertisement. This advertising are including broadcast, print, internet, outdoor and other forms. Hershey`s Kisses have their own website for the customers to get the information about their products and achievements. People who loves chocolates and anything that related to chocolates can get the information about Hershey`s Kisses through this website below: (http://www.hersheys.com/kisses/promotions.aspx ) Besides, Hershey`s Kisses brand promote their products through public relations (PR) which is includes press releases, sponsorships, special events ad web pages. For holiday seasons, Hershey`s Kisses brand have introducing some holiday products especially for the kids. Some example of their holiday products are Giant Hershey`s Kisses milk chocolates, Hershey`s Kisses milk chocolates Cane, Hershey`s Kisses milk chocolates Santa Hat and lots more. In addition, Hershey`s Kisses have introducing Hershey`s Kisses Baking recipes.
- 15. Another recipes that are available for the Hershey`s Kisses products such as Kisses Bread and Muffin Recipes, Kisses Brownies and Bars Recipes, Kisses Cakes and Frosting Recipes, Kisses Candies and Snacks Recipes, Kisses Cheesecakes Recipes, Kisses Cookies Recipes, Kisses Dessert Recipes, Kisses Garnishes and Decorations Recipes and Kisses Pies & Tarts Recipes. Hershey`s Kisses brand also created some events to attract more people so that customers will enjoyed and feel it is worthy to buy Hershey`s Kisses products. For example, designing a message to share your happiness and spread your love to your beloved ones. This event is named as Kiss from me 2 U. Other than that, Hershey`s Kisses brand used direct marketing that includes catalogs, the internet, telephone marketing, kiosks and lots more. In order to promote this products, this company also introduced some other products that have Hershey`s Kisses name on it. People can easily get these products since it was introduced throughout internet and people nowadays are easily access to the internet. Some of the products are stationery; Kisses brand keychain, Contemporary Kisses Magnet set, Kisses chocolates-shaped lip gloss, shirts, sweaters, educational books and lots more.
- 16. Hershey`s Kisses have try their best in order to make sure the entire marketing mix always be coordinated for greatest impact to their company. 6.0 Place At first, the Hershey`s company was located in Lancaster, Pennsylvania in 1984. However, Hershey`s decided to add his production facilities. So, they had move out to Derry Township, south-central Pennsylvania, North America. The location was strategic since it was closed to the ports of New York and Philadelphia that supplied the imported cocoa beans that they needed and surrounded with dairy farms yet the local labor and local farmers that were hardworking and loyal. Hershey`s Kisses had distributed their products in approximately 70 country worldwide. They segregate their operating segments into geographic regions base on their similar economic characteristics, products and services. They combine their operations in the United States and America which is including Canada, Mexico, Puerto Rico, Brazil and their global exports business for segmented reporting purpose. While for the other countries than America and United States, such as Middle East, Africa , Asia and Europe, they combine these countries and form one reportable segments based on their characteristics. Hershey`s Kisses brand distribute their products from the main factories in Pennsylvania, America to the Hershey`s retail stores in New York City, Chicago, Niagara Falls (Ontario), Shanghai, Dubai and Singapore. They operated under the reporting structure designed so that their can focus on North America and ongoing with the transformation to be a global company
- 17. 7.0 Marketing environment A company`s environment depends on the factors and forces outside the marketing that will affect the marketing management`s ability to build and maintain successful relationships with targets customers. There are two types of marketing environment which is microenvironment and macro environment. 7.1 Microenvironment challenges The microenvironment consists of the actors close to the company that affect its ability to service its customers. Microenvironments are divided into five categories. There are the company itself, competitors, publics, suppliers and marketing intermediaries. 7.1.1 The company The Hershey`s Company marketing environment are affecting by their top management and operations. Their goal is to become no 1 position in the North American confectionery market and be the leader of for the chocolate-related grocery and to put up leadership positions in selected international markets. This is done by their top management in order to manage the company in every aspect of their business. Hershey`s would like to have organizational capabilities that can compete in both present and future business. Their management also tried to encourage and promote healthy living to publics. They also constantly transform their products depend on the consumer`s desire so that the customers would love to buy again and again. Apparently, the Hershey`s Company want to maintain a high level of ethics and conducts. It is vital for Hershey`s Company to develop a strong people orientation and employee that truly care about each other. Hershey`s are advance because they put extra efforts to attract customers and sponsorships with of high quality and excellence products.
- 18. 7.1.2 Supplier Hershey`s Chocolates company became the first in marketed products because the owner, Hershey`s had chosen to build his factories on 40,000 acres near with dairy farmland in Pennsylvania. Since the location near the dairy farmland, Hershey`s obviously can obtain a large quantities of the fresh milk and produced very fine milk chocolates. This location was strategic since it is located near New York`s ports that supplied the sugars and cocoas that they needed for the products. That is why Hershey`s products are highly in good quality and consists of genuinely milk chocolate. 7.1.3 Marketing intermediaries The Hershey`s company has many factors that help the company to become powerhouse among chocolate manufacturers in the world. Hershey`s has very excellent quality of their products, customer service, brand innovation, technologies and strategic alliances. Hershey`s had expanded its confectionery products and obtain related companies and change or diversified it into other food products. For example San Giorgio Macaroni and Delmonico Foods (1966), manufacturing and marketing rights to English candy company Rowbtree MacKintoshi`s products (1970); Y & S Candies , makers of of Twizzlers licorice (1977); Dietrich Corp confectionery operations (1986); Peter Paul/ Cadbury`s U.S. confectionery operations (1988) and Ronzoni Foods (1990) (www.hersheys.com). Hershey`s had strengthening their position through powerful alliance with Starbucks. Starbucks, a well known beverage company that famous with their uniqueness experience, provides coffees (includes mocha, cappuccino, milk coffee), teas, fruits and herbs. They had collaborated with Hershey`s ( Artisan Confections Company ) to be paired with Hershey`s premium chocolates and produced delicious chocolates products.
- 19. Hershey`s is the vice president of the North American commercial group while the President is owned by Christopher J. Baldwin. He said that “ Starbucks is the no one in the world for leading brands among consumers. Hershey`s chocolate expertise, distribution and selling capabilities combined with the strength of the Starbucks brand will help transform the high-growth premium chocolate segment” (www.thehersheycompany.com). In the July 19, 2007, Baldwin had been release to announce the agreement between Starbucks and Hershey`s will be prolong to maintain and share their sustainable growth and equity practices. Besides that Starbucks, Hershey`s also had collaborated with other partnerships in order to advertise and introduced their market products such examples Nabisco, Kraft and Coca-Cola companies. Both Nabisco Honey Maid Graham Crackers and Kraft Jetpuffed had permitted Hershey`s to introduced and market their products with the classic Hershey`s Chocolate Bar for the campfire dessert. (www.hersheys.com). Coca-cola company had joined up with the Hershey`s product Reese is Peanut Butter Cup to market both their products together as a buy one get one for free deal (www.hersheys.com.)
- 20. 7.1.4 Publics 7.1.4.1 Financial publics A public is any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives. In this context, financial publics had influence the company`s ability to obtain funds. Recently (before 2010), Hershey`s had get into a credit agreement which is allow them to borrow up to $ 300 million. They describe the agreement is a new short-term credit agreement to create an unsecured revolving credit facility to borrow up to $ 300 million. This agreement had expired on August 22, 2008. This money could be used for general corporate purposes only.(www.hersheyscompany.com). Based on their history, Hershey`s not actually can managed their long-term investments. For example, Hershey`s had involved in long-term debt agreement in order to restructuring of their supply-chain technology during year 1998. Sales and profits are lost and dropped by a large percentage. Hence, Hershey`s management practice needs to be changed, otherwise they will repeat the same mistake and lose more money from their investment. 7.1.4.2 Local publics Hershey`s is dedicated to help by making a difference in other`s lives. A way to show this commitment is by supporting varieties of community organizations. Things that can be done is by donating some corporate financial, employee time (volunteer works) and talents are given enthusiastically. for example such organizations the American Red cross, UNICEF, the YMCA, Habitat For Humanity, the Partnership for a Drug-Free America, Children`s Miracle Network, the United Way, Various AIDS Funds, a number of environmental conservation and protection groups and the Young Survivor Coalition; an international, non-profit network of breast cancer survivors and supporters(www.thehersheycompany.com).
- 21. Hershey`s also supported some minority based groups such as the NAACP, the Urban League and La Raza, Environmental stewardship . (www.thehersheycompany.com). They address their support as collection of practices from emphasizing , recycling in a way to reduce emissions for working to protect the tropical forests. (www.thehersheycompany.com). Hershey`s had recycled 90 % of their waste products and in return, used cardboard and recycle paper in their packaging process. Nowadays, Hershey`s factories use efficiently their water systems and energy saving lighting and appliances in each day operations. Finally, Hershey`s has awareness to their suppliers and vendors to follow their strict standards in order to do business with them. 7.1.4.3 internal publics The Hershey`s employee has a work environment that is positive. Their employees are hard working, loyal, and always focused and passionate. Hershey`s always promotes their high ethical values and has excellent reputation for fairness, honesty in doing the right thing. They always openly welcomes and embraces from different viewpoints as they can establish itself as a diverse company. They also had practiced the promotion from within which means by acknowledging the people who know the business. For the Hershey`s family itself, they try to give compensation or reward to their common stockholders by offering annual dividends. For last ten years, Hershey`s has been able to offer dividends ranging from $ 0.42 per share to $ 1.13 per share. The dividend have increased (www.thehersheycompany.com). at least $ 0.04 per share each year.
- 22. 7.1.5 Customers 7.1.5.1 International markets The world today is considered as globally flattened as their international performance is so poor. This can be explained by borderless nations that actually are easily can produced their products and distributed it around the world and the competitors are not limit to local companies only. As the largest North American of chocolate manufacturer, Hershey performs poorly in the international community. presently, Hershey`s factories existence is limited to Brazil, Canada, Mexico, and the United States (www.investopedia.com). For the past decades, Hershey`s company has experienced weak relationship between Mexican operations and United States operations. In fact, Hershey`s has become progressively more dependent on Mexican production. This is due to the growing manufacture expenditure associated with United States production. 7.1.5.2 Reseller markets Hershey`s main customers are, the grocery stores, convenience store, wholesale distributor, dollar stores, department stores and vending companies. The succeed of the Hershey`s company due to the customer relationship that Hershey`s maintains with these customers. Hershey`s company keeps giving good performance and effective service plus timely manner to their customers. This has led Hershey`s to achieve higher achievement in chocolate industries. Strong customer service department is the key to the success of the Hershey`s company. Over past decades, Hershey`s continues to make improvement to the customer service. Currently, Hershey`s appeared to improved their technologies to be more competitive in the markets of high challenges and demands.
- 23. 7.2 Macro environment The macro environment consists of larger societal forces that affect the microenvironment. This macro environment can divided into six categories which are demographic environment, natural environment, political environment, cultural environment, economic environment and technological environment. 7.2.1 Cultural environment The cultural environment is made up of institutions and other forces that affect a society’s basic values, perceptions, preferences, and behaviors. Core beliefs and values persist because they are passed on from parents to children and are reinforced by schools, churches, business, and government. Secondary beliefs and values are more open to change. Marketers want to predict cultural shifts in order to spot new opportunities or threats. ( Principle of Marketing ,Gary Armstrong, Philip Kotler, (2012), 14th edition, Pearson education, U.S.) Consumer always changes their preferences for all products. It is not a surprise if consumers want for chocolates products have changed into a desire products which means bakeries producing goods by using high quality of chocolates and cocoa products. Moreover, consumer wants varieties of chocolate products. This allowed the chocolate industry to expand their product lines and offered opportunities for better sales of the latest products. The chocolate and cocoa industries can joint venture with other retails in other industries to produce new varieties of products. For instance, chocolate and coffee manufacturers collaborate to create new chocolate flavored coffee products . While food industries cooperate with chocolates product industries to produce better products such as milk flavored chocolates. In recent studies, it shows that dark chocolates have several benefits to our health. The latest research reveals that the flavonoid-rich substance in dark chocolates can provide protective effect on the cardiovascular system and reduce the chances of getting cancer on adults. (Chocolate Trading Co. 2005). In addition, dark chocolates actually can help to decrease our blood pressure because dark chocolates itself had increased our glucose metabolism.
- 24. Threats Nowadays, many people are allergies towards peanut and automatically can give side effect the cocoa and chocolates products as the main ingredient in chocolate manufacturer is the peanut oil. Individual with the peanut allergies would not consume any foods that contain peanut due to the health risks. It will give negative impact on the sales of the peanut products plus will affect the chocolate production as many people are developing to have these allergies. Besides, the increasing of individual with the obesity endemic has made people more conscious with they eat as to avoid any health problems in future. So, this had made them to avoid from eating chocolate that contain high calories and high fat products. This is because if the obesity person do not alert with what they eat , this can lead to the any severe disease such as heart attack, diabetes , high blood pressure and etc. In addition, people nowadays are very alert with what they eat. They might be looking for more healthy foods and organics to maintain their health in good position and avoid from any severe disease. People would not buy chocolates as they know chocolates contains unhealthy ingredients for them. In consequently, the sales of the chocolates products would be decreasing.
- 25. 7.2 .2 Political environment Some chocolates producers’ from some area in the world cannot distribute their goods to industrialized countries due to controversial issues. One great issue that had been debated over years is the used of child for the labor work. Presently, some countries do not permit cocoa to be traded from African countries. This is because they believe these African countries had used children for the labor work which is very not a very good ethic manner. Some of the industrialized countries are threatening to reduce and eliminate purchases the goods from African countries. But the African countries said that they believe the used of child labor is similar concept as the American farmer`s children who are used on farms to help out their family. However, Western Governments believe this is not true at all. Consequently, the Chocolate Manufacturer Association (CMA) and World Cocoa Foundation (WCF) had created the Harkin-Engel Protocol, which is an agreement that addresses instances of abusive child labor practices on cocoa farms in West Africa and ways to remove the worst forms of child labor in the cocoa sector (U.S. Labor, 2006). The Harkin- Engel Protocol`s idea has formed results that will give positive effect on the cocoa and chocolate industries. One of the results is the formation of the International Cocoa Initiative foundation alliance with non-governmental organization (NGOs) to offer social protection programs in West Africa. This will allowed for the opening more new channels for the distribution of cocoa and chocolates to the international community who are currently restrict or prohibit buying cocoas from African countries. In recent years, government had been under pressure either to provide or not for tax breaks of some goods in order to favor low-income brackets. This has lead to many countries to agree an elimination of sales tax for foods item. Someday, many states will follow this trend since many consumers hope there would not be tax on all food in future.
- 26. Threats Recently, healthy eating habits had became the industrialized world target. Since the increasing of some chronic and severe disease such as diabetes, heart disease and cancer due to poor eating habits. This had given great impact to the cocoa and chocolate industry. Thus, the Food and Drug Administration (FDA) has made laws for the food manufacturer to post their health information and ingredient contents on their products packaging. These laws had made the consumer to be more aware with the unhealthy foods such as chocolates. These laws also had helped the consumer to make the right decision for choosing their foods products. Besides, FDA also wants food manufacturer to display new information about new ingredient contain in the products to the public. With these laws also, the manufacturer had be given two options. First, do not provide healthy alternative food and take a larger loss or introduced new healthy foods and take a lot of cost but have greater sales number of their products in future. Both are giving side effect to te manufacturer`s financial departments.
- 27. 7.2 .3 Technological environment Milks are really important for the chocolates and cocoa industries and they really relying heavily on it. in this era, technology had been used to create the modern milking machine to milk cows efficiently, more safely and more hygienic. The main purpose for introducing this technology is to reduce the cost production as well as reduces labor cost. Besides, less time could be spent compare to traditional methods. This mechanical improvement and innovations could actually reduce manufacturing costs for chocolates and cocoa industries. Packing and shipping costs can be deducted through technological advancements that will centre on less waste and more well-organized distribution and logistics channels. For example, some programs like Six Sigma, lean on manufactured, and 5s are continuously making improvements in these areas to boost their efficiency. In many industries, some of the implemented technologies and programs such as Radio Frequency Identification (FRI) had been introduced for a better track inventory and equipment. similar technological advancements could be introduced for the chocolate and cocoa industry to improve the efficiency of tracking and transfer operations. But it is also can cut down the labor costs in those areas. Innovations in the telecommunications had given an opportunity to the cocoa and chocolate industry. These advances helped these industries to expand its business and increase their customer outside of their developed regions. For example, the internet had made more individuals easily get access to chocolate product advertising and enable the consumer to gain more details about the products throughout the company`s website without visiting retail stores.
- 28. 7.2.4 Economic environment Cocoa beans are grown mainly in Far Eastern, West African and South American equatorial regions. However, the world largest cocoa-producing country, Ivory Coast has resulted in volatile prices. So, it would be great opportunity to produce cocoa in other countries. For instance, the Ministry of Agriculture in Jamaica has newly allocated million dollars to let the several production of Jamaican`s crop to expand its productions. (www.laborrights.org). Furthermore, most of the cocoa supply is provided from West African that have controversy issues regarding child labor. This is an opportunity to expand cocoa production since the new development will need more supplier options. Since the refined sugar prices is decreasing from year 2006 until now, this will cut the costs for the distribution of cocoa and chocolates industries. In turn, the savings will be going for research & developments (R& D), reward for the investors and product distributions. One problem for the cocoa and chocolates industries is the deposition of the waste which is requires a lot of money. Recent development has showed that bio-fuel production can give a lot of benefit to all industries. Bio-fuel is the bio-product that used corn to create fuel (it is actually ethanol that is used as fuel for the environmentalfriendly industries). Thus, will reduce the cost for the deposition of the waste products as well as can save our environment.
- 29. 8.0 Future planning In future, Hershey`s Kisses brand will continue with the distribution of its product lines. The company are planning to expand the brand will a new taste and varieties types of Hershey`s Kisses color wrappings. The company will continue to remain focused on building brand in both United States and all around the world to become no 1 chocolates manufacturer. They will make essential investments to ensure that they are positioned to grow their brands and manage the challenges that are going to come. They have planned merchandising and programming events throughout years and work closely with retail customers and watch their brand performance given the higher price points for seasonal candy. They also expect the advertising to boost low double digits in future and volume to be slightly up for the next year. Thus, results in the net sales growth which is about 5 % to 7 % which means including the impact of foreign currency exchange rates. Hershey`s Company had announced the next Century Program as a part of their ongoing efforts to create an advantaged supply chain and competitive cost for all of their products including Hershey`s Kisses brand products. Hershey`s Kisses hope more options contracts are available so that they can cut the risk of future price increases and future cost productions. Hershey`s Kisses brand will develop their products through research & development (R& D) to improve their products to be a better products in future. They also will try to develop new chocolate taste to make varieties types of chocolates so that people or customers will always choose them as no 1 chocolate manufacturer in the world.
- 30. 9.0 Conclusion Hershey`s is a good example of a successful company that managed to maintain its business for more than 100 years. This is really rare for a chocolate industry to achieve until this stage but Hershey`s shows that he can do it without having any heir. Hershey`s company shows that they are very innovative since there are more than 85 brands that had been produced to the markets. This company also has developed their products for more than 70 countries worldwide. Hershey`s Kisses is one of the most popular candies produced by the Hershey`s company. This candies were the 5th most popular chocolates in United States in 1989. Today more than 60 million kisses candies were produced every day. Their marketing strategies had made them reach a point where they already reach to stage two in economic scale( theory of production) but if they are not aware with their surrounding, they will fall and bankrupt. From what I see, Hershey`s had made some mistakes where they are involved in the long-term debt in 1998. However, they managed to overcome these problems by showing some achievements years by years. Overall, Hershey`s is in a good positioning in its markets and continue to make new improvements and get more achievements not only in local markets but also in international markets.
- 31. 10.0 awards Hershey Expands and Accelerates Responsible Cocoa Community Programs in West Africa Hershey Wins PR News CSR Award for Best Sustainability/CSR Report Environmental protection and Natural Resources of Mexico CSR Recognition in 2010 Wins “Socially Responsible Company “ from the Mexican Center for Philanthropy 7-eleven`s Retailer Initiative Awards 2009
- 33. 12.0 Appendixes List of figures a) Hershey`s Factory in America b) Some of the Hershey`s Kisses products c) Hershey`s Logo
- 34. d) Some of the Hershey`s Kisses Packaging e) Milton Hershey books “Chocolate King” E ) Hershey`s Kisses limited packaging
- 36. f) Award wined by Hershey`s.