Marketing Plan Paper on The Hershey Company in China

Marketing Plan

Contents

Executive Summary. 4

Introduction. 5

Background of Hershey’s Company Ltd. 5

Hershey’s in the 21st Century. 6

Market size. 7

Market lenders. 7

Market Concentration. 8

Distribution. 8

Industrial Growth. 9

SWOT Analysis. 9

Strengths. 10

Weaknesses. 10

Opportunities. 10

Threats. 11

Hershey’s Competitive Advantage. 11

Hershey’s 4P. 12

Products. 12

Price. 12

Promotion. 12

Place. 13

Conclusion. 13

References. 14

 

 

 

 

Executive Summary

This report entails a market plan for The Hershey Company in China. It is an American enterprise and one of the largest chocolate manufacturers worldwide. The report has been undertaken to establish whether or not Hershey’s penetration into China market is viable. A SWOT analysis combined with a study of China market segmentation has been involved in establishing common grounds on contemporary market conditions and the company’s capabilities in the country. As such, Hershey’s portrays to incorporate its enormous resources and capabilities on the opportunities presented by the Chinese population, and the growing and already established consumers to create further gains in the nation. Also, the company has incorporated customization of its products to suit its target market needs, hence, showing a future full of considerable growth in its presence in the Chinese market.

 

 

Introduction

A market plan is a business document highlighting marketing strategy and tactics. It is focused on the specific period and details marketing related costs, objectives, actions, as well as activities to be incorporated during the period (Ann, & Terry, n.d.).  Therefore, unlike the static business plan, a marketing plan evolve with the changing business markets trends and developments. It is, hence, a road a map providing a business with directions and activities to be included towards achieving a business’s objectives and needs to be frequently assessed for results and efficacies. On the other hand SWOT analysis is an analysis tool that marketers use to assess a company’s strength, weaknesses, opportunities, as well as a threat. Strengths entail a firm advantage and core competence that enhances the company abilities to meet its market expectations. Weaknesses entail the limitations a company experiences while implementing its desired market. Opportunities are those characteristics of a market that presents potential benefits to a firm, whereas threats entail conditions that may limit a company’s ability to execute its intended operations.  As such, a company often execute a firm SWOT analysis to comprehend the potential effectiveness or limitations of its proposed market plan. A firm often plays to concentrate on its strengths, safeguard against and improve on its weaknesses, capitalize on identified opportunities and establish means f mitigating or avoiding threats (Ann, & Terry, n.d.). Therefore, this document seeks to formulate Hershey’s Company Ltd in China marketing, referencing the strategy from its various SWOT analysis.

Background of Hershey’s Company Ltd

The organization was established by Milton Hershey in 1894 as a supplementary of the Lancaster Caramel Company which was his initial business startup. The company is now accessible across the US due to its notable and well equipped distribution channels located in different areas in America. The company’s products are sold in 60 countries across the world. Additionally, the company is a member of the world Cocoa Foundation which focuses on empowering cocoa producers, a veteran associate of the Hershey Park stadium and the renowned Giant Centre. In the contemporary days, the company has continued to customize and diversify its product and services t meets various markets needs including that of China.

Hershey’s in the 21st Century

Unrefuted globalization and various challenges accompanying globalization affected the company. On 10th June 2006, the company was obliged to discontinue advertising “icebreakers pacs” by Philadelphia city council due to its packaging resemblance with that used in illegal street drugs. In September of the same year, ABC news reported several of Hershey’s Chocolate products to have an agenda of replacing Cocoa butter with vegetable oils as emulsifiers. However, according to the company’s management, the change was deemed necessary to reduce the cost of production while still reducing the prices of its products without decreasing their sizes (Zacks, 2018).

Despite the challenges faced by the company, it has continued to grow it looks to expand its subsidiaries into China to expand its profitability and its predicted employment capacity.  Though most of the business activities are concentrated in the USA, Hershey’s company has a global reputation in over 60 countries confessing to its exceptional business operations (EstherÕs family, 2018). The China market with its particularly high population and expanding consumption of chocolate products present significant investment opportunities.

The company employs over 300,000 individuals worldwide. Approximately, 67 percent of their employees originate from the US, 9.5 percent from Asia and the rest from other parts of the world including cocoa growing countries like Ghana. Based on the above data, Hershey’s is one of the largest employers in the world, employing technical and field personnel worldwide. However, the company’s consumers and competitors range from some small companies in Asia, retailers and local as well as homemade chocolate producers.

Market size

Globally, the consumers of chocolate and chocolate products have a value of over 300, 678.56 million and are forecasted to reach 301,230 million by the end of 2019. The consumer of chocolate and its products in China remains a strong area due to growing Chinese population. As such, the country provides considerably cheap labor and hence exceptionally cheap operational cost. With the continued increase in globalization and the country’s population, the target market is expected to show continued growth at an approximate rate of 7.8 percent amid 2015-2020 financial years.

Market leaders

In China, chocolate is seen as an exotic food product; it has taken decades for Chinese people to accept chocolate. However, due to cultural modernization, the Chinese peoples have incorporated chocolate into their culture (Rosecky, Smith, & Ying, 2003). According to the data from Association of Chinese Chocolate Manufacturer, Chinese consumers 70 grams of chocolate per capita every year. This data is dwarfed by 2 kilos that of Japan and Korea, needless to say, 7 kilos of one European. However, multiplied by 1.3 billion the size of the market which is 3.5 billion is a huge potential as well. That likewise clarifies why the Chinese market witnessed a 40% yearly development in 2008 when the worldwide development is just 10%, and report from Bain gauges that the yearly development will remain around 11% in the following five years and it looks very negative contrasted and that of 30% from AC Nielsen report. Regardless of which one works out as expected, the gigantic capability of the market has been perceived by everyone (Rosecky, Smith, & Ying, 2003). The immense populace implies a major potential to drive the chocolate business up when chocolate utilization per capita achieves 1 kilo.

So far, the top 20 chocolate providers in the market include the Shanghai supermarket which provides over 70 brands of chocolate, of which 90 percent are foreign brands. Consequently, various market studies show that foreign chocolate is more popular than local brands in the Chinese market, hence, providing the international company with high opportunities for growth. Specifically, 32.1 percent of Chinese population prefer foreign chocolate brands while 22.2 percent prefer local brands, with 12 percent not telling the difference between local and foreign brands. Local companies have not improved the imported product, and as a result, 90 percent of Chinese chocolate market is occupied by foreign brands including the Dove, Ferrero, Cadbury, and Leconte which have over 70% of the market share. Only Leconte is a local brand among the three foreign brands, and only Dove has taken one-third of the market share (Rosecky, Smith, & Ying, 2003).

Market Concentration

The Chinese market has many foreign and local competitors ranging from small and large dependent and independent companies. As such, the market concentration spread widely among the bigger and well-equipped chocolate providers in the market. Brands such as UHA, Meiji, and Lindt & Sprüngli take the medium-to-high class chocolate market, and the rest of the market is taken by local companies.

Distribution

The distribution system is well outlined by the manufacturers, wholesalers, retailers, and to the consumers.  However, the distribution bypass wholesalers to include retailers and consumers. As a result, a large number of international and indigenous companies compete for the available distribution channels, with UHA leading in the Chocolate distribution services.

Industrial Growth

China is the highest populated country in the world, showing an average growth rate of about 2.32 percent per annum over the last few years. As the county’s population continues to grow, so does its economy, with a GDP of approximately 6.06 trillion dollars in amid 2014 and 2018 financial years. The country has shown an annual growth rate of approximately 9 percent within 2014 and 2018 financial years. As such, the country presents bright and successful economic opportunities for consumer products including Hershey’s products, capitalized on the needs of the burgeoning economic middle and high-class consumers.

SWOT Analysis

China is a key geological area that furnishes Hershey with simple access to more than 25 countries over Asia. Also, it provides solid framework of networks that provides capable and well educated workforce. Furthermore, the nation has a huge cocoa processing capacity with various localities to act as distribution areas. Moreover, entrance into China will at first make three of the organization’s worldwide brands: Hershey’s Kisses, Reese’s Peanut Butter Cups, and Hershey’s Milk Chocolate bars well known. Hershey’s Kisses and Hershey’s Milk Chocolate bars are presently top-offering sugary treat items in Asia. Reese’s is much more up to date to the area however is developing as purchasers find this new flavor blend. The market will have a basic influence in taking care of the developing demand for our items crosswise over Asia. Hershey’s representatives are the core of organization and Hershey put intensely in preparing, ceaseless learning, and group advancement. Hershey likewise focuses on work-life adjust, and also, corporate social duty projects and offering back to the group as a major aspect of corporate esteems, new representatives in China would profit by uncommon projects and the open doors displayed to develop their vocations with a famous American organization (Nogueira, L. & Nogueira, T, 2015).

Strengths

Hershey produces differentiated items like gum and chocolate. Hershey set new guidelines of chocolate with its extensive variety of chocolate items. The organization likewise holds solid brand name because of its biggest creation of pasta in the USA. With its prestigious chocolate, Hershey also creates an assortment of items. Hershey advances research and instruction by encouraging instructors and understudies with their devoted sans toll number. To propel its representatives, Hershey delegate different offices to workers that incorporate road stops restaurants, schools, and lodging office. Hershey is $ 4 billion Company with a notable quality business reputation throughout the world with 30.7 percent overall industry coverage in USA showcase. Representatives of organization take after a strict set of principles laid by the author of the organization that incorporates ideals like uprightness, genuineness, regard, and quality.

Shortcomings

The weaknesses claimed by the organization include many different organizations working in the market. Because of the notable high profile work needed to continue being in business, the organization needs to employ more specialists. The tremendous increment in publicizing cost that surpasses up to 46% in the business of chocolate confectionary worldwide offered by the organization are most minimal at 10%  which disadvantage the entity. The expanding cost of Cocoa beans involves worry for the organization as an expansion in the cost of the item can diminish sales due to additional costs implied by the manufacturer endeavoring to cover the buying cost.

Opportunities

With more variety in items and taste, the market of Hershey can be improved around the world. Dark chocolate by Hershey offers different focal points from a wellbeing perspective. The successful correspondence of organization among providers and clients. With generation of cocoa in territories like China can lessen the cost of cocoa. The more prominent unwaveringness clients guarantees significant wellbeing of the organization while operating in china. Different undiscovered nations like China, Malaysia, Vietnam, India, Indonesia, and Thailand can offer better open doors for the organization. By creating condition amicable items Hershey can set up its grounds in the group. Hershey can investigate different portions of sweet industry by assembling assortment of non-chocolate items (Niu, Mu, and Chen, 2016).

Threats

Hershey needs to confront intense rivalry from rivals like Mars, Nestle, and Cadbury. The declining wellbeing states of individuals in the USA particularly with rising diabetes in individuals, the interest for Hershey items diminishes. The fluctuating cost of cocoa in various zones impact the creation of chocolate items. With creating innovation the cost of assembling innovation increases the general operation costs significantly, hence, creating a need to employ representatives in different parts of the country in order to establish client’s preferences (Bailey, 2015). Diminishing regular assets, for example, the high cost of sugar drains Hershey needs to manage solid rivalry from its opponents like Mars. Mars is built up in different areas overall, for example, Asia, Europe, Japan, and Mexico. The feedback from different sections of society with respect to need strategies for purchases of cocoa.

Hershey’s Competitive Advantage

Hershey’s main three rivals in the desserts business are Mars, Nestle, and Mondelez. Additionally, Hershey needs to explore neighborhood rivals in various nations and tailor their promoting technique (Bailey, 2015). For instance, Hershey is known for being quality chocolate provider at a lower cost than most different chocolates, and customers react to that positively. In any case, in a nation known for craftsman chocolates, buyers may not be willing to forfeit quality at a lower cost. The sugary treats industry can be taken a gander at all in all, however it likewise can be separated into more particular classes. A few cases are the chocolate, non-chocolate, gum, and breath freshener mint markets, all of which Hershey is engaged with. Hershey’s fundamental spotlight is on the chocolate advertise, however it has items that fall into the non-chocolate, gum and refreshments classifications.

Hershey’s 4P

Products

Hershey items sold as bar merchandise, stowed things and boxed things; staple items through heating fixings, chocolate drink blends, nutty spread, dessert garnishes, and refreshments. Hershey is putting forth in its item on assortment, quality, outline, mark name, and size. Hershey item center around nourishment esteem

Cost.

Hershey’s value all at a lower cost than most different chocolates and customers react to that and have quality. Hershey’s evaluating technique is keeping up the value level at a reliably climbed rate and focusing on for the most part outsiders and high society Indians. The cost cut off, or no expansion in costs yet items weight would be lessened.

Promotions

Hershey illustration advancements like, Wrapper Cash Codes that show up on exceptionally stamped wrappers from Hershey’ famous serve pieces of candy and treats, National radio promotion. The company advances its image name by contributing in different sections of industry like business portion, resorts, stimulation and other market zones.

Place

Hershey’s place are most focus on the place they are more customer and easy to reach them so the customer easy to reach

Conclusion

The introduction of Hershey’s products into the Chines market is a viable proposal due to the insignificant competition and the notable high Chinese population. The company is equipped to concur the market due to little competition exhibited by the local companies occupying the market. Through focusing on its strengths, including the economies of scales, the company has immeasurable economic endeavors while operating in China.

 

 

References

Ann Hamilton, & Terry Hershey. (n.d.). Hershey, Terry. Retrieved from https://www.thehersheycompany.com/en_us/this-is-hershey/milton-hershey.html

Bailey, C. (June 19, 2015). What price Hershey’s then?. Financial Orbit, 2015-6. Retrieved from https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=331542251

EstherÕs family: the Hershey’s of Lancaster County. (2018). Retrieved from https://lancasteronline.com/opinion/the_scribbler/politics-drove-milton-hershey-from-lancaster-county-unpublished-manuscript-explains/article_89bd3808-f31f-11e6-b990-075e0e950ec3.html

Gallo, P. J., Antolin-Lopez, R., & Montiel, I. (February 01, 2018). Associative Sustainable Business Models: Cases in the bean-to-bar chocolate industry. Journal of Cleaner Production, 174, 5, 905-916. Retrieved from https://www.researchgate.net/profile/Ivan_Montiel/publication/320865092_Associative_Sustainable_Business_Models_Cases_in_The_Bean-to-Bar_Chocolate_Industry/links/59ff5cc10f7e9b9968c6525e/Associative-Sustainable-Business-Models-Cases-in-The-Bean-to-Bar-Chocolate-Industry.pdf

Hershey Company (THE). (September 06, 2008). Mergent’s Dividend Achievers, 5, 3, 135. Retrieved from https://www.amazon.com/Mergents-Dividend-Achievers-Editors-Mergent/dp/1564290484

Mukhtaruddin, M. J. (January 01, 2016). Malaysia???US Bilateral Relations in the Aftermath of the 2008 Global Financial Crisis. Retrieved from https://www.researchgate.net/publication/306499466_Malaysia-US_Bilateral_Relations_in_the_Aftermath_of_the_2008_Global_Financial_Crisis

Niu, B., Mu, Z., & Chen, K. (March 30, 2018). Quality spillover, tariff, and multinational firms’ local sourcing strategies. International Transactions in Operational Research, 1.). Retrieved from https://onlinelibrary.wiley.com/doi/abs/10.1111/itor.12537

Nogueira, L. A., & Nogueira, T. F. (January 01, 2015). The Ethical Dimension of Innovation. Retrieved from https://pdfs.semanticscholar.org/0c34/0270f58122c637df76a307655e1fd14ea787.pdf

Rosecky, R. B., Smith, L. W., & Ying, Z. (January 01, 2003). An Empirical Comparison of Consumer Package Labels of Chinese and World Brand Products Sold in China. Journal of Global Marketing, 16, 4, 7-33. Retrieved from http://ro.ecu.edu.au/cgi/viewcontent.cgi?article=7241&context=ecuworks

Zacks, I. R. (March 13, 2017). Hershey’s (HSY) Cost-Saving Initiatives Look Promising. Zacks Investment Research, 2017-3. Retrieved from https://www.zacks.com/stock/news/252544/hersheys-hsy-costsaving-initiatives-look-promising

Zacks, I. R. (December 19, 2017). Hershey to Buy SkinnyPop Owner Amplify for $1.6 Billion. Zacks Investment Research, 2017-12. Retrieved from https://www.zacks.com/stock/news/286363/hershey-to-buy-skinnypop-owner-amplify-for-16-billion