Model analysis on hershey's case study

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Model analysis on hershey's case study

  1. 1. London School of Commerce Westminster International College MBA FOR EXECUTIVES Marketing Management Assignment 1 Model Analysis on Hershey’s Case Study Lecturer: Dr. Lester Massingham Tutor: Dr. Eugene Lim Name: Student ID:Sara Yeap Th’eng Th’eng 0008VMVM0112 Date of Submission: 14 April 2012 Total Word Count: 4,023
  2. 2. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________Table of Contents1.0 INTRODUCTION ...............................................................................................4 1.1 Company Background ......................................................................................4 1.2 Company Mission Statement ............................................................................6 1.3 Hershey’s Product Lists ....................................................................................6 1.4 Market Segmentation ........................................................................................8 1.5 Purpose of study..............................................................................................102.0 INDUSTRY ANALYSIS IN MALAYSIA .......................................................11 2.1 Competitors’ Analysis ....................................................................................123.0 JUSTIFICATION ON MODEL USED .............................................................18 3.1 Overview of Ansoff Matrix ............................................................................18 3.2 Advantage of Ansoff Model ...........................................................................21 3.3 Limitations of Ansoff Model ..........................................................................214.0 EVALUATION, DISCCUSSION & RECOMMENDATIONS .......................22 4.1 Evaluation .......................................................................................................22 4.2 Discussions .....................................................................................................25 4.3 Recommendations ...........................................................................................26 4.3.1 Market Penetration....................................................................................27 4.3.2 Product Development ...............................................................................29 4.3.3 Market Development ................................................................................30 4.3.4 Diversification ..........................................................................................30_____________________________________________________________________________________________Page 2 of 42
  3. 3. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________5.0 CONCLUSION ..................................................................................................316.0 REFERENCES...................................................................................................337.0 APPENDIX ........................................................................................................37 Appendix A – Price, Location & Variety Observation Results............................37 Appendix B – Quantitative Survey Results ..........................................................40_____________________________________________________________________________________________Page 3 of 42
  4. 4. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________1.0 INTRODUCTION____________________________________________________________________________________1.1 Company BackgroundHershey’s - the American’s favorite chocolate, which was previously known as Hershey FoodsCorporation had been established more than a century in the United States. The name “Hershey”was bear from the founder, Milton S. Hershey ever since 1894 (Wikipedia, 2012). This brandwas known as one of the largest chocolates manufacturer in the North America with having morethan 12,000 employees across the globe (thehersheycompany.com, 2009). It owned severalrenowned brands and few of the popular ones are Hershey’s Bar, Hershey’s kisses, Reese’s oreven Kit Kat, just to mention a few. More notable brands can be seen at below figure.Figure 1, Major Brands and Product Line (Source: Case Study of the Hershey’s Company, 2008)_____________________________________________________________________________________________Page 4 of 42
  5. 5. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________With all these brands, they managed to gain profits and popularity by plotting at least $5 billiondollars worth of company’s net revenues with net income of $510 million dollars in 2010 justfrom the North America. Not to be surprised, Hershey’s actually dominated the Chocolate andSugar Confectionery market share in US, topping the chart at 52.8% while Kraft placed thesecond, dominating at 48.6% (Warc, 2011). Albeit Hershey’s has global reach, but more than90% of its revenues came directly from the United States (Zack Investment Research, 2011)These awesome Hershey’s chocolatesbrands could be found in over 50countries with 60 different brands. Notonly gaining earnings by its infamouschocolates brands, they too diverted intodifferent market segments such as food &beverages, baking ingredients, toppingsand etcetera. (Hershey’s FoodCorporation, 2009). Figure 2, Hershey’s Products (Source:http://www.CandyBasket.com)Before Cadbury was acquired by Kraft Foods Inc on January, 2010, Hershey’s had established alicense agreement with Nestle and Cadbury to market several of its own products. Unfortunately,Hershey’s plans were disrupted when Kraft Foods Inc came into picture with a much higher offerover acquisition of Cadbury than Hershey’s (Source). The merger of Cadbury and Kraft Foodshad hurt Hershey’s International Growth prospect as Hershey’s was hoping to expand its brands_____________________________________________________________________________________________Page 5 of 42
  6. 6. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________through Cadbury’s well marketed solutions worldwide beyond their current marketplace (ZachInvestment Research, 2011).1.2 Company Mission StatementHershey’s has been always striving hard to be number one leader in the American ConfectioneryMarket by living closely to its mission statement which resonance “Undisputed MarketplaceLeadership” (www.hersheys.com). They strike hard to live with it by turning the consumers’dreams to reality. (www.thehersheys.com)1.3 Hershey’s Product Lists Milk Chocolate Bar Milk Chocolate and Almonds Bar Special Dark Midly Sweet Chocolate Bar Cookies ‘N’ Crème Bar_____________________________________________________________________________________________Page 6 of 42
  7. 7. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________ Air Delight Chocolate Bar Drops Nuggets Miniatures Mr. Goodbar Candy Bar Symphony Milk Chocolates Bar Extra Dark Chocolate Sugar Free Chocolate Candy Syrup Baking Pieces_____________________________________________________________________________________________Page 7 of 42
  8. 8. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________ Cocoa Dessert Toppings Baking Chocolates Milk & Milk Shakes Table 1, Hershey’s Full Range Product List1.4 Market SegmentationRecognizing market segmentation in a business is vital as it brings us closer to the potentialcustomer’s needs as the market has become more diverse and it is rare to gain profits from amass market. On top of that, it can be used to identify the growth opportunities too (Nelson C,2002). Different people have their own different preferences and likings and this is where weshould be focused in marketing our products. To segment a vast market, marketers need todecide in which areas they need to target. It can be in few categories such as gender, price,interests, location, religion, income, size of household and more (Wikipedia, 2012)._____________________________________________________________________________________________Page 8 of 42
  9. 9. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________ Figure 3, Example of Income Segmented GroupHershey’s had made a smarter move ahead of all its competitors especially Mars in the UnitedStates by targeting on adults instead of children by producing a new product; the Kisses. Thismove has been proven significant as it has separated itself from its competitors and translatedthem into relevant increased profits and market share (MeanGreen, 2008). Nevertheless, thisstrategy did not last long as the market trend started to change as due to high sugar content inMilk Chocolates production, also with the health conscious market, Hershey’s revenue nearlywent flat in 2007 (Dorfman B., 2008).To gain recovery from the losses, Hershey’s is currently focusing on producing more newproducts to venture into Premium Chocolates and Dark Chocolates market. Latest product fromthem is Bliss, which is safe guarding them on the Premium segment. They are putting faith onBliss to recapture the market share by incorporating with Starbucks Corp. “It’s key for their_____________________________________________________________________________________________Page 9 of 42
  10. 10. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________future in that much of the growth in the chocolate category now is in premium and Hersheyreally lacks a presence in that category,” said Morningstar Inc. analyst Mitchell Corwin”(Dorfman B., 2008).1.5 Purpose of studyHershey’s had been doing relatively well ever since the introduction of Premium Chocolates inthe United States but it does not seen happening in Malaysia too. Malaysia is ranked at 24th thelargest cocoa exporter in the world (Lascas J, 2011) and there are simply more than 20 brands ofchocolates could be easily found in the stores, be it imported or local chocolates brands.The main objective of this study was to study on the market share that Hershey’s belongs to inMalaysia via two different approaches; observation and quantitative surveys. From there, theauthor would able to underline on what Hershey’s is lacking and preventing them to grow inMalaysia. The second objective was to discuss a certain marketing model’s functionality,advantages and limitations to determine the suitability of the model used for Hershey’smarketing plan. Whereas providing solutions and recommendations with the help of themarketing mix falls on the last objective._____________________________________________________________________________________________Page 10 of 42
  11. 11. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________2.0 INDUSTRY ANALYSIS IN MALAYSIA_____________________________________________________________________________________The confectionery industry is huge! It is flooded with hundreds or perhaps thousands overdifferent brands in the world, we are talking just on chocolates brands if you are wondering.Since the scope is too wide, we are going to narrow down to only analyze the potentialchocolates and cocoa industry in Malaysia.As Malaysia is ranked 24th, one of the largest cocoa exporter in the world, it is no doubt thatMalaysia is a potential market for Hershey’s to penetrate (Lascas J, 2011). Yet on the other hand,the revenues they gained in few the Asian regions such as Malaysia, Thailand, Singapore andPakistan are lower compared to other region. This is due to sugar, cocoa and peanut areperceived as few of the most profitable products in the market, which result to obtaining half ofthe market revenues. (Del Mundo, Jose Carl, 2011).To obtain the most updated information in the current market, the author decided to do somemarket research in a couple of the well known hypermarkets and convenience stores in Malaysia.The selected hypermarkets and convenience stores are mostly based in Klang Valley wherebythe densities of shoppers are higher than other areas (Wikipedia, 2012). There are altogether 3Hypermarkets and 2 Convenience Stores were being observed. They are the infamous JayaJusco, Carrefour and Cold Storage as the Hypermarkets; MyNews.com and 7-Eleven as theConvenience Store._____________________________________________________________________________________________Page 11 of 42
  12. 12. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________Certain traits are observed as they play the vital role in identifying the market share Hershey’shas in Malaysia. Among of them are the packaging, location, variety, types of chocolatesproduced (white, dark or milk chocolate) and the ultimate one, the price. As Hershey’s relativelynew in Malaysia’s market, few of a more infamous and general brands were analyzed as thedirect competitors to Hershey’s. A few tables were drawn up to sum up the findings which theauthor found prevalent factors which affect the market share of it, which can be referred from theappendix section.2.1 Competitors’ AnalysisThe reasons of why Hypermarket and Convenience Store are chosen to conduct research insteadof dedicated chocolates stores located in shopping malls such as Candylicious or The Cocoa Treeare the convenience and easy accessibility. Chocolates specialty stores are normally perceived asexpensive as most chocolates displayed on the shelf are the imported ones, hence lowering theinterests of buyers as price is also one of their main concerns that could be seen in Figure 12._____________________________________________________________________________________________Page 12 of 42
  13. 13. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________ Figure 4, No Crowds in The Cocoa Trees Chocolate Store on a Public Holiday in Sunway Pyramid (Source: Author)While conducting observations in the mentioned stores, these few brands are found ratherintriguing and attractive compared to Hershey’s in which they are:-  Cadbury by Kraft Foods Inc.  Lindt from Switzerland  Ferrero Rocher_____________________________________________________________________________________________Page 13 of 42
  14. 14. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________Based on depicted tables in the Appendix A, a market positioning analysis tool would bedeployed to determine the market position Hershey’s stand in Malaysia. This DNA footprintconsists of 8 criterions to be measured among the competitors and they are nonetheless the:-  Price  Location  Varieties  Packaging  Promotion  Public Awareness  Taste  Brand Luxury (Premium)This tool will be using the scale of 1 to 10, with 1 signifies the lowest score or rather the area ofthe product is lacking while 10 signifies the highest score. After plotting each of the competitors’strengths and weaknesses on the scale, it will be then linked together thus a DNA alike figurewould be seen. The bigger is the DNA footprint is plotted in the figure, the larger market share inMalaysia they possessed._____________________________________________________________________________________________Page 14 of 42
  15. 15. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________ Figure 5 DNA Footprint Marketing Position ToolAs seen in the figure, Hershey’s DNA pattern is somewhat Legends:-small in comparable with its competitors. There are a few Cadburynoticeable areas in which Hershey’s could be improved Lindtfrom the analysis above. They are the nonetheless; Ferrero RocherLocation which means distribution channel, Promotion and Hershey’sVarieties in terms of adding more attributes into existingproducts._____________________________________________________________________________________________Page 15 of 42
  16. 16. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________Location:While Ferrero Rocher is deemed as one of the premium/luxury chocolates, it plays a good role inbeing made available in everywhere such as all kinds of convenience stores (small, medium orlarge sized) in different packaging and sizes. Hershey’s has a lot of catching up to do with theirdistribution channel as it is seen rather low compared to Ferrero Rocher but slightly better thanLindt, the Switzerland chocolates.The reason why Cadbury is seen practically everywhere in Klang Valley and they are able todiversify their products even on beverages market because they practiced localization marketingstrategy in Malaysia. They have a factory (Cadbury Confectionery Malaysia Sdn. Bhd.) in ShahAlam, Selangor and cost on production and exporting are greatly reduced, thus it also explainsclearly on why their price could be much lower to compare with the rest.Promotion:It refers to an incentive used by a manufacturer to induce the trade and/or consumers to buy abrand and to encourage the sales force to aggressively sell it (Terence A. Shimp, 2000).Hershey’s in this sense is lacking on a lot of sales promotions in comparable to others. There wasbarely any advertisement broadcasted on the media, not even on newspaper to enlighten thepublic with their newer products such as Nuggets. Hershey’s was rather quiet in Malaysia tocompare with US. Every month they will have special consumer promotion with slashed downprice of chocolates to promote their products (www.hersheys.com). Cadbury on the other handoffen includes their latest product with their existing product to have “buy 1 get 1 free concept”._____________________________________________________________________________________________Page 16 of 42
  17. 17. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________VarietiesHaving a wide range of the same products mean adding more value to the brand; however it isnot guaranteed profitable. At times, offering greater product variety is usually associated withhigher cost (Draganka and Jain, 2005; Lancaster, 1979). Unlike Cadbury, Lindt and FerreroRocher, Hershey’s offered a very limited range of products in Malaysia. Given the impressionthe product management is rather inactive and boring to the public._____________________________________________________________________________________________Page 17 of 42
  18. 18. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________3.0 JUSTIFICATION ON MODEL USED____________________________________________________________________________After a thorough analysis performed on Hershey’s market share in Malaysia, Ansoff Matrix waschosen to redefine the Business Strategy in which Hershey’s should be adopted to increase theirrevenues and presence in Malaysia. Ansoff Matrix was chosen over the infamous BCG modelbecause BCG focuses on SBU (Strategy Business Units) more. At this point of time, Hershey’shad been doing fairly well with its existing products in the United States but not every productavailable in the US, available in Malaysia too. Hence, analysis of SBUs of Hershey’s is notappropriate in this study as the few products that brought into Malaysia were the ones which topthe revenues for Hersheys; the Kisses.3.1 Overview of Ansoff Matrix ANSOFF’S GROWTH MATRIX(Figure 6, Source: Usha CV Haley, Strategic Management in the Asia Pacific, Pg. 249)_____________________________________________________________________________________________Page 18 of 42
  19. 19. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________The Ansoff Matrix was introduced by H. Igor Ansoff in 1957 in one of the Harvard BusinessReviews conference. It consists of four main areas built around a two by two matrix, which couldassist business men to decide in which strategies from the four growth quadrants, could provideopportunity for their product or business to grow (Simister P, 2011).This matrix takes four potential strategies to grow a business by leveraging new or existingproducts via new or existing market (paramouthlearning, 2010). Risks would be increased eachtime as we move into a new quadrant be it horizontally or vertically (Manktelow J, 2006). Thefour directive strategies are named as follows (Ansoff 1957): 1. Market Penetration  It is the safest guard to grow a business as it does not involve many resources. This strategy mainly focuses on increasing the market share by recapturing existing or new customers with having intense marketing promotions to straighten the customer value (Simister P, 2011).  Able to dominate the market by either price reduction strategy or mass promotions to retain existing customers, competitors’ customers or new customers 2. Product Development  It lines the second least risky strategy whereby existing product would be replaced with something greater, be it new packaging or develop similar product with more variety to choose from. The new products are normally sold to the customers through existing distribution channels (Simister P, 2011)._____________________________________________________________________________________________Page 19 of 42
  20. 20. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________  This strategy involves product innovation, product augmentation and product line extension to satisfy buyer’s need 3. Market Development  This strategy gives open up the growth opportunity in new areas or new market with the same products to different people. For instance, instead of targeting on the same geographical of people, we could move further in selling our products to oversea, etc (MindTools.com, 2012). 4. Diversification  This strategy stands the most risky decision to put into practice as diversification involves throwing in more resources in putting up new products to the untapped market (new customers) (MindTools.com, 2012). The new product can be either related products in an existing market or with totally unrelated products that unconnected with the existing products and markets (Tutor2u, 2010; Haberfellner, 2009).  There are several diversification strategies which are broken down to: o Horizontal Diversification o Vertical Diversification o Concentric Diversification (Source: The National Agency for Innovation and Research in Luxembour, 2008)_____________________________________________________________________________________________Page 20 of 42
  21. 21. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________3.2 Advantage of Ansoff ModelOne of the most said advantages of the Ansoff Model is the flexibility of defining severalstrategies simultaneously (Wood J.C & Wood M.C, 2007 pg.54). It provides simplicity with thedirect 2 by 2 dimensions overview which allowed managers or marketers to start planning theircurrent or future market and product development with Ansoff Model (Bachmeir K, 2008).Furthermore, it helps us to identify the full range of choices for expansion in a more customer ormarket centric way (socialenterpriseworks.org, 2009). Ansoff matrix is the only model which isable to provide an insight on diversification strategy especially on the ability of changing brands,be it acquisition or merger with another competitor.3.3 Limitations of Ansoff ModelOften said simplicity is only good at giving a head start or a pinch of salt of how the wholepicture looks like. Nevertheless simplicity does not tell us the full details on how to achieve theplanned strategies. It is only measured by two aspects: product and market. It does not takecompany’s resource, risk associated with each choice, the extent to which each choice leveragesa company’s core competences into account (Bachmeir K, 2008; Pearson A, 2010). Generally,Ansoff Model would be best used in conjunction with other notable models such as PorterMatrix, Gap Analysis, SWOT analaysis, and BCG etc and not isolated, to help think through thechoices (Pearson A, 2010). Recommendations made on the based on the model are not concreteand lack in depth which disabled us from viewing the whole picture (Papers4You.com, 2009)._____________________________________________________________________________________________Page 21 of 42
  22. 22. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________4.0 EVALUATION, DISCCUSSION & RECOMMENDATIONS______________________________________________________________________________4.1 EvaluationThere were 10 simple questions put up on the Internet and approximately 100 respondentsanswered to it. Their opinions and suggestions are essential for this study as the strategiesproposed are mostly evolved to their responds in this survey. However, not every question wouldbe analyzed and put into the deliberation of the strategies. Detailed questions and results could beobtained from Appendix B.Figure 7, Demographic – Gender Figure 8, Demographic – Age Group_____________________________________________________________________________________________Page 22 of 42
  23. 23. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________ Figure 9, Chocolates Consumption Figure 10, Brands Preferred Figure 11, Ultimate factors of chosen choice_____________________________________________________________________________________________Page 23 of 42
  24. 24. Model Analysis on Hershey’s Case Study April, 2012 _________________________________________________________________________________________________________ Figure 12, Chocolates Benefits Awareness Figure 13, Concern Chocolates ConsumptionFigure 14, Reason of chocolates consumption Figure 15, Factors influence in buying decision _____________________________________________________________________________________________Page 24 of 42
  25. 25. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________4.2 DiscussionsAlarming, Malaysia is the world’s 8th most sugar consumption thus crowning the diabetic chartsin the world whereby every 7 out of 10 Malaysia adults suffer from chronic diseases (ConsumerAssociation in Penang, 2011). This is really concerning as Datuk Tan Lian Hoe confessed that“Increased number of obesity and diabetes among youths who are the future leaders of thecountry” is her greatest worries in launching the Dutch Lady Malaysia’s “Reduce Sugar”campaign (malaysiandigest.com, 2011).As seen in Figure 11 & 12, the public fears to consume chocolates because of diet (health) issue.A chocolate in contrast, does not play a role in contributing weight and diabetic. In fact, theybring health benefits instead. Reuter (2012) stated that “People who ate chocolate a few times aweek or more weighed less than those who rarely indulged”. Malaysian Cocoa Board wrote anarticle on Cocoa and came out with 6 facts (1998): i. Chocolate does not cause acne ii. Eating chocolate does not make you fat iii. Diabetic people can consume chocolate iv. Chocolate does not cause dental caries v. Chocolate does not cause heart disease vi. Chocolate is an aphrodisiac (intend to improve one’s mood) (Wong SY & Lua PL)Research showed that there were several issues to be addressed: 1. Brand image of Hershey’s is not convincing enough in the face of competition. Consumers were not impressed by the lack of promotion and product variety_____________________________________________________________________________________________Page 25 of 42
  26. 26. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________ 2. One of the core products of “Hershey’s Kisses” received over 80% of revenues in US but received only a small proportion of advertising and promotions pricing. 3. Less than 1/3 of Hershey’s products are available in the stores and they need to be repositioned. 4. Diet is the main concern among the chocolates lovers and sadly, majority of them are not aware of the benefits it could bring to them. 5. Many of them consume chocolates as snacks whereas some purchase it for gift purposes 6. Sales/Consumer promotions played at utmost factor in buying decision and Hershey’s is nowhere seen near there. 7. Many of us have misconception on Chocolates would deteriorate our health but in fact, it improves on cardiovascular system4.3 RecommendationsUpon recognizing the problems, solutions and strategies are to be developed via Ansoff Model.There are two quadrants to be used from the model with the help of 7Ps marketing mix as AnsoffModel alone will not be able to provide end-to-end solutions. Market Existing New Product Market Penetration Market Development Existing  Bring in existing  Join forces with Coffee products from US to Bean/Starbucks to Malaysia by include Hershey’s syrup collaborating with a third or baking products for party manufacturer their confectionery  Organize a competition products for Kisses’ straps_____________________________________________________________________________________________Page 26 of 42
  27. 27. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________ collection and win a trip to Hershey’s World of Chocolate to increase brand image and market share  Compose branding song and slogan to boost company’s brand  Continue to produce small packaging for up- to-date market trend New Product Development Diversification New  New Market Segment on  Venture into mobile Health/Weight Conscious games in Apple and group Android platform  Products could be in nutrition bars form with higher cocoa content (dark chocolate)  Educate the public on health benefits reap from Dark Chocolates Table 2, Ansoff Matrix Analysis on Hershey’s4.3.1 Market Penetration a) Place  To ease the cost of exporting or building a factory here, Hershey’s could collaborate with a third party manufacturer to manufacture its chocolates. Of course the Quality Control of the products is to be monitored by Hershey’s.  When production cost is low, more existing products sold in US could be produced and sell in Malaysia’s market to increase their revenues and presence by_____________________________________________________________________________________________Page 27 of 42
  28. 28. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________ having them on the stores’ racks rather than specialty stores such as KLIA and Langkawi Duty Free Zone (Both are well known for imported goods but very costly) b) Promotion  They have to invest at least some funds in advertisement to create public awareness online through Facebook, Twitter or Google +.  They could have more consumer promotions. For consumer promotions, they can organize an event or competition by purchasing more Hershey’s kisses for collectable paper straps from the Kisses. Currently messages such as “I miss you” or “I love you” could be found on the strap but Hershey’s could produce more lovely messages and organize a competition from there. Customers are to collect it and make up a love story from there and the winner could walk away from grand prizes like a visitation trip to the Hershey’s Chocolate world in US or vise versa.  They could look into sales promotions too as perhaps buying 1 large pack of Hershey’s kisses would free 3 mini bars of Nugget. This strategy will save the cost of trying to market and promote Nugget product. Letting the customers themselves taste the product marks the best marketing strategy.  Composing a fun yet rhythmic songs with a slogan would certainly help repositioning their brand in the market._____________________________________________________________________________________________Page 28 of 42
  29. 29. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________ c) Packaging  Hershey’s could grab hold of opportunities such as festive seasons in Malaysia. Malaysia is a multi-national country with more festive seasons to compare to other country. Packaging of the products could go according to the festive seasons. They could start experimenting in Malaysia by bringing in the idea of Easter day, Halloween or Christmas packaging as well as Malaysia is celebrating it too before starting to venture to other festive seasons such as Chinese New Year or Hari Raya. Having unique designs for the particular festive would attract buyers to present them as gifts (Figure 11).  Continue to produce smaller packaging as it is a market trend right now. As seen in Figure 11, buyers tend to have chocolates as snacks. With smaller packaging, consumers need not worry on how to handle remaining chocolates (Euromonitor International, 2011)4.3.2 Product Development a) Product  New product such as higher cocoa content could be accommodated to new market segment for Hershey’s. This time round they would be targeting on the health conscious consumers who are afraid to gain weight yet chocolates indulger.  Higher cocoa content chocolates tend to taste bitter when sugar content would be decreased too. In this sense, Hershey’s could produce a product range ranging_____________________________________________________________________________________________Page 29 of 42
  30. 30. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________ from percentage of cocoa content for selections. For examples, 50%, 60% or even 70% of cocoa content.  Products could be delivered in form of nutrition bars, perhaps with some mixture of grain ingredient. b) Promotion  Hershey’s could educate the public on the benefits of one chocolate could bring via social media such as Twitter or Facebook as they are free.  They might include road shows in the malls to launch the new product with sampling given to public to try for at least a week to see the benefits reap from dark chocolate especially on diabetics (sugar level) and cardiovascular system.4.3.3 Market Development  To increase their revenues in Malaysia, they could join forces with Starbucks or Coffee Beans with their bakery products such as Hershey’s syrup or toppings on their confectionery.4.3.4 Diversification  Venture into mobility world by creating some adventure games on Apple and Android platforms that relate to Hershey’s brand. This strategy would help to create awareness among the public, especially the children who love cute figures in games, to close the gap they are losing on the market share. If the games are proven profitable, they could endeavor into merchandise route._____________________________________________________________________________________________Page 30 of 42
  31. 31. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________5.0 CONCLUSION___________________________________________________________________________As market evolves, it is no longer product-driven to sustain in the competitive market. In fact,the customers are the one who controls and determines the product’s life cycle! Stunning buttrue, if the product does not fit any purpose in one’s daily life; they would not even consider itunless it is something extraordinary. To maintain and to pro-long the profitable period of aperiod, marketing strategies need to be taught off.Ansoff matrix indeed helpful in identifying growth opportunity in a business but it does not layout what are the precautions steps and strategies in details. However, we can combine analyzedresults from other models to judge whether is it workable with a particular quadrant used. In thiscase of Hershey’s, since the presence and market share in Malaysia is low, hence growthopportunity is vast. Nevertheless, to seize a correct strategy in a correct quadrant is ratherconfusing with Ansoff matrix. Although there is a modified, high level of 9-grid matrix, thedifference of each of the quadrant is just between a thin-fined line.To overcome this confusion, perhaps a fixed Product Life Cycle graph (PLC) and Ansoff matrixcombination model for easier strategy brain storming. Below figure is just a brief idea of how itlooks like, further research needed to prove its usability._____________________________________________________________________________________________Page 31 of 42
  32. 32. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________ Figure 16, Brief Model of PLC + Ansoff MatrixBesides this model, other models such as Promotions + PLC and Building Demand for Productmodel could be considered into Hershey’s case study too as they are in need of Promotions andDemand strategies for their existing products. Overall, this report has met all three objectivesmentioned which are, study on Chocolates Industry on Malaysia, study on Marketing Tools andprovide solutions and recommendations._____________________________________________________________________________________________Page 32 of 42
  33. 33. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________6.0 REFERENCES____________________________________________________________________________________1. Ansoff, I. H. (1957), Strategies for diversification, Harvard Business Review, Vol. 35, No. 2, p. 113-1242. Ansoff Matrix (2008) Ansoff Matrix. [online] Available at: http://portal.tugraz.at/portal/page/portal/Files/i3730/files/Lehre/Controlling%20englisch/Ans off_Matrix.pdf [Accessed: 12 Apr 2012].3. Ansoff Model (2011) Growth Strategies: Ansoff Model. [online] Available at: http://www.slideserve.com/Mercy/growth-strategies-ansoff-model [Accessed: 12 Apr 2012].4. Authorstream.com (2011) Ansoff Matrix Presentation. [online] Available at: http://www.authorstream.com/Presentation/vint_shah90-836296-01-ansoff-s-matrix/ [Accessed: 12 Apr 2012].5. Berger, J. et al. (2007) The In?uence of Product Variety on Brand Perception and Choice. http://marketing.wharton.upenn.edu/documents/research/Product%20Variety,%20Brand%20 Perceptions,%20and%20Choice.pdf, 26 (4), p.460 - 470.6. Berry T. (2012) An effective marketing strategy requires focus. [online] Available at: http://articles.mplans.com/an-effective-marketing-strategy-requires-focus/ [Accessed: 12 Apr 2012].7. Bizdom.com.au (2011) Top 12 marketing models of all time « bizdom. [online] Available at: http://bizdom.com.au/2011/03/30/top-12-marketing-models-of-all-time/ [Accessed: 12 Apr 2012].8. Consumers Association of Penang (n.d.) Malaysians are the 8th largest sugar consumers in the world. [online] Available at: http://www.consumer.org.my/index.php/food/diseases/161- malaysians-are-the-8th-largest-sugar-consumers-in-the-world [Accessed: 12 Apr 2012].9. Coursework4you.co.uk (2009) What is Ansoff analysis? What are the main aspects of Ansoff analysis (Matrix)? How to write Good Ansoff analysis for a company? Where to find information for Ansoff analysis? | PAPERS4YOU.COM | UNIVERSITY ESSAY COURSEWORK DISSERTATION ASSIGNMENT ACADEMIC ANALYSIS. [online]_____________________________________________________________________________________________Page 33 of 42
  34. 34. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________ Available at: http://www.coursework4you.co.uk/essays-and-dissertations/ansoff-analysis.php [Accessed: 12 Apr 2012].10. Dorfman B & Reuters (2008) Hersheys Market Segmentation | Hershey puts faith in Bliss to recapture market share - Los Angeles Times. [online] Available at: http://articles.latimes.com/2008/feb/19/business/fi-bliss19 [Accessed: 12 Apr 2012].11. En.wikipedia.org (2008) Kuala Lumpur - Wikipedia, the free encyclopedia. [online] Available at: http://en.wikipedia.org/wiki/Kuala_Lumpur [Accessed: 12 Apr 2012].12. Euromonitor.com (2011) Chocolate Confectionery in Malaysia. [online] Available at: http://www.euromonitor.com/chocolate-confectionery-in-malaysia/report [Accessed: 12 Apr 2012].13. Haley, U. (1999) Strategic Management in the Asia Pacific. 4th ed. Woburn: Butterworth- Heinemann, p.250 - 252.14. Hargreaves, A. (n.d.) The Ansoff Growth Matrix - Assessing growth strategies for new markets and products. http://alanhargreaves.com/storage/recharge-workshop/The-Ansoff- Growth-Matrix.pdf, p.2.15. Hershey Food Corporation (2011) Hershey Food Corporation. [online] Available at: http://www.scribd.com/doc/48989397/Case-study-Hershey-Food-Corporation [Accessed: 12 Apr 2012].16. Hersheys Products (n.d.) HERSHEYS | HERSHEYS Chocolate Bars, Candies and Baking Products. [online] Available at: http://www.hersheys.com/pure-products.aspx [Accessed: 12 Apr 2012].17. Hersheys.com (2011) HERSHEYS Convenience - Consumer Promotions. [online] Available at: http://www.hersheys.com/cstore/consumer-promotions/ [Accessed: 12 Apr 2012].18. IMAP (2010) Food and Beverage Industry Global Report - 2010. [online] Available at: http://www.imap.com/imap/media/resources/IMAP_Food__Beverage_Report_WEB_AD649 8A02CAF4.pdf [Accessed: 12 Apr 2012]._____________________________________________________________________________________________Page 34 of 42
  35. 35. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________19. Jose Carl D. M. & Roselyn M. (2010) Hersheys Marketing Plan. [online] Available at: http://www.scribd.com/doc/39876031/Hershey-s-Marketing-Plan [Accessed: 12 Apr 2012].20. Lancaster, G. and Massingham, L. (2011) Essentials of Marketing Management. New York: Routledge, p.465 - 468.21. LUXINNOVATION G.I.E. (2008) Ansoff Matrix = the product/market grid. [online] Available at: http://www.innovation.public.lu/en/ir-entreprise/techniques-gestion- innovation/outils-gestion-strategique/080612-Matrice-Ansoff-vers-eng.pdf [Accessed: 12 Apr 2012].22. Lonie, J. (2008) Advertisement Research Report - Fall 2008. http://www.jamielonie.com/jamielonie.com/Portfolio_files/Hershey_Research_Report.pdf.23. Malaysiandigest.com - Bernama (2011) Malaysian Sugar Consumption Exceeds WHO Recommended Intake. [online] Available at: http://www.malaysiandigest.com/news/38- health/36350-malaysian-sugar-consumption-exceeds-who-recommended-intake.html [Accessed: 12 Apr 2012].24. Managementparadise.com (2010) Financial Analysis of Hershey Foods. [online] Available at: http://www.managementparadise.com/forums/financial-management/216222-financial- analysis-hershey-foods.html [Accessed: 12 Apr 2012].25. Manktelow J. (n.d.) The Ansoff Matrix - Understanding the risks of different options. [online] Available at: http://www.timeanalyzer.com/lib/ansoff.htm [Accessed: 12 Apr 2012].26. MarketingPlanNow.com (n.d.) MarketingPlanNow. [online] Available at: http://www.marketingplannow.com/userfiles/marketing/Image/pdf/2%20marketing%20objec tives.pdf [Accessed: 12 Apr 2012].27. MeanGreen (2012) An analysis of Hershey and Mars (The Kings of Candy). [online] Available at: http://meangreen.hubpages.com/hub/marketing-strategy-examined-An-analysis- of-Hershey-and-Mars-The-Kings-of-Candy [Accessed: 12 Apr 2012].28. Mindtools.com (2010) The Ansoff Matrix - Problem-Solving Training from MindTools.com. [online] Available at: http://www.mindtools.com/pages/article/newTMC_90.htm [Accessed: 12 Apr 2012]._____________________________________________________________________________________________Page 35 of 42
  36. 36. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________29. NAIDU R - Koko.gov.my (2012) Malaysian Cocoa Board Official Website. [online] Available at: http://www.koko.gov.my/lkm/loader.cfm?page=Industry/ArticleOC.cfm [Accessed: 12 Apr 2012].30. Paramountlearning (2010) Four Ways to Grow Your Business!. [online] Available at: http://paramountlearning.wordpress.com/2010/02/22/four-ways-to-grow-your-business/ [Accessed: 12 Apr 2012].31. Pearso A. (n.d.) Ansoff Strategies. [online] Available at: http://www.uniquebusinessstrategies.co.uk/pdfs/budding_manager/ansoff.pdf [Accessed: 12 Apr 2012].32. Reuters (2012) Chocolate lovers tend to weigh less | Free Malaysia Today. [online] Available at: http://www.freemalaysiatoday.com/category/living/2012/03/27/chocolate- lovers-tend-to-weigh-less/ [Accessed: 12 Apr 2012].33. Simister P. (2011) Ansoff Growth Matrix – Four Ways To Grow A Business. [online] Available at: http://www.differentiateyourbusiness.co.uk/ansoff-growth-matrix-four-ways-to- grow-a-business [Accessed: 12 Apr 2012].34. Thehersheycompany.com (2012) HERSHEYS | The Hershey Company - Makers of Chocolate Bars, Reeses Peanut Butter Cups and Other Candies. [online] Available at: http://www.thehersheycompany.com/ [Accessed: 12 Apr 2012].35. Tutor2u.net (2007) Business Strategy - Ansoffs Matrix. [online] Available at: http://tutor2u.net/business/presentations/strategy/ansoff/default.html [Accessed: 12 Apr 2012].36. White, S. and Hill, G. (2008) Hershey Research Report. http://www.jlfcunningham.com/docs/situation_analysis_book.pdf, p.16, 24.37. Wong, S. and Lua, P. (2012) Chocolate: Food for Moods. http://www.nutriweb.org.my/publications/mjn0017_2/Wong%20285RV-11.pdf, 17 (2), p.259, 260.38. Zacks Investment Research (2011) The Hersheys Company. [online] Available at: http://www.zacks.com/mediaroom/zer_get_pdf.php?r=Z777603 [Accessed: 12 Apr 2012]._____________________________________________________________________________________________Page 36 of 42
  37. 37. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________7.0 APPENDIX____________________________________________________________________________________Appendix A – Price, Location & Variety Observation ResultsCADBURY BY KRAFT FOOD INC._____________________________________________________________________________________________Page 37 of 42
  38. 38. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________FERRERO ROCHERLINDT – SWITZERLAND_____________________________________________________________________________________________Page 38 of 42
  39. 39. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________HERSHEY’S_____________________________________________________________________________________________Page 39 of 42
  40. 40. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________Appendix B – Quantitative Survey Results1. Are you Male or Female? Response Percent Response Count Male 48% 48 Female 52% 522. Can you tell me your age group? Response Percent Response Count 0-22 6% 6 23.35 72% 72 36-55 20% 20 56 & above 0 0 N/A 2% 23. Do you consume chocolates? Response Percent Response Count Yes 96% 96 No 4% 44. Which brand of chocolates do you prefer? Response Percent Response Count Hershey’s 20% 20 Cadbury (Kraft Food) 30% 30 Lindt 6% 6 Toblerone 14% 14 Others: 30% 30 Van Houten Godiva x3 Imported Dark Chocolates All of the above Reeses (Hershey) No specific brand Cote d’Or x2 Any Belgium Chocolates Neuhaus Ferrero Roche x55. Please tell me the ultimate factor of your Response Percent Response Count chosen brand Price 2% 2 Taste 76% 76 Packaging (attractiveness) 4% 4 Convenience 0 0 Mixtures of variety flavor 8% 8 Branding Status 8% 8_____________________________________________________________________________________________Page 40 of 42
  41. 41. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________ Others 2% 2 Ingredient6. Your purpose of purchasing chocolates Response Percent Response Count Daily needs 2% 2 Gifts 18% 18 Snacks 74% 74 Others: 6% 6 Crave All the above x27. Are you aware of the possible benefits from Response Percent Response Count chocolates? Yes 46% 46 No 54% 548. What is your main concern in chocolates Response Percent Response Count consumption? Price 40% 40 Diet 46% 46 Others: 14% 14 Energy Sugar content – may lead to diabetes Constipation Taste Interest Snacks9. What other factor will influence you in buying Response Percent Response Count different brand of chocolates? Promotion 36.63% 74 Word-of-Mouth 18.81% 38 Advertisement 19.80% 40 Campaign 11.88% 24 Competition 5.94% 12 Convenience (such as delivery) 5.04% 10 Others: 1.98% 4 Introduce by friends Sampling 10. Are you a initiator in purchasing new Response Percent Response Count product launched in the market? (Definition of Initiator: A person who often tries out newly_____________________________________________________________________________________________Page 41 of 42
  42. 42. Model Analysis on Hershey’s Case Study April, 2012_________________________________________________________________________________________________________ launched product without influenced by others by their feed backs and in return will initiate/persuade others to try it) Yes 46% 46 No 8% 8 Maybe 46% 46Source: http://www.surveymonkey.com/s/8YPT9VJ_____________________________________________________________________________________________Page 42 of 42

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