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Jenna Boyle, Kerry McDermott and Rob Whitehead. Name the Brand?? Taste the rainbow Melts in your mouth, not in your hand Gimme a break, gimme a break…

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Presentation on theme: "Jenna Boyle, Kerry McDermott and Rob Whitehead. Name the Brand?? Taste the rainbow Melts in your mouth, not in your hand Gimme a break, gimme a break…"— Presentation transcript:

1 Jenna Boyle, Kerry McDermott and Rob Whitehead

2 Name the Brand?? Taste the rainbow Melts in your mouth, not in your hand Gimme a break, gimme a break… Nobody better lay a finger on my… There’s no wrong way to eat a…

3 Industry Overview Advertising Analysis Pivot Table Analysis Target Market Perceptual Map Advertising Strategies Mars Inc. The Hershey Company “The Elegants” Where the Industry is Going Recommendations

4 Why is it relevant to us? 65% percent of all American branded candy bars have been on the market more than 60 years. Americans eat approximately 25lbs of candy each a year (7.7 billion lbs total), about 60% of which is chocolate Engrained in American culture. Candy is EVERYWHERE!!!

5 Industry Definition The Candy Production industry acquires raw materials such as cocoa, sugar, cornstarch, fruit, preservatives and flavorings to process them into a range of sugar and non-sugar based confectionery products. Major Products: Chocolate candies Sugar candies Sugarless candies Gum

6 Product Segmentation PRODUCTS AND SERVICES SEGMENTATION Product/ServicesShare Candy or chocolate bars % Soft candy % Block chocolates % Industrial chocolate9.40% Hard candy8.90% Gum4.70% Chocolate spreads and drinking powders4.70% Box chocolates4.00%

7 Market Segmentation MAJOR MARKET SEGMENTS Market SegmentShare Confectionery wholesalers61.30% Supermarkets and grocery stores16.70% Food manufacturers8.10% Hospitality trade5.70% Discount stores4.30% Direct to public3.90%

8 Cost Structure COST STRUCTURE ItemCost % Purchases58.30% Wages10.10% SG&A6.80% Depreciation3.50% Rent1.20% Utilities1.10% Other6.70% Profit12.30%

9 The Production of Confectionery

10 Government Regulation The level of regulation is heavy - All cocoa, chocolate and sugar manufacturers must meet the standards of the FDA. - Manufacturers also must comply with the hygienic regulation - Environmental regulation - Stricter labeling

11 Industry Structure Life Cycle StageMatureRegulation LevelHeavy Revenue VolatilityLowTechnology ChangeHigh Capital IntensityMediumBarriers to EntryLow Concentration LevelHighCompetition LevelHigh

12 CR₄ and HHI The HHI for just the top 4 companies in the industry is The CR ₄ for the industry is 78.1%. Therefore, the industry is highly concentrated with only a few major firms holding a majority of the market share. HHI = 49.5²+21.6²+4²+3²= CR ₄ = = 78.1% *Hershey and Mars Inc. alone hold 71.1% of the market share. -Many mergers occur.

13 Concentration Concentration in this industry is high This concentration of ownership is primarily a result of an increase in acquisitions, along with natural growth for a majority of major players encouraged by continued product innovation, strong brand loyalty and aggressive marketing. Ways for companies to survive: - adaptability to new trends - economies of scale - product differentiation - successful supply chain management - powerful marketing strategies******

14 Competition Quality Price Distribution Innovation and differentiation Substitute Products Imports

15 Candy v. Chocolate HHI (for top 4)= Cr ₄ = 78.1% High level of concentration HHI (for top 4) = 1141 CR ₄ = 59% Medium level concentration ->Concentration is increasing! CANDY CHOCOLATE 518 Businesses overall!! 1,039 businesses overall !!

16 Revenue for candy v. revenue for chocolate Candy Production in US REVENUE GROWTH Revenue $ millionGrowth % 20007, , , , , , , , , , , REVENUE GROWTH Revenue $ millionGrowth % ,613.30N/A , , , , , , , , , , Chocolate Confectionary Production in US

17 Total Sales for Confectionery Industry

18 (** in millions of dollars) Confectionery Seasonal Sales (** in millions of dollars) projections * Valentine’s Day - $971$1,036$1,024$928$935* Easter - $1,884$1,987$1,846$1,990$1,970* Halloween - $2,146$2,202$2,209$2,207$2,225* Christmas - $1,389$1,420$1,376$1,401$1,420* * – projections for VALENTINE’S +0.7%*-9.4%-0.2%+6.7% +0.1% -4.0% EASTER -1.0%*+7.9%-7.1%+5.4% +7.0% -7.6% HALLOWEEN +0.8%*Even+0.1%+2.6% +2.8% +2.3% CHRISTMAS+1.4%*+1.8%-3.1%+2.2% +1.0% +2.4% NCA projects a 0.4% increase in 2010 for total seasonal sales

19 2010 US Confectionery Market Retail Sales $22.5B Imports $4.7B Exports $1.895B CategoryRetail Sales $ Billions Imports $ billions Exports $ billions Total Confections $22.5$4.7$1.895 Chocolate$14.862$3.0$1.3 Non-Chocolate$7.621$1.7$.595

20 2008 Per Capita Retail Sales

21 Overview of Industry The recent desire for healthy alternatives has required companies become more innovative. Strong brands and customer loyalty. Economies of scale and value addition during production. Despite recession, consumers still continuously consume the same amount of candy because it is and inexpensive and feel good luxury. Growth segments such as sugar-free confectionery and organic and fair-trade chocolate have shown considerable promise and are expected to continue in the next five years.

22 Demand Determinants Changing Consumer Lifestyles Pricing and Distribution Presence of Substitutes Product Innovation Culture and Tradition

23 How to Reach Consumers: Advertising

24 2010 Total Advertising Expenditures for Top Players Hershey$404,092,700 Mars$422,510,500 Lindt$51,094,100 Nestle$743,163,800 Tootsie Roll Tootsie Pop$784,500 Jelly Belly$3,939,900


26 Pivot Table Data

27 Adverting Based on Location

28 Advertising Expenditures based on Population

29 Advertising Based on Day of Week

30 Total TV Advertising


32 Mars


34 Target market (based on Pivot Table) Majority of the Market Children Age 5-24 is main target Health Conscious Parents- also a major target Increased advertising to parents about healthier candy choices, may be why parents are still so heavily targeted Premium Producers- Target educated consumers Sell luxury Target all adults

35 Annual Advertising

36 Advertising to Sales Ratio for 2010 Sales Advertising Expenditure Advertising to Sales Ratio Mars Inc.28,000,000,000422,510, % The Hershey Company5,670,000,000404,092, % Lindt2,740,000,00051,094, %

37 How we’re going to break it down: Adventurous Classy Family-Oriented Free Spirited Mars Inc. The Hershey Company Lindt&Sprungli + Ghirardelli

38 Brands Adventurous Classy Family-Oriented Free Spirited Mars Inc. Hershey Lindt Ghirardelli Skittles Twix M&M s Snickers Dove Kit Kat Reeses Hershey Kisses Hershey Bar

39 Experience Attribute Don’t use informative Don’t advertise place Don’t advertise price Don’t use combative/comparative Don’t do comparisons to others MEMORY JAMMING HUGE

40 Types of Advertising Used in Industry Humor appeal Holiday Sweepstakes Point of Sale Pricing Strategy Negative to Positive Heritage Advertising Product Differentiation Brand Identity

41 Mars Overview Mars was founded in 1911 by the Frank C Mars, and the Mars Family remains privately owned to this day. Mars Inc. is one of the world's biggest private companies, with annual sales approaching $30bn. Candies included: Snickers, Twix, M&Ms, Skittles, Starburst, Milky Way, 3 Musketeers etc… Seen as Adventurous and Free-Spirited #18 Advertiser according to Advertising Age Memory Jamming Target Market:

42 Mars Incorporated Advertising Mars now owns Wrigley as of April 2008 Similar strategies throughout Heritage Advertising Product Differentiation Brand identity Sweepstakes Advertising Pricing Strategy Holiday Advertising Negative to Positive Advertising Humor Appeal

43 Brand Identity Stick to Roots Spokescandy Huge in Differentitation Melts in your mouth not in your hand

44 What is real? “Unreal” situations Taste the Rainbow

45 America’s favorite candy bar! Satisfies hunger Celebrity “You’re not you when you’re hungry”

46 Need a moment… … Chew it over with a Twix

47 General Conclusions about Mars Inc. Stick to roots Differentiation is key Even among own products Starburst: “It’s a juicy contradiction” 3 Musketeers: “A lighter way to enjoy chocolate” Milky Way: “Life’s better the milky way”

48 The Hershey Company Overview Founded in 1894 Hershey Manufactures chocolate and confectionery products Largest chocolate manufacturer Major brands include:

49 Why Hershey has been so successful? Strong financial performance Leader in confectionery products in the US due to it’s well-known brands Brand Equity Marketing Strategies (Obtaining Sales) Ability to determine consumer trends

50 Financial Performance 2010 Sales$5.67B 1-Year Sales Growth 7.03% 2010 Net Income $509.80M 2010 Sales % of total US85 Other countries 15 Total100

51 Hershey Products Hershey’s Bliss Cookies ‘N’ Crème Hershey’s Milk Chocolate Hugs Kisses Nuggets Sticks Reese’s Fast Break Nutrageous Peanut Butter Cups Pieces Reesesticks Whipps Other 5th Avenue Almond Joy Cacao Reserve Caramello Eat More Good & Heath Jolly Rancher Kit Kat Milk Duds Mounds Mr. Goodbar Payday Pot Of Gold Rolo Special Dark Symphony Take5 Twizzlers Whatchamacallit Whoppers York Zagnut Zero Refreshment products Breath Savers Bubble Yum Ice Breakers York

52 Hershey’s Brand Equity

53 Harris Interactive Poll RANK 25 Highest Ranked Brands 1 Hershey's Kisses Chocolate Candy 2 M&M Plain Chocolate Candy 3 Hershey's Milk Chocolate Candy Bars 4 5 Duracell Batteries 6 Reese's Peanut Butter Cups Chocolate Candy 7 Heinz Ketchup 8 Kleenex Facial Tissues 9 Oreo Cookies 10 Neosporin Ointment 11 Cheerios Cereal 12 Ritz Crackers 13 Kraft Foods Inc. 14 Arm & Hammer Baking Soda 15 Campbell's Soups 16 Snickers Chocolate Candy 17 Coca-Cola 18 Sharpie 19 Dawn Dish Detergent 20 Johnson & Johnson 21 Energizer Batteries 22 UPS 23 Hershey's Chocolate Chips 24 M&M Peanut Chocolate Candy 25 Hallmark Greeting Cards

54 Advertising Strategies Brand Image/Identity Holidays Community Amusement Park

55 Brand Identity Old-fashioned Warm Family-Oriented Happy Nostalgic Love SnL0g Rascal Flatts 6Rw&NR=1 Kisses

56 Sticking to Roots 1930spresent

57 Hershey’s Slogans “There’s no wrong way to eat a Reese’s” "Sometimes you feel like a nut, sometimes you don't" (Almond Joy) "Makes mouths happy“ (Twizzlers) "It's more than a mouthful - it's Whatchamacallit” “There’s a smile in every Hershey Bar” “Have a break, have a Kit Kat.”

58 Hershey’s Jingles “Hershey’s is the GREAT AMERICAN, GREAT AMERICAN chocolate bar!!!” “Gimme a break, Gimme a break, break me off a piece of that Kit Kat Bar.”

59 Holidays Easter Valentine’s Day Halloween Christmas

60 Community Milton Hershey School American Red Cross Habitat for Humanity of Central Pennsylvania Children's Literacy Initiative - Lancaster, PA Hershey partners with Children’s Miracle Network

61 Amusement Parks Way for fans of Hershey to interact with the company. Increases revenue for the company Annual Sales: $270.96M Annual Net Income: $6.94M

62 Chocoladefabriken Lindt and Sprungli Founded in 1845 in Switzerland Leading world producer of premium chocolate Brands carry the name Lindt, Ghirardelli, Caffarel etc.

63 Strengths of the Company Strong brand name Easily able to penetrate new markets Strong Global Operation with diversified revenue base Effective Use of Advertising

64 Lindt’s Main Marketing Strategies Product Differentiation Premium Luxury Affordable Public Relations Point of Sale Advertising and Free Samples Bundling

65 Product Differentiation Premium quality = Premium Ingredients Affordability Public Relations

66 Upcoming Trends Showcasing your value Sugar-free Who you can advertise too Obesity Healthy Lifestyle Employee Morale Darker Chocolate (higher cocoa content) Exotic Flavorings (e.g. citrus, fruits, spices) More upscale private label chocolate

67 Things Companies Need to Think About: Age Group Cost of Advertising Health Consciousness Per Capita Disposable Income Price of Inputs

68 Keys to Success in Future: Economies of Scale Ability to adapt to change Product Differentiation Brand Loyalty Customer Retention

69 Questions?

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