Business Project: Hershey Analysis
Introduction
Over the past decade, global food industry has become very competitive. Nonetheless, the food industry continues to witness substantive growth due to factors like technological advancements, population/market growth, improved cold chain facilities, and streamlined manufacturing processes. According to (Yu, 2020), the global food industry is highly consumer-driven with a multi-dimensional network. Globally, this sector attracts many investors. Thus, food production and packaging needs to continue being more customer friendly. Consumer wellness and health is the key attribute to consider in good production (Burlacu, Bodislav, & Radulescu, 2018). In this essay paper, The Hershey Company, a global food company will be used to analyse the ongoing trends and marketing strategies in the food industry.
Name of the Global Brand and Overview
The Global Food Company to analyse in this paper is Hershey Foods. Founded in 1849, Hershey Foods is a U.S. based food manufacturer, headquartered in Hershey, PA; that operates globally in over 90 countries. The company is ranked high in the U.S. confectionery market (Cooper, 2013). Hershey Foods main product groups include mint and gum refreshment products, chocolate and confectionery products, and pantry brands such as beverages, baking ingredients, and toppings. With more than 80 brands globally, Hershey remains among the top competitive players in the international food chain. Among its famous brands include Hershey’s Kisses, Brookside, Hershey’s Reese’s, Ice Breakers, and Jolly Rancher (Williamson, 2018). Hershey Foods engages in diverse activities, including manufacturing, sales and marketing, distribution, and packaging of its diverse chocolate and sugar confectionery products. As at 2019, Hershey had employed over 21,000 people globally. In terms of revenue, Hershey enjoys over $783 USD from its core business activities both domestically and internationally. Nonetheless, Hershey Foods has always been committed to operating sustainably, ethically, and fairly.
Food Industry and the Hershey’s Main Competitors
The food industry relies on production and distribution (Williamson, 2018). However, production in the food sector begins with the filed workers, then transported to the industries for production. Thereafter, the produced food products are distributed as ordered into the market. Besides, the global food industry, where Hershey operate is highly competitive with a plethora of diverse rivals in the market. Nonetheless, the food industry thrives with strong distribution network, highly skilled workforce, customer diversity, high demand in the market, and good marketing techniques (Olayanju, 2019). In particular, Hershey’s thrives due to its huge product portfolio, huge annual sales, innovate food brands, wide distribution network in over 90 countries, brand equity and corporate social responsibility. However, Hershey’s has been accused of fake products, limited expansion given its many years of operation into the market, and its disorganized Cocoa products purchase (Lindell, 2019). Yet, Hershey’s is exposed to distribution network, market expansion, and snack segment opportunities. Competitive-wise, Hershey faces high competition from other giant global food players like Cadbury, Nestle, Galaxy, and Mars.
What does it mean to be a Global Organization? Why is your Chosen Organization Global?
According to (Ericksen, Ingram, & Liverman, 2019), a global organization operates in many different countries. A global organization, also termed as a global corporation, global company, or global firm, is based from the term “global”, which refers to worldwide. To go global, a company need to introduce itself and its products into another country. Thus, to be a “global organization” means to expand a company’s business operations from domestic country to another country or countries. According to (Ginzl, 2016), companies go global to increase sales and profitability, create jobs, enlarge market base, explore untapped markets, gain competitive edge, and to offset slow home market growth. The Hershey Company is a global organization because it operates in over 90 countries. Also, Hershey employs over 21,000 people across all countries where it operates. Besides being an American based chocolate manufacturer, Hershey is ranked among the top chocolate producers all over the world (Hallet, 2018). Moreover, Hershey’s main competitors, Cadbury, Galaxy, Nestle, and Mars are global food companies. Again, Hershey’s main strength is strong global brand awareness and presence in the international food industry.
Success Factors of Hershey
Marketing Strategy: Hershey has a unique marketing strategy. The company applies a micro-marketing concept to its marketing operations. Under this marketing concept, Hershey markets specific products to small target audiences, tailoring its brands to meet the particular demands for these audiences (Hirsch, 2018). In this doing, the company provides consumers with a wider range options by personalizing their core brands at higher prices.
Competitors and Competitive Advantage: In the global food industry, Hershey faces stiff competition from Cadbury, Nestle, and Mars. However, the company has managed to thrive over its efficient distribution network, strong brand awareness, supply chain technology, customer loyalty, strong public and social image, and corporate social responsibility (La Femina, 2015). In this way, Hershey has always coped with this competitive force, and thus being able to maintain competitiveness and sustainability in the global market place.
Strategic focus and people: Hershey strongly focuses on digital innovation, strong brand image, and diversity of brand portfolio. As a result, leveraging artificial intelligence and advanced analytics has been easy and convenient for the company (La Femina, 2015). With the help of diverse and adequate resources (people, technology, and capital), Hershey has been able to maintain consistency in market performance..
Globalization v. Customization
According to (Lindell, 2019), globalization refers to the implementation of a marketing strategy that cut across all the company’s operations in the global market. On the other hand, customization refers to the building of separate marketing strategies to be used by a company into different countries. Hershey’s globalization strategy is to partner with foreign organizations that have commendable knowledge and understanding of that target local market. Thus, Hershey is constantly creating international partnerships through joint ventures, merges, and acquisitions (Kash, 2012). Also, Hershey relies on the foreign employees who understand the language and culture of their country to market and sell its products. For example, Hershey’s main globalization focus is on the emerging markets of India, China, Mexico, and Brazil. Hershey’s customization strategy considers local preferences and conditions when producing and distributing the product. In this approach, Hershey seeks to bring efficiency to customization, and endeavours to include case to case country cultures in designing its product promotion language (Yu, 2020). For example, chocolate Hershey’s brand sells high in markets given the considerate promotional language used which value the culture of different shoppers in different countries.
Hershey’s Brand Building Challenges
Hershey faces various challenges in brand building, such challenges include brand equity, changes in consumer behaviour, environmental change, positioning, market share, and communication (La Femina, 2015). Brand equity has always been a challenge for Hershey, because while the company seeks to maintain brand awareness and relevance into the global market, building a digital strategy is costly and thus achieving strong IMC not easy for its brand. Also, changes in consumer behaviour in terms of tastes and preferences, demand, and response to quality and price continue to challenge Hershey’s brand in the market (La Femina, 2015). Besides, the global environment in which Hershey operates is very different, and the brand experiences different political, legal, social, and environmental markets; coping is not easy. Moreover, the stiff competition in the market limits Hershey’s growth in market share, because the other firms are also focused to obtaining a competitive advantage and sustainability in the market. Again, due to the diversity of culture in different countries, communication continues to be a major challenge to Hershey brand (Kash, 2012).
Hershey’s Future Plans, Expansion and Diversification
Hershey continues to align inside to win the outside. As digital shopping continues to grow, the company is capturing opportunities for both planned and unplanned purchases. The main objective of Hershey’s future pan is driving commercial advantage, digital transformation, and competitive advantage in the global food industry (La Femina, 2015). Hershey is heavily investing into technology to encourage innovation of new food and beverage brands which are healthy, of top quality, and cost-friendly to the target market while maintaining optimal profitability (Burlacu, Bodislav, & Radulescu, 2018). Also, the current social media marketing initiative is set to develop a one-to-one connection between Hershey and its consumers. Besides, Hershey is currently running the “Margin for Growth” program whose future aim is enabling investments into its business model while generating more profits to the company in future. Externally, Hershey’s global operations are challenged by hostile government policies, mismatch of communication cultures and consumer behaviour, and fast growth in technology. Hershey’s future plan to curb these external challenges is aligning inside to win externally. Nonetheless, Hershey seeks to leverage artificial intelligence and advanced analytics (Ginzl, 2016). Also, the company wants to expand and diversify its operation to the rising world demand of sugar free confectioneries.
Conclusion
Every player in the global food industry wants to maintain sustainability, competitive edge, and relevance in the world market. Hershey, a food manufacturer firm headquartered in the U.S. thrives under its wide distribution network, wide brad portfolio, digital innovation, and strong brand portfolio both locally and internationally. However, Hershey continues to face threat from Nestle, Cadbury, Mars, and Galaxy who have already leveraged artificial intelligence and advanced business analytics into their food and beverage processing and distribution operations. Globally, the mismatch of cultures, environmental and governance changes, brand equity, and stiff competition from other companies limit Hershey’s brand expansion and diversification. Hershey should rely on its unique marketing strategy, strategic focus, and diverse resources to maintain sustainability and competitive position in the global food industry.
References
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