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Strategy and international operations of The Hershey Company

Paper Type: Free Essay Subject: Marketing
Wordcount: 2355 words Published: 1st May 2017

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The Hershey Company was incorporated on October 24, 1927 as an heir to an industry founded in 1894 by Milton S. Hershey fiscal interest. The Hershey Company has been and still is the leading producer of excellence chocolate in North America as well as being a global head in chocolate and sugar confectionery. Her primary product groups comprise chocolate and confectionery commodities; snack products; gum and mint stimulant products; and pantry items, for instance baking ingredients, toppings and beverages.

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The company runs as a distinct reportable division in manufacturing, selling, retailing and dispensing out a variety of packaged types of chocolate and confectionery merchandise, pantry substance and gum and mint refreshment commodities all in more than 80 different brand names. The Hershey Company has several operating market segments which consist of various geographic regions such as Canada, the United States and Mexico. In addition there are other worldwide locations, such as the Middle East, Japan, Philippines and China. The company ships its products to over 50 countries worldwide

For the sake of segment reporting purposes, the Hershey Company has mostly concentrated all her attention as well as operations in the Americas which are made up of Canada, United States Brazil and Mexico. The company’s aggregation is based on long term trend of similar economic characteristics such as the product and services offered, the various types of production processes, the difference in types and classes of customers, various distribution techniques available in addition to the existence of distinct nature of the regulatory environment present in each specific location. Other international operations are harmonised and aggregated with the Americas with the aim of forming one consolidated reportable segment. When all these are combined, all the other international operations contribute towards most of the aggregation criteria and this represents less than 10% of the total operating profits and assets as well as consolidated revenues.

Selling and Marketing Organization

The Hershey Company Marketing and Selling organisation consists of the Hershey International and the global Marketing Group as well as the Hershey North America. The organization is intended to; leverage the company’s sales and marketing control in the United States as well as Canada, lay an emphasis on the major strategic and development areas in the international market as well as construct capabilities benefit on the exceptional consumer and customer trends.

Hershey North America

It is the exclusive duty of Hershey North America to continue building the company’s chocolate and confectionary market spot, while at the same time taking advantage of the economy of scale present in the U.S. and Canada. The Organization has been able to control the company’s ability to capitalize on exceptional consumer and customer trends within each country. This is inclusive of the sustained growth and development of the business as far as chocolate refreshment, sugar confectionary, pantry, as well as food service product are concerned. The Hershey North America Has a subsidiary known as The Hershey Experience and which is endowed with the management of retail operations in the United States.

Hershey International

The Hershey worldwide markets products worldwide and has duty for trailing down gainful development prospects in key markets, principally in Latin America and Asia. This group is liable for worldwide subsidiaries that produce, trade in, promote, sell or distribute chocolate, confectionery and drink products in India, Brazil as well as Mexico. Hershey International produces confectionery commodities for the marketplace in Asia, predominantly in China, under a manufacturing accord with Lotte Confectionery Co., Ltd. A constituent of Hershey International, International Marketing and Innovation, runs the Hershey’s Shanghai vending attraction store in Shanghai, China.

Global Marketing Group

In addition, the Global Marketing Group has duty of structuring global brands, in addition to steering the transformational growth stand, brand placement and portfolio stratagem. This group is endowed with the development of market-explicit insight, strategies and stage improvement for Hershey North America and Hershey International.

Customers

It is the responsibility of the Hershey’s company Full-time sales representatives and food brokers to market the market products to the company’s expansive pool of customers. The majority of the customers consist mainly of “chain grocery stores, general distributors, and mass chain medicine stores, vending companies, general clubs and expediency stores.” These intermediate customers are then responsible for reselling the company’s products to end-consumers who are spread in over 2 million retail outlets in both North America and other locations around the globe. For instance, in 2009, the total deal to McLane Company, Inc. – among the leading wholesale distributors in the United States – were about 27% of the company’s overall net sales. McLane Company, Inc. is the only major and principal distributor of the Hershey company merchandise to Wal-Mart Stores, Inc.

Marketing plan and Seasonality

The Hershey company marketing strategy is founded and based on the strapping brand equities, the consistent superiority in the quality of the products, the unique mass distribution and production expertise capabilities. The company has devoted all her substantial resources toward the recognition, improvement, production, testing as well as the marketing of the new products. There exists a variety of promotional programs mostly targeting the end-user consumers as well as advertising, awareness and sales promotional programs for all customers. The promotional programs are meant to stimulate sales of some products at different times all through the year. The company’s sales are characteristically high in the third and fourth quarters of the year, signifying seasonal and vacation-related sales prototypes.

Product Distribution

In close concurrence with the company’s sales and marketing efforts, the effective merchandise distribution system has assisted in maintaining coherent sales growth as well as ensuring a sustained provision of superior customer service. The company has plans underway for optimal inventory levels in addition to working closely with the customers with the aim of setting up rational delivery times. The company’s distribution network has continued to provide for efficient product shipment from various production plants to distribution hubs located strategically in Canada, Mexico as well as the United states. Common carriers are extensively used in the delivery of the manufactured products from the distribution sites to the customers.

Price Changes

The company has always been involved in the modification of products weight and prices, whenever necessary with the sole aim of accommodating changes in competition and profit objectives, changes in various operating costs and overheads and while all the time trying to maintain consumer’s value and preferences. The changes in prices and weights have been instrumental in offsetting increases in the company’s input costs associated with packaging materials, raw materials, transportations, employees’ remuneration and benefits in addition to other utilities.

Raw Materials

Cocoa products are generally the most important raw materials used in the production of chocolate products. Cocoa produce, for instance cocoa butter, cocoa liquor, and cocoa powder processed from cocoa beans are used to assemble basic production requirements. Cocoa products are bought openly from third party traders. In the past, there have been occurrences of unfavourable weather conditions, crop infection, in addition to other problems mostly associated with cocoa-producing countries. Due to the prevalence of such mishaps, there have been infrequent price fluctuations; however, this has never led to a complete loss of a particular cocoa exporting country. In the occasion that such interference would be experienced in any country, the company is confident that other cocoa producing counties especially from existing substantial cocoa stocks in consuming countries would furnish a significant supply buffer.

Competition

The majority of the company’s brands have continued to enjoy a wide consumer approval and these have facilitated them to be among the most important brands sold in the market in North America. All brands from the Hershey Company are sold in a highly competitive market alongside other several international, nationwide, and local firms. Most of the Hershey’s competitors are much well-built firms with greater resources at their disposal in addition to enjoying a more substantial global operation.

Research and Development

On the other hand, Hershey Company has continued to sustain a variety of exploration and development activities. The company has plans underway regarding the development of novel products, improving the excellence of existing products, improving and modernizing the manufacturing processes, the improvement and implementation of innovative technologies to improve the quality and significance of both existing and planned product lines. All information appertaining to the company’s current research and development expenses is always reflected in the consolidated fiscal statements.

Food Quality and Safety Regulation

The production and sale of consumer foodstuff products is extremely synchronized. For instance, in the United States, all the company’s actions are subject to regulation by various administration agencies, as well as the Department of Agriculture, Food and Drug Administration and the Federal Trade Commission in addition to various local and foreign agencies outside of the United States.

Through the Product Excellence Program, the Hershey Company is assured of providing an effectual product quality and safety program. The aim of this program is to assure that all the products purchased by the company are for manufacturing and distribution purposes are of superior quality, act in accordance with all applicable laws and regulations and are safe for human consumption. It is through the Product Excellence Program that the company is able to monitor and evaluate the supply chain together with the required ingredients, appropriate packaging, safe manufacturing and distribution processes, the quality of products, and the entire environment to decide where product quality and security controls are essential. Risks are identified and counter controls are established with the aim of sustaining a guaranteed assurance in product quality and safety. Different government agencies, quality assurance staff, as well as third party partners all carry out audits of all amenities that produce the company’s commodities to guarantee efficiency and conformity with the program as well as all applicable laws and regulations.

Employees

As of the financial year ending December 31, 2009, the Hershey Company had an approximated employee database of 12,100 full-time as well as over 1,600 part-time employees in the whole world. Out of these, approximately 5,000 employees were fully covered by collective bargaining agreements which translated to approximately 43% of the total workforce. The company has managed to maintain good employee relations with the customers, consumers, management as well as among fellow employees.

Corporate Social Responsibility

The Hershey Company’s founder, Milton S. Hershey, commissioned a permanent model of accountable citizenship while developing a thriving business. Creating a distinction in the communities, lashing sustainable business operations and functioning with the maximum veracity are fundamental parts of the Hershey company heritage that shapes the life of many. For example, Milton Hershey School, established by Milton and Catherine Hershey, lies at the core of the company’s inimitable legacy. Mr. Hershey contributed and donated nearly all his whole fortune to the Milton Hershey School, and which remains the company’s primary recipient. The centre has been providing a world-class schooling along with fostering nearly 2,000 poor children annually.

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In light of environmental conservation, The company has continued to practice environmental stewardship by cutting down on waste and greenhouse gas emissions, by plummeting her use of natural resources, by convalescing the ecological sustainability of packaging as well as following environmentally acceptable cocoa cultivation. For instance, in 2009, the Hershey Company took part and for the first occasion in the Carbon Disclosure Project, and it is through this submission that the company considered the impact of climate variance on her business as well as several plans to deal with the blow of climate change on Hershey’s operations all over the globe.

Conclusion

The Hershey Company has continued to run in extremely aggressive markets and solely rely on sustained demand for her products. To ensure sustained revenue and profit generation, the firm continue to sell products that appeal to both their customers and to consumers. Sustained success is reliant on efficient retail implementation, suitable advertising operations and marketing programs, the aptitude to secure ample shelf space at retail shops and product improvement, as well as upholding a strong pipeline of novel products. In addition, the Hershey company achievement will widely depend on the company’s reaction to consumer trends, consumer health apprehension, and modifications in product type use and consumer demographics.

 

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