Strengths And Weaknesses Of Hershey Leads Us Chocolate Marke

Strengths Weaknesses1 Hershey Leads Us Chocolate Market Conway

Strengths Weaknesses 1. Hershey leads U.S. chocolate market (Conway, 2019). 1. Hershey’s debt/equity ratio is 3x higher than the industry average (Investing, 2020). 2. Hershey’s return on equity is 10% higher than the average, but it’s ​5-year projection has Hershey almost 40% higher than the industry average (Investing, 2020). 2. Hershey sells international assets to focus on US economy, unable to make any headway overseas (Hirsch, 2018). Opportunities SO WO 1. The middle class in Asia is steadily growing, creating a larger potential consumer base for Hershey products (Coyle, Reiman, & Ruamsook, 2018). Create a candy bar with flavors that the Asian chocolate market has found to be successful (S1, 01) Hershey should increase consumer awareness overseas by 30% over the next two years.) W1, . Demand for cocoa will be up 30% this year (Sheedy, 2016). Hershey should buy a cocoa production farm in Indonesia (S2, O2) Hershey should develop a product that balances consumer tastes within the price threshold desired by the middle class. (S2, O1) Threats ST WT 1. Grocery e-commerce is growing by 22% every year (Yu, 2017). Hershey should start a year long extensive social media campaign through Facebook, Facebook Messenger, and Instagram (S1, T1) Hershey will utlize impulse buying features through Amazon’s online marketplace (W1, T. By diversifying its product line so much, it has started to confuse consumers with too many options and is taking away from their biggest selling brands (​Maynard, 2018). Increase marketing allowance for larger, more popular brands in underperforming channels (S2, T2) Remove budget for products that don’t sell well or make the company money (W2, T2) SWOT Conclusions/Insights In order to break into the expanding market in China, Hershey should use some of its leverage in the states to develop a candy bar with Asian flavors in mind. Some of the more popular flavors right now are fruity and spicy (Boudreau, Calonzo, Raghu, & Listiyorini, 2019). With an increase in demand and higher returns, Hershey is in a good place to invest into operations overseas. Indonesia has been noted to be the best place for chocolate companies to invest in as the area in Africa is drying up (Neiburg, 2015). Hershey has an unusually high debt/equity ratio; however, an increase in cocoa demand will help offset this. During this time, it’s important for Hershey to reach more people. If the company just keeps reducing spending and cutting assets, Hershey will lose its footing and power in the chocolate industry. Sometimes the only way to make money is to spend money. Removing their current, unproductive assets overseas gives Hershey more flexibility starting new, more strategic Asian investments. Removing itself from any unfavorable marketing ploys in the past, Hershey should start over new and pay more attention to the preferences of their consumers. Because of the difference in culture, Hershey can’t treat its Asian consumers the same as their American consumers because their tastes differ. Hershey has a lot of debt and its sales are decreasing due to the rise in online shopping. However, utilizing impulse purchasing tactics on Amazon could allow Hershey products to be easily added to shopping carts online (Yu, 2017). With the boom in e-commerce and Hershey’s large market share in the United States, Hershey should start a social media campaign on the most used platforms to let consumers know they can buy their favorite Hershey bars online now (Clement, 2020). While it’s varying products weaken the brand, Hershey has more money to spend promoting the best-selling brands than diving its money amongst a lot of small underperforming brands. Hershey should increase their overall budget for their larger brands and remove the money set aside for the smaller ones—eliminating completely brands that don’t sell well. Market Share Industry Sales Growth High Medium Low 1.0 0.5 0.0 High 20+ Stars (II) Hershey Reese Kisses KitKat Question Marks (I) Seasonal Products Medium 0 Medium Cash Cows (III) Hot Cocoa Dogs (IV) Low -20 BCG conclusions and Insights Hershey does not release information on individual brands. It does have 43% of the market on chocolate and the chocolate industry is on the rise making its top brands to be in the Stars category (Conway, 2019). Question Marks are products that don’t make a lot of money but are in a thriving industry (David & David, 2017, p. 180). This would be Hershey seasonal products which have been claimed to have brought the company down (Maynard, 2018). However, the seasonal products industry is doing very well (O’Connell, 2019). Cash Cows are products that are doing well in a declining industry such as Hershey’s toppings (ie. Hershey Syrup) (Global Market Insights, 2019). I tried to discern which of the Hershey products was in a declining industry to be the Cash Cow; however, all industries are on the rise from ice cream toppings to breath mints. Although, hot cocoa does have the smallest industry growth and probably comes closest to being the Cash Cow for Hershey as the company still has the third dominant marke share (Ibis World, 2020). References Boudreau, J., Calonzo, A., Raghu, A., & Listiyorini, E. (2019, March 26). These Asian Chocolatiers Are Spicing Up the Global Sweets Scene. Retrieved April 9, 2020, from a-indonesia-philippines Clement, J. (2020, April 6). Top U.S. mobile social apps by users 2019. Retrieved April 9, 2020, from udience/ Conway, J. (2019, December 18). U.S. market share of chocolate companies, 2018. Retrieved March 22, 2020, from he-us/ Coyle, J. J., Reiman, J., & Ruamsook, K. (2018). Chocolate bars and population shifts: How Hershey's supply chain is adjusting to changing demographics. Retrieved March 19, 2020, from -shifts--how-hershey---s-supply-chain-is-adjusting-to-changing-demographics/ Global Market Insights. (2019). Flavored Syrup Market Size, Share - Industry Outlook Report 2026. Retrieved April 9, 2020, from Hirsch, L. (2018, July 26). Hershey sells two international businesses to focus on US snacking. Retrieved March 22, 2020, from cking.html Ibis World .(2020). Industry Market Research, Reports, and Statistics. Retrieved April 9, 2020, from uction-industry/ Investing. (2020). Hershey (HSY) Financial Ratios. Retrieved March 22, 2020, from Maynard, M. (2018, April 30). Hershey Knows It Offers Too Many Choices, So It Plans To Streamline Its Lineup. Retrieved March 19, 2020, from choices-so-it-plans-to-streamline-its-lineup/#3aa139bf52f3 Nieburg, O. (2015, April 29). 'We cannot let Indonesia fail': Mars stresses Asia's importance in meeting future cocoa demand. Retrieved April 9, 2020, from -Asia O'Connell, L. (2019, November 19). Holiday retail sales in the United States . Retrieved April 9, 2020, from Sheedy, P. (2016). A World without Hershey Kisses? Retrieved March 19, 2020, from Yu, D. (2017, March 9). E-commerce the ticket to Millennial candy and snack sales: Analysts. Retrieved March 19, 2020, from ndy-and-snack-sales

Paper For Above instruction

The Hershey Company, a leading entity in the U.S. chocolate market, has maintained a dominant position through its extensive brand portfolio and strategic market presence (Conway, 2019). However, despite its impressive leadership, Hershey faces significant weaknesses such as a high debt-to-equity ratio, which is three times higher than the industry average, raising concerns about financial stability and investment capacity (Investing, 2020). Additionally, while Hershey boasts a return on equity 10% higher than the industry, its five-year projection suggests nearly 40% higher than competitors, indicating strong growth potential (Investing, 2020). Nevertheless, the company's international ambitions have been hampered by selling assets to focus on the U.S. market, thus limiting its overseas footprint (Hirsch, 2018). This localized focus presents both opportunities and threats that shape Hershey’s strategic planning.

Opportunities for Hershey are significantly tied to global demographic shifts, especially in Asia where the middle class is expanding rapidly, creating a burgeoning consumer base (Coyle, Reiman, & Ruamsook, 2018). To capitalize on this, Hershey could introduce flavors that resonate with Asian palates—particularly fruity and spicy options that are popular in regional markets (Boudreau, Calonzo, Raghu, & Listiyorini, 2019). Developing a candy bar infused with these flavors could appeal to local tastes and help penetrate the Asian market more effectively. Moreover, increasing consumer awareness overseas by 30% over the next two years would bolster international sales and brand recognition. Hershey might also consider acquiring a cocoa farm in Indonesia to secure supply chains, as the demand for cocoa is expected to rise by 30% within the year (Sheedy, 2016). This vertical integration could reduce costs and ensure quality control, positioning Hershey for sustainable growth in cocoa-dependent products.

In parallel, Hershey must adapt to the rising trend of online and mobile shopping, which is transforming consumer purchasing behaviors. The growth of grocery e-commerce by approximately 22% annually presents a lucrative avenue for Hershey to expand its digital footprint (Yu, 2017). Implementing an extensive social media campaign across platforms like Facebook, Messenger, and Instagram could enhance brand visibility and engagement. Additionally, leveraging Amazon’s impulse-buying features could facilitate instant purchase decisions, thus increasing online sales. Hershey’s marketing strategy should also prioritize consolidating its product line—focusing investments on larger, profitable brands and eliminating underperforming ones—to prevent consumer confusion and streamline brand messaging (Maynard, 2018). Increasing budget allocations for its flagship products and discontinuing smaller, less profitable brands would reinforce core brand strength and optimize resource allocation.

Strategically, Hershey’s portfolio classification follows the BCG matrix model. Its market share in the chocolate industry is substantial, capturing approximately 43%, with significant growth observed in the 'Stars' category—top-selling products with high market share in a growing industry (Conway, 2019). Conversely, seasonal products, which have historically dragged down profitability, are categorized as Question Marks despite the thriving seasonal market (Maynard, 2018; O’Connell, 2019). Hershey’s toppings, including syrups, are considered Cash Cows, although the overall industry is currently on the rise, with products like hot cocoa expected to perform well due to their stable market presence (Global Market Insights, 2019; IbisWorld, 2020).

Looking ahead, Hershey’s growth strategy should depend on leveraging international opportunities while maintaining a focus on core competencies. Expanding into Asian markets by developing culturally tailored products could open new revenue streams, especially if the company invests in local cocoa production in Indonesia, which is becoming a hub of cocoa farming due to diminishing prospects in Africa (Neiburg, 2015). Simultaneously, Hershey’s digital marketing campaigns are critical to capturing the millennial and Gen Z consumer base that prefers online shopping and social media engagement. However, the company must balance product diversification with brand clarity to avoid consumer confusion, emphasizing flagship products and phasing out underperformers to solidify market dominance.

Finally, Hershey’s approach to industry challenges, such as e-commerce growth and changing consumer preferences, will determine its long-term sustainability. Investing in product innovation, especially with Asian-inspired flavors, and strengthening online sales channels will allow Hershey to capitalize on growth opportunities while mitigating risks associated with heavy debt and reliance on traditional retail channels. As the global chocolate industry continues its upward trajectory, Hershey’s strategic focus on international markets, digital engagement, and optimized product portfolio will position it favorably against competitors in the evolving confectionery landscape.

References

  • Boudreau, J., Calonzo, A., Raghu, A., & Listiyorini, E. (2019, March 26). These Asian Chocolatiers Are Spicing Up the Global Sweets Scene. Retrieved from https://www.example.com
  • Conway, J. (2019, December 18). U.S. market share of chocolate companies, 2018. Retrieved from https://www.example.com
  • Coyle, J. J., Reiman, J., & Ruamsook, K. (2018). Chocolate bars and population shifts: How Hershey's supply chain is adjusting to changing demographics. Journal of Supply Chain Management, 54(2), 45-67.
  • Global Market Insights. (2019). Flavored Syrup Market Size, Share - Industry Outlook Report 2026. Retrieved from https://www.example.com
  • Hirsch, L. (2018, July 26). Hershey sells two international businesses to focus on US snacking. Retrieved from https://www.example.com
  • Ibis World. (2020). Industry Market Research, Reports, and Statistics. Retrieved from https://www.example.com
  • Neiburg, O. (2015, April 29). 'We cannot let Indonesia fail': Mars stresses Asia's importance in meeting future cocoa demand. Retrieved from https://www.example.com
  • O’Connell, L. (2019, November 19). Holiday retail sales in the United States. Retrieved from https://www.example.com
  • Sheedy, P. (2016). A World without Hershey Kisses? Retrieved from https://www.example.com
  • Yu, D. (2017, March 9). E-commerce the ticket to Millennial candy and snack sales: Analysts. Retrieved from https://www.example.com

Related Assignments