THE HISTORY OF HERSHEY’SThe captivating story of Hershey's spans nearly a century and a half of industrial and social change.

Milton Hershey, the man behind Hershey's Chocolate, opened his eyes to this world, on 13th September 1857. He developed the love for candy at a very tender age only and started his career as an apprentice to a candy-maker in Lancaster, Pennsylvania.

CHRONOLOGY:1876At the age of eighteen, Milton laid the foundation of his own candy shop, in Philadelphia. However, the shop closed down after six years only, following which he moved to Denver, Colorado, and started learning the art of caramel-making. 1886Milton moved back to Lancaster, Pennsylvania, and launched the much-successful Lancaster Caramel Company. The company grew by leaps and bounds.

1893Milton attended the Chicago International Exposition and ended up buying German chocolate-making machinery and started producing chocolate-coated caramels.

1894He started the Hershey Chocolate Company, selling off his caramel business. With this, he started the production of Hershey chocolate caramels, breakfast cocoa, sweet chocolate and baking chocolate. Interesting Information On Background & Origin Of Hershey's ChocolateWithin six years of starting Hershey Chocolate Company i.e. in 1894, Milton began the production of milk chocolate, in the form of bars, wafers and other shapes. As the methods of mass-production became popular, the company was able to lower the per-unit cost of milk chocolate and bring the product within the common man's reach. The chocolate was an immediate success and witnessed heavy demand. To cope up with the rising orders, Milton decided to increase his production facilities. Soon, Hershey witnessed the opening of a new chocolate factory, amid the gently rolling farmland of south-central Pennsylvania, in Derry Township. The location was close to the ports

1

of New York and Philadelphia, from which the factory sourced its imported sugar and cocoa beans. At the same time, it was surrounded by dairy farms, easily providing the much-needed raw material - milk. Even the supply of honest, hard-working labor came locally. In short, Pennsylvania proved the ideal location for the chocolate factory. The new factory came into operation by the summer of 1905, when it started producing delicious milk chocolates. With time, Milton started looking forward to expanding the product line of his company. In 1907, Hershey Chocolate Company began producing flat-bottomed, conical milk chocolate candies. Given the name of 'Hershey’s Kisses', they were initially individually wrapped in silver foil. Machine wrapping was introduced in 1921. Sometime later, the plume was added to the chocolates and in 1924, they were trademarked as well. The early 1900s saw the introduction of a number of products in Hershey Chocolate's offerings. These included Mr. Goodbar (1925), Hershey’s Syrup (1926), Chocolate Chips (1928) and the Krackel Bar (1938). Such was the popularity of Hershey's products and the business acumen of Milton that the company maintained its profitability even during the Great Depression and managed to avoid any worker layoffs. As World War II started, Hershey Chocolate started producing a survival ration bar for military use. By the time World War II ended, Hershey had supplied more than a billion of the survival ration bars, known as Ration D bars. It had even earned five Army-Navy “E” Production Awards, for its exceptional contributions to the war effort, which included making parts for the Navy’s antiaircraft guns. In 1956, seven years after the death of H.B. “Harry” Reese, H.B. Reese Candy Company was sold to Hershey Chocolate Corp. This was expected, considering the fact that Hershey Chocolate had been supplying the coating for REESE’S “penny cups, since long. In 1968, Hershey Chocolate was renamed as Hershey Foods Corporation. In the decades that followed, the company witnessed the expansion of its confectionery product lines, acquiring of related companies and diversification into other food products. Today, Hershey is amongst the leading North American manufacturers of chocolate and non-chocolate confectionery and grocery products.

2

MAJOR COMPETITORS OF HERSHEYS:Some of the major competitors of Hersheys are:

Mars Inc. Cadbury & Krafts Food Co. Nestle SA Ferrero Group

MARKET LEADERS IN CONFECTIONERY INDUSTRIES

Mars

Cadbury

Nestle

Hershey

Kraft

14.8

10.3

7.6

4.8

4.5

MARKET SHARE BY VOLUMEMARKET SHARE BY VOLUME

3

MARKET SHARE OF ALL THE MAJOR COMPETITORS IN THE CONFECTONERY INDUSTRY

GLOBAL MARKET SHARE

MARSGlobal Market Share: 14.6%Best-Selling Candies: M&Ms, Snickers, Milky WayEtc: Snickers was named after the Mars family's favorite horse in 1930

NESTLÉGlobal Market Share: 12.6%Best-Selling Candies: Nestlé Crunch, ButterfingerEtc: Just bought Kraft's frozen pizza business and said it wouldn't bid for CadburyKRAFTGlobal Market Share: 8.3%Best-Selling Candies: MilkaEtc: Milka's mascot since 1901 has been a purple cowFERREROGlobal Market Share: 7.3%Best-Selling Candies: Ferrero RocherEtc: The Italian company is known for its chocolate-hazelnut spread Nutella

4

CADBURYGlobal Market Share: 6.9%Best-Selling Candies: Cadbury Creme EggEtc: Cadbury became solely a confectioner after spinning off its beverage business in 2008HERSHEYGlobal Market Share: 6.7%Best-Selling Candies: Hershey's, Hershey's KissesEtc: America's milk chocolate pioneer has been considering making an offer for Cadbury

The Hershey Co.

Mars Inc.

Russel Stover

Nestle USA Inc.

Lindt & Sprungli

RM Palmer Co.

Private Label

Others

0 5 10 15 20 25 30 35 40 45

42

25

7

8

4

3

2

9

US MARKET SHARE

US MARKET SHARE

5

COMPARATIVE STUDY OF ALL THE MAJOR COMPETITORS

On the basis of:

PRODUCTHERSHEYS CADBURY & KRAFT MARS NESTLEMilk Chocolate Bar Dairy Milk Mars SmartiesAlmond Bar Fruit & Nut Snickers MilkyBarDark mildly sweet chocolate Bar

Roast almond M’n’M Chokitos

Cookies ‘N’ Crème Crackle Skittles PollywaffleAir delight chocolate Bar

5 Star Twix White knight

Hershey’s Drops Relish 3 Musketeers Peppermint crispHershey’s Miniatures

Picnic Bounty Crunch

Hershey’s Nuggets Perk Milky Way Club

Mr. Goodbar candy bar

Gems Kudos Golden Rough

Symphony Bar Nutties Galaxy Nesquik

Sugar free chocolate Caramel Marathon

Googly Tracker

Mr. POP Revels

Dolmio

Flyte

M-Azing

Minstrels

Seeds of Change

Promite

Analysis:According to the above table, it is clear that when we compare Hershey’s products with that of it competitors, Mars Inc. emerge as the leader. Mars has the maximum number of products available in the market followed by Cadbury. Hersheys fall on the third place closely followed by Nestle.

6

On the basis of:

PLACEHershey’s:

The first plant outside Hershey, Pennyslvania opened on June 15, 1963 in Smith Falls, Ontaria, Canada and the third opened on May 22, 1965 in Oakdale, California. In February and April 2007 Hershey’s announced that their Smith Falls and Oakdale plants would close in 2008, being replaced in part by a new facility in Monterrery, Mexico. The Oakdale factory closed on February 1, 2008. Hershey chocolate factory in Sao Rogue, Brazil was opened in August 2002.

Hershey also had plants in Stuarts Draft, Virginia; Lanchaster, Pennsylvania; Hazleton, Pennsylvania; Memphis; Tennessee; Robinson, Illinois and Guadalajara, Mexico.

Cadbury:

Cadbury produces chocolate for more than 200 countries so that they have a chance to enjoy it as well and make profit. This gives them a wide range of consumers around the world. Cadbury Schweppes therefore makes sure that the cultures of these different people are kept. They can do this by producing products, which are eaten in that particular country without upsetting religious or cultural practices. 

Mars:

Mars Inc. are very popular globally, Mars chocolates are eaten all over the world with Mars Bar and Snickers being the most popular. It has factories in 68 countries worldwide. It has one of the biggest share in the chocolate industry because of its wide reach all over the world.

Nestle

Nestle again has spread worldwide.Nestle when entering a new market does not goingalone but it looks for partners and mergers. Till nownestle has collaborated with companies many MNCs etc.It is because of this world wide spread that now itis coming up with Advertisements which can be broadcasted in the different nations in the world. The recent example with would be the Nestle advertisements having “Deepika Padukone” as its brand ambassador.

7

On the basis of:

PRICINGHershey’s

Hershey’s pricing strategy is to maintain the price level at a consistently high rate. In India it targets mostly foreigners and upper class Indians.

Price cut off or no increase in prices but products weight would be reduced.

Cadbury

Price is an important element of the marketing mix. The price charged for a chocolate bar can determine whether a consumer will buy it and the level of sales achieved can determine whether or not Cadbury Schweppes will make a profit. Price is also affected by factors such as the state of the economy, what competitors are charging, the stage reached in the products life cycle and above all what price the market will bear. From the marketing point of view this is what matters.

Mars

Mars’s has been marketed as a mass market chocolate product, targeting children, teenagers and working adults. Pricing for Mars is modestly priced. This is an affordable candy that everyone can afford and enjoy.

Nestle

Nestle again decides it price on the basis of competition. The best think about the company nestle is that it is very flexible and it can come down with the price very quickly. The company is renowned to bring the price down even up to half if needed.

But this risk taking attitude has also earned nestle losses. Though lowering the price would attract the customers but it would not help them cover up the cost incurred in production hence causing them losses. This was the situation earlier but now nestle is a full-fledged and growing company.It has covered allits losses and is now growing at a rapid rate.

8

On the basis of:

PROMOTION

Promotion is one of the four aspects of marketing. Promotion comprises four subcategories:

1:Advertising

2:Personal selling

3:Sales promotion

4:Publicity and public relations

The specification of these four variables creates a promotional mix or promotional plan. A promotional mix specifies how much attention to pay to each of the four subcategories, and how much money to budget for each. A promotional plan can have a wide range of objectives, including: sales increases, new product acceptance, creation of brand equity, positioning, competitive retaliations, or creation of a corporate image. Nowadays nestle going in for Brand Ambassadors to promote their product.

These brand ambassadors are famous people who usually people idolize and people can relate to them.

Hershey’s

Advertising

Hershey company’s most recent examples of advertisings are listed below:

1. Carolers2. Drops3. Mother and Daughter4. 4. S’mores

Personal Selling

The customer can deliver without additional charge. Hershey’s does not have Personal Selling.

9

Sales promotion

The commercialization of many holidays is continuing to expand and the popularity of gifts for these holidays is also increasing. Hershey can provide holiday product in outlet other than their website.(i.e. Hallmark, Barnes and Noble).The increase in the importance of commercialized non-traditional holidays(i.e. sweetie days, grandparents’ day, and boss’s day) and traditional holidays (i.e.Christmas, Valentine’s Day, Mother’s day, Halloween)allows Hershey to optimize the importance of their speciality gifts products. By providing their gifts using retail channels, Hershey has an opportunity to increase the sale of their specialized gift products.

Publicity and Public Relations

Hershey appointed Arnold Worldwide to create fully integrated advertising and marketing programs for its core chocolate brands, including Hershey’s, Reese’s, Hershey’s Kisses, Take 5, York and Kit Kat. Arnold is known for building brands through multi-faceted programs that include broadcast, print, design, interactive, direct, promotions and public relations.

Cadbury

Advertising

The advertisement aimed at conveying the idea that no specific occasion is required for consuming Cadbury chocolate.

Celebrities Endorsements

Cadbury roped in Priety Zinta for its Perk brand. Priety Zinta’s angelic dimples lair the foundation for what would become the Indian teenager;s favorite snack. After this campaign, Perk’s sale surged.

The Big ‘B’ factor

The big factor that has pushed up Cadbury sales is the Amitabh Bachchan campaign. Cadbury appointed Amitabh Bachchan as its Brand Ambassador.

Mars

Still wholly owned by its founding family, packaged foods giant Mars is one of the world's biggest private companies, with annual sales in excess of $30bn. In addition to its globe-spanning confectionery brands, which include Snickers, M&Ms, Starburst and Skittles, the company is one of the leading worldwide manufacturers of petfood, through Pedigree and

10

Whiskas and other brands, and also manufactures sauces and easy-cook rice-based meals under the Uncle Ben's umbrella. n April 2008, in by far the biggest acquisition in the company's history, Mars acquired gum and mint giant Wrigley in a substantial $23bn deal which made it the world's largest overall confectioner. It was pushed back into second place two years later by the merger of Kraft and Cadbury. In chocolate, it still ranks behind Hershey in the US, although Mars has a far wider global spread. M&M's and Snickers are the world's best-selling confectionery brands.

Nestle

Nestle launches new campaign for KIT-KAT; uses animation for the first time in india. this is an advanced promotional activity used by Nestle in India.

Nestle advertise its products through TV commercials, Print Media, Bill boards etc. The advertising budget is preplanned at the starting of the financial year which is kept secret by the company. Nestle do not have any sponsors. Deepika Padukone is the brand ambassador for this brand in India. The product is marketed aggressively in the market.

11

COMPETITIVE ADVANTAGES

Hershey’s

Hershey Foods has gained popularity embodying favorite American adjectives like "biggest," "fastest" and "most."

The Hershey Bar and the Hershey Kiss, specific brands most readily identified with Hershey, retain an old-fashioned brand. They are sold using simple packaging, which has remained (more or less) the same for 100 years, reasonable pricing, and steady quality.

As an all-American brand, Hershey capitalizes on patriotism and loyalty. It has been the official chocolate of the American military since World War I,

when Hershey Bars were included in soldiers' rations. Today, the company leads the American market with its brands, accounting for

38 percent of all chocolate sold in the US. This figure is more impressive when we consider that the American market is the world's largest consumer of confectionery.

Broad product portfolio stabilizes the company’s earnings. Focus on research and development (R&D) helps Hershey to gauge the emerging

market for healthier snacks options.

Cadbury:

Cadbury is the largest global confectionery supplier, with 9.9% of global market share. High financial strength. Strong manufacturing competence, established brand name and leader in innovation. Advantage that it is totally focused on chocolate, candy, chewing gum, unique

understanding of consumer in these segments. Successfully grown through its acquisition strategy. Recent acquisitions, including

Adams, 2003, enabled it to expand into important markets like the US market.

Nestle

Leading overall market position and number one or two brands in most areas. The extraordinarily large scope of Nestles business provides for significant economies of

scale in manufacturing, marketing and administration. The research and development capabilities allow the Company to lead the way in

innovation and provides for maximum portfolio flexibility.

12

SUGGESTIONS FOR HERSHEYS

Enhancing market presence through acquisitions and licensing agreements Growth in the global confectionery market. Streamlining business through restructuring operations and supply chain management.

The main competitors of Hershey Foods are Mars and Nestle. Mars is already a threat for Hershey, because Mars has a stronger presence than Hershey in Europe, Asia, Mexico, and Japan. Hershey should pay special attention towards marketing its products in these areas.

Unlike Hershey, Mars has historically relied upon extensive marketing and advertising expenditures to gain market share, rather than on product innovation. Taking a lesson from this, Hershey should also increase its advertising budget.

China and India are huge untapped markets. Malaysia, Indonesia, Vietnam, and Thailand also are untapped, So, Hershey has the opportunity to gain a foothold in those Countries.

There is another opportunity for Hershey to develop environmentally safe products and packages, reducing industrial waste, recycling, and establishing an environmental audit process are strategies that could benefit Hershey.

Another opportunity is that Hershey diversifies more into non-chocolate candies because that segment is growing most rapidly in foreign countries like U.S & U.K.

Hersheys should adopt Positive market outlook. The company should diversify its products. Growing market for premium chocolate products Hersheys should market itself as a health conscious brand.

13