Hersheys Global Marketing Strategy - Essay Example

MARKETING STRATEGY ____________________________________________________ Hershey’s global marketing strategy College Hershey: General Overview The Hershey Company is the largest manufacturer of premium quality chocolate and confectionary products. It operates throughout many subsidiaries worldwide employing more than 13,000 employees. Hershey has been leading the USA grocery market for dark and premium chocolate segment. The basic products group includes confectionary products in the forms of bar goods, boxed or bagged items and grocery items in the forms of baking ingredients, chocolate drinks, peanut butters and beverages. It manufactures confectionary in 50 brands. According to Michman (1998), Hershey’s marketing strategy has been predicated on consistently superior product quality, intensive distribution and best possible value in terms of price and weight (p. 207). With a vision to continuously provide premium quality confectionary goods to its customers, Hershey became the market leader with a market share of 29%. Hershey’s Global Market Hershey’s selling and marketing organization is comprised of Hershey North America, Hershey international and global marketing groups. Hershey International markets its products worldwide and has responsibility for pursuing growth in other countries focusing mainly in Asian growing markets like India and China. The global marketing group is responsible for building global brands, developing transformational growth platforms, brand positioning and pricing strategies. Hershey has been approaching various methods in order to gain competitive advantages on its counterparts like MARS, Cadbury and Nestle. It has been operating business worldwide with various strategies that helped them to be strong in most markets like India. Taylor (1997) emphasized that Hershey had been using a range of strategies to penetrate the international confectionary markets and it had always relied heavily on direct exports to smaller markets and had participated in the processes of acquisitions, joint ventures, licensing agreements and strategic alliances of various kinds (p. 344). ‘Acquisition’ as a Global Marketing Strategy Acquisition of major market players has been considered to be an effective strategy in order to gain access in to global market. Accessing in to a global market like confectionary is extremely vulnerable, especially when the competition within the marketplace is fierce, the technological innovations put forward by companies are highly advanced and strategies are constantly fluctuating. But, through acquisition and mergers, the company can gain the advantages of easy access and effective marketing operations with the help of acquisitioned firms as they are well aware of the market within its country. The Hershey’s international business group, which is designed to promote and widen its marketing in the global market especially in the growing Asian countries, will look at developing global growth, global brands and technological innovations. Hershey considers acquisition as value adding and profitability-enhancing strategy as it would help the company to access complicated markets easily and deliver record sales. Acquisition of major stakes in a particular company will play crucial role in the successful expansion of Hershey’s global expansion strategy. Hershey has recently acquired major stakes in Godrej Food and Beverages Ltd which is an Indian company for more than $60 million. It has helped Hershey generate a profitable operation in Indian confectionary market through supply chains and effective distribution going hand-in-hand with Godrej Ltd. Hershey has experienced efficient global expansion through acquisition and it will keep the same strategy so as to restructure and expand its worldwide markets. In order to do it effectively, finding a best suited company that also deals in supply chain would be a determinant factor as well as a crucial stage. Acquisition or collaboration strategies can help Hershey to maintain a strong distribution channels and increased sales in countries where main competitors like Cadbury, Mars and nestle have relatively good market shares. In order to acquire stakes in major companies, Hershey needs to spend enough in its capital requirements and hence it can go for further debt rather than diluting the ownership of its stock as it won’t be an effective means to cope with changing economic conditions. Advertising as part of global strategy There are growing concerns in confectionary markets like social responsibility and business ethics. Most worldwide chocolate consumers are becoming increasingly aware of those African slaves who are being compelled by corporate to work in the cocoa fields. This would be challenge for any chocolate and confectionary company that tries to enter in to new marketing arenas. Hershey proposes to conduct wider promotions and advertising campaigns as part of its strategic approaches that would make people aware of Hershey products and growing concerns of ingredients in Hershey’s products. It also looks at providing ongoing information regarding nutrition and how its products create greater values to nutrition. ‘Five Force’ Analysis Michael E Porter’s (1979) ‘Five Forces’ analysis would help determine the strategic efficiency and competitive intensity of Hershey within its both micro and macro marketing environments. The five combinations of Five Force analysis show how effective the strategic planning and how profitable the business are. Conclusion This paper provides a detailed analysis on Hershey’s global strategy in order to restructure and develop its marketing horizons. It presents acquisition as a best suited global strategy for Hershey and analyses various factors related to this strategy. References Michman RD and Mazze EM (1998), The food industry wars: marketing triumphs and blunders, Edition: illustrated, Greenwood Publishing Group Porter M (1979) "How competitive forces shape strategy", Harvard Business Review, pages 86 – 93 Taylor DH (1997), Global cases in logistics and supply chain management, Cengage Learning EMEA National Confectioners Association (2008), U.S Confectionary Market Overview, Retrieved from http://www.ecandy.com/ecandyfiles/BG_Overview.pdf Bibliography Anderson and Vincze (2006), Strategic Marketing Management Second Edition, Wiley-India Annual Reports (2002), Hershey’s Annual Reports, Hershey, Retrieved from http://www.thehersheycompany.com/ir/reports.asp Annual Reports (2003), Hershey’s Annual Reports, Hershey, Retrieved from http://www.thehersheycompany.com/ir/reports.asp Weele AJ (2005), Purchasing & supply chain management: analysis, strategy, planning and Practice, Cengage Learning EMEA Read More