Market Trends Hershey's 1
Running head: MARKET TRENDS HERSHEY'S MIGHT FACE
Market Trends Hershey's Might Face
Market Trends Hershey's 1
In the North America, Hershey is one of the largest manufacturer and provider of confectionary items like chocolates and sugar candies. The company is not only famous or builds its image in the United States, but also around the world. Around the world, Hershey exports quality products nearly around 90 countries and its total revenue is about $4 billion. More than 14,000 employees are employed at Hershey’s. The major goals of Hershey includes to raise the high level of ethics or conduct, maintain good relationship with the employees, maintain the ever lasting relationship with the customers by providing good quality chocolates and sugar candies.
Hershey is the perpetually expanding company because of the high demand of their product in the market. Hershey will try to expand its product line into the snacks and premixed milk drinks, so that it will be a leader in the confectionary industry. For fulfilling the future market demand or trends, the company uses the various high technology equipment and methods to boost up their productivity, thus it will be easy to grab the future opportunities (Background & History of Hershey).
The future market trends that Hershey faces in the chocolate market are raising cost of the commodities eliminate the profit margins, higher spending on the advertisements easily helps in the promotion of the product in the market. In order to face the future market trends in the same areas, the market structure of Hershey is same as in the current market conditions. The market structure has the oligopoly structure. In this structure, the leading companies such as Mars, Nestle, and Milky Way will only rule the confectionary market. The market structure involves the number of leading companies in the chocolate market, which supplies highly quality products to fulfill the future market trends
In the U.S. chocolate market, Hershey captures the largest market share and has become the leader in Chocolate products. If the new companies enter into the chocolate market, it will be negatively impacted on the current position of Hershey. Mainly, it affected its current market share 42%. Competitive position of the Hershey will also be highly affected because company has to face the tough competition with the counterparts in the confectionary market. Hershey will also have to alter its licensing agreements in the U.S. market, thus preventing new competitors from entering into the US market.
In the future the company wants to increase its product prices by 10%, due to the continuous increase in the cost of ingredients of the chocolates and sugar candies such as sugar, corn and peanuts, the increase is around 20% to 45%. Hershey’s operating margin is highly affected, because of the continuous increase in the commodities cost or ingredients cost.
In the year 2008, as compared to Hershey’s profit with its forecast range is too low. In order to maintain future market conditions, Hershey depicts that in 2008 the earning per share is quite low in comparison to its forecast range $1.85 to $1.90 per share (Hershey to Raise US Candy Prices by Roughly 10 Pct, Cites Higher Costs of Ingredients, 2008).
For more than 100 years in the central region of Pennsylvania Hershey has been making its finest chocolates, with the recent economy crises Hershey is forced to be reduced to layoffs within the company and plants closing. They all have been forced to outsource the labor which in turn Hershey does not have to pay such a high wage due to the fact if that job is being outsourced then Hershey is able to pay the person doing the labor nearly half the wage, this is leaving consumers to wonder is Hershey going to stay an American company? And why are they taking America’s jobs away (Christian, Sherry,2007).
Hershey created a theme park called Hershey Park back in 1946, the theme park contains many rollercoaster rides and many attractions to visit and see Hershey is so serious about chocolate that the cross streets to the amusement park are “Chocolate” and “Cocoa”,even the street lamps are in the shape of Hershey kisses. It appears as if the theme park never gets old to the people of Pennsylvania or its tourists, many people visiting the park many times a year, were else can someone go and smell the sweet smell of chocolate in the air and enjoy indulging on many kinds of chocolates that Hershey offers. In the future Hershey plans to expand its park and add some new attractions like the boardwalk that was just put in the budget for Hershey, more changes are coming, and Hershey is joining with its sister company to open Hershey entertainment and resorts with new shops with new Hershey attire and maybe even a new hotel within Hershey. The new upgrades are to bring more people to the town of Pennsylvania to bring in more revenue and create more jobs within the community (Beiser2008).
Hershey has also decided to contribute more to the less fortunate people in the world. Hershey is going to start donating more monies to children who are ill, needy people, people who are starving and cannot afford to make ends meet. Hershey also wants to contribute to scholarships so people have a better opportunity to get an education. Hershey does donate money to help people in their community when it comes to children and education, with this said Hershey wants to be the all American organization with all American dreams, always trying to keep an open mind and new ideas within the organization to keep up with the times.
With the economy today Hershey hopes that in the year 2009, they are not forced to raise their prices on their goods sold this would make it even harder for the company to sell its products and provide jobs for people if prices rise. Hershey was forced to raise its prices in 2008 due to the raise in goods to make the products. Hershey wants to stay a family business and wants to be able to provide jobs and happiness with every bite of their wonderful chocolate.
Competitors can make business tough. Like Mars-Wrigley and Nestle, Hershey has other competitors. Hershey faces competitors from other countries and continents for example, Frey Chocolate. Frey Chocolate Bars invented by Daniel Peter of Vevey, Switzerland. Daniel Frey and his brother created a chocolate company and promptly became famous for the chocolate bars that they produced. Mixing Swiss chocolate styles and other products, the Frey chocolate bars are now available in the United States. The chocolate bars can be located in Target stores throughout the United States. Another competitor that Hershey has to be concerned about is Swiss-Master Chocolatier from Toronto, Canada. Unlike other chocolate makers, Swiss-Master Chocolatier has been thriving in a tough demanding market, through downturns and recessions and other competitors.
Competition can affect Hershey positively and negatively. The positive side to competition is that competition can help the organization thrive. Positive competition can also keep the organization current with new technology and current market trends to get the word out on new products and existing products. But competition can also affect the organization negatively. Competition can cause the organization to decline in the sales due to the competitor’s product being reasonable and having better quality. Another aspect that can affect the organization negatively is by shutting the doors to the organization and letting all the employees go due to the downfall of the organization and the rise in the ingredients to produce the products. As stated by a press release from The Hershey Company (2008), “In 2009 we expect the commodity cost to increase to be more than double the 2008 increase. Execution of the commodity hedging strategies to firm up the 2009 commodity cost profile will add approximately $10-12 million, or roughly $0.03 per share, to the initial estimate of about $100 million increase in 2008 raw material cost.” However, Hershey does not have to worry about being affected negatively because the organization is the number one leading chocolate and sugar candy producer in the United States. Hershey is also aware of the environment.
Hershey is busy in saving the delegate ecosystem by helping to maintain the cocoa farming. Hershey works with people in the manufacturing industry, other organizations, and international agencies. Hershey also works with communities that farm cocoa to start programs that helps with the economy and social development and environmental protection in the world wide of cocoa-growing communities. “As a member of the World Cocoa Foundation, The Hershey Company helps cocoa farming a sustainable and successful way of life for families who farm through programs that improve growing techniques and the health of cocoa trees to reduce crop loss” (The Hershey Company, 2008).
References
Background & History of Hershey. Retrieved October 8, 2008, from
Beiser,(2008) Hershey honors its past, and looks to the future, RetrievedMay27,2008,from
Christian, Sherry. (2007, November28). The future of Hershey, Retrieved from
The Hershey Company- Social Responsibility: Cocoa Growing (2008). Retrieved on October 7, 2008 from
Hershey To Raise US Candy Prices By Roughly 10 Pct, Cites Higher Costs Of Ingredients. (2008). Retrieved October 8, 2008, from
Press Release- The Hershey Company (August 2008). Retrieved on October 7, 2008 from