Jenna Boyle, Kerry McDermott and Rob
Whitehead
Name the Brand??
 Taste the rainbow
 Melts in your mouth, not in your hand
 Gimme a break, gimme a break…
 Nobody better lay a finger on my…
 There’s no wrong way to eat a…
•Industry Overview
•Advertising Analysis
•Pivot Table Analysis
•Target Market
•Perceptual Map
•Advertising Strategies
•Mars Inc.
•The Hershey Company
•“The Elegants”
•Where the Industry is Going
•Recommendations
Why is it relevant to us?
 65% percent of all American branded candy bars have
been on the market more than 60 years.
 Americans eat approximately 25lbs of candy each a
year (7.7 billion lbs total), about 60% of which is
chocolate
 Engrained in American culture.
 Candy is EVERYWHERE!!!
Industry Definition
 The Candy Production industry acquires raw materials
such as cocoa, sugar, cornstarch, fruit, preservatives
and flavorings to process them into a range of sugar
and non-sugar based confectionery products.
Major Products:
 Chocolate candies
 Sugar candies
 Sugarless candies
 Gum
Product Segmentation
PRODUCTS AND SERVICES SEGMENTATION
Product/Services
Candy or chocolate bars
Soft candy
Block chocolates
Industrial chocolate
Share
32.70
%
23.40
%
12.20
%
9.40%
Hard candy
8.90%
Gum
4.70%
Chocolate spreads and drinking
powders
Box chocolates
4.70%
4.00%
Market Segmentation
MAJOR MARKET
SEGMENTS
Market Segment
Confectionery
wholesalers
Supermarkets and
grocery stores
Share
61.30%
16.70%
Food manufacturers
8.10%
Hospitality trade
5.70%
Discount stores
4.30%
Direct to public
3.90%
Cost Structure
COST STRUCTURE
Item
Purchases
Wages
SG&A
Depreciation
Rent
Utilities
Other
Profit
Cost %
58.30%
10.10%
6.80%
3.50%
1.20%
1.10%
6.70%
12.30%
The Production of Confectionery
Government Regulation
The level of regulation is heavy
- All cocoa, chocolate and sugar manufacturers must meet the
standards of the FDA.
- Manufacturers also must comply with the hygienic regulation
- Environmental regulation
- Stricter labeling
Industry Structure
1.00%
1.00%
13.40%
2.00%
Mars Incorporated
2.00%
2.50%
The Hershey Company
3.00%
49.50%
4.00%
Tootsie Roll Industries
Ferrara Pan Candy Company
Jelly Belly Candy Company
Russell Stover Candies Inc.
Kraft Foods
21.60%
Nestle Inc.
The Topps Company
Other
Life Cycle Stage
Revenue Volatility
Capital Intensity
Concentration Level
Mature
Low
Medium
High
Regulation Level
Technology Change
Barriers to Entry
Competition Level
Heavy
High
Low
High
CR₄ and HHI
 The HHI for just the top 4 companies in the industry
is 2941.81.
 The CR ₄ for the industry is 78.1%.
 Therefore, the industry is highly concentrated with
only a few major firms holding a majority of the
market share.
HHI = 49.5²+21.6²+4²+3²=2941.81
CR ₄ = 49.5 + 21.6 + 4 + 3= 78.1%
*Hershey and Mars Inc. alone hold 71.1% of the market share.
-Many mergers occur.
Concentration
 Concentration in this industry is high
 This concentration of ownership is primarily a result of an
increase in acquisitions, along with natural growth for a
majority of major players encouraged by continued
product innovation, strong brand loyalty and aggressive
marketing.
Ways for companies to survive:
- adaptability to new trends
- economies of scale
- product differentiation
- successful supply chain management
- powerful marketing strategies******
Competition
 Quality
 Price
 Distribution
 Innovation and differentiation
 Substitute Products
 Imports
Candy v. Chocolate
CANDY
Mars Incorporated
The Hershey
Company
1.00% 1.00%
2.00%
2.00%
2.50%
HHI (for top 4) = 1141
CR ₄ = 59%
Medium level concentration
->Concentration is increasing!
Tootsie Roll
Industries
13.40%
49.50%
3.00%
21.60%
Ferrara Pan Candy
Company
Jelly Belly Candy
Company
1,039 businesses overall!!
Russell Stover Candies
Inc.
Kraft Foods
CHOCOLATE
Nestle Inc.
4.00%
HHI (for top 4)= 2941.81
Cr ₄ = 78.1%
High level of concentration
518 Businesses overall!!
The Hershey
Company
Mars Incorporated
The Topps Company
25.00%
39.00%
Other
Nestle
Russel Stover
20.00%
10.00%
0.50%
0.50%
1.00%
Lindt & Sprungli
Guittard Chocolate
Company
See's Candies
4.00%
Other
20
15
Revenue for
candy v. revenue
for chocolate
10
5
Candy Revenue
Growth %
0
Chocolate Revenue
Growth %
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
-5
-10
Chocolate
Confectionary
Production in US
-15
Candy Production in
US
REVENUE GROWTH
REVENUE GROWTH
Revenue $ million
Growth %
Revenue $ million
2000
16,613.30N/A
2001
16,563.30
-0.3
2002
15,700.10
-5.2
2003
16,074.00
2004
Growth %
2000
7,079.60
3.1
2001
7,201.60
1.7
2002
7,240.50
0.5
2.4
2003
6,504.50
-10.2
16,150.20
0.5
2004
6,621.70
1.8
2005
16,366.50
1.3
2005
7,610.90
14.9
2006
16,185.50
-1.1
2006
6,763.10
-11.1
2007
15,200.10
-6.1
2007
6,919.40
2.3
2008
13,801.20
-9.2
2008
7,082.60
2.4
2009
13,180.10
-4.5
2009
7,298.10
3
2010
14,861.60
12.8
2010
7,621.20
4.4
Total Sales for Confectionery
Industry
$22.6
7.1
$24.0 $22.9
$22.8
7.3
7.6
7.7
$22.1
7.4
$28.2 $20.5
7.2
$22.5
7.1
Dollars Sold at Retail, Billions
Pounds Sold at Retail, Billions
2003 2004 2005 2006 2007 2008 2009 2010
Confectionery Seasonal Sales
(** in millions of dollars)
2006
Valentine’s Day - $971
Easter $1,884
Halloween $2,146
Christmas $1,389
2007
$1,036
$1,987
$2,202
$1,420
2008
$1,024
$1,846
$2,209
$1,376
2009
2008
2009
$928
$1,990
$2,207
$1,401
2010 projections *
$935*
$1,970*
$2,225*
$1,420*
* – projections for 2010
2010
2007
2006
2005
VALENTINE’S
+0.7%* -9.4% -0.2% +6.7%
+0.1%
-4.0%
EASTER
-1.0%* +7.9% -7.1% +5.4%
+7.0%
-7.6%
HALLOWEEN
+0.8%* Even
+0.1% +2.6%
+2.8%
+2.3%
CHRISTMAS
+1.4%* +1.8% -3.1% +2.2%
+1.0%
+2.4%
NCA projects a 0.4% increase in 2010 for total seasonal sales
2010 US Confectionery Market
Retail Sales
Imports
Exports
$22.5B
$4.7B
$1.895B
Category
Retail Sales
$ Billions
Imports
$ billions
Exports
$ billions
Total
Confections
$22.5
$4.7
$1.895
Chocolate
$14.862
$3.0
$1.3
Non-Chocolate
$7.621
$1.7
$.595
2008 Per Capita Retail Sales
$92.91
$100
$52.46
$80
$60
$28.34
$40
$9.54
$20
$0
Total
Chocolate
Non Chocolate
Gum
Overview of Industry
 The recent desire for healthy alternatives has




required companies become more innovative.
Strong brands and customer loyalty.
Economies of scale and value addition during
production.
Despite recession, consumers still continuously
consume the same amount of candy because it is and
inexpensive and feel good luxury.
Growth segments such as sugar-free confectionery
and organic and fair-trade chocolate have shown
considerable promise and are expected to continue
in the next five years.
Demand Determinants
 Changing Consumer Lifestyles
 Pricing and Distribution
 Presence of Substitutes
 Product Innovation
 Culture and Tradition
How to Reach Consumers:
Advertising
2010 Total Advertising
Expenditures for Top Players
Hershey
$404,092,700
Mars
$422,510,500
Lindt
$51,094,100
Nestle
$743,163,800
Tootsie Roll Tootsie Pop
Jelly Belly
$784,500
$3,939,900
The Hershey Company
Advertising
9.19851%
0.00000%
0.00945%
0.00163%
0.98037%
Magazines
0.00020%
0.58932%
Sunday Magazines
30.52552%
Newspaper
33.14173%
National Newspaper0.8
Outdoor
23.99148%
Mars Inc. Advertising
Network TV
Spot TV
1.56180%
0.478%
Syndication
Magazines
0.251%
Sunday Magazines
35.279%
Newspaper
30.119%
National Newspaper0.8
Outdoor
25.168%
4.237%
Lindt's Advertising
0.00
0.00
34.46%
0.00
0.24%
0.00
18.71%
0.12%
Sunday Magazines
Newspaper
National Newspaper
27.86%
18.04%
Outdoor
Network TV
Spot TV
Syndication
0.56%
0.145%
0.754%
Magazines
Cable TV
2.786%
0.583%
0.199%
Network TV
Spot TV
Syndication
Cable TV
Pivot Table Data
Adverting Based on Location
Total Spending on Advertising in Location
8000
Dollars Spent On Advertising
7000
6000
5000
Total Spending on
Advertising in
Location
4000
3000
2000
1000
0
City
Advertising Expenditures based on
Population
Price Paid Per 1000 Residents
25
20
15
10
5
0
Price Paid Per 1000 People
Advertising Based on Day of Week
Candy Ad. Spent on Days of Week
102000
100000
98000
96000
94000
92000
Total
90000
88000
86000
84000
82000
SUN
MON
TUE
WED
THU
FRI
SAT
Total TV Advertising
1.99%
0.25% 0.57%
0.20%
% of Total Ad. Expenditures
2.95%
4.23%
15.06%
37.33%
3.95%
0.16%
4.79%
7.10%
14.46%
2.04%
3.84%
0.60%
0.09%
0.42%
Animation
Award Pageants/Parades
Children's Entertainment
College Sports
Documentary
Drama/Adventure
Entertainment and Film
Game Show
Informercial
Intruction/Advice
Mini Series
Music Videos
News- All Types
Sports
Science Fiction
Police/ Crim Show
Situational Comedy
Other
Mars Main TV Advertising Program Types
Hershey
35000
DOCUMENTARY/SALUTE/TRIBUTE
DRAMA/ADVENTURE
30000
FEATURE FILM
Dollars Spent
25000
INSTRUCTION/ADVICE
20000
SITUATION COMEDY
SLICE-OF-LIFE
15000
SPORTSCAST
10000
TALK
5000
UNCLASSIFIED
VARIETY - GENERAL
0
Mars Inc
VARIETY - MUSICAL
Lindt Main TV Advertising Program Types
6000
DRAMA/ADVENTURE
Dollars Spent
5000
ENTERTAINMENT
MAGAZINE
4000
FEATURE FILM
3000
INSTRUCTION/ADVICE
NEWSCAST (LOCAL
ONLY)
2000
SITUATION COMEDY
1000
SLICE-OF-LIFE
0
Chocoladefabriken Lindt & Sprngl Ag
Company
Target market (based on Pivot
Table)
Majority of the Market
 Children
 Age 5-24 is main target
 Health Conscious Parents- also a major target
 Increased advertising to parents about healthier candy
choices, may be why parents are still so heavily targeted
Premium Producers Target educated consumers
 Sell luxury
 Target all adults
Hershey's Annual Advertising
Annual
Advertising
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
Mars' Annual Advertising
50,000
0
2006
600,000.00
500,000.00
400,000.00
300,000.00
200,000.00
100,000.00
0.00
2006
2007
2008
2009
2010
2007
2008
2009
2010
Advertising to Sales Ratio for 2010
Sales
Advertising
Expenditure
Advertising
to Sales
Ratio
Mars Inc.
28,000,000,000
422,510,500
1.51%
The
Hershey
Company
5,670,000,000
404,092,700
7.13%
Lindt
2,740,000,000
51,094,100
1.86%
How we’re going to break it down:
Adventurous
Mars
Inc.
Lindt&Sprungli +
Ghirardelli
Free Spirited
Classy
The
Hershey
Company
Family-Oriented
Brands
Adventurous
Skittles
Mars Inc.
Hershey
Lindt
Ghirardelli
Twix
Reeses
Free Spirited
Kit Kat
M&M
s
Snickers
Dove
Hershey
Kisses
Hershey
Bar
Family-Oriented
Classy
Experience Attribute
 Don’t use informative
 Don’t advertise place
 Don’t advertise price
 Don’t use combative/comparative
 Don’t do comparisons to others
MEMORY JAMMING HUGE
Types of Advertising Used in
Industry
 Humor appeal
 Holiday
 Sweepstakes
 Point of Sale
 Pricing Strategy
 Negative to Positive
 Heritage Advertising
 Product Differentiation
 Brand Identity
Mars Overview
 Mars was founded in 1911 by the Frank C Mars, and the






Mars Family remains privately owned to this day.
Mars Inc. is one of the world's biggest private
companies, with annual sales approaching $30bn.
Candies included: Snickers, Twix, M&Ms, Skittles,
Starburst, Milky Way, 3 Musketeers etc…
Seen as Adventurous and Free-Spirited
#18 Advertiser according to Advertising Age
Memory Jamming
Target Market:
Mars Incorporated Advertising
Mars now owns
Wrigley
as of April 2008
 Similar strategies throughout
 Heritage Advertising
 Product Differentiation
 Brand identity
 Sweepstakes Advertising
 Pricing Strategy
 Holiday Advertising
 Negative to Positive Advertising
 Humor Appeal
 Brand Identity
 Stick to Roots
 Spokescandy
 Huge in Differentitation

Melts in your mouth not in your hand
http://www.youtube.com/watch?v=4gtM_mmvDww
http://www.youtube.com/watch?v=SMrLz9tUrew
 What is real?
 “Unreal” situations
 Taste the Rainbow
 America’s favorite candy bar!
 Satisfies hunger
 Celebrity
“You’re not you
when you’re
hungry”
 Need a moment…
… Chew it over with a Twix
General Conclusions about Mars Inc.
 Stick to roots
 Differentiation is key
 Even among own products
 Starburst: “It’s a juicy contradiction”
 3 Musketeers: “A lighter way to enjoy chocolate”
 Milky Way: “Life’s better the milky way”
The Hershey Company
Overview
• Founded in 1894
• Hershey Manufactures chocolate and confectionery
products
•Largest chocolate manufacturer
Major brands include:
Why Hershey has been so
successful?
 Strong financial performance
 Leader in confectionery products in the US due to it’s
well-known brands
 Brand Equity
 Marketing Strategies (Obtaining Sales)
 Ability to determine consumer trends
Financial Performance
2010 Sales
$5.67B
1-Year Sales
Growth
7.03%
2010 Net
Income
$509.80M
2010 Sales
% of total
US
85
Other
countries
15
Total
100
Hershey Products
Hershey’s
Bliss
Cookies ‘N’ Crème
Hershey’s Milk Chocolate
Hugs
Kisses
Nuggets
Sticks
Reese’s
Fast Break
Nutrageous
Peanut Butter Cups
Pieces
Reesesticks
Whipps
Other
5th Avenue
Almond Joy
Cacao Reserve
Caramello
Eat More
Refreshment products
Good &
Breath Savers
Heath
Bubble Yum
Jolly Rancher
Ice Breakers
Kit Kat
York
Milk Duds
Mounds
Mr. Goodbar
Payday
Pot Of Gold
Rolo
Special Dark
Symphony
Take5
Twizzlers
Whatchamacallit
Whoppers
York
Zagnut
Zero
Hershey’s Brand Equity
Harris Interactive Poll
RANK 25 Highest Ranked
Brands
1 Hershey's Kisses Chocolate
Candy
2 M&M Plain Chocolate Candy
3 Hershey's Milk Chocolate
Candy Bars
4 Google.com
5 Duracell Batteries
6 Reese's Peanut Butter Cups
Chocolate Candy
7 Heinz Ketchup
8 Kleenex Facial Tissues
9 Oreo Cookies
10 Neosporin Ointment
11 Cheerios Cereal
12 Ritz Crackers
13 Kraft Foods Inc.
14 Arm & Hammer Baking Soda
15 Campbell's Soups
16 Snickers Chocolate Candy
17 Coca-Cola
18 Sharpie
19 Dawn Dish Detergent
20 Johnson & Johnson
21 Energizer Batteries
22 UPS
23 Hershey's Chocolate Chips
24 M&M Peanut Chocolate
Candy
25 Hallmark Greeting Cards
Advertising Strategies
 Brand Image/Identity
 Holidays
 Community
 Amusement Park
Brand Identity
 Old-fashioned
 Warm
 Family-Oriented
 Happy
 Nostalgic
 Love
http://www.youtube.com/watch?v=EV0u08
SnL0g
Rascal Flatts
http://www.youtube.com/watch?v=Plf9bzri
6Rw&NR=1
Kisses
Sticking to Roots
1930s
present
Hershey’s Slogans
 “There’s no wrong way to eat a Reese’s”
 "Sometimes you feel like a nut, sometimes you don't"




(Almond Joy)
"Makes mouths happy“ (Twizzlers)
"It's more than a mouthful - it's Whatchamacallit”
“There’s a smile in every Hershey Bar”
“Have a break, have a Kit Kat.”
Hershey’s Jingles
 “Hershey’s is the GREAT AMERICAN, GREAT
AMERICAN chocolate bar!!!”
http://www.youtube.com/watch?v=47-blY2vZMY
 “Gimme a break, Gimme a break, break me off a piece
of that Kit Kat Bar.”
http://www.youtube.com/watch?v=DLJgyr-g3Ck&NR=1
Holidays
 Easter
 Valentine’s Day
 Halloween
 Christmas
Community
 Milton Hershey School
 American Red Cross
 Habitat for Humanity of Central Pennsylvania
 Children's Literacy Initiative - Lancaster, PA
 Hershey partners with Children’s Miracle Network
Amusement Parks
Way for fans of Hershey to
interact with the company.
Increases revenue for the
company
Annual Sales: $270.96M
Annual Net Income: $6.94M
Chocoladefabriken Lindt and Sprungli
 Founded in 1845 in Switzerland
 Leading world producer of premium chocolate
 Brands carry the name Lindt, Ghirardelli, Caffarel etc.
Strengths of the Company
 Strong brand name
 Easily able to penetrate
new markets
 Strong Global Operation
with diversified revenue
base
 Effective Use of
Advertising
Lindt’s Main Marketing Strategies
 Product Differentiation




Premium
Luxury
Affordable
Public Relations
 Point of Sale Advertising
and Free Samples
 Bundling
Product Differentiation
 Premium quality =
Premium
Ingredients
 Affordability
 Public Relations
Upcoming Trends
 Showcasing your value
 Sugar-free
 Who you can advertise too
 Obesity
 Healthy Lifestyle
 Employee Morale
 Darker Chocolate (higher cocoa content)
 Exotic Flavorings (e.g. citrus, fruits, spices)
 More upscale private label chocolate
Things Companies Need to Think
About:
 Age Group
 Cost of Advertising
 Health Consciousness
 Per Capita Disposable Income
 Price of Inputs
Keys to Success in Future:
 Economies of Scale
 Ability to adapt to change
 Product Differentiation
 Brand Loyalty
 Customer Retention
Questions?