International Market Entry Strategy for Hershey Foods Corp Essay

I. excogitationThe Hershey lodge is famously kn declare for being the biggest manufacturer of chocolates and confecti singlery products in USA, having hired over 15,000 employees universal and exporting their products to ninety different countries over the world.The Hershey Company has several popular brands, some of most no peeled-fashionedorthy ones being Hersheys burnt umber Bar, Kit Kat, Hersheys Kisses, Reeses, York Peppermint Pattie, Rolo and Krackle Bar.With the help of these brands, Hershey cleared success and popularity, make the familys net worth over $4 billion dollars.Hersheys products include chocolates, confectioneries, food and deglutition related products such as baking ingredients, toppings etc.The union lives by its mission statement, Undisputed securities indus judge Leadership (www.hersheys.com). Hershey continues to preserve a higher position by successfully converting consumer desires into reality.II. ObjectiveIt was Mr. Roger Clarke, Vice electric chair Sales of Hershey supra kingdomal, a division of Hershey Foods Corporation, was reviewing the Australian take in. He had a board meeting to attend in a weeks time and had to present his assessment of what the cause of failure had been in Australia. Was it st deemgic mistake or had implementation been the problem, and what dodge would be appropriate for re-entry. in this case we will try to help how to retrace the re-entry going smoothly by using the key SCM strategies, tools, best practisesIII. LiteratureThe Inter tribeal Marketing Entry Evaluation Process is a five stage process, and its purpose is to gauge which world(prenominal) merchandise or markets offer the best opportunities for our products or services to succeed. The five steps are dry land Identification, Preliminary Screening, In-Depth Screening, last Selection and Direct Experience. Lets take a pick up at each step in turn1. Step One Country IdentificationThe World is your oyster. You discount choose an y agricultural to go into. So you conduct country identification which means that you begin a general overview of potential new markets. at that place might be a simple agree for example two countries might share a homogeneous heritage e.g. the United Kingdom and Australia, a similar language e.g. the United States and Australia, or even a similar culture, political ideology or religion e.g. China and Cuba. Often selection at this stage is much straightforward. For example a country is nearby e.g. Canada and the United States. Alternatively your export market is in the same trading zone e.g. the European Union. Again at this point it is very(prenominal) early days and potential export markets could be include or discarded for any number of reasons. pic2. Step Two Preliminary ScreeningAt this irregular stage one takes a more serious look at those countries remaining after undergoing preliminary exam screening. Now you begin to score, weight and rank nations based upon macr o-economic factors such as currency stability, exchange rates, take aim of interior(prenominal) consumption and so on. Now you have the basis to start calculating the nature of market entry costs. Some countries such as China require that some fraction of the company accounting entry the market is owned domestically this would need to be taken into account. There are some nations that are experiencing political instability and any company entering such a market would need to be rewarded for the risk that they would take. At this point the marketing manager could decide upon a shorter list of countries that he or she would wish to enter. Now in-depth screening stinker begin.3. Step Three In-Depth ScreeningThe countries that make it to stage ternion would all be considered feasible for market entry. So it is vital that detailed information on the arse market is obtained so that marketing decision-making potful be accurate. Now one fuck deal with not only micro-economic facto rs but to a fault local conditions such as marketing research in sexual intercourse to the marketing mix i.e. what tolls can be charged in the nation? How does one distribute a product or service such as ours in the nation? How should we communicate with are scar segments in the nation? How does our product or service need to be adapted for the nation? all(prenominal) of this will information will for the basis of segmentation, targeting and positioning. One could besides take into account the value of the nations market, any tariffs or quotas in operation, and similar opportunities or threats to new entrants.4. Step Four Final SelectionNow a final shortlist of potential nations is decided upon. Managers would reflect upon strategic goals and look for a match in the nations at hand. The company could look at close competitors or similar domestic companies that have already entered the market to get firmer costs in relation to market entry. Managers could also look at other na tions that it has entered to see if there are any similarities, or learning that can be employ to assist with decision-making in this instance. A final scoring, ranking and weighting can be undertaken based upon more foc utilize criteria. After this exercise the marketing manager should probably try to chew up the final handful of nations remaining on the short, shortlist.5. Step Five Direct ExperiencePersonal experience is important. Marketing manager or their representatives should travel to a small-armicular nation to experience firsthand the nations culture and product line practices. On a first impressions basis at least one can ascertain in what ways the nation is similar or dissimilar to your own domestic market or the others in which your company already trades. Now you will need to be painstaking in respect of self-referencing. Remember that your experience to date is based upon your life mainly in your own nation and your expectations will be based upon what your alr eady know. Try to be flexible and experimental in new nations, and dont be judgmental its about whats best for your company happy huntingP.E.S.T. Analysis for HersheyPEST analysis stands for Political, Economic, Social, and Technological analysis and describes a framework of macro-environmental factors used in the environmental scanning component of strategic management1. Political/Legal Analysis Chocolate producers unable to distribute products to certain countries. Major issue is child labour in cocoa farms broadly speaking affected areas in Africa where child labour runs rampant. The Chocolate Manufacturers Association (CMA) and the World Cocoa Foundation (WCF) prepared the Harkin-Engel Protocol, which is an conformity that focuses on child labour practices on cocoa farms in West Africa. Result opened new channels to export and distribute cocoa to international countries.2. Economic Analysis In every year, referable to hurricane impact, flood, etc, the price of refined suga r decreased from $0.38 to $0.31 per pound (estimate cost). This allowed companies to cut retail costs and redistribute the savings. A lot of waste material is produced, and companies spend thousands of dollars on disposing it. However, there is a new opportunity born(p) due to recent developments in bio fuel or another energy patronage(a). New mode of output that can use the by-product of chocolate manufacturing companies.3. Socio-cultural Analysis Consumers want a larger variety of chocolates and healthy alternatives to the traditional chocolates. Dark chocolates provided several health benefits by adding a flavonoid in the chocolate that prevents conglomerate cardiovascular problems.4. Technological Analysis The chocolate and cocoa industries lack supports of Non-Government Organizations (NGO), which restrict the farmers access to bloodline guidance, funding, and continuing education. Farmers cant learn new technologies making them less efficient. This prevents the chocola te manufacturers from gaining cocoa efficiently to create more chocolates for the consumer.Target Audience for Australia MarketThe primary consumers of Hershey Chocolates include a vast earreach ranging from children, teenagers and adults. But mostly, Hershey targets its consumers ranging from age 13-30 years old.The chocolate bar is considered a snack or is part of a daily diet in case of some athletes. The chocolates are available in most securities effort stores, gas stations, malls etc.Consumers primarily buy chocolates harmonize to their price. They also prefer if the chocolates fit their health and nutritional requirements, although there is a very low margin of difference between selecting according to price and according to health.S.W.O.T Analysis for Hershey Food CorporationSWOT analysis (alternatively SWOT Matrix) is a structured planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. A SWOT analysis can be carried out for a product, place or person. It involves specifying the neutral of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that bearinga. Strengths Hershey has grown from one product one plant to a $4 billion company with various quality chocolates. Its a strong brand name and has a strong image. Hershey was largest candy manufacturing business in U.S. with 30.7% market share And want to expansion to Australia with market share 25% It is also the largest alimentary paste manufacturer in U.S. with 28.4% market share Worlds largest chocolate plant in U.S., with more than 2 million sq. feet. Powerful partnerships (Starbucks, Kraft, Coca-Cola etc) Major profits go to Milton Hershey initiate for Orphans. Also donates to Red Cross, UNICEF, and home ground for Humanity etc. Cooperative with students and professors. Toll free number 1800-468-1714, to access additional information on request.b. Weaknesses Hersheys Global market share is very low, around 10% and it happen in Australia fretfulness for natural environment needs to be expressed. Cocoa production rates are rising, and even a small price increase at retail level affects consumer buying. Poor decision making as company relies on brand loyalty and has reduced advertising expenditure. Higher price from the competitor make Harshey became premium pricing and the target make segmented. Insufficient promotion by Hersheyc. Opportunities Potential to expand surf of Dark/Sugar free products for health benefits. Use partnership ventures to create chocolate flavoured coffee products. allege cocoa in new areas other than Africa, maybe from second east Asia (Indonesia, Thailand, etc) Produce bio-fuel and another alternative Energy from the chocolate by-products Develop environment friendly packaging, recycling industrial waste China, India and majority of South East Asia are untapped markets and it can be deli vered from Australian.d. Threats Consumer demanding healthier substitutes. Steady rise in prices of cocoa, take out and sugar. Main competitors are Mars and Nestle. 25% of Nestle revenues profits come from coffee. Nestle plays its strengths in international markets. Hershey is more focused on just local markets. Mars uses extensive marketing and advertising expenditures to gain market share. Hershey just uses product innovationsFive forces to growth in Australia1. Threat for new entrantsThere is very little threat for new entrants in the chocolate industry because of the current economy, the various differences in products, and the eternal need for large capital requirements. Also, since there is a lack of distribution channels and with the strict FDA regulations unploughed in place for food manufacturers, the threat for new entrants is almost non-existent2. Bargaining powers of buyersThe bargaining powers of buyers increase by two factors a number of large volume buyers and the buyers relatively low profits from the product.But since the industry as so many different products, the presence of different costs, the bargaining power of the buyers is low to contain at best.3. Bargaining power of suppliersThe bargaining power of suppliers has decreased since the chocolate industry is an important customer for the suppliers. But the power is moderate to high since the suppliers are concentrated there are no substitute products available.4. Pressures from substitute productsThe chocolate companies compete with various substitutes that threaten the industry. There are various flavours that are used as a substitute for chocolate. These include vanilla, butter, mint, rose, lemon, etc. Many consumers readily switch to these as they also consider chocolate to be unhealthy.5. Rivalries amongst competitorsAmong the chocolate industry, there are intense rivalries amongst the highest competitors. There are legion(predicate) strong chocolate manufacturers giving out var ious varieties of chocolates at different prices, resorting to creative advertising schemes, eer giving out new products and high quality chocolates to satisfy the consumer needs.Marketing mix Strategya. merchandise The new Hershey Slim dark chocolates will have a flavonoid substance added which helps protect the cardiovascular clay and is efficient until three hours upon consumption Produced for health aware consumers to ensure that Hershey favours healthier alternatives. Hershey will also cover people with health issues such as diabetics, that their chocolates are a safe and healthy alternative. The core strategy is to reinvent the image of chocolates from being a source of a lot of sugar and calories therefore making people fat and/or diabetic, to an image where chocolates are considered an aid for protecting the consumers from heart disease and enhancing the rate of metabolism, by using flavonoids in their products.b. Price To keep back the chocolates reasonably affordable , keeping current financial trends in mind. To have a promotion campaign in part with the contest Currently chocolate prohibit are priced at $2.50 each. As part of the contest promotion, the chocolate will be sold at $2.00 each.c. People Target Audience would primarily be consumers from age range of 13-30 years, particularly health conscious individuals. The most bought products are chocolate bars, which some consider as a snack, while others as part of their daily diet.d. Place The chocolates will be available in grocery stores, malls, supermarkets, gas stations, coffee shops, airports, and at the main outlets.Major Channel Distributors Secondary Channels Supermarkets Commercial stores (7-11, Cheers) Department Stores Amusement areas (cinemas, parks) Pharmacy School Duty Free Outlets Mini market Grocery store Channel Distributor Gas send Main outlet e. Promotion The chocolates will be marketed through an interactive contest. Also, some promotional programs could be held under joint sponsorships through gyms/spas. customised chocolate products for the promotional, corporate, hospitality and special occasions industriesObjectives and Strategiesa. Product To reinvent Hershey Chocolates as a health conscious low calorie dark chocolate. To reassure health conscious consumers to leverage this new product by providing all the necessary nutritional information Hersheys goal is to keep each products nutrition information up-to-date and accurateb. Objectives To promote the health benefits of the new Hershey Dark Chocolate Help the consumers change their mind-set that chocolates are unhealthy. To spread awareness and increase sales of the product.c. Strategy To increase sales using promotional materials such as an interactive contest. Make a new plant for chocolate nearby Australia, to increase the cost and make the price competitive.Example we can use one of the three proposed strategies.1. Hershey Dark Chocolate Mascot Strategy Each chocolate has a cypher which in the package Unlocks part of a spirit. A total of 25 unique parts allowing consumers to create 120 variations of characters. Customers can go online and create the character of choice online and submit to the contest Winning character will be the new mascot for the Hershey Slim. Winner will also receive gift vouchers and a 1 month membership to California Fitness Gym2. Healthy mind, healthy body with Hershey Strategy In the chocolate packaging are instructions to visit website Consumers have to play a classic reminiscence game which has five levels of difficulty. Cards show healthy foods, and Hershey products Winners who complete the final score under a specific time limit win a one day all access happen to California Fitness Gym3. Wrapper Cash Strategy Each Hershey Slim wrapper contains points These points can be collected under an online account Purchases can be made from the Hershey shop using these points. There would be a limit to the number of points one can input per day, per account. The more you save, the bigger go against things you can buy. Products would mostly include exercise equipment. Possible to buy products at half their retail price using the point system.ReferenceHershey Co. Form 10-K, The Hersheys Company, December 31st, 2009.Retrieved January 14th, 2011.http//www.thehersheycompany.com/assets/pdfs/hersheycompany/2009AnnualReport.pdfLovell, Jeremy. Eat More Chocolates and Help the Environment PlanetArk.com November 7th, 2007. Retrieved January 14th, 2011.Michael et al. The Hershey Company Introduction the World of Chocolate, 2007. Retrieved January 10th, 2011.U.S. Labour Department Funds Project to Evaluate Effectiveness of Anti-Child-Labour Efforts in the Cocoa Industry. Worlds Technology News. October 4th,2006. Retrieved January 14th, 2011.Website http//www.marketingteacher.com www.hersheys.com www.thehersheycompany.com www.gogle.com