Monday, November 23, 2015

Brand Story - Hershey || Sumit Bedi || IIM Shillong || August 2015 edition

Founded in the year 1894, the Hershey’s company is one of the largest producers of chocolates in the world. It sells more than $6billion worth of chocolates every year making it the 5th largest chocolate seller in the world. Milton S. Hershey founded a caramel producing company and he used to buy chocolate as a coating for his caramel. In the year 1899, the founder was able to invent the formula to manufacture milk chocolates. So, finally in the year 1900 he sold the caramel producing business to start manufacturing chocolates. The company was established with the view to democratize chocolates and make quality chocolates (a luxury item back then) available to all. Within 5 years The Hershey Company had more than 100 products in its portfolio to offer the customers. The tastes and names of the products were mostly inspired by French Chocolates.

But it was finally in the year 1907 that the legendary Kisses chocolate was invented. The flat base
with conical top shaped chocolate was an instant hit. Not only the unique shape and name but also the extraordinary packaging caught the imagination of people. From the very first day each kisses chocolate was wrapped separately by hand to give it sort of a luxurious feel. The product was named Kisses because of the sound that machines produced while making the chocolate. Today, the company produces more than 80 million kisses per day. Hershey’s is the only chocolate company in the world to have a theme park. Located in Pennsylvania the park was established in the year 1906 for leisure purpose of Hershey’s employees. But over the years the park has become a significant brand extension for Hershey’s helping it promote its brand among the kids.

In the year 1925, Hershey’s was one of the first companies to introduce the delicious chocolate syrup in the world. The Hershey’s brand can boast of some unique incidents that are not common to most chocolate brands. Hershey’s was given 5 Army-Navy “E” batch for exceptional contribution in World War 2 as it provided ration bars to American soldiers. In the year 1948, US Air Force pilots dropped Hershey’s bars with parachutes to children while making runs of food in Berlin. Then in 1971, Hershey’s Tropical (a heat resistant chocolate bar) became one of the first chocolates to be taken to moon in Apollo 15.

Today, Hershey’s is a household name in North America. This was not how it used to be. This huge expansion of the Hershey’s brand has been possible because of the great advertisement campaigns the company has undertaken since early 1960s. From the very first day the company has been obsessed with quality and that is something it advertises. All the advertisement is focused on quality and purity of chocolates. The tools with which they tell this might change but the brand communication is very clear. Hershey’s is a great brand. It has produced amazing chocolates in the last century and has spread smiles on the faces of millions of people who have consumed the legendary brand.

Moving forward the company will have to reassess its channel strategy, as e-Commerce will dominate the retail space of the world. Also, it will have to constantly grow into emerging markets as the market in Western countries saturates. Also, it will have to come up with new flavors for the new geographies depending on the tastes of the people. Currently the company generates more than a billion dollars in revenue from the foreign markets but still the profitability is much lower as compared to the US market. Hence, the company should focus on ways to improve profitability in the overseas markets as well. All said and done Hershey’s is an awesome brand. It is a great case study for young marketing enthusiasts like us to learn and get inspired from.

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