Case Analysis Hershey
MARKETING & THE Economy
Hershey
During uncertain economic times, there are still some things that today’s consumers just aren’t willing to give up—such as chocolate.
But as with eating out and clothing purchases, they are trading down. That is just fine with Hershey, America’s best-known chocolate maker. For years, riding the good times, premium chocolates grew faster than lower-priced confectionery products.
Slow to jump on the premium bandwagon, Hershey lost market share to Mars Inc.’s Dove line. But as consumer frugality increased during the Great Recession, the sales of premium chocolate brands went flat. However, Hershey’s sales, profits, and stock price increased as many consumers passed up higher-end goods in favor of Hershey’s chocolate bars, Reese’s Peanut Butter Cups, and
Kit Kat wafers. Hershey seized the opportunity of this trend by running new ads that stressed their value. It also cut costs by paring back the varieties of products such as Hershey’s Kisses. As supermarkets reduced the shelf space they allotted to premium chocolates, Hershey cashed in as consumers looked to affordable Hershey favorites to satisfy their cravings. After all, even on a tight budget, people need to indulge at least a little.
1. Is Hershey’s resurgence (recovery) based on a want or a need?
2. Evaluate the shift in chocolate sales based on benefits and costs that customers perceive.
3. What other products are harmed or helped by the new consumer frugality?
Before relating Hershey’s upturn to either element of human behavior towards products, it would be helpful to first look in to the nature of the product itself while keeping the brand aside.
1. Is Hershey’s resurgence (recovery) based on a want or a
Hershey
During uncertain economic times, there are still some things that today’s consumers just aren’t willing to give up—such as chocolate.
But as with eating out and clothing purchases, they are trading down. That is just fine with Hershey, America’s best-known chocolate maker. For years, riding the good times, premium chocolates grew faster than lower-priced confectionery products.
Slow to jump on the premium bandwagon, Hershey lost market share to Mars Inc.’s Dove line. But as consumer frugality increased during the Great Recession, the sales of premium chocolate brands went flat. However, Hershey’s sales, profits, and stock price increased as many consumers passed up higher-end goods in favor of Hershey’s chocolate bars, Reese’s Peanut Butter Cups, and
Kit Kat wafers. Hershey seized the opportunity of this trend by running new ads that stressed their value. It also cut costs by paring back the varieties of products such as Hershey’s Kisses. As supermarkets reduced the shelf space they allotted to premium chocolates, Hershey cashed in as consumers looked to affordable Hershey favorites to satisfy their cravings. After all, even on a tight budget, people need to indulge at least a little.
1. Is Hershey’s resurgence (recovery) based on a want or a need?
2. Evaluate the shift in chocolate sales based on benefits and costs that customers perceive.
3. What other products are harmed or helped by the new consumer frugality?
Before relating Hershey’s upturn to either element of human behavior towards products, it would be helpful to first look in to the nature of the product itself while keeping the brand aside.
1. Is Hershey’s resurgence (recovery) based on a want or a