Hershey Media Plan

The Hershey Company Media Plan 2015

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Executive Summary

Marketing and Communication Objectives During 2015 Hershey will implement an effective advertising campaign in order to increase sales by 6%. The rising level of disposable household incomes presents an opportunity to raise brand awareness as consumers are becoming able to purchase nonessential goods. The campaign will raise brand awareness by reaching a high amount of the target audience through strategic advertisements and promotions.

Budget The total budget for Hershey is $120,000,000 with a $4,000,000 national contingency and $8,000,000 spot contingency.

Target Market The primary market for Hershey will be households with children age 13 and younger with disposable incomes of $50,000 or more. A smaller secondary market will consist of the quickly growing Hispanic community around the Philadelphia, Pennsylvania area.

Scope The media mix will consist of advertising nationally throughout the entire year with advertisements in spot markets during seasons of high demand. The mix will focus on television, radio, magazines and some digital media.

Media Objectives National: February, March, April, October, November, and December January, May, June, July, August, and September

R: 80.0 F: 4.0 R: 65.0 F: 3.0

Spot: February, March, April, October, November, and December June and July

R: 90.0 F: 6.0 R: 65.0 F: 3.0

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Table of Contents Situation Analysis ………………………………………………1 Company Analysis ……………………………………………1 Competitive Analysis …………………………………………3 Consumer Analysis …………………………………………...4

SWOT Analysis ………………………………………………...7 Marketing Objective …………………………………………....8 Communication/Advertising Objective ………………………...8 Consumer Target Market ……………………………………….8 Reach/Frequency Goals ………………………………………..11 Geography ……………………………………………………...12 Timing and Scheduling Strategy ……………………………….13 Media Mix ……………………………………………………...14 Television …………………………………………………….14 Radio …………………………………………………………15 Magazines ……………………………………………………16 Digital ………………………………………………………..17

Media Mix Scope ………………………………………………19 Promotion Plan ………………………………………………....19 Budget Recap Chart …………………………………………….22 Appendix Sources Media Flight Plan Flow Chart Year at a Glance Table

Situation Analysis Company Analysis The Hershey Company is the largest chocolate manufacturer in North America.

Founded in 1894 and headquartered in Hershey, PA, the company employs more than 14,000 workers5. Milton S. Hershey began working in the confectionary field with his new and improved caramel candies. Although these candies were successful, Hershey shifted his focus to chocolates as he determined this would develop into a big business.

The creation of Hershey’s Kisses in 1907 jump-started the company, reaching $5 million in sales by 19111. By the late 1920s Hershey introduced the Mr. Goodbar Chocolate Bar, Hershey’s Syrup and semi-sweet chocolate chips for baking. Today one of the most popular Hershey products is the Reese’s Peanut Butter Cups.

Five companies dominate the chocolate confectionary category accounting for 87.7% of the market share in 20134. Hershey leads the category with 43% of the market share4. Mars follows in second with 27.9% and Nestle in third with only 5.8%. Sitting a little below Nestle, Lindt & Sprungli A.G. and Russell Stover round out the category with around 5% market share each. Chocolate confectionary sales grew 24% from 2008 to 2013 and are forecast to grow another 14% from 2013-20184. Despite the fact that chocolate prices are on the rise4, with such a large share of the market Hershey maintains a good position to continue sales growth. Large companies that produce iconic brands with a loyal customer base can typically pass on commodity price hikes in the form of higher prices without significantly damaging demand5. In a addition, Hershey has furthered their efforts to stay relevant to consumers by launching a new corporate identity in August 2014.

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According to a company release the refreshed corporate brand “builds on the company’s powerful legacy and creates a new, modern look and feel that positions the company for the next 100 years”2. All of the products across the brand will benefit from the updated image and being associated with the familiarity of Hershey Company. The new company branding initiative will help modernize the already established brand, showing its adaptability to the current consumers needs in a digital world. The Hershey Company is relevant on social media, a staple in society today, with 6.3 thousand followers on Twitter and 6.7 million likes on the company Facebook page. Despite their social media presence, this is not their top choice of media purchased. According to Redbooks, The Hershey Company spends the most on Cable TV totaling $317,249,041 in 2013, a 26% growth from 20127. They continue to spend with the second largest sum of money on syndication, Network TV, and Span Lang Net TV. The first non-television media receiving a large amount of attention is magazines coming in at $7,440,752 spent in 2013. The company spends the least on national radio, newspapers, and US Internet display and search7. To continue implementing new, innovative ideas for products Hershey has created a new candy experience at Winn-Dixie grocery stores in Baton Rouge14. They have redesigned the candy isle to be more appealing to consumers, as well as placing the displays at the front of the store. The new design hopes to create a memorable and enjoyable candy shopping experience for consumers, compelling them to remember the brand and the products.

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Competitive Analysis Although Hershey leads the market with the largest percent of share, they do see competition from two main companies Mars Inc. and Nestle. Mars has the second largest share of the market with 27.9%4. Mars produces some of the most popular global candies such as M&M’s, Snickers, Skittles, and Twix. Despite its large size, Mars is a privately owned company known for trying to stay out of the press and keeping company matters secret9. In 2014 Mars opened up a new chocolate plant, the first in 35 years, near Topeka, Kansas8. The strategy in doing so is to help grow the demand for Snickers and M&M’s as they use the strength of existing brands to launch new products as extensions8.

Mars advertises their products most in magazines with $213,117,405 spent on the media in 201310. They focus second on placing themselves in Cable TV, $182,996,246 and Network TV, $104,163,200, all in 201310. Unlike Hershey, Mars does show interest in US Internet display and spent $58,524,065 in 2013 a 4.3% increase from the previous year10. Out of all of the brands and products owned under the Mars company the three top products promoted with the US Internet display money were Snickers, Wrigley’s, and M&M’s. However, their social media presence is far less impressive when compared to Hershey. According to Redbook, they have only acquired roughly 8,882 followers on Twitter and 72,147 likes on Facebook10.

The second main competitor, Nestle USA, Inc., is a subsidiary of Swiss food giant Nestle S.A. but has been operating in the U.S. for more than 100 year11. Many products and brands are produced under Nestle making The United States Nestle S.A.’s largest market11. Out of all of the products offered through Nestle the confectionery segment accounts for about 11.2% of the company’s total sales5. Their chocolate sales have

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consistently grown over the past several years but are projected to start declining through 20145. Nestle spends the most on media for Cable TV, $236,592,544 and Network TV, $155,107,100 both in 201312. They also spend $140,750,584 on magazines; their third most used media12.

The chocolate production industry is moderately to highly concentrated because these three large companies account for the majority of industry revenue5. Therefore, there is not much competition from smaller or specialty companies. However, consumers have started to shift their tastes and follow current trends such living healthier lifestyles.

This creates an opportunity for smaller companies to introduce products that are tailored to this market, making them healthier, more nutritious, and capitalizing on dark chocolate5.

Consumer Analysis Confectionery sales in the United States are determined by a number of factors.

Some of these factors included the price of the product, consumer disposable income, seasonality, and health trends. According to Simmons OneView, females are more likely to purchase chocolate and candies with an index of 105 than males at only 9417. Since females are more likely to purchase chocolate in general they score high for purchase of Hershey’s but also of Mars and Nestle.

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When looking at age Mintel has concluded that young consumers age 18-44 and especially 18-34 is a key segment on confectionery consumers indicating that they purchase these treats on at least a weekly basis13. Most consumers 65 and older are less likely to consume such sugary goods because of health related issues13. They are also less likely to have young children in the home driving them to make these purchases.

The presence of children in the household is a large factor in driving adult consumers to the market13. Households with 2 or more children under the age of 18 have a much higher likelihood than households without children to purchase confectionery goods on at least a weekly basis13. Simmons OneView also provides information to support the claim, indicating that households with children ages 6-17 are more likely, yielding high indexes, to purchase Hershey’s products then adults age 30-49.

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The level of disposable incomes also affects consumers. Confectionery goods are nonessential, so consumers may be less likely to spend money on such a product if they feel a threat of lower income levels in the future5. Disposable income levels fell during the recession but this is expected to turn around opening up the opportunity for more consumers spending.

Lastly, seasonality proves to be another major factor of when consumers are driven to the market. Mintel finds that 86% of adults indicated that they purchase confectionery goods to mark holidays such as Halloween, Easter, and Christmas13. These three holidays generate the highest percentage of sales13. The presence of children in the household is yet again important as it also affects consumer’s seasonality purchases. A study done by Mintel shows that 73% of adults without children said they did purchase for any holiday while 88% did with child younger than 18 in the household and 91% for 2 or more children in the household13.

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SWOT Analysis

Strengths

Weaknesses

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Brand recognition and familiarity

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Leader in market share

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New corporate identity

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Small number of distributers

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Innovative company ideas

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Future struggle to keep up with

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Diversified product line

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Uncertainty of economy and stability in foreign locations and branches

demand of products without company expansion

Opportunities •

Threats

Hispanic consumers and their strong

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Health conscious trend and consumers

purchasing power as a fast growing

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Concerns for cocoa farm ethics

population

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Increasing prices of raw materials

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Hispanics in the Philadelphia region

such as cocoa, sugar, and dairy

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Disposable income levels rising

products

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Holidays

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Marketing and Communication Objectives Marketing Objective Post-recession the levels of disposable household incomes are rising presenting the opportunity to implement an effective advertising campaign in order to increase sales by 6% during 2015.

Communication and Advertising Objective Hershey already holds a large share of the market, with a loyal customer base and high familiarity among the industry. Now that household incomes are rising allowing for extra spending on confectionery goods, we want to raise brand and product awareness.

This will be done by reaching a high amount of households with children under the age of 13 through strategic advertisements and promotions.

Target Audience The primary target audience will be households with children age 13 and under, and a disposable income of $50,000 or more. Confectionery goods are nonessential, so consumers may be less likely to spend money on such a product if they feel a threat of lower income levels in the future5. This proved to be true during the recession when disposable income levels fell, resulting in consumers reduced spending on discretionary products5. “As the economy began to recover, consumers had more money to spend and were willing to purchase more premium products, facilitating a 0.4% revenue boost in 2013”5.

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As the figure shows, significant change in attitudes towards chocolate confectionery prices begins with incomes of $50,000 and up. Respondents starting at this bracket show that they are willing to spend more on premium chocolate and would probably not notice a price increase of 10% in candies they typically buy. Clearly, a household’s access to a disposable income greatly influences their likelihood to purchase. Therefore, as consumer’s confidence is expected to grow throughout 20145 this will be a key attribute of the targeted audience in 2015. Targeting households at this income level and above will help diminish any decreases in demand if product prices need to be raised.

In addition, a great amount of demand for confectionary products comes from children under the age of 106. “Some 95% of households with children purchase chocolate confectionery, compared to 82% of those without”4. Studies show that nearly three quarters of parents buy chocolate for their kids4. Slightly better numbers result for children 6-11 but strong numbers exist for age reaching up to 17 years old. Simmons OneView also found that households with children ages 6-17 are more likely, yielding high indexes, to purchase Hershey’s products then adults age 30-4917.

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Despite these results, most children 14-17 need less assistance purchasing confectionary goods. We set the target to a solid middle ground of children 13 and under due to this rationalization and the information suggesting industry demand being led by children 10 and under.

In addition to this nationally important target, the campaign will have a small secondary market consisting of Hispanic consumers in the Philadelphia region.

Hispanics in the Philadelphia area have a total purchasing power of approximately $4.2 billion3. James Nevels, Hershey chairman said, “Hispanics are a marketer’s dream, a salesperson’s dream. They are digitally savvy, they are young, and they are socially connected”3. It is important to stay connected with consumers, so it will be important to reach out and show support for such a powerful group of people.

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Reach and Frequency Goals Hershey is an established, familiarized brand, a leader in the category with few competitors and has sales which peak seasonally. Due to this position, a campaign focusing on brand awareness will be most effective. Therefore, the focus of this media plan will be reaching three-fourths of the target market nationally and the majority of the market in certain areas. Consequently, there will be less focus on the frequency gained by the media. Since sales peak during holiday seasons we will use a pulsing pattern to optimize advertising time during seasons of high demand. We will first aim to reach the greatest amount of the audience during the months of February, March and April. The campaign will follow the same strategy during the fall holiday months of October, November and December. Reach will be set slightly higher during June and July as these summer months usually mean children are out of school and have more time around parents. Some national advertising will happen during the remaining months of the year but the campaign will not be as concerned with high reach during this time.

Goals were exceeded every month of the campaign, reaching a larger amount of the audience with higher frequency than expected. We set a goal of 80.0 reach and 4.0 frequencies nationally, as well as 90.0 reach and 6.0 frequencies in spot markets during the months of February, March, April, October, November and December. The actual average reach and frequency during these months came to 93.4 reach and 7.6 frequency nationally and 95.2 reach and 13.6 frequency for national and spot media. The campaign continued to exceed goals during June and July. The original goals were set at 65.0 reach and 3.0 frequencies nationally with spot goals set at 70.0 reach and 4.0 frequencies. The actual numbers ended at 78.9 reach and 3.3 frequencies nationally and adding spot 90.1

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reach and 5.1 frequency. The last section of months including January, May, August and September did not target spot markets but had national goals of 65.0 reach and 3.0 frequency with actual numbers reaching 78.7 reach and 3.3 frequency15. The overall campaign goals were largely successful and surpassed with numbers greater than anticipated.

Geography We will run a national campaign with a few specific spot markets. The first two spot markets focused on are New York City and Philadelphia. The Mid-Atlantic region these two cities inhabit are home to the largest share of industry establishments, accounting for an estimated 22.7%. Another benefit of the region is the level of higher disposable incomes5. “Furthermore, Pennsylvania accounts for 10.2% of industry establishments but only 4.1% of the population”5. Advertising in the Philadelphia region also helps reach the smaller secondary market of Hispanic consumers. Paired with the benefit of the Hershey headquarters, Philadelphia is a prime spot market. There are large cities with access to several portions of the population in the Great Lakes region and the West. However, with two of Hershey’s main competitors, Mars and Nestle, headquartered in these regions providing a home court advantage we do not find the benefits of entering the segment to out way the costs. Another indication of a worthy spot market came from the distribution of confectionery wholesaling establishments.

“Wholesaling operations are generally located near population centers, where the industry’s downstream customers (retail outlets) set up shop in order to benefit from high customer density”6. When considering this the Southeast region of the U.S. accounts for

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the second largest share of establishments, serving the country’s largest share (25.4%) of the population6. Keeping this in mind we will also purchase media in the Birmingham, Atlanta, Dallas, and Houston spot markets.

Timing and Scheduling Strategy Small occasions, such as anniversaries and birthdays, throughout the year lead consumers to purchase confectionery goods6. However, the majority of sales in the confectionery industry are gained around holiday seasons6. A pulsing pattern will be used to reach people nationally throughout the year as well as increasing awareness during times of high demand. Most of the budget will be spent around main holiday months including February, March, April, October, November, and December. These months will provide the time necessary to reach people for Valentines Day, St. Patrick’s Day, Easter, Halloween, Thanksgiving, and Christmas. Advertising while these largely popular holidays are in season will give a great chance to increase sales and brand awareness as people are already looking for confectionery goods. The second portion of the year in which the target is extremely available to be reached is the summer when children are not in school. Therefore, June and July will see slightly more media buys in an effort to market to households while they have the most amount of time to be influenced by one another. Lastly, the remaining months, January, May, August, and September will receive national media buys too keep the Hershey name present in the market but not enough to heavily dispense the campaign elements. These months will be used primarily to continue with the on-going brand awareness campaign for personal events such as birthdays and anniversaries.

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Media Mix Vehicles Television Despite the continuous growth of online advertising television still remains one of the most successful mediums for advertisement. Many shows watched by parents occur during the day from morning to afternoon. Especially shows for cooking, daily life, and home improvement, which are most relevant to the uses of the product and the consumer’s life. Simmons OneView shows that households with children under the age of 13 agree on some level, more than average, that they find TV advertising interesting and quite often gives them something to talk about17. Another positive statistic developed by Simmons OneView is that households with children under the age of 13 indicate that on average they do not avoid watching television commercials17.

Nationally the plan spent a total of $5,573.3 (000) on network early morning television gaining 450 GRPs, $26,919.8 (000) on network daytime television gaining 750 GRPs, and $6, 489.0 (000) on network early news television gaining 450 GRPs. Network cable also received $2,265.6 (000) during daytime gaining 600 GRPs, $2,176.5 (000) on Â

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early fringe gaining 300 GRPs, and $4,929.9 (000) during prime gaining 300 GRPs. Additional money was spent on spot television during months of high demand totaling $2,515.6 (000) gaining 2,050 GRPs including daytime, early news, prime, and cable15.

Radio Parents who live in households with children under the age of 13 are often in the car a great deal of the day. This includes taking children to school in the morning, picking them up in the afternoon, transporting to extracurricular activities, running carpools, doctor’s appointments, friends houses and the list goes on. This does not even include parent’s own responsibilities and household errands such as grocery shopping.

Due to this great amount of time spent in the car radio is a consistent, reliable and daily source of exposure into the market. As pointed out on Simmons OneView, above average indexes indicated that households with children under 13 agreed somehow that they always listen to the radio while in the car and listen to the radio every day17.

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Nationally the plan allocated $3,518.4 (000) dollars to network radio between morning drive and daytime day parts, gaining 1,320 GRPs. Plus an additional $570.9 (000) on spot radio allocated between morning drive, daytime, evening drive, and nighttime day parts, gaining 1,200 GRPs15.

Magazines Magazines offer the best way to target certain groups of people because of all of the different content specific publications available. This makes it very easy to inset Hershey advertisements into related topics such as cooking, crafting, household ideas, and children/family, which will appeal to the target audience. Households with children under the age of 13 agree to some degree, more than average, that magazines are their main source of entertainment and that they cannot resist buying them, according to Simmons OneView17. In addition they showed very high indexes when agreeing somehow that they enjoy reading ads in magazines17. Magazines are also the second type of media Hershey spends the most money on, behind television. The quality of magazines is one of the main reasons it is chosen as an advertising medium for large companies such as Hershey. Presenting ads in magazines sends a message to the reader that the product or company is of high quality through better printing, color, image resolution and feel. Magazines were allocated $20,001.3 (000) nationally for women’s and general interest magazine types. These generated a total of 1,260 GRPs15.

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Digital The main allocation of the budget will go to TV, radio, and magazines but national digital media will also receive a portion. Social media is a great way to generate brand awareness by creating content that can be viewed, shared, and talked about among users of the site. This can help not only advertise but also jump-start awareness by word of mouth. Households with children under the age of 13 show high indication that they talk about things they see on social sharing/networking websites in face-to-face conversations, according to Simmons OneView17. The same group of respondents agreed in someway that they are more likely to purchase products they see advertised on a social sharing/networking website and that they often access these website from different devices. This medium allows for the target audience to access the advertisements on the websites through different devices meaning they do not have to be in one set location as

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with television. There is potential for an advertisement to be seen while on the go or already in the store.

Digital media was bought nationally during every month for mobile, social, video networks, and targeted sites/ad networks. $3,067.2 (000) was spent with 387 GRPs. In addition, digital media for social and video networks was bought in spot markets during the months of February – April and October – December. This yielded an additional 690 GRPs for $221.8 (000)15.

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Media Mix Scope The media plan with use both national and spot advertising across a variety television, radio, magazines and digital media. Adding more advertising in spot markets during select months will increase sales due to the large amount of demand for confectionery goods during the holidays. At the same time, advertising nationally throughout the year with keep Hershey products present in the consumers mind for smaller occasions. After 10% of the budget was set aside for contingency, $108,000 (000) was available to spend. The media plan cost $78,249.3 (000), coming in under budget by $29,750.7 (000) while still exceeding goals each month. The media purchased by the decisions of this plan were extremely successful in reaching the target markets with the added benefit of appeasing the client by coming in under budget, ultimately saving money.

Sales Promotions Plan 1. In an effort to drive traffic to the Hershey’s website, the company will hold a promotion starting March 22 and ending April 12 centered on Easter and crafts.

Easter is one of the main holidays in which confectionary sales spike. We will hold a contest in which consumers can submit their crafts created for Easter, pictures of the end result, how they did it, and for what purpose on the Hershey website. All submissions will be displayed on a special page of the website so that they gain the satisfaction of being recognized for their work and efforts.

Hershey will also set up interactive displays in grocery stores throughout the Philadelphia area. A Hershey employee who will give out samples, coupons,

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demonstrate a particular craft and promote the contest will run these. At the end of the period a monetary reward of $1,500 will be awarded to the first price winner, $1,000 to second place, and $500 to third place. The contest will also be advertised on displays in grocery stores without the demonstrations, promoted tweets on twitter, Food Network online ads, pop up ads on Food Network shows, and magazines such as Southern Living, Better Homes and Gardens, and food/cooking specific magazines.

2. Hershey will capitalize on food related television shows focusing their topics on Thanksgiving during the month of November. Knowing that consumers like to purchase Halloween candy on sale after the holiday4, this promotion will give consumers an extra incentive to do so. A small campaign will run sponsoring segments on television shows such as The Chew and Food Network programming, in which the program shows how to cook something with repurposed Halloween candy. During the segment it will be stated that viewers can submit their own repurposed recipes online while a pop up display on the screen directs the viewers to the correct websites. This pop up display will be interactive if seen on a tablet or computer so the viewers may click a link directing them to the Hershey web page. This promotion will last for two weeks starting November 14st and ending November 28th, 2015. At the end of the promotion period one submission will be chosen and awarded a monetary reward of $1,000 as well as coupons for Hershey products for the next year.

3. In an effort to reach out to the smaller secondary target audience, Hershey will sponsor The Greater Philadelphia Hispanic Chamber of Commerce’s Annual Golf

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Tournament at Radnor Valley Country Club September 11th – 13th, 2015. The golf tournament allows for business executives, professionals and small business owners to network and entertain prospective or existing clients. The country club provides a relaxed and pleasant environment for sporting fun, socializing and networking all while contributing to small Hispanic business education16. Hershey will take the opportunity to prepare a dessert to accompany the dinner and awards after the tournament. In addition, attendees will receive a packet upon leaving the tournament including samples, how to connect with Hershey’s on social media and codes to receive coupons once they have connected. This provides a great opportunity to reach out to such a fast growing and socially connected population in the Philadelphia region with the total purchasing power of approximately $4.2 billion.

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Budget Recap $(000) Spot TV, 2,515.6 Natl. Digital, 3,067.2

Spot Radio, 570.9 Spot Digital , 221.8

Natl. TV Natl. Radio

Magazine, 20,001.3

Magazine Natl. Digital Spot TV

Natl. TV, 48,354.1

Spot Radio Spot Digital

Natl. Radio, 3,518.4

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Appendix Sources 1. "Hershey Company." International Directory of Company Histories. Ed. Tina Grant. Vol. 110. Detroit: St. James Press, 2010. Business Insights: Essentials.

Web. 16 Nov. 2014.

2. http://www.mintel.com/blog/food-market-news/chocolate-packaging-trends 3. http://www.newsworks.org/index.php/homepage-feature/item/75153-chamberreports-on-state-of-hispanic-business-in-philly-region 4. Mintel Chocolate Confectionery – US – April 2014 5. IBIS Industry Report - Chocolate production 6. IBIS Industry Report - Confectionery Wholesaling 7. RedBooks - The Hershey Co. Advertising Profile 8. Hoover’s Company Records – Mars, Incorporated profile 9. "Mars, Incorporated." International Directory of Company Histories. Ed. Jay P. Pederson. Vol. 114. Detroit: St. James Press, 2010. Business Insights: Essentials.

Web. 25 Nov. 2014.

10. RedBooks – Mars, Incorporated Advertising Profile 11. Hoover’s Company Records – Nestle USA, Inc. 12. RedBooks – Nestle USA, Inc. Advertising Profile 13. Mintel Seasonal Chocolate – US – August 2011 14. http://www.retailingtoday.com/article/winn-dixie-customers-sweet-treat-hershey’s 15. Media Flight Plan results 16. http://philahispanicchamber.org/GPHCC_Events/signature_events.aspx 17. Simmons OneView