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De La Salle University-Dasmariñas
College of Business Administration
Marketing Department

In Partial Fulfillment of the Requirements in

Product Management


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Submitted by:

Del Mundo, Jose Carl

Mallanao, Roselyn

Matienzo, Judith

Navarro, Michelle

Piche, La Purisma

Submitted to:

Ms. Chona Bautista

2010

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aershey¶s is the largest producer of quality chocolate in North America and a

global leader in chocolate and sugar confectionery. Its principal product groups

include chocolate and confectionery products; food and beverage enhancers, such as

baking ingredients, toppings and beverages; and gum and mint refreshment products.

aershey¶s operate as a single reportable segment in manufacturing, marketing, selling

and distributing various package types of chocolate and confectionery products, food

and beverage enhancers and gum and mint refreshment products under more than 80

brand names.

aershey¶s chocolate bar has been tagged as the ³Great American Chocolate Bar´

manufactured by the aershey Company, invented by Milton aershey.

aershey¶s will be reinventing itself by producing a low-calorie dark chocolate

which will be tagged as a healthy snack in contrary to the recent issues that the

confectionery industry has faced.

aershey¶s Company, although experienced flunking market share over the past

years, continues to leverage the marketing and sales leadership in the Philippines.

With a forecasted annual growth of 13%, aershey¶s believes on the success of this

plan.

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A  
c  is a confection in bar form comprising some or all of the

following components: cocoa solids, cocoa butter, sugar, milk. The relative presence

or absence of these components forms the subclasses of dark chocolate, milk

chocolate, and white chocolate. It is also referred to as a ³candy bar´ in Australian

English, British English, Canadian English, Indian English, Irish English and New

Zealand English; it is a form of confectionery usually packaged in a bar or log form,

often coated with chocolate, and sized as a snack for one person. Certain brands of

chocolate bars are sold as being for nutritional supplementation purposes. These bars

contain protein and various vitamins while still retaining a sweet taste.

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The Philippines confectionery market reached a value of $164.8 million in

2005. It is one of the à
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region. Malaysia, Pakistan, Singapore and Thailand are the only countries in

this region where revenues from the sale of confectionery products are lower.

Sugar confectionery in the country forms the most profitable product

category, obtaining over half the market revenue.



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The dominance of the Sugar confectionery will continue over the next five

years. Chocolate follows this with one quarter of the market held. But with a

shift from 11.5% in 2005 to 13.4% in 2006, the product became more efficient

over the 2006 fiscal year.



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At maturity stage, the product has experienced slow growth in sales due

to its marketing mix and many key players in the industry. Also, it has shrunk

in its market share which greatly affected the annual profit f the company.



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The product is not seasonal since it offers one of the greatest snacks in the

Philippines. Although it is very much purchased during the Valentine¶s and

Yuletide Season, it is always available to the market for consumption any time

of the year.



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The annual profit rate of the confectionery industry is about 30% of the

whole food industry, and has achieved a steady annual growth rate of the past

ten years of 13% more or less.



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There is a low threat of new entrants in the chocolate and cocoa product

industry because of the existence of economy of scale, the differences in

products, the need for large capital requirements, the existence of switching

costs, the lack of access to distribution channels, and the regulations that are

in place for food manufacturers.



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The bargaining power of buyers is increased by two factors: a number of

large volume buyers and the buyers¶ relatively low profits from the product.

aowever, the bargaining power of buyers is low to moderate because of the

industry¶s differentiated products, the presence of switching costs, the lack of

threat of backward integration and the reliance on the industry¶s product.c



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The bargaining power of suppliers is decreased because the industry is an

important customer of the supplier group and the supplier does not pose a

threat of forward integration. But the bargaining power of suppliers is

moderate to high because the supplier group is concentrated; there are no

substitute products, and the importance of the supplier¶s product to the

industry.



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The chocolate and cocoa industry must compete with numerous substitute

products that can threaten the industry¶s profitability. Alternate cooking

flavors are a substitute product to chocolate and cocoa. These flavors include

vanilla, lemon, butter, or mint flavoring. These flavors can be used by the

industry¶s customers that use chocolate and cocoa products for industrial and

cooking use. Another significant category of substitutes is à
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chocolate snacks are available, such as peanut butter, fruits, potato chips, ice

cream, etc. There is no need to stick with a specific snack other than personal

preference. Further, many consumers consider chocolate unhealthy and are

willing to substitute it readily.



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The confectionery industry has been one of the consumers¶ favorite;

however, the trending issues of chocolate as an unhealthy snack make it hard

for the company to penetrate the market.



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Although the chocolate and cocoa industry has partially differentiated

products, the industry¶s intensity of rivalry among competitors is high. The

industry has numerous, equally balanced competitors, is slowly growing, has

high storage and fixed costs, and has high exit barriers. All of these conditions

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create price wars, advertising battles, new product lines, and higher quality of

customer service in the chocolate and cocoa industry.



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The chocolate and cocoa industry relies heavily on milk for their products.

The modern milking machine is a technology that is used to milk cows efficiently,

safely, and satisfies all milk hygiene requirements. The main benefit for the

chocolate and cocoa industry is the ability to reduce time spent on traditional

milking routines, which in turn reduces labor costs. We expect that the chocolate

and cocoa industry will harvest financial benefits by reducing manufacturing costs

through additional mechanical improvements and innovations.

aowever, the chocolate and cocoa industry lacks support of Non

Governmental Organizations (NGO) and Local Government Support, which

limits the farmers¶ access to business guidance, funding, and continuing

education. Due to the lack of resources, support, and education opportunities,

farmers are unable to learn how to use new technologies (Whinney, 2007).

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In recent years, the industrialized world has begun to focus more heavily on

healthy eating habits. This is a direct result to the increased instances of diseases

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linked to poor eating habits, such as cancer, diabetes, and heart disease. This

causes a great threat to the chocolate and cocoa industry. c

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Gasoline has been increasing at a surprising rate in the past few years. This

trend is more than likely going to continue in the coming years for many reasons,

such as natural disasters reducing supplies, and oil becoming a scarcer natural

resource not only in the nation, but as well as the whole world. This will affect the

chocolate industry in multiple ways. First, production and transportation costs will

increase as gasoline prices increase. Second, as gasoline prices rise, the demand

for ethanol will also increase. Sugar is one primary ingredient for creation of

ethanol. Therefore, as demand for ethanol increases, sugar demand increases. The

added demand for sugar for other purposes either decreases the sugar supply to

the chocolate industry or increases the price of the commodity. Both these effects

create additional costs for the chocolate industry and will affect sales and/or profit

margins.

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The trend has caused recent laws to be passed by the Bureau of Food and

Drug that forces food manufacturers to post ingredient and health information for

consumable items. These laws compelled food manufacturers to provide

customers with previously unknown health information therefore discouraging

sales of many unhealthy products, such as chocolate. Further, as new ingredients

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are found to be a health risk, the BFAD will most likely require food

manufacturers to post the new information to the public.

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Consumers constantly change their preferences for products. It is no surprise

that consumers¶ wants for chocolate products have changed to a desire for richer

products, which has resulted in commercial bakeries using higher quality

chocolate and cocoa product industry to produce its goods. Further, consumers

also want a greater variety of chocolate products. This enables the industry to

expand their product lines to meet the new needs of customers and provides an

opportunity for greater sales of the new products.

It has been a trend in recent decades for consumers to desire healthy

alternatives to traditional foods. In recent years, studies have shown that dark

chocolate provides several health benefits. ³The latest research indicates that the

flavonoid-rich substance could have a protective effect on the cardiovascular

system, at least in the  à



 
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(Chocolate Trading Co., 2005). This recent revelation adds to studies that have

noted 
 



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An increase in the importance of commercialized non-traditional holidays (e.g.

monthsaries, grandparents¶ day, bestfriends¶ day) and traditional holidays (e.g.

Christmas, Valentine¶s Day, Mother¶s Day, birthdays) presents an industry

opportunity to market specialized products tailored for the holidays. The

commercialization of these holidays encourages consumers to purchase more

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chocolate products than they would in an average day. This provides an

opportunity for specialized gift products to increase sales.

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f.c Reinvent aershey¶s chocolate as a healthy low-calorie dark chocolate.

g.c Encourage health-conscious people to consume such product provided the

health and nutrition information they need to know about the new and

improved product.

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a.c Promote the health benefits of the product.

b.c aelp people change their perspective that chocolate is an unhealthy snack,

and therefore should be avoided.

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a. Increase potential sales through promotional programs planned throughout

the year.

b. Repackage aershey¶s so that its new look will appeal to the consumer,

considering that it will be tagged as ³low-calorie´.c

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and design new (£c
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products

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or deliver the servicec
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this category (£c (£c (£c

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The primary consumers of the product are:

Œc Children

Œc Students

Œc Athletes

Œc Coffee Shops

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They buy chocolate bar as a snack. Some consider it as part of their daily diet

like in the case of most athletes while others are just impulsive buyers.

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Since chocolate snack bars are very well distributed in the market, they are

available. Many buys from grocery/stores while others on the Malls

(Supermarket).

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Some buy just whenever they like it, while others purchase during occasions

like Christmas Day, Valentine¶s Day and even anniversaries. Also, a huge

chunk of Filipino consumers purchase chocolate bars after coming home from

abroad.

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A lot of consumers buy merely because it is a chocolate and Filipinos have

always loved chocolates. Next comes the price. aealth-conscious people base

their purchase activity of such product on the health and nutrition benefits.

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They participate in but do not guarantee that they will automatically switch to

the product.

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Consumers may or may not buy the product again considering the following:

income, health/ diet.

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aershey¶s customers are divided according to their psychological profiles as

well as their willingness to buy the product again, the price shifts, inflation and

many others.

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Total Population (2010) 94, 000, 000

Estimated non-eaters of product (3, 650, 000)

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Total Sales of aershey¶s Php 64, 111, 793

Projected Sales Growth 13%

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aershey¶s corporate level strategy is focused intently on 








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Company may take pleasure in the branding of its headquarters as ³The sweetest

place on earth,´ however over the past year, it was said that investors and

management confidence has had a more bitter taste residing in their palate. So,

the company needed to do a major revamp on the company¶s market share by

reaching a higher annual profit rate.

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The business level strategy for The aershey Company focuses on a

combined strategy integrating 
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in the midst of an overhaul of their supply chain, reducing the number of

production lines, outsourcing production of some of their products.

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Increased marketplace competition has significantly impacted aershey¶s

business and as a result, The aershey Company has been required to


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à à. The foundation of the aershey marketing strategy is

their strong brand equities, product innovation, superior quality of the

products, manufacturing expertise, and mass distribution capabilities. aershey

stimulates sales of certain products with promotional programs at various

times throughout the year. c

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Leverage our marketing and sales leadership in the Philippines by

maintaining 13% growth in sales.

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Our plan is to achieve these objectives within this year 2010. Our new

improvement of aershey¶s will require us two to three months to introduce to

the market (may it be current/new).

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Build capabilities that capitalize on unique consumer and customer trends.

Furthermore, restoring the brand equity of aershey¶s may not bec

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an easy task given the fact that nowadays, consumers are more

practical and find substitutes from other product categories.

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The product will be improved by:

1. catering the consumers with a low-calorie dark chocolate which

also change their perception of chocolate as an unhealthy snack.

2. adding a ³flavonoid´ substance which helps protect the cardio-

vascular system immediately the next 3 hours upon consumption.




From a Php 40.00 retail price, we are very much willing to lower

down its cost to Php 35.00 as part of our promotion.




The product is available in the stores/groceries and mall supermarkets,

coffee shops, airport, movie houses, and etc.

 


The product will be marketed through the TVCs and print

advertisements, particularly in magazine. Also, the company plans to

accomplish promotional programs through sponsorship of events.

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aershey¶s mainly targets the A, B, C market -- the children, teen agers young

adults, professionals, and even the old ones. As chocolate products can be used as

gift and give away in occasions like Birthdays, Valentines, Christmas, It is targeted

to everyone. Furthermore, chocolates are also a source of quick energy for those

people who need physical endurance (athletes).

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The main competitors of aershey¶s Cadbury and Toblerone targets are the

same as the aershey¶s target market. They also target everyone in the society,

only that lower-price offerings are targeted to the lower class level of the society.

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aershey¶s newly-discovered low-calorie dark chocolates will assure people

especially those who are diabetic, with health benefits.c

aershey will introduce to the market the dark chocolate that will lower blood

pressure and maintain the body¶s normal blood sugar level.

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Maltitol, cocoa paste, cocoa butter, cocoa powder, lecithin, vanilla.


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ac The product may contain peanuts or other nuts.
ac The product may contain peanuts or other nuts.

ac Excess consumption may cause a laxative effect

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Serving Size:25g/0.88oz
Servings: 9
Calories: 110
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Saturated Fat: 5 g 25%
Trans Fat: 0 g 0%


 : 0 mg 0%
: 0 mg 0%

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: 12.5 g 4%
Dietary Fiber: 1 g
Sugars: 0 g
Sugar Alcohol: 12 g

: 2 g
Vitamin A: 0%
Vitamin C: 0%
Calcium: 2%
Iron: 10%

*Percent Daily Value (DV) is based on a 2,000 calories diet. Your daily values may be higher
or lower depending on your calorie needs.
Calories from Fat: 75

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INCLUDES ONLY TaOSE CARBS TaAT CAUSE A NOTED EFFECT ON BLOOD
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ac aERSaEY'S chocolate drink

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ac aERSaEY'S chocolate syrup

ac GOOD & PLENTY candy

ac aERSaEY'S SPECIAL DARK SYRUP

ac JOLLY RANCaER hard candy

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Statistics showed that Candy bars like chocolates today are more demanded

than any other food ± whether it is a part of daily diet, or as a snack. Thus,

aershey¶s will reinvent itself by presenting a low-calorie chocolate which

eliminates the thought that it is a chocolate therefore it is rich in sugar and will

make one fat and diabetic; and giving the people the fact that it is low in calorie

and is an aid for protecting the cardio-vascular system by the aid of the

³flavonoid´ substance present in the product.

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Advertising rates for 30 second ads:

>c TV Commercial
Oc GMA 7 and ABS-CBN 2 (thrice a day for 6 months)
Php52, 199/30 seconds ad aired twice on 
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Luzon only)
Php153, 459/30 seconds ad aired once on $

(in Luzon
only)
>c Print
Oc Magazine (Monthly full-page advertisements)

aealth Today - (282mmx212mm) Php130, 342/month

Food- (8.25´x11.25´) Php 86, 250/month

Cosmopolitan- (8.25´x11.25´) Php 74,000/month

Candy - (8.25´x11.25´) Php 121, 000/month

Oc Billboard
3c billboards within a year which costs Php300, 000/ billboard
(12¶x14¶)

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The company will endorse the product through advertising in events that will
promote aershey¶s all-new and healthier chocolate, in-store displays, and many
others.
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Price cut off, or no increase in prices but products¶ weight would be reduced.

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aershey Corporation uses producer to wholesaler to consumer channel for

distributing chocolates within a short distance whereas they use producer to

wholesaler to retailer to consumer where the distance is long.

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ac Supermarket Ɣ School canteens

ac Department Stores Ɣ Commercial areas (7- Eleven, Mini Stop)

ac Pharmacies Ɣ Amusement Areas

ac Convenience Stores

ac Duty Free Outlets

ac Groceries

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My aershey¶s aappiness Annual Photo Contest

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To maintain a growth in the sales of the product, we will be continuously

implementing the ³My aershey¶s aappiness Annual Photo Contest´.

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The aershey's main website www.hersheys.com consumers can find links to

different products, recipes and downloads, including wallpapers for computers

and cell phones, screen savers and e-cards, and a link to aershey's promotions.

aershey's has set up a website dedicated to aalloween, TrickorTreats.com. It

includes crafts and activities, from costume ideas to pumpkin-carving stencils to

coloring-book pages. There are also recipes, decorating ideas, party-planning tips,

resources for classrooms and downloadable extras such as screensavers, MySpace

layouts, wallpapers and clip art.

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aershey¶s and:

Œc Duty Free

Œc Selecta (Selecta¶s aershey¶s Collection)

Œc Red Ribbon

Œc Olympics

Œc E-Bay

Œc Starbucks

Œc Coca-cola

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Media Seconds/size Price / Frequency Total

Ad

TVC PRIME TIME

(ABS-CBN) 30s 153,459 1 x a day 8, 593, 704/ 6 month
(GMA) 30s 153,459 1 x a day 8, 593, 704/ 6 month
TVC NON-PRIME
TIME
(ABS-CBN) 30s 52,199 2 x a day 5, 846, 288/ 6 month
(GMA) 30s 52,199 2 x a day 5, 846, 288/ 6 month

PRINT
MAGAZINES FULL PAGE

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(aEALTa TODAY) 282mm x 130,342 Monthly 1,564,104/year

212mm
(FOOD) 8.25" x 11.25" 86,250 Monthly 1,035,000/year
(CANDY) 8 3/4" x 11 1/4" 74,000 Monthly 888,000/year
(COSMOPOLITAN) 8 3/4" x 11 1/4" 121,000 Monthly 1,452,000/year

BILLBOARD 12' x 24' 300,000 3 billboards 900,000/year

TOTAL BUDGET 34, 719, 088/ year

The above table shows the estimated budget for the implementation of the IMC

PLAN. The total budget for the whole year is Php 34, 719, 088. Inclusive of the

following: A 30 sec. TV ad for the 2 station (ABS-CBN & GMA) is Php 28, 879, 984. It

is for a 3 times a day air time for the same broadcasting companies for 6months.Also,

Print ads at 4 selected magazines which cost of Php 4, 939, 104 / year and 3 Billboards

located in EDSA, SLEX, and NLEX for Php 900, 000 / year. It is the [ü. of the net

sales of aershey¶s chocolate in the Philippines.

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ac External ± we will be measuring the customer satisfaction and response rate,

customer loyalty, the quantity of the products being purchased and the sales

seasonality. Some may be form in survey.

ac Internal ± quantification of the market share and market penetration.

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Consumer survey was conducted to analyze consumer and their preferences.

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ac Internal

Sales record

Stock record

Accounting record

Distribution date

Sales personµs opinion

ac External

Government statistics

Specialist business organizations

Customer database

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Since aershey¶s has a global position, we intend to redefine it locally. Also,

we would most likely to increase the campaign for healthier chocolate snack and

tie up with Public Relation firms.

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ßc http://www.washingtoniv.com/?p=65

ßc http://www.washingtoniv.com/?p=69

ßc http://www.washingtoniv.com/?p=71

ßc http://www.scribd.com/doc/38616935/The-aershey-Company

ßc http://www.scribd.com/doc/38616705/Comparative-Valuation-Analyses-of-Wrigley-

Wm-Jr-Co-Wwy-and-the-aershey-Company-asy

ßc ³Chocolate Is Good For You.´ Chocolate Trading Co. July 13th, 2005. November

1st, 2007.

ßc ³Chocolate Stops Cancer Cells.´ Chocolate Trading Co. March 5th, 2005.

November 1st, 2007.

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