Hershey Business Model

Hershey’s business model focuses on delivering high-quality and delicious confectionery products to its target customers, including confectionery lovers, families, and gift shoppers. By leveraging its strong brand reputation and heritage, Hershey generates revenue through product sales via retail and distribution channels. Key activities involve manufacturing, marketing, and research and development. The company’s key resources include manufacturing facilities, brand and intellectual property, and a robust distribution network. Hershey forms strategic partnerships with suppliers, raw material providers, retailers, and distributors. The cost structure comprises raw material and ingredient costs, manufacturing and production costs, and marketing expenses.

Value Proposition

• Quality and Variety: Hershey offers a wide range of high-quality chocolate and confectionery products that cater to diverse consumer preferences and occasions. From classic chocolate bars like Hershey’s Milk Chocolate to specialty treats like Reese’s Peanut Butter Cups and Kit Kat, Hershey provides indulgent options for every taste and craving.
• Iconic Brands: Hershey’s portfolio includes some of the most recognized and beloved brands in the confectionery industry. With a rich heritage spanning over a century, brands like Hershey’s, Reese’s, and Kisses evoke nostalgia and familiarity, resonating with consumers worldwide and fostering brand loyalty.
• Innovation and New Product Development: Hershey continuously innovates to meet changing consumer demands and preferences, introducing new flavors, formats, and packaging innovations to stay relevant in the market. Through research and development efforts, Hershey explores emerging trends and technologies to create innovative products that captivate consumers and drive growth.
• Commitment to Quality and Sustainability: Hershey is committed to producing high-quality products using responsibly sourced ingredients and sustainable practices. The company prioritizes ethical sourcing, environmental stewardship, and community engagement throughout its supply chain, ensuring that its products are not only delicious but also produced with integrity and care.

Revenue Model

• Sales of Chocolate and Confectionery Products: Hershey generates revenue primarily through the sale of chocolate bars, candies, mints, and other confectionery products. These products are sold through various channels, including grocery stores, convenience stores, mass merchandisers, and e-commerce platforms, generating revenue through both wholesale and retail sales.
• Branded Merchandise and Licensing: Hershey monetizes its iconic brands through licensing agreements and branded merchandise sales. By partnering with manufacturers and retailers to produce and sell licensed products such as apparel, accessories, and novelty items featuring Hershey’s logos and characters, the company extends its brand reach and generates additional revenue streams.
• Foodservice and Hospitality Sales: Hershey supplies chocolate and confectionery products to foodservice outlets, restaurants, hotels, and other hospitality establishments. These sales channels cater to consumers seeking indulgent treats and desserts outside the home, providing Hershey with opportunities to reach new customers and expand its market presence.

Marketing Strategy

• Brand Advertising and Sponsorships: Hershey invests in brand advertising campaigns to build awareness, drive engagement, and reinforce its brand positioning. Through TV commercials, digital marketing, and print advertisements, Hershey communicates its brand values, product benefits, and promotional offers to consumers, leveraging storytelling and emotional connections to resonate with its target audience.
• In-Store Promotions and Point-of-Sale Marketing: Hershey employs in-store promotions and point-of-sale marketing tactics to drive impulse purchases and encourage trial among shoppers. Through displays, signage, and promotional pricing, Hershey creates visibility and excitement around its products, enticing consumers to make impulse buys and try new flavors or varieties.
• Digital and Social Media Engagement: Hershey leverages digital and social media channels to engage with consumers, share content, and foster brand advocacy. Through platforms like Facebook, Instagram, Twitter, and YouTube, Hershey interacts with its audience, shares product news and updates, and encourages user-generated content and community participation, driving brand loyalty and word-of-mouth marketing.
• Product Innovation and Sampling Programs: Hershey invests in product innovation and sampling programs to introduce new products and flavors to consumers and encourage trial and adoption. By conducting product launches, tastings, and sampling events in stores, at events, and through digital channels, Hershey creates buzz, generates excitement, and stimulates demand for its latest offerings.

Distribution Channels

• Retail Distribution: Hershey products are distributed through a wide range of retail channels, including grocery stores, drugstores, convenience stores, mass merchandisers, and specialty retailers. These retail partners stock Hershey’s chocolate and confectionery products on their shelves, providing convenient access to consumers seeking sweet treats and indulgent snacks.
• E-commerce and Online Retail: Hershey sells its products directly to consumers through its e-commerce platform and online retail partners. By offering a convenient and accessible shopping experience online, Hershey reaches consumers who prefer to purchase snacks and treats from the comfort of their homes or through mobile devices, catering to changing shopping habits and preferences.
• Foodservice and Hospitality Channels: Hershey supplies its chocolate and confectionery products to foodservice outlets, restaurants, hotels, and other hospitality establishments. These channels serve consumers seeking indulgent desserts, snacks, and treats outside the home, providing Hershey with opportunities to reach new customers and expand its presence in the foodservice market.
• Global Distribution Network: Hershey operates a global distribution network to reach consumers worldwide, distributing its products across various regions, countries, and markets. Through partnerships with distributors, wholesalers, and logistics providers, Hershey ensures that its products are available in diverse locations and channels, meeting the needs and preferences of consumers globally.

Cost Structure:

• Raw Material and Ingredient Costs: Expenses related to procuring high-quality ingredients for confectionery production.
• Manufacturing and Production Costs: Costs associated with the production process, including labor and equipment.
• Marketing Expenses: Investments in marketing efforts to promote products and build brand awareness.

Key Business Model Elements

• Quality Confectionery Products: Hershey’s primary focus is on providing high-quality and delicious confectionery products to a variety of target customers.
• Revenue Streams:
  • Product Sales: Generating revenue through the sale of confectionery products to confectionery lovers, families, and individuals seeking gift items.
• Target Customers:
  • Confectionery Lovers: Catering to individuals with a penchant for sweets and treats.
  • Families: Providing products that appeal to family members of all ages.
  • Gift Shoppers: Attracting those seeking gift items for special occasions and events.
• Key Activities:
  • Manufacturing: Engaging in the production of a diverse range of confectionery products.
  • Marketing: Promoting the brand and its products through various marketing channels.
  • Research and Development: Focusing on innovation to create new and exciting confectionery offerings.
• Key Resources:
  • Manufacturing Facilities: Operating production facilities to manufacture confectionery products.
  • Brand and Intellectual Property: Leveraging a strong brand and trademarked products.
  • Distribution Network: Utilizing an extensive network to distribute products effectively.
• Strategic Partnerships:
  • Suppliers and Raw Material Providers: Collaborating with partners to source high-quality ingredients.
  • Retailers and Distributors: Partnering with retailers and distributors to ensure products reach consumers efficiently.
• Cost Structure:
  • Raw Material and Ingredient Costs: Incurring expenses related to procuring high-quality ingredients.
  • Manufacturing and Production Costs: Costs associated with the production process.
  • Marketing Expenses: Investments in marketing efforts to promote products and the brand.