HERSHEY ’ S New Product Proposal

1. HERSHEY’SNew Product Proposal Rebecca Buddingh, Robyn Wolfish, Stephanie Carpenter, Stanley Ho, Winnie Xu

2. POSITIONING STATEMENT Hershey’s is the only chocolate candy brand in the United States that offers low price, convenient, multipurpose products uniquely associated with feelings of nostalgia and the classic American dream. BRAND MANTRA

3. MENTAL MAPS Positive Associations Negative Associations

4. PERCEPTUAL MAP Convenience versus Quality Note: The ratings for Hershey’s and the competing brands are based strictly on quantitative survey findings Quality Cheerfulness

5. CONSUMER PROFILE • The typical Hershey’s consumer is: • Young and/or • Youthful • Loves chocolate • American • Family-oriented • Happy • Fun • Middle Class • Conservative • Frugal

6. POINTS OF PARITY • -- Used for snacking or baking -- Variety of types • - Sweet and indulgent -- Enjoyed by people of all ages • - Consistent quality • - Associated with holidays (ie: Halloween, Valentine’s Day) POINTS OF DIFFERENCE • -- “American” image -- Associated with S’mores • - Nostalgic, heritage brand -- Identifiable by Hershey Kisses • - Low price enables daily consumption -- Hershey, PA • - Sold in different types of retailers -- Entertainment & resorts

7. CBBE MODEL Weaknesses: Strengths: • Consumer Judgments: • Though consumers trust Hershey’s as a company, they question the quality of the products. Hershey’s is not usually preferred when premium chocolate brands are available, but considered “a quick fix for a chocolate craving,” as one respondent said. • Brand Salience: • Hershey’s is extremely well-known in the chocolate category and the favorite chocolate brand for about 1/5 of consumers. Additionally, Hershey’s has a 75% likelihood of repeat purchase among respondents. Brand Performance: Consumers indicate that they purchase Hershey’s chocolate because of its low price, convenience, easiness of purchase (available in grocery stores, convenience stores, superstores, etc.) and large variety of products. • Consumer Feelings: • Hershey’s fails to evoke strong feelings among consumers. Levels of happiness and satisfaction are raised slightly after consuming Hershey’s products, but does not compare to competitors in other feeling categories. • Brand Imagery: • Hershey’s has a wide variety of usage situations (S’mores, cooking, snacking), associations with holidays and an exceptionally high sense of nostalgia and history. • Consumer Brand Resonance: • Though Hershey’s consumers exhibit some behavior loyalty, they do not actively engage with the brand or recommend it to others.

8. CONCEPT # 1 Bisquick Pancake Mix with Hershey’s Chocolate Chips “Love chocolate chip pancakes? Now you can make your breakfast experience that much easier with your favorite pancake mix and Hershey’s chocolate chips in one convenient box.” With

9. CONCEPTSTATEMENT • Traditional Bisquick box and product • Will include 6 oz bag of Hershey’s semisweet chocolate • chips for consumer to add if they choose • Bisquick box will include Hershey’s logo • Will be sold next to traditional Bisquick in the baking aisle at grocery stores Description: A new Bisquick product with Hershey’s chocolate chips for chocolate lovers everywhere. Suggested Price: $ 5.00 BRANDING STRATEGY Branding Strategy: Modified Ingredient Branding Extension Strategies: Product that contains the brand’s distinctive ingredient; Product that capitalizes on the firm’s perceived expertise Extension Classification: Category Extension

10. PRODUCT OPPORTUNITY GAP • SOCIAL • Shoppers want to spend minimal time at grocery store • Increase of in-home breakfast preparation • Increase in single, working parents results in little time to make breakfast • ECONOMIC • Shoppers looking for “bundled” deals in current economy • Discretionary income available for middle and upper-middle class to afford the luxury of convenience products Quick and easy-to-make pancakes that simplify the grocery shopping experience and capitalize on an existing usage trend • TECHNOLOGY • Increase in manufacturing partnerships between corporations with different expertise, especially within the baking category

11. CONSUMER INSIGHT Points of Parity • Baking item • Easy-to-make pancakes • Breakfast • Quick, Instant Points of Difference • Pre-packaged chocolate chip pancakes • First partnership of its kind

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13. VALUE OPPORTUNITY CHART Focus group participants said: “It is instant and quick. Easy to make in bulk.” “I love chocolate chip pancakes.” “Never been done, smart!”

14. PROS AND CONS Pros Cons • Respondents said product was slightly unoriginal; feel similar products already exist • Consumers can purchase their own chocolate chips, and may not be motivated to purchase the product unless the price was low or a better value than purchasing the two ingredients separately • Respondents were disillusioned by high caloric value • 61% of respondents said a partnership between Hershey’s and Bisquick is a “great idea” • All respondents preferred Bisquick to other instant pancake mix brands • Respondents felt the product was instant, quick and made it easy to produce large quantities RECOMMENDATIONS • Market product as something that is unique because it simplifies the shopping process for chocolate chip pancakes • Remain silent about health risk, high caloric value. The product is not intended to be healthy and should be advertised as a special, nostalgic treat – much like Hershey’s chocolate products

15. CONCEPT # 2 Hershey’s Cocoa-To-Go “A portable alternative to the bulky hot chocolate packages offered by competitors such as Swiss Miss and Nestlé. No need to hassle with the big container of chocolate powder or syrup. And with dual uses, Hershey’s Cocoa-To-Go pleases fans of hot chocolate and chocolate milk.”

16. CONCEPTSTATEMENT • 1.5 oz of Hershey’s unsweetened chocolate cocoa and sugar mix, in a slender tube • Each box of Cocoa-To-Go will contain 10 servings • Portability will allow consumers to bring the product with them to school, work, restaurants • Will be sold in grocery stores in the coffee/tea aisle and in an end display near the milk Description: High quality chocolate powder for quick and easy hot cocoa or chocolate milk. Just add water or milk and you’re good-to-go! Suggested Price: $ 3.00 BRANDING STRATEGY Branding Strategy: Modification of Existing Brand Extension Strategies: Same product in a different form; Product that contains the brand’s distinctive ingredient; Product that capitalizes on the firms perceived expertise Extension Classification: Line Extension

17. PRODUCT OPPORTUNITY GAP • SOCIAL • Trend of on-the-go products • Decrease in amount of leisure time to enjoy hot or cold drinks at home • Capitalizes on success of other packaged powder drinks (ie: Crystal Light, Nescafé, Tasters Choice Instant Coffee) • Trend of 2-in-1 products • ECONOMIC • Increase in discretionary income to purchase higher-end drink mixes (ie: Starbucks VIA) • Low material costs, as the product’s main ingredient is already offered by the parent brand Multi-use chocolate powder in a portable, slender package that can be used to make hot cocoa or chocolate milk • TECHNOLOGY • Increase in manufacturing abilities to produce slender, sleek food packaging

18. CONSUMER INSIGHT Points of Parity • Cocoa Mix • Hot Drinks • Chocolate Milk Mix • Can be combined with milk or water Points of Difference • Can be used on-the-go • Stick-shaped package • Pre-portioned

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20. VALUE OPPORTUNITY CHART Focus group participants said: “Portable, fast, and easy” “Inventive” “I love hot cocoa and things that are portable”

21. PROS AND CONS Pros Cons • Many competitors • Some respondents felt that existing hot chocolate packets are easy enough to transport so there is no need for new packaging • Concern that the price would be too high • Finding hot water or milk on-the-go is not always a simple task • The product may be too similar to regular hot chocolate; there is not a big enough differentiation • Respondents said the product is convenient, has likeable ingredients and would be effortless to carry • This product ranked higher than the other new Hershey’s products for being the easiest to use • It has different packaging and a unique look in comparison to other hot chocolate and chocolate milk products RECOMMENDATIONS • Develop another point of difference between Hershey’s Cocoa-To-Go and competitors • Drop the dual use (hot chocolate, chocolate milk) and focus solely on a hot cocoa product or a chocolate milk product • Stress the low price point that is similar to competitors when marketing the product

22. CONCEPT # 3 Betty Crocker Supreme Bars – S’mores “Recreate the S’mores taste you love without the campfire. Betty Crocker Supreme Bars—S’mores, combine Hershey’s chocolate with miniature marshmallows and graham cracker crumbs for an easy-to-make dessert, perfect for any time of the year!”

23. CONCEPTSTATEMENT • Packaged in Betty Crocker Supreme Bars box • Box comes with: • 1 package of graham cracker dough mix • 5 Hershey's Milk Chocolate bars • 1 package of miniature marshmallows • 1 packet of squeezable chocolate for decorative finish • Additional ingredients needed: • Water, 1 egg, vegetable oil • Sold in baking aisle next to cookie, cake and bar mixes Description: Betty Crocker’s newest addition to the Supreme Bars line. An easy-to-make dessert creation with Hershey’s rich milk chocolate, graham crackers and marshmallows. Suggested Price: $ 3.00 BRANDING STRATEGY Branding Strategy: Ingredient Sub-Brand Extension Strategies: Product that contains the brand’s distinctive ingredient; Product that capitalizes on the firm’s perceived expertise Extension Classification: Line Extension

24. PRODUCT OPPORTUNITY GAP • SOCIAL • Trend of baking desserts from boxed mixes (ie: Betty Crocker, Duncan Hines, etc.) due to less free time to make baked goods from scratch • Increased desire for more occasions to eat S’mores • ECONOMIC • Value-priced grocery products appeal to the masses • Low material costs by using ingredients already produced by Betty Crocker and Hershey’s An easy-to-make dessert that leverages a common Hershey’s association with the strength of one of America’s favorite baking brands, Betty Crocker • TECHNOLOGY • High-quality manufacturing abilities of Betty Crocker

25. CONSUMER INSIGHT Points of Parity • Baking product • S’mores flavor • Dessert • Entertaining usage Points of Difference • Easy to make • Creates nostalgia through sense of place

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27. VALUE OPPORTUNITY CHART Focus group participants said: “I like bars, they’re easy to make.” “I love these.” “It’s easy and it makes me nostalgic.”

28. PROS AND CONS Pros Cons • The product creates nostalgia because it is something respondents associated with memories of their childhood • Makes it easy to recreate the traditional S’mores treat through the new usage location • This product was rated higher than the other new Hershey’s products in tastiness • Focus group participants received this product more favorably than the other two • This product appeared difficult to make to some respondents • Some focus group participants would rather make regular, authentic S’mores RECOMMENDATIONS • Market the product as something that would be extremely easy to bake, to reduce fears of those who are not experienced with baking

29. FORECASTED SALES Betty Crocker S’mores Bisquick with Chocolate Chips Cocoa-To-Go Purchase Intent: Definitely Buy: 28% Probably Buy: 44% −−−−−−−−−−−−−−−−−−− Adjusted Intent: 37% Brand Awareness: 50% Availability: 40% Trial: 37% Repeat: 7.4% Market Share Percentage: .54% Projected Annual Category Sales: 8,860,800 units Revenue Per Unit: $2.25 per box Annual Sales Forecast: $107,658.72 Purchase Intent: Definitely Buy: 20% Probably Buy: 20% −−−−−−−−−−−−−−−−−−− Adjusted Intent: 23% Brand Awareness: 50% Availability: 40% Trial: 23% Repeat: 6.4% Market Share Percentage: .29% Projected Annual Category Sales: 12,439,200 units Revenue Per Unit: $1.35 per box Annual Sales Forecast:$48,699.47 Purchase Intent: Definitely Buy: 44% Probably Buy: 20% −−−−−−−−−−−−−−−−−−− Adjusted Intent: 42% Brand Awareness: 50% Availability: 40% Trial:42% Repeat:15% Market Share Percentage: 1.26% Projected Annual Category Sales: 37.317.600 units Revenue Per Unit: $1.35 per box Annual Sales Forecast:$634,772.38 Note: See Appendix for calculations

30. OVERALL RECOMMENDATIONS • Recommendation: Drop • - Survey respondents liked the partnership between Bisquick and Hershey’s, but still intended on purchasing chocolate chips separately • Focus group participants did not feel this idea was unique • Would be difficult to establish Hershey’s in the breakfast-food category • Not a very profitable endeavor • Recommendation: Drop • - Respondents reacted neutrally to this product • Opportunity does not resonate with the consumers’ needs and desires • There is not enough of a difference between this product and competing products • Low likelihood-to-purchase percentages • Projected sales forecast is very low • Recommendation: Move Forward • Ranked highest in survey in likeability, uniqueness, reliability, quality and other categories • Combines a well-known Hershey’s association (S’mores) with an easy-to-make dessert item • Highest value ratings of the three products • Highest likelihood-to-purchase percentage • The most profitable of the products presented

31. LAUNCH PROGRAM Product • Tangible Benefits: • Appropriate for entertaining at any given time of year • Can be easily targeted toward children or adults • Evokes strong sense of taste, smell, sight; almost all focus group members said the packaging alone made them hungry • High quality associations with Betty Crocker and Hershey’s • Leverages secondary equity from Betty Crocker by using the same logo and packaging as the existing Betty Crocker baking mixes • Intangible Benefits: • Easily accessible to many people through placement strategies • Ranked extremely high by survey respondents in reliability and trustworthiness • Emotional relevance is established through nostalgia and sense of place associated with Hershey’s

32. LAUNCH PROGRAM Placement Price • Distribute through indirect channels, at retailers like grocery stores • Mass placement recommended to be consistent with brand’s previous efforts • Push Strategies: • Cooperative Advertising: Pay for placement in grocery store circulars • Quantity Discounts: Offer deals to retailers for ordering a certain number for their stores • Pull Strategies: • Advertising • Promotions • Coupons • Product should follow the value pricing model • Pricing should reflect existing pricing on Betty Crocker products, thus we suggest a retail price of $3.00

33. MARKET ENTRY STRATEGY Promotion • IMC Plan: • Advertising • Print Advertisements: Place in family, parent and cooking magazines, as well as local newspaper inserts • Television Commercials: Create a TV spot emphasizing the sense of nostalgia associated with product, and the same delicious treat without the need for a campfire • Sales Promotion • Offer coupons • “2 for the price of 1” deals to grocery store shoppers • Point of Purchase • Create a point-of-purchase display in the baking aisle to draw attention to the new product; Would work well because Betty Crocker already has one of the largest presences in the baking aisle