12/7/2012

CSU
MRI ANALYSIS: HERSHEYS MILK CHOCOLATE BAR
FULLERTON

Dr. Atwong | Heather Castner, Wonmin Choi, Erika Hosking, Daniel Ni

 Table of Contents

Executive Summary 2

Highest Spreads 3

Segment Indices 4

Hersheys Consumers 5-7

Milk Chocolate Bar Comparisons: Age 8

Milk Chocolate Bar Comparisons: Childrens Age 9

Milk Chocolate Bar Comparisons: Value of Home 10

Milk Chocolate Bar Comparisons: Household Income 11

Milk Chocolate Bar Comparisons: Education 12

Demographic Mass Market 13

Demographic Niche Market 14

Media Vehicles Mass Market 15-16

Media Vehicles Niche Market 17-18

Hersheys Bar Spread Sheet 19

Nestle Bar Spread Sheet 20

Ghirardelli Spread Sheet 21

Marketing 353-03 1 MRI: Hersheys Chocolate

Executive Summary
Hersheys milk chocolate bar is a branded candy that first appeared in 1900. It has been a
household name since 1903 when Hersheys revolutionized the chocolate making industry by
mass producing affordable chocolate bars for the public. Since that time, the Hersheys brand
has penetrated the market with extensive product line extensions, such as: milk chocolate bars
with almonds, chocolate kisses, chocolate syrup, chocolate miniatures, dark chocolate, cookies
in cream, and chocolate with toffee nuggets. The Hersheys brand thrives on their motto of
pioneering opportunities for the less fortunate while delivering an affordable quality chocolate
around the world.

The report included in this document is an analysis of Hersheys chocolate user demographics
across the nation alongside two of Hersheys main competitor consumer demographics, Nestle
Chocolate and Ghirardelli Chocolate companies. The comparison is formatted around the top
five most important consumer segments to classify niche and mass markets.

The argument of this research is to conclude the most efficient use of media vehicles to deliver
effective marketing messages of the Hersheys Milk Chocolate Bar to the targeted consumer. To
achieve this, extensive research and analysis of consumer demographics throughout the target
market will be presented along with supporting graphs and charts to illustrate the
commonalities and differences between Hersheys consumers, competitors consumers, and
industry wide consumers through highest indices.

Once niche and mass markets are determined, a clear understanding of Hersheys target
market will be presented with obtainable media marketing avenues that are available.

Marketing 353-03 2 MRI: Hersheys Chocolate

Highest Index Spreads
Highest Index Spreads is the difference between the highest index score and the lowest index
score within a demographic category. The table below details each of the three brands top five
index spreads.

The top five index spread categories for the Hersheys brand are consumers childrens age,
consumer age, home Value, household income, and education.

For the Nestles brand, the top five index spread categories are race, household income,
education, home value and occupation.

Finally, for the Ghirardelli brand, the top five index spread categories are occupation,
household income, education, home value, and gender.

Ghirardelli Nestles Hershey's

Spread Spread Spread

Occupation 106 Race 184 Child Age 40

Household Income 101 Household Income 158 Age 37

Education 85 Education 156 Household Income 32

Home Value 72 Home Value 107 Home Value 32

Gender 70 Occupation 102 Education 28

One thing to note for is these index spread categories is that for the Hersheys brand spread is
much lower than the other two competitors spreads. The highest spread for Hersheys has a
score of 40, while the highest for Nestles is 184. This could mean that demographic
segmentations have little impact on the sales of Hersheys while Nestles and Ghirardelli have
significant opportunities for segmentation. Another assumption that could be made due to this
discrepancy is that the distribution of consumption is so evenly spread that most demographics
and their factors all meet the criteria to be or become a Hersheys brand consumer.

Marketing 353-03 3 MRI: Hersheys Chocolate

Highest Segment Index
The Segment Index shows the likelihood of purchasing the product from a segment of people
within a demographic category. The average segment index is 100 and if a particular group has
a segment index of 120, it refers to this group of people being 20% more likely to purchase the
product than the rest of the people within the respected demographic category.

For our main brand, Hersheys, the segments with the highest index score are Child Age < 12
Month with a score of 127, Adult Age 18-24, with a score of 121,Home Value < $50,000 with a
score of 121, HHI < $20,000 with a score of 116, and Did Not Graduate High School, with a score
of 108. Again, Hersheys has the least index spreads out of the three brands, therefore, the
Hersheys Index index scores does not deviate too much from 100.
Child Age: <12 months 127 Least amount of spread usually indicates a good
Age: 18-24 121 opportunity for mass marketing, as consumers
Value of Owned Home: <$50,000 121 from different demographics enjoys the product
HHI: <$20,000 116
equally.
Educ: Did not graduate HS 108

The table below shows the index spreads of Ghirardelli brand. These segments are the same
segments that had the highest index score for Hersheys. In comparison, Ghirardelli has scored
below 100 on every segment except for the
Adult Age: 18-24 group. This is a clear Ghirardelli Index
Age: 18-24 113
indicator that Hersheys and Ghirardellis
Value of Owned Home: <$50,000 86
have different target demographics. Child Age: <12 months 64
HHI: <$20,000 63
Educ: Did not graduate HS 57

The table below shows the index spreads for Nestles brand. Again, these segments are the top
five segments for our focus brand, Hersheys. In comparison, Nestles scored very high on all
segments. The average index score among these segments is 164.8, which is a lot higher than
Hersheys. This shows that Hersheys and Nestles both appeal to the same demographic
segments, Nestles however, is even more
Nestles Column3
effective at penetrating to these segments Educ: Did not graduate HS 216
than Hersheys. HHI: <$20,000 210
Value of Owned Home: <$50,000 165
Age: 18-24 120
Child Age: <12 months 113

Marketing 353-03 4 MRI: Hersheys Chocolate

Hersheys Product Consumers
The percentage-down represents what percentage of a products users fall into a given
segment. In other words, if the percent down for Age: 18-25 is 17%, this means that 17% of the
users are between 18 and 25 years of age. This is useful for determining the key market
segments that we should focus on. For Chocolate, we came up with several demographics to
consider: Adult Age, Child Age, Home Value, Household Income, and Education level.

The following chart show the different age ranges for Hersheys Milk Chocolate. As you can see,
the primary age of users for Hersheys is between 18 and 24 years of age with 15.9% of people
falling into this category. Upon taking a look at the graph overall however, we notice that the
age demographic for Hersheys chocolate is relatively spread out among all the age ranges
considered. There is however, a
slight trend towards a decline in
use as age increases.

The next graph shows us the ages of the children of Hersheys users. While the numbers for
most of the segments in this category are quite close, there is a slight lead by users who have
children under 12 months of age, followed closely by children between 2 and 5 years old.

The three categories that

cover under 6 years of age
through 17 years of age all sit
at about 15% each.

Marketing 353-03 5 MRI: Hersheys Chocolate

The home value of Hersheys users can be seen in this next chart, where it clearly shows that
15.9% of users have a home value of less than $50,000. Although this is the largest percentage
of the categories provided, there is a fairly even distribution of home value consumption
throughout all of the graphs. This further proves that the Hersheys market can effectively
penetrate all home value categories.

We believe these lower home values may be affected by the users being primarily young adults
between the ages of 18-24, who tend to have a lower income rate and therefore often have
lower home values. This lower income rate for users is also supported by the Household
Income chart below, which clearly shows the largest segment to be a Household Income of less
than $20,000 making up 15.2% of total users.

Marketing 353-03 6 MRI: Hersheys Chocolate

Hersheys users fall primarily into the segment that did not graduate from high school; however
the segments that graduated high school and have no college only trail it by 0.1% each. This is
another example that contributes to the overall conclusion that the Hersheys brand for milk
chocolate bars can reach a wide range of consumers based on the low frequency differences.

Based on comparison of the top five demographics for the Hersheys brand, it is made clear that
there is a fairly even distribution of consumption across all categories within each respective
demographic making the Hersheys chocolate an ideal product to reach a large market share.

Marketing 353-03 7 MRI: Hersheys Chocolate

Milk Chocolate Bar Comparisons: Age
The first demographic we are exploring is the adult age of the consumers of chocolate. As you
can see from the graph, Hersheys largest segment in this category is consumers age 45-54
years old; 19.6% of these consumers fall into this category. Nestl has a comparable percentage
in this segment at 20%, but the highest percentage of sales comes from the 25-34 age range.
Ghirardelli on the other hand, has the highest percentage of sales from the 45-54 segments,
outshining the other brands by around 4%. This is also the age group that accounts for the
majority of its sales. We believe that Hershey and Ghirardelli appeal to this age range better
than Nestl due to the history of the companies and their impact on this specific generation.
Both the Ghirardelli and Hersheys companies were founded and produced, and still are, in the
United States, while Nestl is a European founded company that imports most of its products.

% Down Adult Age

25.0%

20.0%

15.0%
% Down Age Hershey
% Down Age Nestl
10.0%
% Down Age Ghirardelli

5.0%

0.0%
Age: 45- Age: 25- Age: 35- Age: 18- Age: 65+ Age: 55-
54 34 44 24 64

Marketing 353-03 8 MRI: Hersheys Chocolate

Milk Chocolate Bar Comparisons: Childrens Age
The next categories we are analyzing are the ages of children in the families who consume these
products. Hersheys largest segment for this category is families with children age 12-17 years old which
makes up 24.1% of its sales. Ghirardelli follows Hershey fairly closely with all segments in this category
until the two categories covering children between birth and 23 months. Nestl on the other hand, has a
concentration of sales in the category with children less than 6 years of age. This is the second largest
segment for both Hershey and Ghirardelli. We found it interesting to note that while Nestl did not have
an advantage in the 12-17 year old range; it dominated most of the other segments. We believe this
may be due to Nestls procurement of the Willie Wonka branding for this age group as well as
Hersheys largely diversified product mix.

% Down Child Age

30.0%

25.0%

20.0%

15.0% % Down Child Age Hershey

% Down Child Age Nestl
10.0%
% Down Child Age Ghirardelli

5.0%

0.0%
Child Child Child Child Child Child Child
age: 12 age: <6 age: 6 - age: 2 - age: <2 Age: age: 12-
- 17 Years 11 5 Years years <12 23
Years Years months months

Marketing 353-03 9 MRI: Hersheys Chocolate

Milk Chocolate Bar Comparisons: Value of Home
Next we looked at the Home Value. Hersheys largest segment in this category was consumers with a
home value of 200-500 thousand dollars. The graph shows us that 25.8% of its target market comes
from this category. This was also the largest segment for Ghirardelli and Nestl; however Ghirardelli
dominated this segment with a towering 34.4%, while Nestl lagged behind both its competitors at a
weak 17.7% of its market coming from this segment. Ghirardelli lead in every segment over $50K where
Nestl finally picks up the slack in the only segment where it outperforms either competitor.

% Down Home Value

35.0%

30.0%

25.0%

20.0%

15.0%
% Down Home Value Hershey
10.0%
% Down Home Value Nestl
5.0%
% Down Home Value Ghirardelli
0.0%

Marketing 353-03 10 MRI: Hersheys Chocolate

Milk Chocolate Bar Comparisons: Household Income
Then we come to Household Income. While Hershey pulls a significant portion of its market
from the $75,000-$149,000 range at 26.6%, Ghirardelli outperforms again with 36.9% of its
market falling into this category. From the graph we can see that Nestl doesnt perform very
well in this segment, but vastly outperforms the others in the segment covering household
incomes less than $20,000. We believe the price point and brand association has much to do
with this comparison. For example, Ghirardelli prides its marketing on quality coco bean
production, boosting its pricing as well as segmenting itself from the lower incomes. Inversely,
Nestl and Hersheys marketing techniques rely on targeting an average consumer with an
affordable price.

% Down Household Income

40.0%

35.0%

30.0%

25.0%

20.0% % Down Household Income

Hershey
15.0% % Down Household Income Nestl

10.0%
% Down Household Income
5.0% Ghirardelli

0.0%

Marketing 353-03 11 MRI: Hersheys Chocolate

Milk Chocolate Bar Comparisons: Education
Finally, we examine the Education of our market. While almost half of Hersheys market
segment and over 60% of Nestls market-segment have no college experience, it is good to
keep in mind that almost 45% of the US population falls into this category. Meanwhile,
Ghirardelli doesnt seem to perform as well in this segment, instead leading the way in the
College Plus segment, and Nestl seems to lead the segment of people who did not graduate
from High School.

% Down Education
70.0%

60.0%

50.0%

40.0%

30.0%
% Down Education Hershey
20.0% % Down Education Nestl

10.0% % Down Education Ghirardelli

0.0%

Marketing 353-03 12 MRI: Hersheys Chocolate

Demographics: Mass marketing
Mass marketing is a marketing strategy used to search for a whole market ignoring market 5
segments differences and appeal the whole market with one offer or one strategy. It is a type of
marketing strategy that sells a product to a wide audience. Traditionally this marketing strategy
has focused on radio, Television and media like newspaper as the medium used to reach this
broad audience. Exposure to the product is maximized by reaching a large amount of audience
possible. A high index and a large share of product users would be a good candidate of mass
marketing.

After analyzing the high indices and highest percent downs, the demographic that we
recommend for mass marketing is people with No college of Education. It has the largest
share for Hersheys out of all Education, which is 48.1%. As you can see the table below, this
groups index is 107 which is pretty high. It means that this education segment is 7% more likely
than the average population in consuming the Hersheys.

Education % Down Education index

Educ: No college 48.1 Educ: No college 107
Educ: Graduated college plus 23.4 Educ: Graduated college plus 86
Educ: Attended college 19.9 Educ: Attended college 103
Educ: Graduated high school 33.3 Educ: Graduated high school 107
Educ: Did not graduate HS 14.9 Educ: Did not graduate HS 108
Educ: Post graduate 7.5 Educ: Post graduate 80

The second demographic that we recommend for mass marketing is people who have Children
age between 12 to 17 Years. It has the largest share for Hersheys out of all Children age group,
which is 24.1%. As you can see the table below, this groups index is 120 which is pretty high. It
means that this education segment is 20% more likely than the average population in
consuming the Hersheys.

%down index
Child age: 12 - 17 Years 24.1 120
Child age: <6 Years 22.3 120
Child age: 6 - 11 Years 21.5 118
Child age: 2 - 5 Years 17.7 124
Child age: <2 years 8.1 107
Child Age: <12 months 5.2 127
Child age: 12-23 months 3.2 87

Marketing 353-03 13 MRI: Hersheys Chocolate

Demographics: Niche marketing
A niche market is the particular market on which a specific product is focusing. So the niche
market defines the specific product features aimed at satisfying specific market needs and the
demographics which is intended to have a influence on. It is considered as a small market
segment. However It is well defined segment of the population. The niche marketing segment
has highest index and a small amount of share in the industry.

Demographic segment that we recommend for niche marketing is the age group segment,
specifically the people who have children less than 12 months ago due to high index of 127,
and small share percentage 5.2% in that segment. As you can see from the first table below,
people who have children less than 12 months age are 27% more likely to buy an Hersheys
than average, against people who have children between the age of 12-23 months are 13% less
likely to buy it than average. The second table shows that 5.2% of Hersheys consumers are the
people who have children less than 12months age. It is small percentage down compare to the
segment who has children 12-17 years age.

index Down %
Child Age: <12 months 127 Child Age: <12 months 5.2
Child age: 12-23 months 87 Child age: 12 - 17 Years 24.1

The other demographic segment we recommend is Value of owned home segment, Specifically
people who has value of owned home less than $50,000 due to a high index of 121 and a small
share of Hersheys consumers at 5.1%. As you can see from the first table below, people whose
has home value less than $50,000 are 21% more likely to buy an Hersheys than average,
versus people who have home value $500,000+ Dollars are 11% less likely to buy Hersheys
than average. The second table shows that 5.1 % of Hersheys consumers have home value
less than $50,000 compared to the people who have home value between the $200,000 to
$499,999.

Home value index Home value % Down

Value of Owned Home: <$50,000 121 Value of Owned Home: <$50,000 5.1
Home Value: $500,000+ Dollars 89 Home Value $200,000-$499,999 25.8

Marketing 353-03 14 MRI: Hersheys Chocolate

Media Vehicle: Mass marketing
The five media vehicles that we chose for mass marketing in magazines are Newspaper
Distributed, Women, General Editorial, NNN Top 100(Sunday), Home services. The first media
channel that we chose is News paper Distributed because it has an index of 104 and 48.1% of
Hersheys consumers The second media channel that we chose is Women because it has an
index of 119 and 47.7% of Hersheys users. The third media channel that we chose is General
Editorial because it has an index of 115 and 47.8% of Hersheys users. The fourth media channel
that we chose is NNN Top, because it has an index of 112 and 39.6% of Hersheys consumers.
The last media channel that we chose is the Home services because it has an index of 108 and
31.8% of Hersheys consumers.

%down index
Magazine Types: Newspaper Distributed 48.1 104
Magazine Types: Women 47.7 119
Magazine Types: General Editorial 47.3 115
Magazines: NNN Top 100 (Sunday) 39.6 112
Magazines : Home services 31.8 108

The five media vehicles that we chose for mass marketing in cable shows are The Weather
Channel, The Discovery Channel, CNN, Fox News Channel, and TNT. The first media channel that
we chose is The Weather channel because it has an index of 111 and 36, which is 7% of
Hersheys consumers. The second media channel that we chose is The Discovery channel
because it has an index of 114 and 35.8% of Hersheys consumers. The third media channel that
we chose is CNN because it has an index of 108 and 31.1% of Hersheys users. The fourth media
channel that we chose is Fox News channel because it has an index of 103 and 30.7% of
Hersheys consumers. The last media channel that we chose is TNT because it has an index of
105 and 30.2% of Hersheys consumers.

% down index
Cable: The Weather Channel 36.7 111
Cable: The Discovery Channel 35.8 114
Cable: CNN (Cable News Network) 31.1 108
Cable: Fox News Channel 30.7 103
Cable: TNT (Turner Network Television) 30.2 105

Marketing 353-03 15 MRI: Hersheys Chocolate

 The five media vehicles that we chose for mass marketing on the radio are radio shows during
weekend 10:00am-3:00pm, Weekend 6:00am - 10:00am, Weekday 7:00pm -Midnight,
Weekend 7:00pm I-Midnight, Weekday Midnight -6:00am. The first media channel that we
chose is radio during weekend 10:00am-3:00pm, because it has an index of 103 and 43.2% of
Hersheys consumers. The second media channel that we chose is radio shows during Weekend
6:00am - 10:00am it has an index of 110 and 33.4% of Hersheys users. The third media channel
that we choose radio shows during Weekday 7:00pm -Midnight , because it has an index of 110
and 17.3% of Hersheys consumers. The fourth media channel that we chose is radio shows
during the Radio: Weekend 7:00 pm - Midnight, because it has the highest index of 109 and
17.2% of Hersheys consumers. The last media channel we chose is radio shows during the
Weekday Midnight -6:00am because it has an index of 117 and 15.6% of Hersheys users.

% down index
Radio: Weekend 10:00 am - 3:00 pm 43.2 103
Radio: Weekend 6:00 am - 10:00 am 33.4 110
Radio: Weekday 7:00 pm - Midnight 17.3 110
Radio: Weekend 7:00 pm - Midnight 17.2 109
Radio: Weekday Midnight - 6:00 am 15.6 117

Marketing 353-03 16 MRI: Hersheys Chocolate

Media Vehicle: Niche marketing
The top five media vehicles that we chose for niche marketing in TV show Types are
Entertainment Specials, News specials , Awards- Specials , Early Morning News, Basketball
Specials-College. The first media channel that we chose is Entertainment Specials because it has
an index of 183 and 16.4% of Hersheys consumers. The second media channel that we chose is
News-Specials because it has an index of 176 and 16.7% of Hersheys users. The third media
channel that we chose is Awards- Specials because it has an index of 159 and 11.8% of
Hersheys users. The fourth media channel that we chose is Early Morning News, because it has
an index of 155 and 10.9% of Hersheys consumers. The last media channel that we chose is the
Basketball Specials-College because it has an index of 151 and 10.7% of Hersheys consumers.

%m down index
TV Show Types: Entertainment Specials 16.4 183
TV Show Types: News- Specials 16.7 176
TV Show Types: Awards-Specials 11.8 159
TV Show Types: Early Morning News 10.9 155
TV Show Types: Basketball Specials-College 10.7 151

The top five media vehicles that we chose for niche marketing in Magazine Types are TV Guide,
Video Games/PC & Console, Good Housekeeping, Parenthood, and Southern Living. The first
media channel that we chose is TV Guide because it has an index of 196 and 10.6% of Hersheys
consumers. The second media channel that we chose is Video Games/PC & Console because it
has an index of 180 and 12.6% of Hersheys users. The third media channel that we chose is
Good Housekeeping because it has an index of 164 and 15.9% of Hersheys users. The fourth
media channel that we chose is Parenthood, because it has an index of 159 and 18.2% of
Hersheys consumers. The last media channel that we chose is the Southern Living because it
has an index of 159 and 10.4% of Hersheys consumers.

%down index
Magazines: TV Guide 10.6 196
Magazine Types: Video Games/PC & Console 12.5 180
Magazines: Good Housekeeping 15.9 164
Magazine Types: Parenthood 18.2 159
Magazines: Southern Living 10.4 159

Marketing 353-03 17 MRI: Hersheys Chocolate

The five media vehicles that we chose for niche marketing in cable shows are Cartoon Network,
Nick at Nite, OWN, The Disney Channel, and ABC Family Channel. The first media channel that
we chose is Cartoon Network because it has an index of 171 and 20, which is 8% of Hersheys
consumers. The second media channel that we chose is Nick at Nite because it has an index of
147 and 10.2% of Hersheys consumers. The third media channel that we chose is OWN
because it has an index of 142 and 11.2% of Hersheys users. The fourth media channel that we
chose is The Disney Channel because it has an index of 132 and 21.3% of Hersheys consumers.
The last media channel that we chose is ABC Family Channel because it has an index of 129 and
27.5% of Hersheys consumers.

%m down index
Cable: Cartoon Network 20.8 171
Cable: Nick at Nite 10.2 147
Cable: OWN 11.2 142
Cable: The Disney Channel 21.3 134
Cable: ABC Family Channel 27.5 129

Marketing 353-03 18 MRI: Hersheys Chocolate

 Appendix A

Marketing 353-03 19 MRI: Hersheys Chocolate

 Appendix B

Marketing 353-03 20 MRI: Hersheys Chocolate

 Appendix C

Marketing 353-03 21 MRI: Hersheys Chocolate