Running head: SERVICES, PRICING AND DISTRIBUTION 1
Services, Pricing and Distribution
Denyse Miskin
Liberty University
Busi 520 Strategic Marketing Management
Dr. Keith Bowery
February 23, 2020
SERVICES, PRICING AND DISTRIBUTION 2
Services, Pricing and Distribution
Support Services Needed
Support services are an integral part of a company’s business. The customer service that
a company offers can potentially help make or break the company. Customers are often worried
about what could happen after they purchase a product. The key to determining what type of
customer service is needed for a company is determining what the customer wants and ultimately
needs.
Customers usually have three specific concerns about product service. Initially, they
worry about the reliability of a product and its potential failure. The next worry is about product
downtime. The final worry is the customers out of pocket expenses for maintenance and or
repair (Kotler & Keller, 2016).
The customer support services needed by the buyers of Hershey Kisses are slightly
different and less cumbersome. The consumers who are purchasing Hershey Kisses are looking
for a reliable and responsible company that responds to questions, concerns and inquiries of their
products. For example, during the Christmas holidays of 2019, there was a unique problem that
plagued the Hershey Kisses. Many bakers, who use the Hershey Kiss to bake the famous
Blossom cookies, found the tips of the Hershey Kisses missing. In the baking community this
was an uproar and the Hershey Company had to find a quick solution to the outcry of unhappy
bakers, many of whom took to social media to share their concerns. Before the Hershey
Company knew about the problem, bakers all over the country were already alerted. The
Hershey Company used this opportunity to thank customers for their feedback and fixed the
manufacturing problem immediately (Hirsch, 2019). This is a prime example of customer
SERVICES, PRICING AND DISTRIBUTION 3
service at its best, the customers were unhappy, and the Hershey Company listened and fixed the
problem.
The customer service offered by the Hershey Company is simplistic. The Hershey
Company has a customer service department that the consumer can reach in three different ways.
The consumer can send an email directly through their web portal, call or text a 1-800 number or
place a message using the consumer’s Twitter account.
The Hershey Company’s website invites the consumer to call, text or email any
questions, concerns or to simply find out nutritional information on any favorite product. The
company’s website also offers easy ordering of fresh products to be delivered directly to the
consumers home (Hershey's, n.d.).
The Hershey Company’s main competitor, the Mars Wrigley Corporations, “contact us”
page on their website is different than the Hershey Company’s. The Mars Wrigley Corporation
offers a lengthy contact form that is to be filled out if a consumer has any questions, problems or
concerns about their product. The consumer initially selects their country, the concern or
question they may have, and then the consumer enters some additional of personal information.
The Mars Wrigley Corporation process for contacting them does not seem as user friendly as the
Hershey Company’s (Mars Wrigley Corporation, n.d.).
Post-Sale Services
The customer services provided by companies’ post sale of their product, vary greatly. If
a consumer purchases a vehicle, they expect the customer service departments to be large and
offer many services. For a consumer purchasing a Hershey Kiss, the post-sale services would be
very different. If the consumer had a problem with the Hershey Kisses the company would
address the problem via their customer service web portal. Additionally, the Hershey’s Company
SERVICES, PRICING AND DISTRIBUTION 4
takes advantage of social media to promote and build a communication bridge with its
consumers all over the world. The Hershey’s Company encourages consumers to find them on
Facebook and follow the Hershey Company’s Twitter account (Kizil, Eddy, Clary, & Crowell,
2013).
Bad customer service could be the next bad headline for a company and creates very
unhappy customers. Additionally, bad customer service can trigger a loss of loyal consumers and
inevitable loss of revenues and market shares (Bieienberg, 2006). The Hershey Company’s
customer service efforts could affect the company greatly if a consumer complaint or question
was not addressed timely or accurately.
New Product Screening Process
“Marketers play a key role in new-product development by identifying and evaluating
ideas and working with Research and Development and other areas in every stage of
development” (Kotler & Keller, 2016, p. 429). A company can introduce a brand-new product
by making the product or by buying the product from another company. When acquiring
products, the company can buy other companies’ products, or buy the company’s patents or buy a
license or franchise. The development of products can come from within the company or come
from a suggestion by a consumer.
The Hershey Company does both acquisition of existing products and development of
new products as well as repositioning their current products in the market. Recently, the Hershey
Company saw a need for their current products to be repackaged. The existing packaging did not
lend itself to easy recognition on the supermarket shelves or easily identifiably on a mobile
phone. The packaging the Hershey Company used for many years was a package that only laid
flat on the supermarket shelves. The Hershey Company knew if they did not evolve their
SERVICES, PRICING AND DISTRIBUTION 5
packaging and properly merchandise their products, consumers may pick another product. The
Hershey Company is always trying to remain innovative and technology friendly for their
consumers, so they developed a new stand-up packaging for about 150 of their products. The
candy maker was looking to launch something that would look good on the supermarket shelves,
was appealing on a smaller sized screen like a cell phone, could be opened easy and stored
upright. The Hershey Company strived to make a package that would appeal to the consumer
and they succeeded (Lindell, 2019).
The future of the Hershey Company is based on making the right product, at the right
quality and for the right price at the right time. The Hershey Company believes they must
anticipate customer’s and consumer’s wants and needs. Much of the Hershey Company’s focus
is on the applying the latest technology, whether its ingredients, quality control or a new
automation. The Hershey Company prides themselves on having the latest and greatest
technology to drive quality, efficiency and improved food safety.
Rework is a great way to describe the Hershey Company in general, the company never
stops reworking its existing product lines, existing manufacturing plants and the company’s
approach to confectionery industry as a whole (Lindell, 2019).
The Hershey Company is always looking for new ideas for new products and the ideas
can come from consumers. On the Hershey Company’s website there is a link to submit an idea.
The consumer enters their birth date and then continues to another screen that allows the
consumer to tell the Hershey Company about their idea.
Pricing Methods
Pricing decisions are very complex, and a company must look at many factors. In order
to price a company’s product, they must look at the company, the customers, the competition, the
SERVICES, PRICING AND DISTRIBUTION 6
raw material costs and the marketing environment. In today’s environment consumers can
readily check the prices of many different products at one time and instantaneously so the price
of a product needs to be competitive with like products.
Since the company’s inception and today, the Hershey Company prides themselves with
having high quality and low-cost affordable products. The Hershey Company, prices their
products based upon the products of their raw materials. In making their chocolate products, the
Hershey Company uses cocoa, milk and other related products. The prices of their chocolate
products are a direct reflection of the market prices of the raw materials which are used. In
2014, 2018 and 2019 the Hershey Company has raised its prices minimally to keep up with the
rising costs of the raw materials (Hershey's, n.d.).
When introducing existing products to a new market, it is the Hershey Company’s
general practice to go into the market with a lower price than the competitors’ price. When the
Hershey Company introduced their chocolate products in the Australian market, they decided to
offer their products at a lower price. The Hershey Company’s reason behind this was they
believed lower prices than their competition would give the consumers an incentive and
encourage them to try the new products. This type of pricing does not lead to profitability but
once the new products are established, the Hershey Company would reevaluate the prices of its
products.
Price adaptation is when a company has a base price for a product and uses discounts,
allowances, and promotional support to sell their product. There are several types of price-
adaptation strategies, geographical pricing, price discounts and allowances, promotional pricing,
and differentiated pricing.
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The Hershey Company should use several types of price-adaptation. The Hershey
Company should use geographical pricing based upon where the product is being sold. The
Hershey Kiss would be a different price whether it was being sold in North America verses the
Hershey Kiss being sold in a third-world country. The Hershey Company should use price
discounts and allowances when being sold at discount stores, for example Wal-Mart. Offering
the Hershey Kiss at Wal-Mart should be cheaper than if the Hershey Kiss is sold at a Wegmans
grocery store. The Hershey Company would do this type of price-adaptation through discounts.
Promotional pricing should be used by the Hershey Company when introducing an existing
product into a new market.
Distribution Strategy
“Most producers do not sell their goods directly to the final users; between them stands a
set of intermediaries performing a variety of functions” (Kotler & Keller, 2016, p. 494). These
intermediaries operate a marketing channel also known as a trade or distribution channel. Part of
the marketing channels are the interdependent organizations participating in process of making a
product. Some of the intermediaries are wholesalers and retailers. Typically, the wholesaler is
the company or merchant that makes the product and the retailer is the company that sells the
product. There could be three major distribution channels before the product reaches the
consumer, the producer, the wholesaler and the retailer (Kotler & Keller, 2016).
The Hershey Company operates as the producer, wholesaler and retailer of their
chocolate products. The Hershey Company manufactures most all their products in one of their
manufacturing plants. The Hershey Company has seven manufacturing plants in North America,
a manufacturing plant in Brazil, Canada, Greater China, India, Japan, Korea, Malaysia, Mexico,
Philippines, and Dubai. The Hershey Company acts as a wholesaler for most of their products,
SERVICES, PRICING AND DISTRIBUTION 8
they make the products and then sell the products an intermediary like a grocery or convenience
store who then sells the product to the consumer. The Hershey Company also acts as a retailer,
offering most of their products on an online store which sells directly to the consumer.
SERVICES, PRICING AND DISTRIBUTION 9
References
Bieienberg, D. (2006). The financial impact of bad customer service. Credit Control, 27(4), 80-
86. Retrieved from http://ezproxy.liberty.edu/login?url=https://search-proquest-
com.ezproxy.liberty.edu/docview/208167784?accountid=12085
Hershey's. (n.d.). www.hersheys.com
Hirsch, L. (2019). Tips included: Hershey says it's fixed the problem of its kisses' missing peaks.
Retrieved from https://www.cnbc.com/2019/01/31/hershey-says-its-fixed-the-problem-of-
its-kisses-missing-peaks.html
Kizil, C., Eddy, V., Clary, L., & Crowell, K. (2013). Hershey's entry to the australian market with
a new brand: An accounting and marketing perspective. Emerging Markets Journal, 3(2).
http://dx.doi.org/10.5195/emaj.2013.43
Kotler, P., & Keller, K. L. (2016). Marketing management (15th ed.). Upple Sadle River, NJ:
Pearson.
Lindell, C. (2019). How the 125-year-old hershey company continues to innovate. Retrieved
from https://www.candyindustry.com/articles/88674-how-the-125-year-old-hershey-
company-continues-to-innovate
Mars Wrigley Corporation. (n.d.). www.mars.com
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