Industry Analysis with Marketing Plan

Extension Report

This is a report that was my final assignment for my Marketing Strategy capstone class in my last

semester at East Carolina University in the Spring of 2016. The class was assigned the project over the

course of the semester and worked in groups of three to pick an industry and develop both an external and

internal analysis of that industry. The external analysis focused on the entire industry itself whereas the

internal analysis focused on a single competitor in that industry. Because it was a group paper, I have

included only the portions that I researched and wrote about. We had to use at least three scholarly

resources and two popular resources in order to find information about our industry. If you would like for

me to send you the entire paper, I will be more than happy to do so.

External Analysis Report-Soft Candy Industry

Competitor Analysis

Competitor Identification

Company Products/Brands Market

Share

Strengths Weaknesses

Mars Inc Starbursts,

Skittles,

Life-Savers

Gummies

30.4% All 3 brands are the top

selling chewy candy

brands

Acquisition of Wrigley’s

gave them huge

competitive advantages in

production

Differentiated products to

appeal to various customer

segments

Recent product

recalls have made

customers question

their brand image

Hershey’s

Company

Twizzlers,

Good & Plenty,

Jolly Rancher

27.9% Iconic brands and

American heritage has

driven customer loyalty

Values include quality,

transparency, community

and well-being and

committed to simple

ingredients

Largely known for

their chocolate

products which

accounts for most of

their business,

meaning more of

their assets go to

chocolate than other

products

Ferrara

Candy

Company

Brach’s, Trolli,

Now and Later,

Sathers,

Jujyfruits,

Lemonheads

13.4% Wide product line breadth

Merged with Farley and

Sathers to increase their

market concentration

Known for their innovation

and creativity

Highly segmented

may make it hard to

differentiate into

other segments

Mondelez

International

Sour Patch Kidz 6.2% Niche sour candy market

whose products are popular

with younger demographic

Single brand with

various products but

not well-

differentiated

Haribo of

America

Gold-Bears,

Happy Cola,

Licorice Wheels

Totals

30.4% Leads the gummy segment

with iconic Gold-Bears

“It’s all about Quality”

philosophy has driven their

success

Limited room for

product

differentiation due to

their leadership in

the gummy segment

Tootsie Roll

Industries

Tootsie Roll,

Sugar Daddy,

Fruit Chews

High quality, low price

philosophy

Product line that has

offerings for various

demographics

Seen as mysteriously

not giving out

company

information may turn

away customer trust

Jelly Belly

Company

Jelly Beans,

Candy Corn Innovation has driven them

to create over 100 flavors

of jelly beans

Known for The Original

Gourmet Jelly Bean

Highly specialized in

their product

category

Product distribution

is limited

Performance

Accounts for 15.5% of revenue of the entire candy production industry. Candy

production of non-chocolate sales generated $8.1 billion in revenue in 2015 (IBIS). This

industry is highly concentrated with many competitors, meaning that it would be hard for

new competitors to come in and take control of the market. Customers are brand loyal to

these bigger competitors.

Industry has seen declining sales trend due to the rise in health-conscious lifestyles and

because of its mature product life cycle. Consumers are buying less and demand has

fallen because consumers are choosing healthier options with lower sugar content.

Additionally, a rise in childhood obesity accounts for this decline as parents look for

ways to cut back on calories for their children. The soft candy segment of the market is

known for offerings with heavy sugar content and coatings that are not adaptable to

different dietary needs. Competitors are finding ways to make their products customized

to these dietary needs. (D’Costa, 2015)

Non-chocolate sales reached $10.4 billion in 2014 with top performers including fruity

candy, sour candy, and gummies. This means that these segments are the most popular

with customers and are dominating the market. (State, 2014)

In 2015, the soft candy segment had a 7.94% increase in sales, contributing $3 billion in

revenue to the non-chocolate industry. This has spurred many candy production

competitors to find new ways to enter this segment and expand their product line to

include chewy candy. This means the market has become more saturated but also creates

new opportunities for innovative products. (Lindell, 2015)

Seasonal candy contributes $7.2 billion per year meaning that to compete, companies

must differentiate their product and offer various options per seasonal trends. (State,

2014)

Characteristic Strategic Groups

Image and Personality

Innovation: Many companies that compete in this industry look for ways to create new

flavors and offerings by using innovation in their product development. Because this

industry segment is seen as more sugary and more vibrant compared to the rest of the

confectionary industry, companies use this as an advantage and create products that are

more unconventional compared to their industry substitutes. Competitors in this industry

use this to market their product and portray the value of having differentiated products.

Age demographics of consumers: One major way companies in this industry define their

products and their product lines is the age of their target customers. Many competitors

target a younger demographic and therefore make their brand more appealing by using

fun and vast arrays of colors. Many products in this industry use a variety of colors to

Fruity Candy Chewy Candy Sour Candy Licorice Candy

Starbursts

Jolly Rancher

Chews

Jujyfruits

Skittles Tootsie Rolls

Sugar Daddy

Jelly Beans

Twizzlers

Good and Plenty

Licorice Wheels

Trolli Sour Patch Kidz

Lemonheads

Gummy Candy

Gold-Bears

Life-Savers

Gummies

Sather’s

appeal to a younger population. Fruity candies also use shape to appeal to younger

customers, making their products look similar to the fruit they are flavored to taste like.

Other companies in this industry appeal to an older demographic, those who grew up

with candies such as licorice, Good & Plenty and Now and Laters. They appeal to these

customers by adding nostalgia to their branding to recreate those memories for these

customers.

Seasonal offerings: One of the major strengths of this industry is their ability to

differentiate their products based on seasonal customer preferences. Having the ability to

sell different flavors throughout the year allows companies to balance out times when

their sales are down with those when sales increase due to these limited-edition products.

Having specialty offerings appeals more to customers because they realize that it is not

available all the time, seeing the product as rare and making sure to buy before they no

longer can. This also allows companies in this industry to use their innovation, research,

and product development strengths to create new unique flavors to appeal to a wider

customer base.

Dietary needs: With the rise of childhood obesity and the World Health Organization

recommendations of sugar being no more than 5 percent of a person’s daily caloric

intake, competitors have taken efforts to find alternative ways to sweeten their products

and make their products better suited to their customers (Lindell, 2015).

Low cost, high differentiated products: Large companies can cut costs by using highly

automated production and passing off costs, such as the rise of sugar, to their brand loyal

consumers. This helps keep the industry’s costs low as well as still be affordable to their

customer. Products in this industry start at relatively low price points, meaning that if

their prices rise, customers will still be able to see them as affordable (D’Costa, 2015).

Marketing: Marketing is a big investment by the companies in this industry to help raise

product awareness and establish brand loyalty, which is very high in this industry. For

example, Skittles uses the motto “Taste the Rainbow” due to their colorful offerings.

Mars, Inc. has used major advertising avenues such as the Super Bowl to promote

Skittles, using celebrity endorsements including Steven Tyler. This industry is marked

by their use of vibrant colors, celebrity endorsements and unconventional advertising to

appeal to their target market. Because no other segment of the confectionary industry is

as vivacious as this segment, companies use marketing to really appeal to their

customers’ wild side.

Internal Analysis Report--Wrigley’s

Key Issues

Strengths

Mars and Wrigley Merger in 2008: Mars bought Wrigley in 2008 for $23 billion and

allowed Wrigley to operate as a subsidiary. The deal increased Mars’ competitive

advantage, market share and penetration in different product categories. Wrigley was a

market leader in the chewing gum and soft candy segments and made Mars the biggest

global confectioner company. At the same time this deal occurred, Wrigley redesigned

their product packaging and placement to stand out more amongst their competition (Jay,

2008). Having Mars as their parent company has provided Wrigley with the economies

of scale and efficient production and other competitive advantages that Mars had at their

disposal.

Innovation: Innovation has allowed for Mars to test out new flavor combinations and

varieties of colors and shapes, as well as to find alternative ingredients to make their

products healthier by using less sugar and less artificial ingredients. The Life Savers

Gummies product extension allowed Wrigley to appeal to their target market by being

able to change their shape, add sweet and sour flavors, and use more natural ingredients,

three important product attributes in this segment. For example, their Fruit Explosions

and Sweet Strings n’ Sour Rings offer a combination of two flavors in one product. In

addition, their Starbursts’ Flavor Morph product extension offers a two-flavor experience

as well (Albader, 2012).

Corporate Responsibility and Sustainability Commitment: In 2013, Mars was named the

“Best Private Company by Ethical Corporation Responsible Business Awards”. This

award is presented to companies who have made a conscious effort and commitment to

responsible business practices and corporate responsibility. This means that Mars was

recognized for their business practices that benefit not only the needs of their consumers

and internal stakeholders but the environment and the societies in which they operate in

as well. These efforts have included “eliminating fossil fuel energy use and greenhouse

gas emissions, minimizing their impact on water quality and availability” in their

farmers’ communities and “mitigating the impacts of their company’s waste by 2040,”

Strengths

• Mars, Wrigley merger in 2008

• Innovation

• Skittles Brand Marketing

• Sustainability and Social Responsibility Commitment

Weaknesses

• Brand association with Trayvon Martin case

Opportunities

• Bite size trend

• Commitment to remove artificial sweeteners

• Healthier lifestyles trend

• Technology

Threats

• Declining industry sales

• NCA's Children's Confection Advertising Initiative

(“Mars”, 2013). Mars has shown their commitment to sustainability and making sure that

the environment is unaffected for future generations. In 2016, they were also awarded

the Climate Leadership Award for Organizational Leadership by the U.S. EPA (“Mars,

Inc.”, 2016). Mars received this award for their efforts in tracking their supply chain and

making decisions affecting their operations to minimize their impact on the environment.

This is a competitive advantage because consumers appreciate those companies who do

make a conscious effort to protect their environment; it makes consumers feel more

valued by these companies. In return, consumers will give more business to those

companies who do make these commitments when deciding which brands to buy.

Consumers are more willing to support these companies and they develop a more positive

image of these committed brands.

Skittles Brand Marketing: Strong and effective marketing is a key success factor to the

soft and chewy candy industry. Wrigley’s Skittles brand has found marketing strategies

that have proven to be successful to gain brand awareness. In 2009, Skittles launched a

social media campaign that made any Tweet, or Facebook page click or Skittles.com

search redirect to the Skittles main homepage. Consumers who posted Skittles comments

on any social media site would see their post on the actual Skittles.com website, drawing

more traffic to the product’s homepage. Using this user generated content made

customers feel like a part of the company and in return, Skittles would receive more

digital promotion and buzz. Because of this campaign, more customers started

conversations about their brand and saw a 1,332% jump in their website traffic (McKay,

2009). Skittles was also successful in airing its first Super Bowl advertisement in 2015

was an official sponsor for the NFL. Skittles collaborated with NFL celebrities

Marshawn Lynch and Kurt Warner to promote their product in this campaign as well as

hosted tailgating parties and other Super Bowl activities leading up to the game

(“Skittles”, 2015). Skittles renewed this relationship in 2016 by having a 30-second

advertisement during the Super Bowl that featured a celebrity-Steven Tyler of the band

Aerosmith-using their slogan, “Taste the Rainbow,” for the first time (Channick, 2016).

This Super Bowl partnership helped Skittles become the top non-chocolate candy in the

U.S. (Channick, 2016). Skittles is known for innovative and off-the-wall marketing

strategies, and these two new campaigns fall right in line with their past success.

Weaknesses

Brand Association with Trayvon Martin Case: Trayvon Martin was a young black man

involved in a controversial shooting by police in Florida. When the media first reported

his death, it was stated that he was carrying a pack of Skittles and iced tea when he was

shot. In memorials, rallies, and other cultural movements involving his death, Skittles

suddenly became a symbol of the “racial injustice” and unfortunate “circumstances

surrounding his death” (Severson, 2012). Customers were making the brand association

between Skittles and the feelings of racial injustice this event incited. Consumers

demanded that Wrigley make a statement and be proactive in the case disputes. Others

suggested it was a marketing ploy that allowed Wrigley to profit from the attention and

so the company should donate money to the family. Wrigley decided it was wiser to pay

its respects to the family but felt it was inappropriate to get directly involved in this case

(Severson, 2012). Wrigley had to ensure that the negative press would not affect their

overall brand image and make sure consumers did not associate Skittles with any

malicious racial injustice intent.

Opportunities

Bite Size Candy Trend: Today’s health conscious consumers are preferring to buy bite

size, smaller candy to control their portions and limit the amount of sugar they consume

daily. The chewy candy segment has an advantage in being able to capitalize on this

trend due to the nature of their product. Many candies in this segment are already small,

easy to eat and easy for consumers to grab only a handful. Many candy companies are

repackaging their products into re-sealable bags to make it more convenient for their

customers to eat only a portion of the bag at a time. Due to this trend, the chewy candy

segment has already seen a 6% market growth, reaching $2.8 billion in sales since 2013

(King and Lindell, 2014).

Commitment to Remove Artificial Sweeteners by 2021: Consumer transparency has

become extremely important to companies. This, along with the growing demand for

products with more natural ingredients, has led Mars to make the announcement that they

are committed “to removing artificial flavors and FDA-certified colors” from all its candy

products in the next five years (Lindell, 2016). This provides a challenge for Wrigley’s

products (especially Skittles and Starbursts) to provide the same taste and vibrant colors

they are known for while being able to accommodate this commitment. Research and

Development, Product Design and Suppliers should adjust and develop alternatives to

their current ingredients to maintain the product quality and the taste for which they are

known. This commitment provides Wrigley with the opportunity to gain loyalty of those

customers who demand natural ingredients and prefer to know where their products came

from. Responding to their target audience in this way will give Wrigley an advantage

over their competitors who do not respond to these customers.

Healthier Lifestyles Trend: In 2009, consumers started to cut back their calorie intake,

dining out less and demanding that companies make nutritional information public.

Adults now consume an average of 118 fewer calories per day than before 2009, and the

average number of meals Americans eat out has dropped from 215 to 193 in 2013 (Beck

and Schatz, 2014). Weight tracking mobile applications have increased consumer focus

on choosing quality nutritional foods and demanding healthier menu items. This has led

restaurants and food production companies to reduce their portion sizes and include

lower-calorie options in their product lines. This provides Wrigley with the opportunity

to gain the customers who are following this trend by offering their products in alignment

with the focus of this trend. If customers see the effort Wrigley is making to develop

healthier products, then they will see the added value in their product. Consumers will be

more willing to switch to Wrigley’s products because it aligns with their personal goals.

Technology: Other confectionary companies are starting to use 3-D printing to produce

their candy, including gummies in the soft candy segment. Wrigley can use this

technology to create product molds with various shapes and sizes which will cut down on

their product development costs (Federal, 2015). This technology can also be used to test

different types of products and ingredient combinations for taste testing purposes. 3-D

printing can also be used to design and create different innovative packages, making them

more appealing, more convenient, or easier-to-use for the customer. Wrigley can

capitalize on this technology to develop more innovative and newer products and get

them to the market quicker. It can also help them cut down on costs and production time.

Threats

Declining Industry Sales: The soft candy industry has seen declining sales in recent years

due to the rise in health-conscious lifestyles and its maturing stage in the product life

cycle. Consumers are buying less and demand has fallen because consumers are choosing

healthier options with lower sugar content. Additionally, a rise in childhood obesity

accounts for this decline as parents look for ways to cut back on calories for their

children. The soft candy segment of the market is known for offerings with heavy sugar

content and coatings that are not adaptable to different dietary needs (D’Costa, 2015).

This creates a challenge for Wrigley to find a way to make their products meet these

consumer needs for dietary and health reasons. They also want to respond to the rising

demand for more natural and healthy products or they will continue to see a decline in

sales.

NCA’s Industry Members Children’s Confection Advertising Initiative: Companies in the

candy industry have committed to not advertising their candy products directly to

children under the age of 12 (Candy and Snack, 2016). While Mars is one of these

committed companies, it represents a threat to their future sales and revenues. If

children, one of the main target demographic for Wrigley’s soft candy products, do not

directly see the advertising, they may not know about these products and may not ask

their parents to buy them. This may decrease the amount of product Wrigley sells. On

the other hand, this is seen as a positive in the eyes of the parents and older consumers

who have demanded that companies start acknowledging the growing rate of childhood

obesity and diabetes. Parents are more likely to be loyal to companies who put forth the

effort to care for their consumers and market their products responsibly.

Marketing Objectives To stay relevant in their product category by capitalizing on trends for bite size candy,

natural ingredients, and organic products

To differentiate Wrigley’s product from its competition by addressing to the consumer

trends of natural and healthy lifestyles

Marketing Strategy Placement: Find new distribution sites for product placement to align with the natural and

healthy lifestyles trend. This requires researching to find new stores and retail spaces

whose core values and mission follow the healthy lifestyles trend. New channels that

Wrigley can pursue in this market segment include food stores such as Whole Foods, The

Fresh Market, Harris Teeter and Walmart Neighborhood Markets. These stores all

promote a healthy lifestyle for their customers and products they carry are generally

viewed by the public to be healthier choices. Making sure each product is in the right

aisle or placement inside the store is also important to convey the product category

Wrigley is trying to compete in. For example, Starbursts can sell a smaller serving size

and place it at the store checkouts, making its convenient and easy for the customer to

grab one serving.

Packaging: Packaging will be very important to this product realignment. Packaging will

help convey the right portion size and new ingredients to the consumer. Packaging

should be convenient for the customer to have one portion and control the amount they

eat. It should also be printed with the information explaining the new product formula

and include the ingredient list with all the natural ingredients in their product.

Price: Price should not change much due to Wrigley’s new marketing strategy. Due to

the economies of scale they currently possess because of the size of their company, they

should be able to afford to switch ingredients and packaging and keep their products in

the same price range. Customers are price sensitive to fluctuations in candy prices,

preferring to switch to store brands or cheaper companies if one company decides to

increase their prices. To prevent customers from switching brands, prices should stay

within the same range at which they currently sell.

Promotion: Advertising will be vital to make healthy lifestyle consumers aware of these

new product changes. Traditional media channels should be pursued and research should

be done on how healthy lifestyles customers prefer to obtain their information. Buying

advertising space on these channels will make them aware of the product and understand

that is aligns with the healthy and natural trend. Digital media channels such as social

media should also be included and should contain more information for the consumer

about the product redesign and new ingredients in Wrigley products.

Marketing Action Plan Skittles: The Skittles brand is already formidable to the bite size candy trend. They are a

“poppable” product, allowing customers to grab a handful at a time. Skittles can further

take advantage of this trend by redesigning their packaging to have a pourable opening,

allowing the customer to shake out just a small amount in their hand and better control

the amount that comes out of the package. Skittles can adjust their product to adhere to

the natural and healthy consumer trend by releasing their product with a new formula that

includes only natural ingredients and no artificial ingredients. This could be solved by

Research and Design finding a way to use real fruits in creating the fruit flavors of

Skittles. This new product innovation will make Skittles a market leader in this product

category. Advertising this new formula will be important in making consumers aware of

the new ingredients. This can be done easily for this brand because their marketing is a

major competitive advantage. They can use their social media campaigns and their

celebrity television advertising to convey their new, healthier product formula.

Starbursts: The Starbursts brand is also already aligned with the bite size candy trend.

Because Starbursts are individually wrapped, customers can eat as many or as few as they

please. They also already have a Starbursts Mini product extension. Starbursts can

further capitalize on the bite size candy trend by packaging a smaller amount of candies

in one serving, making customers need to buy more if they want to eat more. This will

also coordinate with the portion control trend that consumers are trying to stick to as well

as give Starbursts the chance to gain more revenue because customers will have to

purchase more packages if they want more product. Starbursts must also remove their

artificial flavors, finding innovative ways to implement real fruit in their products, and

convey this new formula to their audience to capitalize on the natural ingredient trend.

LifeSaver Gummies: LifeSaver Gummies can adapt to the bite size candy trend by selling

their product in smaller, snack-size packages. Downsizing the size of the package will

decrease the amount that customers eat in one sitting. This will also mean that customers

must purchase more packages if they want more gummies. Selling these smaller

packages in a box that comes with six servings means they can place these gummies

beside other gummy snacks such as Fruit Gusher, thus directly competing for more

customers. Reformulating this product can also allow them to use more natural

ingredients and can market their new formula as healthier than competitors such as

Gushers.

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