Mars is an extremely powerful force in the candy business. In 1989, four of the ten best-selling chocolate candies in the United States were Mars products (Snickers, M&Ms plain, M&Ms peanut, and Milky Way) and Snickers was the leading candy bar. Other popular Mars brands included Uncle Ben's converted rice and Kal Kan dog food. The firm is among the leading U.S. advertisers, spending around $300 million each year.
However, in 1988, Mars' candy sales decreased by 0.4 percent, while Hershey's sales increased by 7.2 percent. One reason for this disappointing performance is the limited success of Mars' new product development program. It also can be attributed to its production, rather than marketing, orientation, and competitors with more vigorous acquisition policies.
In the early and mid-eighties, Mars new product development group was able to produce only two major new products. Mars had hoped that their new product efforts would lead to the introduction of at least one or two new products per year into the marketplace.
New products at Mars have been chosen more on the basis of conformity with production equipment than on customer needs and desires. The firm's Three Musketeers, Snickers, Milky Way, and Mars bars all are made in a common shape, and all are manufactured on machinery that runs 24 hours per day to maximize production economies of scale. For a new product to use this machinery efficiently, Mars demanded annual sales of $50 million. Competitors aimed only for products that could achieve a minimum of $25 million annually.
Throughout the 1970s and the early 1980s, Mars was consistently the market share leader in candy in the United States. However, with Hershey's acquisition of Cadbury Schweppes in the late 1980s, Hershey took market share leadership from Mars (44% market share vs. Mars 37%). Cadbury's brands (such as Peter Paul, Almond Joy, Mounds, and York Peppermint patties) have an 8 percent market share. These brands give Hershey additional shelf space in the store. This is crucial for self-service items like candy. Mars does not have an aggressive acquisition policy.
Mars pet food business has also suffered from the lack of new products and acquisitions. Quaker Oats purchased Gaines Pet Foods in 1987 to take the number two market share position in the pet food market after Ralston- Purina. Mars' Kal Kan is a leading brand, but heavy spending on advertising and promotions left Mars with a $49 million loss on sales of $460 million in 1987.
Mars' pet foods have been very successful in Europe, where Mars was the first firm to market canned pet food. Until fairly recently, Europeans fed their pets table scraps instead of pet food. The percentage using canned pet food has risen sharply since Mars' market development efforts. Mars' market share in most European countries' pet food markets is at least 50%.
1. Perform a SWOT analysis for Mars in 1989.
2. Recommend new marketing strategies Mars could use to retake leadership from Hershey in 1989. Focus on candy products and be as specific as possible. You can use what you know about what Mars actually did or come up with your own ideas about what they should have done..
* Prepared by Dr. Kathy Winsted using information from a case in Marketing by Evans and Berman, 1990.
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