New products launched between 1988 and 1998 comprise over 15% of Hershey's total U.S. confectionery business.

New products were crucial to Hershey achieving the number one position in the U.S. non-chocolate confectionery category and maintaining our leadership position in the chocolate category. Hershey's new product success vastly exceeds the success rate of the food industry. Every new brand launched by Hershey since 1990 is still in distribution.

There are six key factors in a successful new products program:

• The first and most important factor is a very clear, well-thought-out plan — "the strategic blueprint." This means taking the time to understand every segment of the confectionery category. Hershey follows the latest consumer and snack category trends and understands their implications for the confectionery business.
  
  
• Our second key to success is the effective use of technology to meet consumer needs. The role of technology is critical to ensuring that we deliver the highest possible quality and great taste.
  
  
• Third is constantly talking to and listening to consumers every step of the way to be sure we stay on track.
  
  
• Making sure the product has a meaningful point of difference is the fourth key factor. Most new products fail in the market because they are "me-too" products with no unique benefit to the consumer.
  
  
• Executional perfection is the fifth factor. We test every element of our new products with consumers before we bring them to market. This includes the name, the package, the advertising, and above all, the taste and quality.
  
  
• The sixth key element is Hershey's high-performing team. Behind every new product we launch there are hundreds of people who are incredibly capable and dedicated. The secret ingredient of our success has been the ability to bring together a multi-functional group from across the corporation and mold them into a motivated team intensely committed to common goals. We continue to learn from every launch, constantly fine-tuning the process.

Supported by the six key factors, our new products process is analogous to a funnel which is full at all times with new products in various stages of development. The top of the funnel contains many concepts. While they are being evaluated with consumers by our Marketing Department, they also are undergoing technical evaluation for feasibility by our Product Development and Engineering Groups. Product Development then creates product prototypes which receive further consumer testing.

As the funnel narrows, products continue to be improved. Some products are discarded because of technical barriers, lack of desired profitability or lower-than-desired consumer test scores.

Finally, those products having high potential for success emerge from the developmental funnel and are launched in the marketplace. If we have done our job, the new product will deliver:

• Great taste;
• Excellent value;
• High consumer acceptance;
• Acceptable shelf life; and,
• Profitability.