May 222015
 

Those who invest in cocoa should put their money behind bars. Chocolate bars that is! 😀 Earlier this week in part 1 of my investing in chocolate series I wrote about the insatiable global appetite for chocolate and how to make money from that. 🙂 Today I’ll go into details about how I plan to do it.

Last week I purchased about $4,000 USD of chocolate companies, Hershey Co and Mondelez International Inc. 😀 Both are major players in the chocolate space and own some very high quality products and valuable brands. I bought 20 shares of HSY and 50 shares of MDLZ, which is roughly $2,000 of each company.

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As we can see I bought these 2 stocks in my US dollar TFSA for efficiency. I’ll post a tutorial on how to open a registered $USD account in the future if anyone’s interested. For now let’s go over some analysis to understand why I believe these companies should be in my long term investment portfolio.

The Hershey Company

Famous investor Warren Buffett said one of the secret formulas to a successful business is to “buy commodities, and sell brands.” That is exactly what Hershey is doing. 🙂 It purchases sugar, milk, cocoa, etc, and sells products that have major brand recognition. About half of the chocolate consumed in America is milk chocolate, and that is what Hershey is known for. 🙂 If someone goes into a candy store to buy a Hershey chocolate bar and the store owner says “sorry, we don’t have Hershey, but we have this other generic brand that is 20% cheaper,” then the customer will probably leave and try to find another store to get his Hershey fix. 😆 That is the power of brand loyalty. It automatically puts a 20% value premium over other businesses offering the same food. Check out some of the awesome brands Hershey is responsible for.

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Dec 042013
 

Marketing in today’s world is very important. It affects how a company acquires new customers and how to maintain its relationship with them. I recently read a story about how a professor was able to explain complicated marketing terms to his students. He basically described the different kinds of marketing with simple to understand examples.

  • You see a girl at a party. You go to her and say “I’m rich, marry me.” – That’s called Direct Marketing 🙂
  • Your friend goes to a girl and pointing at you tells her, “he is very rich, marry him.” – That’s called Advertising 😉
  • A girl walks up to you and says you are rich, and asks if she can marry you. – That’s called Brand Recognition 😆
  • You say “I’m very rich, marry me,” and she slaps you. – That’s called Customer Feedback 😎
  • You say “I’m very rich, marry me,” and she introduces you to her husband. – That’s called Demand and Supply Gap 😐
  • Before you have a chance to say “I’m rich, marry me,” your wife arrives to the party. – That’s called Restriction from Entering New Markets 😕

Marketing isn’t just about sales and advertising. Even thanking customers through Twitter, or improving packaging design, will help to make a business more successful. The 4Ps of marketing are product (or service,) place, price, and promotion. This means understanding what unique advantage your company’s product has over its competitors, where the target audience is and how to reach them, don’t charge customers too much, and promote your company’s product.

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Ultimately marketing aims to match a company’s products and services to the people who need and want them. Good job. Now you know as much about marketing as an MBA student 🙂

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Random Useless Fact: A pancake is a cake, that you make in a pan. And Hershey Kisses.. are really just big chocolate chips.