Heineken Marketing Mix

Heineken Premium Lager Beer Evaluation from a Marketing Mix Perspective Product Evaluation This is Heineken’s regular beer which is the same as the original Heineken started with. Its mildly bitter taste, fresh, fruity aroma, bright colour and exceptional clarity are obtained using only the purest water, hops and barley malt. Alcohol: 5% vol. Under the product evaluation in Malaysia, Heineken Beer is the No.1 selling product in its segment (premium) compared to other brands available in Malaysia. To maintain the quality standards, GAB as brewer always emphasis on good quality raw material. Since the product falls under high premium brands, GAB always maintain the consistency of the quality it’s brewed in Malaysia.Heineken Beer always tastes fresh due to good quality and well developed distribution network by GAB. The hangover due to heavy consumption is very mild makes the product among favourites for working professionals and youngsters who enjoy drinking sensation. Heineken Premium Beer (Figure 4) can be evaluated based on attributes, packaging and branding. Heineken Premium Beer is the only product available in the beer segments for Heineken family in Malaysia. This product has no line extension or variants for consumers to select.

Figure 4: Current Heineken Premium Beer packaging Heineken Lager Beer taste has remained the same till to date despite indications of stagnant market share and brand switching. This is referred as a maturity stage in a product life cycle (figure 5). Heineken Malaysia should introduce another line extension in light segment with differentiated taste and drinking sensation to capture new markets from its competitors.

Figure 5: Product Life Cycle

(Source: - Kotler, 2009, p.324) Heineken Premium Beer packaging has also remained the same for the past 5 to 6 years. It is deemed not appealing to the young and stylish crowd. It is important that Heineken Malaysia introduce or rebrand their packaging concept to attract the new generation. This is in tandem with the style and fad trend for any product offered which would diminish over a period of time. (Figure 6)

Figure 6: Fashion & Fads (Source: - Kotler, 2007, p.458) Heineken Premium Beer needs to increase its brand equity activities (Figure 7) especially on awareness, preference, image & personality.

Pricing Evaluation Figure 7: Brand Equities Dimensions

Internal Factors Marketing Objectives Marketing mix strategy Costs Organizations considerations

Pricing decision s

External Factors The Market & demand Competitors price and offers Other external factors

Figure 8: Pricing decision factors (Source: - Kotler, 2007, p.480) Product pricing decision for Heineken Premium Beer can be evaluated by internal and external factors as illustrated above (figure 8). Heineken Premium Beer is positioned under product quality leadership as a premium product within Premium category with Budweiser, Foster & Hoegaarden (figure 9).

Quality Low Low

Economy

High

Skimming

High Penetration

Price Premium Heineken Budweiser Foster Hoegaarden

Figure 9: Pricing Strategy Matrix

The beer industry in Malaysia falls under oligopolistic competition market. The pricing approach is based on “Competition Based Pricing” which will be agreed collectively by the 2 key market leaders (figure 10 below).

Manufacturer

Product

*RRP (RM) for 320 ml can * based on average pricing found at 7 Eleven stores.

Carlsberg

Budweiser

8.50

Carlsberg

Foster

8.50

Guinness Anchor Berhad

Heineken

8.50

Figure 10: Competitors Pricing

In Marketing Mix Pricing strategies, Heineken uses •

Product Line Pricing i.e. 325 ml can (RM8.50)

•

Product Bundle Pricing; a carton of beer (24 cans of 325 ml) are being sold cheaper i.e. RM 155.75 at major hypermarkets

•

Price Adjustment Strategies via o Discounted pricing of 3-5% via Functional/Trade Discount for retailers & whole sellers o Discounted pricing for staff which is similar to retailers pricing o Geographical pricing of 50% less for Duty Free Zone ( i.e. Langkawi and Labuan )

Heineken had only initiated two Functional/Trade Discount activities compared to competitors who had at least five or more activities. Therefore it is vital to increase pricing adjustment strategies to penetrate premium segment.

Promotions Evaluation One of the most important components for beer promotion used to be through advertisement and sponsorship. Heineken sponsorship is for the Chelsea Malaysia Tour football competition, 007 James Bond movie sponsor for local screening, Astromasters Golf competition, Rainforest World Music Festival Sarawak, TGI Fridays Fathers Day promotion and other local pubs and club joint promotion as shown in Figure 11 & 12. Heineken Malaysia is deeply committed to promoting responsible consumption. While Heineken’s does not provide medical advice, nor attempt to advise individuals on important and complex medical issues, the Company is committed to ensuring that consumers access the best available information regarding alcohol and their health.Steeping into Men’s Fashion apparels collections for better brand visibility. Aggressive advertising at Outlets & Pubs. Recently it also started merchandizing sports goods and trendy clothing and accessories under Heineken brand name.

Figure 11: Among the advertisement and sponsorship by Heineken Malaysia.

Figure 12: Heineken is a major sponsor of the Rainforest World Music Festival Sarawak Since beer drinking is a major religion, public and social health issue in Malaysia, the Government has imposed many restrictions on Promotions mainly advertisement & sponsorship control. Heineken beer promotions only focuses on Personal selling, Sales promotion and Public relations. Personal selling activities are commonly carried out in entertainment outlets in metropolitan areas, using young and attractive ladies (Figure 13).

Figure 13: Personal Selling Promoters Sales promotions are via Trade Promotions (for retailers) and the payment terms are rigid and conducted via Cash on Delivery (COD) only which does not allow traders to stock up. GAB projects an image of corporate leader by sponsoring Chinese children’s education (Dragon Mission Project) and providing financial aid for natural disaster victims such Tsunami victim at Banda Aceh as part of their Public Relations Activities (Figure 14). This shows that it does not only focus on profit reaping but more of a corporate social responsibility champion who does more by giving back to the society.

GUINNESS Anchor Berhad (GAB) raised a whopping RM2.788 million in just seven weeks with the participation of coffee shops, restaurants, entertainment outlets and hypermarkets nationwide for it Dragon Mission project. The project involves the community to raise funds for the development of Chinese education.

In Malaysia, Guinness Anchor Berhad donated RM200, 000 to The Star Fund to provide aid for the tsunami victims. Figure 14: Public Relation Activities for GAB (Source: GAB Malaysia, 2009)

Placement Evaluation

GAB which brewed and market Heineken locally made it available throughout Malaysia, and is dominant particularly in urban and metropolitan area. Apart from that Heineken as a brand also has a presence in 60 countries. It also has some one hundred shops apart from pubs and bars. Better retailing outlets are also to be opened under the Heineken brand. Heineken also has tie-ups with large department stores like ‘Foodworld’ for retailing its Beers. Heineken also has association with number of Very Classy, Up-market & Stylish bars & lounges which goes hand in hand with its brand image. In Malaysia, GAB is using channel management, logistic management and demand management. In channel management, our analysis shows that Heineken Lager Beer is marketed in urban areas. The Mini Fridge as display unit at the retailers is perceived as “outdated” and focuses more on the single product only. (Figure 15).

Figure 15: Heineken Mini Fridge Display unit Based on Channel design decision model (Figure 16), intensive distribution method is being used. Currently GAB has captured 7-eleven outlets nationwide, hypermarkets i.e. GIANT and Cold Storage.

This shows that the distribution market for GAB is wide and comprehensive but they do not leverage on this by distributing Heineken Lager Beer throughout the channel. It is also noted that Heineken Lager Beer is not focus in the Hotel, Restaurant and Café (HORECA) segment. Currently the HORECA patrons are youth where it is monopolised mostly by Carlsberg (65 %). (Sourced: SMI Magazine Report report 2009)

Intensive Distribution

Selective Distribution

Exclusive Distribution

Figure 16 : Channel Design Decision Model (Figure 7.2) (Source: - Kotler, 2007, p.555) In logistic management, hybrid marketing channel networks (Figure 17) with few Centre of Excellence (COE) distribution points through out the country being R adopted. The distribution centres are located marketM –segments R Dist at the designated Manufacturer R namely north, central, south and east.North Dist – Distributer M

Dist Central Dist East Dist South

R

R

R

R - Retailer

R

R

R

R

R

R

Figure 17: Hybrid marketing Channel Networks Model (Source: - Kotler, 2007, p.554) Demand management currently is based on monitoring done by sales representative. This is extremely crucial as GAB would need to avoid Out Of Stock (OOS) situation where consumer switches to another brand due to unavailability of Heineken Lager Beer in places where the product is well established.