Heineken n v Global Branding and Advertising

Situation Analysis : • At the end of 1993, Heineken had a 24% volume share in the Netherlands, far ahead of its main competitor “Grolsch”, but the sales volume was declining and brand image needed revitalization. •

In foreign markets, such as the United States and Hong Kong, Heineken had always been marketed as a premium brand, and had managed to create a distinct image for itself • The image was sometimes, however, narrowly drawn, leading to a general perception that Heineken was appropriate only for special occasions • Across European countries, Heineken had very strong brand awareness • In Latin America, Heineken was viewed as just one amongst the many European Beer imports • However, across all markets Heineken was perceived as a lighter beer of superior quality, in attractive packaging • Heineken was the most heavily advertised premium brand in Europe and worldwide, with more than 90% of the advertising taking place in the form of TV Commercials Problem Identification: • •

Heineken needed to work out its global brand image and advertising efforts too, needed to be integrated on a global scale Regional managers often developed their own commercials citing unique competitive conditions. Standardization was thus non-existent, and required.

Table A – Strengths and Weakness of Heineken Strengths World‟s leading premier Beer.

Weakness Lack of global presence in bottling business. In the major beer-consuming market, Germany and US it‟s imported and not bottled. Known for its good taste, rich tradition and History. Lack of presence in Latin America. Viewed as just one of many imported European beers in Latin Acknowledge as lighter beer of superior quality. Perceived America. premium brand image in some markets, which resulted in decline of sales volume across all the Packaging is attractive and one of the best in Leader in Netherland market. Heinekens brand image is not being business. consistently projected in Brands Number One imported beer in US Market. Brand loyalty needscommunication. to be build on, in Eastern Europe people keep on switching brands. Successful premium brand image globally (US, Hong Kong etc). Have majority stakes in its existing and prospective partners to ensure tighter control in production and marketing. Significant advertising expenditure at its disposal. It also has the ability to come up with advertisements that are state of the art.

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Project Comet •

Was initiated in 1991 to enhance Heineken‟s competitive advantage through advertisement projections as the world‟s leading premium beer

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The project team had identified “good taste” as the desired brand image of Heineken

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The project identified the following five factors as core brand values: o Taste o Premiumness o Tradition o Winning Spirit o Friendship The first two were recognized merely as points of parity, and hence were necessary, but didn‟t provide any significant advantage Differentiation was to be achieved through the communication of the remaining three values Impactful advertisements, incorporating leading edge technology and calculated risks, were recommended

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Project Mosa •

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Focus groups were commissioned in eight countries to o Understand what male beer drinkers meant by taste and friendship in relation to premium beer drinking o Which expressions of taste and friendship could be used in advertising The qualities of beer that appealed to the mind and ones that appealed to emotion were identified by running focus groups among 21-27 year olds and 28-35 year olds. The cues employed for the focus groups were based upon „taste‟ and „friendship‟ Customer reactions to Heineken advertisement claims along both these cues were elicited and suitability ratings were calculated

Regions Africa

Stage of development Embryonic

Eastern Europe

Take-off

SE Asia,S. America, Greece

Started growing

Italy,Spain,Japan

Growing

N & C Europe,Australia

Full growth

USA

Fully matured

Market evolution High local consumer loyalty Fragmented local brewers Development of standard beer Shifts in consumer taste Quality improvements Introducing premium beer High volume focus Price Competition Consumer Sophistication Market segmentation Brand/segment proliferation Product Differentiation

Beer Market had different development stages and Heineken at that time was in different phases of development at same time. In USA the market was fully matured where as in Africa it was in Embryonic Stage.

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Quantitative Analysis Quantitative Analysis of Heineken‟s Growth is Shown in Appendix-A Recommendations • •

As Heineken follows a global strategy of expansion, standardization of marketing communications is a necessary step The Beer industry was in a globalizing phase through the 1990‟s. Emerging markets carried a lot of promise due

to population expansion and increasing per-capita beer consumption • Each country was in a separate stage of market evolution: Embryonic, Take Off, Growing, Mature or Declining • Heineken‟s strategy was to build market share in the emerging (embryonic) markets, to enrich and increase market share in the Take-off and growing markets. At the same time, Heineken sought to maintain or restore market share in markets that were in the Mature or Declining phase • Despite differing strategies across markets, a unifying marketing communications theme is necessary • A global branding strategy will lower marketing costs, realize economies of scale in production and clarify the brand‟s positioning in the minds of customers Appendix- A Reference Year - 1993 World Beer Production Heineken Beer Production Total Sales 1 bn Ltr of Heineken

Regions Netherlands Rest of Europe America Asia/Australasia Africa

120 bn Ltr 5.6 bn Ltr 7420.18 mn guilder 1325.03 mn guilder

Sales(bn ltr) 1.34 2.63 0.73 0.45 0.34

Sales revenue(mn guilder) 1780.84 33487.47 964.62 593.61 445.21

Inference: Growth in regions like Netherlands and Europe is reduced and in Asia/Australasia has increased.

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