Heineken

HEINEKEN N.V.: GLOBAL BRANDING AND ADVERTISING (CASE STUDY ANALYSIS)

2009

International Marketing

SUBMITTED TO: Prof. Ram Mohan Pisharodi SUBMITTED BY: TEAM NO- 1 Section-B (Marketing) NANDITA SINHA ROY SARVANAN V R NARENDRA SHARMA NISHCHINT VIPUL KOTADIA KAPIL RAINA

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Company Profile Heineken is one of the world‟s great brewers and is committed to remaining strong and independent. The brand that bears the founder‟s name – Heineken – is available in almost every country on the planet and is the world‟s most valuable international premium beer brand. Heineken brews great beers and builds great brands. In addition to the Heineken brand, we have more than 170 international, regional, local and specialty beers around the globe. Our famous brands include Amstel®, Europe‟s third-largest selling beer, Cruzcampo®, Tiger®, Zywiec®, Birra Moretti®, Ochota®, Murphy‟s® and Star®. At Heineken we aim to be a leading brewer in each of the markets in which we operate and to have the world‟s best brand portfolio. We have the widest presence of all international brewers, thanks to our global network of distributors and 115 breweries in more than 65 countries. Our brands are well established in profitable, mature markets, while the popularity of our beers is growing daily in emerging beer markets such as Russia, China and Latin America. We are the largest brewer and distributor in Europe. Our global coverage is achieved through a combination of wholly-owned companies, licence agreements, affiliates and strategic partnerships and alliances. Often, our wholesalers also distribute wine, spirits and soft drinks. Our international export operations ship beer to large and profitable markets worldwide. We are committed to growth and have embraced innovation as a key component of our strategy in the areas of production, marketing, communication and packaging. In all of these areas, it is the consumers and their changing needs that is at the heart of our efforts. We also fully acknowledge the role that we have to play in society. Social responsibility and sustainability underpin everything we do. We will continue expanding initiatives to combat alcohol abuse and misuse and work hard to reach the highest environmental standards in the industry.

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History of the Company The history of Heineken starts on December 16, 1863 when Gerard Adriaan Heineken bought the De Hooiberg Brewery (The Haystack) in Amsterdam. The purchase of De Hooiberg was the birth of the firm of Heineken & Co. Within a few years Gerard Adriaan increased sales so much that construction of a new brewery was necessary. On the outskirts of Amsterdam, a new brewery was built. It remained in operation until 1988 when it was eventually closed because of logistics obstacles (the steady spread of the city meant that the brewery was located in the center of Amsterdam). A large part of the brewery made way for houses. But the brew house and part of the storage cellars were converted into the Heineken Reception Center where more than a hundred thousand visitors a year from all parts of the world are given a guided tour. On January 4, 1873 the board of directors of Heineken's Bierbrouwerij Maatschappij NV decided to build a brewery in Rotterdam as well. The Rotterdam brewery, too, eventually closed its gates in the 1970's because a brand-new brewery had been built at Zoeterwoude, mid-way between Rotterdam and Amsterdam. This brewery, Europe's most advanced started production in 1975. The brewery currently has an annual capacity of eleven million hectoliters.

Global Operations Heineken beer is available in more than 170 countries. The company's product portfolio consists of over 80 brands although Heineken USA only imports Heineken Lager, Heineken Special Dark, Amstel Light and Buckler into the U.S. With more than 110 breweries in over 50 countries and export activities all over the world, Heineken is the most international brewery group in the world. In 1999 the total beer volume of the Heineken Group amounted to 90.9 million hectoliters, ensuring the Group's second place in the world rankings. All Heineken products imported into the U.S. are brewed in Holland. According to our 2001 annual report, we sold 22.4 million hectoliters of Heineken and 10.8 million hectoliters of Amstel in that year.

Employees In 2007, the average number of employees employed was 54,004

170 brands Heineken‟s leading brand portfolio includes more than 170 international premium, regional, local and specialty beers. Our principal brands are Heineken® and Amstel®. We continually seek to reinforce our brands through innovations in production, marketing and packaging.

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139.2 million hl The Heineken brand is available in almost every country on the planet. We own more than 119 breweries in more than 65 countries brewing a Group beer volume of 139.2 million hectoliters.

Q1. What are Heineken’s strength and weaknesses? Is Heineken a global brand? Strengths: 

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The taste of Heineken beer is unique. The yeast that is used to make Heineken beer till today was developed in 1886. So the taste and uniqueness of it has been there for a hundred years. Heineken is the world‟s second largest beer manufacturer. They produce 5.6 billion ltrs of beer each year. Second only to Anheuser-Busch who produce 10 billion ltrs. This gives them economies of scale and a platform for further expansion of their market capitalization. They have substantial market share in Europe and America with 38% where as they are growing very fast (rate of growth 23% over 1992 sales) in Asia and Australia. In some markets like USA and Hong Kong the Heineken brand is perceived as a premium brand and has successfully established a brand image. They have wholly owned subsidiaries in Netherlands, France and Ireland whereas they held majority stake in 15 other breweries all over the world. This gave them a global presence. Across all markets the brand was acknowledged as a lighter beer or superior quality presented in attractive packaging The company has through mergers and acquisitions obtained distribution line efficiencies which in would add to the market reach of the Heineken and would give it a much deeper penetration to the untouched markets.

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Weaknesses: 

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The local Heineken brand managers had the resources to develop own commercials which were not always aligned to the Heineken brand image that the managers at headquarters wanted to project. In some countries the brand image of Heineken was too narrow such that the brand was seen appropriate for special occasions only. While in other countries like Latin America the brand was viewed as just another imported European beer. In Netherlands it was viewed as a mainstream brand. This difference in brand image across global markets is hurting Heineken. Heineken is losing market share in Europe (drop in sales 1.6% compared to 1992 ratings). In Africa also the brand was losing market share @ 1.5%. Is Heineken a global brand? Heineken is a global brand in the. The company has limited its reach to the European and the Western countries and there still lies a scope for scaling up in countries like India where the beer is just imported and thus making it impossible to penetrate deep down.

Yes, surely Heineken is a global brand having its presence in and around 170 countries and this means that the brand has possibly gone much beyond to be recognized as a global brand.

Q2. Evaluate the research. What has been learned? What did you learn? What could have been done better? The research projects namely Project Comet and Project Mosa were commissioned to clarify Heineken‟s brand identity and t he implications for television advertising. The findings from the research carried out are as follows. Project Comet identifies taste, premium brand image, tradition, winning spirit, and friendship as the brand‟s core brand values. The team detailed how each of the core brand values should be portrayed in Heineken brand commercials. Project Mosa confirms that „taste appeals to the head‟ and „expressions of friendship appeal to the heart‟ and identified how the expressions of taste and friendship could be used by the Heineken brand in advertising. Friendship expressions will be portrayed through True friends and the Taste expressions through the Quality of the product. Consumer tastes for beer vary across the globe in markets that have strong brand preferences and are in diverse stages of development. Heineken must maintain a consistent branding strategy with central control from headquarters and build brand equity by utilizing market research to design advertising specific to local markets. Advertising should not be limited to traditional media markets, but should include sponsorship of various public events including sporting events and concerts. Heineken must inspire international confidence while maintaining local appeal. Heineken should keep packaging and branding

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consistent while varying advertising. This consistent reminder of the Heineken brand will remind consumers of Heineken‟s universal appeal, while acting as the official stamp of a quality beer. The learning for the research are that the company must not only focus on the developed markets or the markets that are into saturation level and it should focus on the markets that are in the embryonic stage and also on the developing markets and one of them being India, Heineken still has not penetrated India and the beer that is available is through imports. It has also been found out that the company does not have a fixed group that looks into the Marketing Communication Mix and that is the major reason that the company is suffering, not in terms of revenue but in terms of market capitalization. The things that could have been one better would surely be that the company must look into their global Integrated Marketing Communication Mix which would help Heineken develop into a global brand which would have a hegemonic dominance over the competing brands. They should go into like “When in Rome, do as the Romans do” that signifies that the communication mix should be different from country to country, and it should be significantly referring to the personalization of the masses representing the target population of a particular country. It should keep learning from what had happened to other brands that entered into foreign markets and did not do well and they should learn from their failures. Instead of giving the authority to the regional managers for developing of the advertisements, the Heineken Management could have outsourced the Marketing Communication Mix to some of the leading Advertising Agencies like O&M, Framfab etc.

Q3. How can the Heineken brand be developed through marketing communication? The Heineken brand can be developed through the distinctive characteristics of the marketing communication mix: •

multiple forms of marketing communications are needed to communicated the value benefits of a product or market offering to larger and larger numbers of actual and potential consumers

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the value benefits of a product or marketing offering is communicated to the target market through three modes: marketing communication mix, mass marketing forms of communication (non-personal), personal marketing forms of communication

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creating strong associations and responses in the consumer‟s mind: creating awareness of the brand, establishing the brand image, implanting „top of the mind‟ brand judgments and feelings , and creating strong consumer-brand connect

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by designing a marketing communication strategy that delivers a consistent message that aims at informing, persuading , and reminding consumers –directly or indirectly- about the products and brand for sale in the market segment

The message should be implanted in the minds of the consumer to create brand equity by establishing the brand as a value-creator in the memory of the market and creating for itself a brand image. This can be accomplished in the following manner:

1. Extensive use of events and experiences to create novel brand interaction with consumers: Heineken organizes Heineken Jammin' Festival which is a large live rock festival in Venice, Italy featuring international and Italian rock acts. In 2008 the festival had acts by Linkin Park, Sex Pistols, Vasco Rossi and the Police and also the brand organizes the Heineken Cup for the UEFA Championship and also has an ATP Tennis TournamentThe Heineken Open which is played in New Zealand.This helps in creating a novel interaction with the customers thus building on the brand image of Heineken as sports frenzy, youth centric and a brand that dwells friendship. 2. Extensive use of print and TV ads featuring, humour, family values, friendship, trust, romance, happiness, aspirational lifestyles and testimonial by celebrities. This would create a deeper penetration for the Heineken brand in the minds of the consumers and also increase the share of mind and share of heart for the brand thus adding onto the brand equity.

Q4. What should be the role of Heineken’s headquarters in shaping the marketing of the brand worldwide? The Headquarters should presumably perform the following significant functions in order to market the brand worldwide:      

Define and establish a strategic roadmap for Brand Experiences. Implement a plan for short term and long-term improvements. Lead the negotiation of major new sponsorships, new brand experience platforms and partnership agreements Manage the integration of media buys into overall Brand Experience Strategy. Collaborate with Brand teams to negotiate relevant Added-Value resources (print) to support Brand Experience strategy Responsible for Brand Experience Implementation and ensuring (International) best practices are being adhered to Identify and manage Brand Experience agency resources against the development of agreed to activities.

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Conduct post-evaluation of all Brand Experiences to ensure continuous learning and improvement. Proactively work with regional marketing and sales to help drive and support the successful sell-in and execution of Brand Experiences to distributors and retail. Develop the Public Relations Strategy as it relates to support of all Heineken Brand Advertising, Media and Experiential activity, i.e. new product launches, advertising, platform launch, major event sponsorships, etc. Manage the PR Agency against the agreed to PR strategy. Collaborate with company-wide PR Director who manages the company‟s overall strategic public relations programs, i.e. media relations, internal communications, and investor relations. Work with the merchandising and logistics team to manage the development of brand experience merchandise and point of sale support material ensuring active input from regional marketing and channel management. Work with communications manager to manage the development and execution of an internal communication plan for employees, distributors and the trade. Track the pre-approved Brand Experience budget.

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GLOBAL BRAND DEVELOPMENT

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