Heineken N.V: Global Branding and Advertising

INDEX

1 Executive Summary.................................................................................................................... 3

2 Situation Analysis........................................................................................................................ 3

3 SWOT analysis.............................................................................................................................. 5

4 Main issue....................................................................................................................................... 5

5 Role of the headquarters........................................................................................................... 6

6 Recommendations....................................................................................................................... 7

6.1 Brand Development................................................................................................................. 7

6.1.1 Sponsorship Strategy......................................................................................................... 7

6.1.2 Advertising Strategy............................................................................................................ 9

7 Reference List.................................................................................................................................................... 9

1 EXECUTIVE SUMMARY

Heineken N.V, one of the most famous beer brewery in the world, with superior quality

and taste, lately is experiencing a decreasing of the sales volume and a differentiation

of its brand perception across the globe.

To address these issues, Heineken has commissioned two marketing studies, Comet

and Mosa projects, in order to analyse reasons and causes of such matters.

Analysing the reports and the market prospective, the company should differently face

the approach to the markets and the customer.

In particular, Heineken should have a both centralization and decentralization marketing

organizational structure to promote successfully a global brand and to support local

marketing managers in setting and implementing strategies tailored to each local

market.

Moreover, a different sponsorship and advertising strategy should be implemented to

allow customer to percept Heineken brand closer to their needs and expectations.

2 SITUATION ANALYSIS

Gerald Adriaan Heineken founded the Heineken brewery in Amsterdam in 1863.

Since the beginning of his story, Heineken has played a primary role in the worldwide

beer market.

Already in the 1889 Heineken beer won a gold medal at the Paris World’s Fair and by

1893 was one of the largest selling beers in the Netherlands.

In 1993, Heineken N.V. recorded net sales of 9,049 millions guilders1 (more than 4

billions Euro) with 1.52 billions litres of beer.

Heineken is undoubtedly recognised as a globe brand, however, today brand

perception does not look the same across the world differentiating country by country.

1

In US and in Hong Kong Heineken is considered to be a premium brand but mainly for

special occasion rather than for daily consumption, in Latin America is seen as a

European imported beer among others and in the Netherlands it is viewed as a

mainstream brand, and a market leader.

This means that Heineken does not have a consistent brand image.

Moreover sales volume is declining and the brand needs to be regenerated with an

uniform identity.

For this purpose, two projects have been established.

The first, named Project Comet, had the goal to recommend how to improve Heineken

brand image and positioning the brand as the world’s leading premium beer.

The second, Project Mosa, aimed to find out which expressions of taste and friendship

could be used to brand in its advertising

Project Comet pointed out that the brand should have the “good taste” image built on

five core values of the brand: taste, premiumness, tradition, winning spirit and

friendship.

Project Mosa found that premium beer tightly relates friendships and important relations

that are built based on enjoyable, joyful, personal, luxury social conditions such as

meeting people, fancy meals, savouring, elegant parties, intimate moments and places

etc.

3 SWOT ANALYSIS

Strengths

- Light beer of superior quality

- Attractive packaging

- Market leader in Netherlands and is viewed as mainstream brand

- Traditions

- Premium brand

Weaknesses

- Different Image perception from country to country

- No production base

- Lack of integrated marketing campaign

- Lack of worldwide advertising campaign

Opportunities

- Growing in the non-alcoholic market

- Global expansion

- Growth in the flavoured beer and draught beer market

- Developing are still in the early stages in the beer market.

Treats

- Price competition in Europe due to overcapacity and minimal population growth.

- Presence of no-or-low-alcohol, flavoured beers, and dry beers in the market.

- Variation in market on the basis of per capita consumption, consumer preferences and behaviours, and competition mix.

- Tough alcohol regulation

4 MAIN ISSUE

One of the main issues Heineken has to face is that an international brand needs to

inspire but at the same time needs to remain personally relevant, attached to the target

group’s personal cultures and origins.

This implies that the customer needs to precept its brand as a global but also that it

matches his/her needs and expectations.

Ed Marra, president and chief executive officer of Swiss-based Nestlé Canada Inc., said

that his company tries to bring things that are global and then adapt them very much to

local markets.2

As consumer needs and tastes vary, Heineken must decide how much to adapt its

marketing strategy to local needs using a variance of standardised marketing mix &

2

adapted marketing mix, owing to the strong brand preferences & loyalties that exist

among the beer drinkers. Also, Heineken need to prioritise between global integration

vs. national responsiveness evident from decreasing sales in Holland, Rest of Europe,

and Africa.

What then Heineken should develop is the “glocal” concept, which refers to acting

global but thinking local.3

The other relevant issue is the needs of strengthen its message in order to make

Heineken become a “all day long” instead of a “special moment” beer.

5 ROLE OF THE HEADQUARTERS

Heineken’s headquarters should be the centre in which the marketing strategy are

designed and agreed for the international market. Local marketing department have

then to customise the message reshaping it into the local environment.

Central HQ’s guidelines should be flexible enough to allow local dept to create their own

strategy leveraging on the global idea.

It is fundamental to understand the correct balance between central guidelines that the

entire organization.

The exchange must be both ways so that also the local dept can propose advertising

plans and budgets for their markets, which must be viewed and approved by the

headquarters. This will make sure there will be no gap between HQ and local

marketers.

The company should think of being more present locally to better address the market

needs. In this sense I would not recommend to go for merging or acquisitions but to

constitute alliance, which can represent a local asset.

3

An alliance or partnership with a local brewery would allow Heineken to benefit of most

of the advantages of being local with out paying the impact of starting a new production

site up.

In such partnership the local brand and Heineken can be seen together speeding up the

brand acceptance into the market where local loyalty plays a significant role and to

benefit of cost saving due to the localisation.

For instance packaging and bottling can be arranged to be done in the local brewery,

keeping the original Heineken image, but saving cost of importing and transporting.

This much more than the merging and acquisition could be the initial step to do.

It is not excluded that lately when the business has been started, an acquisition or a

merging can be doable and advantageous for the growth.

6 RECOMMENDATIONS

6.1 BRAND DEVELOPMENT

Brand development is the essential step to permit Heineken to be recognised worldwide

as a global brand. The mix approach suggested starts from the belief that a brand that

wants to be global should not forget to be local.

Customers are first part of their own country (market) and then world citizen.

The mix approach will be driven by a more focused sponsorship and advertising

strategy.

6.1.1 SPONSORSHIP STRATEGY

In order to strengthen its brand perception as a “glocal” brand, Heineken should invest

in a massive marketing campaign. This should include sponsorship to big happenings

and events across the globe.

Keller (1993) suggests that brand associations can be influenced when a brand

becomes linked with a celebrity through an endorsement or linked with a sporting event

through sponsorship activities. In these cases, the pre-existing associations held in

consumers' memories regarding a celebrity or sporting event become linked in memory

with the endorsed or sponsoring brand. In essence, the celebrity or event image is

transferred to the brand.4

Therefore, sponsorship of sport events such as the Uefa Champions League or

International Music festivals such as the “Heineken Jamming Festival”5 could be an

effective mean of addressing a market share all over the world which is averagely

constituted by potential drinkers which then will associate the feeling of the event to the

brand.

One more tactic of the glocalisation strategy, using the web advertising, is to develop

and maintain local advertising sites within their global websites to communicate with

local consumers.6

Main website (.com) would then gather all the international information and messages

while locals will differentiate the message from country to country being sure that the

specific message is transferred.

This will also allow a sort of customisation of the brand linking it to local traditions, public

holidays or special events.

The brand should be also permanently linked to an unfading icon, which can keep its

brand perception constantly high.

The fictional spy James Bond, for example, has been widely associated with the

popularity of the vodka martini drink.7

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6.1.2 ADVERTISING STRATEGY

Heineken message and meaning should be enforced by letting the audience precepts it

not “just” a simple beer as all the others but as something “superior” which will bring

more satisfaction and joy linking its use to every environment and moment of the day.

Tv ads that reflect every day life (home with friends, sport events, romantic dinner etc)

can transfer the right message that this is a drink for every moment.

Moreover it should highlight that “it’s not just a beer but an Heineken”.

7 REFERENCE LIST

1. Old Netherlands’ currency. http://en.wikipedia.org/wiki/Dutch_guilder

2. Young L. 'Glocal' Marketing. Marketing Magazine [serial on the Internet]. (2003,

Oct 27), [cited February 13, 2010]; 108(36): 11-12. Available from: Business

Source Premier.

3. Jayne V. GLOCAL INSIGHTS for a shrinking world. New Zealand Management

[serial on the Internet]. (2009, June), [cited February 13, 2010]; 56(5): 68-69.

Available from: Business Source Premier.

4. Gwinner K, Eaton J. Building Brand Image Through Event Sponsorship: The

Role of Image Transfer. Journal of Advertising [serial on the Internet]. (1999,

Winter99), [cited February 13, 2010]; 28(4): 47-57. Available from: Business

Source Premier.

5. http://www.heineken.it/main/HeinekenJamminFestival/

6. Daechun A. Advertising visuals in global brands' local websites: a six-country

comparison. International Journal of Advertising [serial on the Internet]. (2007,

Aug), [cited February 13, 2010]; 26(3): 303-332. Available from: Business Source

Premier.

7. http://en.wikipedia.org/wiki/Vodka_martini