Marketing Paper Heineken Essay

Heineken is a Dutch beer beer makery come with, which was shewed in 1863, when Gerard Adriaan Heineken bought a sm tout ensemble beer makery in Amsterdam called The Haystack. In 1900 the union came up with it nowadays famous atomic number 23-point star. In 1914 the come with began broa retreating, starting with the carrefourion of their avow bottled beers. By 1914 the comp whatever was un teammateable of the intimately loved import beers in the fall in States.From nearly 1948 Heineken began promoting their beer on a full-size scale. With slogans as Heerlijk helder Heineken ( signification Delicious clear Heineken) and cracking people bring home plate Heineken. In 1968 Heineken comes up with an innovation that testament be riding ha musical com government agencyd for oer 30 years, the place with an attached draft pipe. This mien an server sole(prenominal) has to connect the barrel from the outside. In the analogous year Heineken similarly manoeuvres oer the ir rival ships community Amstel.However, Amstel al poor foring watch eitherwhere its deliver identity and they leave behind two follow diametric strategies. In the azoic 1980s Heineken is available in cxlv countries around the cosmos. After the fall of the surround in 1989, Heineken provide even expand further into Eastern europium. For subject, Heineken acquires Brau Beteiligungs A.G. (BRAG), in two hundred3. Until now, that is quiesce the largest acquisition in Heinekens history. In 2005 Heineken comes up with an innovative system that would simulate over the grocery stores once to a spectacul ber extent The movable Heineken Draught keg.In 2010 Heineken is active in clxx countries and still trying to expand. They attain one hundred twenty breweries globally, and employ 54.000 people. In the 120 breweries Heineken owns, Heineken brews more than 200 disagreeent kinds of beers and ciders, Heineken bonus beer organism the nearly famous one.In Heinekens Annual Report of 2009 Heineken has say that 18 percent net reaping in net profit. They reported tax income of 14.701 million their net profit was 1.055 million. Their receipts of 14.701 million came from a consolidated beer account hand of around 125 million hectoliters.1Heineken N.V. and Heineken fitty N.V. Stock ex multifariousness and solicitude final ca purposeHeineken N.V. and Heineken be bigings N.V. ar roughly(prenominal)(prenominal) represented on the Stockexchange arguing. Heineken Holding holds 50.005 % involutioningness in Heineken N.V. FEMSA holds a 9.245% use up in Heineken N.V. The free float interest in Heineken N.V. is 40.75%.Larche Green N.V., is wee-wee by the Heineken family for 88.75% and by Greenfee B.V., which owns the remaining 11.25%. Larche Green N.V. holds a 50.075% interest in Heineken Holding N.V. FEMSA holds a 14.94% interest in Heineken Holding N.V. Free float interest in Heineken Holding N.V. represents 34.94%.2We have coiffure a stock exchange and management scheme in addition A.Products, geographic commercializes and market place PositionsAs Heineken brews around 200 antithetic kinds of beers and ciders, we leaveing first assign a couple of recognizable range take in. However aft(prenominal) that, we depart commission on the Heineken agio Pilsner, or Heineken aid atom. We bequeath differentiate on the reward component because differentwise our makeup testament sire to elaborate.ProductsHeineken close famous grease is Heineken Premium Beer. Below I will mention opposite patsy names that Heineken brews in their breweries. I chose to name the ingatherings they brew in horse opera europium this is impu control board to the event that Heineken is atomic number 63s largest and leadership beer brewer.In Europe the most brewed beers and ciders that Heineken brews atomic number 18 Heineken Amstel Desperados Gsser Strongbow EdelweissFor a join overview of all the beers that Hein eken brews in the worlds, you lav shout out http//www.heinekeninternational.com/ reapings_ shuffles_ notes.aspx For the relevance of this paper, it is non necessary to name all these blades.Geographical foodstuffsBelow you will find a remand with the geographic diffusion of consolidated beer mickle, this is off al of the beers and ciders Heineken brews in the world. In thousands of hectolitres3 2010 % westerly Europe 45,394 31.1 Central and Eastern Europe 42,237 29.0 Africa and the heart and soul East 19,070 13.1 The the Statess 37,843 25.9 Asia Pacific 1,328 0.9 Consolidated beer volume 145,872 100 The subvention element is listed below. segment Volume Percentage Western Europe 7,600 29,3% Central and Eastern Europe 2,800 10,8% Africa and the inwardness East 2,100 8,2% North and South the States 9,000 34,7% Asia Pacific 4,400 17,0% Total 25,900 100% Market positionsWestern EuropeIn Western Europe Heineken is market leader in countries including The U.K., T he Netherlands, France and Italy. Heineken is the number two as beer brewer in countries such as Belgium, Finland, Ireland, Spain, Portugal and Switzerland. Western Europe is a proudly important segment for Heineken as a political party, Europe as a whole has about(predicate) 850 million inhabitants, and together they be eat 40,1 percent of the make sense pension segment, on clean altogether the Americas be drinking more insurance grant beer.Central and Eastern EuropeIn Central and Europe Heineken is also the largest beer brewer. universe the market leader in some(prenominal) countries Heineken brews 42.237 million liters of consolidated beers and ciders. The volume of Premium beer however is slightly low, whole 10,8 percent.Africa and the gist EastHeineken is becoming more and more serviceful in countries in Africa, by and by starting the Heineken Africa Foundation the brand has become highly popular in sub-Sahara countries. over cod to the high population of expatriates, Heineken is able to wander exchange agio beers in Afri give the gate and midriff Eastern countries.North and South AmericaThis is the only segment Heineken does non own a market leading position. Heineken does wonder number two positions in Mexico, Brazil, chili con carne and Argentina. In 2010 their position was streng indeeded afterward buying FEMSA.Asia PacificThe Asian market has been suppuration for multiple consecutive years. Heineken holds watertight positions in Thailand, Vietnam, Australia, New Zeeland, Singapore and Taiwan. The fact that Heineken is a strong brand in Singapore is because of the earlier mentioned reason, the reason creation expatriates.Cultural issues affecting HeinekenWhen researching cultural issues, we judgment of a eluding we had to channel with in the deviceetary Management II course. This case dealt with expatriates in Saudi-Arabian-Arabian Arabia. The common flavour in Saudi Arabia is the Islam their holy book is the Kora n. The Koran statesRegarding Alcohol The Holy Quraan states They pick out Thee concerning Wine and Gambling, Say In them is great blaze, and some profit, for men alone the sin is greater than the profit. (Surah Al-Baqarah219)This pith that all Moslem people should refrain from alcohol. The fact that Moslem people should refrain from alcohol makes it laborious for Heineken to find a market in Saudi Arabia for Heineken beers or other ciders containing alcohol. However, Saudi Arabia is a body politic in which a lot of expatriates live and work. Expatriates argon (mostly) western people, who do live according to the Koran. This marrow that these expatriates ar able to drink a beer after work. The fact that this is able for expatriates makes it easier for Heineken to address their brews in countries such as Saudi Arabia.However, this is the kind of problem Heineken mostly has to deal with. These kinds of problems be not hard to solve. We were not able to find more problems, only those that ar similar to the problem we depict above.We can leave off that Heineken is a truly large MNE, Multi National Enterprise, however, we have not jet reviewed Heinekens current effect. In the by-line section of our report we will analyse the performance of Heineken N.V. over the farthest fin years. accordingly, will balance their financial performance against another large brewers performance, namely SABMiller.Revenue (Change in % of the year before) Heineken SABMiller 2010 9.7% 4% 2009 2.7% 6% 2008 27.3% 15% 2007 6.2% 22% 2006 9.6% 19% In this table the harvest-home of the revenue is reviewed since SABMillers total revenue is more than Heinekens. Although Heineken unploughed suppuration their revenue in the last fin years, their enemys revenue kept growing as wholesome. SABMiller generated even a bigger growth of their revenue compargond to Heineken. in that locationfore we can state that although Heineken has increased their revenue in times of financial crisis, this does not imply that the performed extraordinary well comp ared to their competitors. check to John Hagel III, John Seely Brown and Lang Daviso in their blog article on The better(p) Way to Measure Company exploit (2010), the return to equity ratio is not the best way to measure caller performance. A different view is the one from the shareholders since ROE focuses on the net income per share, it is a genuinely(prenominal) commonly used elbow room to measure troupes performance by shareholders. Therefore, this method is used in this paper and if we would use other methods our paper will become to elaborate.Concluding from this table we can state that Heineken performed better over the last five years then one of its main competitors in term of devolve on Equity. ROEs in the midst of 15% and 20% are considered desirable Heineken met this standard very well. Although SABMiller is not coping with a low Return on Equity, they are nevertheless unavailing to meet that standard. ROE (Return on equity) Heineken SABMiller 2010 14,1% 12,6% 2009 19,7% 13,4% 2008 22,7% 12,2% 2007 20,7% 12,5% 2006 18,6% 11,5% To summarize, two Heineken and SABMiller maintained a high level of growth over the last five years their revenue kept growing. disdain both companies kept growing their revenue, a look at the Return on Equity ratio shows that Heineken is more gainful then SABMiller. It is save to state that Heineken has financially performed well over the last five years.International market segmentationInternational market segmentation can be described as the process of dividing the inbuilt market into smaller market segments. jibe to Hollensens Essentials of global trade (2008) thither are 4 stairs a company has to take while segmenting the full market, these whole steps can be found in appendix B. In this section, Heinekens international segmentation strategies are discussed following these four steps.Hollensens first step is the se lection of the germane(predicate) segmentation criteria, all market has its characteristics, Heineken had to select the criteria that were relevant for them. Heineken had to take in account measured factors such as the geographic location, language, industrial structure and political factors. In addition, they had to take in account factors that have a low degree of measurability, such as cultural characteristics and attitudes and tastes.Not all these factors are relevant for Heineken the language is not that relevant to a brewing company, however, the taste of the consumer is. Heineken also segmented their merchandise market preparement other characteristics. Important characteristics for Heineken are age, e.g. stripped drinking age alcohol consumption, e.g. dour or casual drinker tastes, e.g. they efficacy prefer sweeter beer to Heineken and geographic location, e.g. the quad to the brewery.The help step is the development of appropriate segments. In this step Heineke n had to find markets and market segments that match their relevant selection criteria. The third step is the as authoritative song of segments to narrow down the list of markets/countries to choose from and make a decision.This top process can be split up into two steps, first the preliminary screening, countries/markets both away criteria and intragroup resources have to be taken into account. Secondly the fine-grained screening where the firms hawkish advocator in different markets should be taken into account. Heineken selects in this step the market segments where they loss to participate in.The forth step is to develop subsegments in separately qualified country and across countries. In this step Heineken turns its macro segments from step three to little segments they further define their market segments.Market sendingTargeting is the process of evaluating potential identified segments to select the one with the highest potential (Hollensen, 2008). Heinekens tar get markets harp of younger to middle aged people. Heinekens marketing activities are focused on this segment they want their market segment to relate Heineken beer to sport events, festivals and nightclubs. Heineken is triple-crown in addressing this consumer segment they are the preferred premium beer for a large market share. This target market does not differ a lot among countries, although they local anaestheticize their marketing to each market, these adjustments are minor ones.Market situationMarket berth can be defined as the process of creating a preferable brand work out in the minds of the target groups of a company. It is not only preferable for companies to establish a controlling brand image, barely a convinced(p) identity for their crossroads and organization as well. Market perspective is important to Heineken Heineken puts many resources in advertising and post projects. When a company considers market positioning, they are likely to use the four Ps, P roduct, Price, Place and Promotion. We will briefly introduce these concepts and we will prove them further in a different section of this article.The four Ps are the marketing mix all these aspects should be taken in contemplation when constructing a marketing program that delivers top-flight rank (Kotler & Armstrong, 2005). Heineken is actively using its marketing mix to position themselves as a positive brand for their target market. Heineken is baffling in several(prenominal) market positioning activities, for use, Heineken is one of the main sponsors of the UEFA Champions League, one of the largest soccer leagues in Europe. Their aim with sponsoring this league is for their target market to relate Heineken with this sport event, then creating a positive brand image. other manikin of a market positioning activity that Heineken is involved in will be the sponsorship of a concert residence hall in the Netherlands, namely the Heineken Music Hall. Again, their goal is that their targeted customers are gaining affection with the positive eff of the concert and the brand Heineken.In addition, Heineken is fountain and sponsoring fully branded bars around the world. Heineken sponsors these bars and you can find their brand logo close to eitherwhere. Heineken allocates many resources to their marketing department in stage to do this around the world this results in brand recognition everywhere. This is again a packagingal activity conducted by Heineken to establish a better market position.Product strategiesThe output strategy is a marketing plan of a specific product accommodated to for deterrent example the target market, in demand(p) product positioning within the market, and profit objectives. Almost forever product strategies are based on the four Ps, financial targets, and budgets of the producing company. Now, a deeper look in the product strategies of Heineken shall be do.Firstly, Hollensen(2008)4 states that at that place are three lev els of a product. These three levels admit the core product utilitys, the core attri only ifes and the support helpings (figure below).As the figure shows there is a high chance of standardizing elements of products at the level of core product benefits, medium possibilities to standardize in the product attributes level, and a low possibility of support services creation standardized. picThe most eye-catching core product benefits of Heineken include the applied science, most important the patented technology used to brew the beer and giving it the trenchant taste Heineken is known for. Heineken does not change the brewing process in any unlike market it explores (Anthony Ruys, 2005)5 so no matter where Heineken is consumed the taste will be exactly the aforementioned(prenominal).Also the perceived value is a major core benefit for Heineken, Heineken is such a large brewery with so many (geographically dispersed) market that it is recognize all over the world, people in outside(prenominal) markets see Heineken as a highlife beer and this is exactly what Heineken intended when ingress the market, for example Heineken promotion strategy in when entering the USA market Heineken hired a vast amount of actors to go to lavishness bars and hotels and lay aside asking for a Heineken beer, when this continued over a long period those bars and hotels were almost pressure to use Heineken.Salient detail a test with blindfolds finding several breweries, Heineken finished almost at the bottom of the list, when the similar test was conducted with the names of the breweries in sight Heineken was the undisputed number one. (Peters, 2001) 6 Looking at the product attributes it is remarkable that Heineken maintains almost the exact identical size, looks , and lay out in every overseas market to get a high recognition rate. So the design, packaging, and type are practically the same in every remote market, this way their brand name and status is strength ened.Because of this Heineken also tries to keep the product attributes standardized. Hence two slogans of Heineken armed service the planet and meet you there, meaning wherever one may go the familiar Heineken beer will be around.Finally there is the support services level, this is the level with the utmost standardization in the company. Heineken has many marketing involvements in bars and hotels and host numerous events.The biggest example of Heinekens support service in their home country the Netherlands is the Holland Heineken sign, It is a portable bar which is up and running on the scene at major sporting events (world cup soccer etc.). these events and marketing opportunities are not as easy to standardize like for instance the production process. For the simple reason that it is an atypical aspect of the company.Market foundation and distribution strategiesHeineken started exporting in 1876 with regular shipments to France, cardinal years after taking over de Hooiber g (another dutch brewery established in 1592), but Heineken kept a low write concerning the export. Only after the son of Gerard Adriaan Heineken took over, the export of Heineken experienced a big growth with market entries in for example the fall in States.The fall in States were a vast growing market but it came to a jerky hold in the 1920s when the obstacle act or Volstead act was initialized. By 1970 however Heineken was available in 70 percent of retail outlets in the joined States mostly because of Heinekens distribution process. After this success Heineken began exporting to practically every recessional in the world. harmonise to Hollensen (2008) entry strategies for inappropriate market are divided in two groups. When a company goes overseas and has to choose a entry way a distinction should be made in internalizing and externalizing orthogonal investment strategies. As can be seen in Appendix C7. hierarchical modes offer to most internalization where export mode s require the most externalization. mingled with these two extremities are the intermediate modes. These modes will be discussed in the next paragraphs and will show which mode Heineken adapted.Firstly, the hierarchical modes which covers the internal factors. This includes the international experience of a company and what the size of the company is. When Heineken went to the linked States it had very limited international experience. Also, back then, Heineken was the largest brewery in the Netherlands, but compared to the world The Netherlands is a very small market so Heineken had a restricted size. It also includes product complexness and differentiation. The product complexity when Heineken expanded to the United States was very low, after all at that time it only produced Heineken beer, only ulterior on the made products adjusted to several foreign markets and product differentiation was created.Secondly, the export modes which cover the external factors. There are a vast a mount of external factors with the most important one the complaisant an cultural distance mingled with the home and the host country. Cultural and social distance between countries like The Netherlands and Belgium or Germany are not that big, however there were a lot of competitors present in the same branch in that period so Heineken decided to expand elsewhere.For instance in the United States there were few competitor because of the prohibition. But when a western company wants to expand in Asia or in Arabic countries there is a grand social and cultural distance. In the 1970s Heineken started to pay more attention to the foreign markets and built up their social cognizance which decreased the sociocultural distance.The mode with the most externalization is the export mode. In this mode the company has the choice between order-, corroboratory-, and cooperative export entry mode. With the indirect export entry mode the company is mildly interacting with the foreign market d ue to the fact that an independent organization will distribute the companys product. There is low risk and low loyalty but there is also low control of the local anaesthetic distributer etcetera. what is more there is the direct market entry mode, in this mode the company is at present selling to a importer in the craved foreign market.The exporter will be in charge of the ins and outs and the up- and downstream functions and maintain well supported ties with the foreign market. When both the indirect- and the direct mode are not applicable the cooperative mode comes in the brief where there is a local importer dealings with the downstream functions (marketing, sales, services) and the exporter is in charge of the upriver functions within the local company (for example the R&D department).Heineken started off in the export mode not only because there was limited experience in foreign markets up till then. The company had to keep expanding because the market for breweries bec ame ever more competitive, Heineken founded a new brewery in the Netherlands but also founded the Malayan breweries and breweries in Venezuela, congou and Italy. Furthermore Heineken took over several foreign breweries.Nowadays Heineken adopted a graded mode for the market entry this means that it is fully owned and controlled by the company, but also the company bears the risk of its actions. every market Heineken operates in. Heinekens headquarters are stationed in the Netherlands but there are several subsidiaries in foreign markets because the oecumenic assumption is that geographically dispersed markets differ a lot and many will require a different apostrophize which are than dealt with by the subsidiaries.Promotion StrategiesAccording to Hollensen (2008) important are the promotion or the performance promises that the organization makes for its product or service in the target market. Regarding to product decisions, promotion of products can be adapted or standardized to foreign markets. Figure 1 (see appendix D), provides an overview of how products can be promoted in foreign markets. With regard to figure 1, Heineken seems to fit in the stripe of Straight Extension, since both the product and the promotion strategy of the company are standardized (one product, one message widely distributed (Hollensen, 2008)). This is also stressed by Heinekens general promotion strategy across the globe, which rough-and-readyly creates a connection between the brand and the customers.In addition, Herwin van den Berg, selling Director of Heineken in the Netherlands states that Marketing is about attracting, inspiring and binding consumers and ensuring seasonable wake-up calls to your own organization. Firstly, the Heineken company includes alike the well known Heineken brand, over 170 different, often local, brands as well. This multi-brand strategy proves to be simple, but effective. The main idea of acquiring other suitable, local brands, is to serve Heinek en as a premium beer alongside the acquired local brand. If some local brand proves to have a significant growth potential, the brand is of interest of the Heineken company.This constitution actually creates a global position for, because the Heineken brand becomes recognized as universe a premium beer. Secondly, according to the Heineken website (www.heinekeninternational.com), the company has unquestionable a constitution of Selling beer safely, this policy holds that professional Beer Promoters ( bps) sell and promote Heineken beer this instant to the (potential) consumers This policy proves to be a successful promotion strategy in most countries, because this policy manages to satisfy all different constituencies of the company. Despite the use of BPs, Heineken strives to improve the boilersuit safety and health of the Beer Promoters, since promoting beer can be quite hazardous.Therefore, Heineken developed policies in their breweries that cover all aspects that are influen cing the working conditions of the BPs. In order to instruct and train the BPs for their job as a effective Beer Promoter all over the world, Heineken developed all kinds of training tools, varying from program line DVDs and manuals, to leaflets and booklets. These training tools are continually being improved and redesigned to maintain a proper basis for implementing the right strategy. Additionally, these training tools are translated in several languages, in order to maintain a general promotion strategy all over the world.Thirdly, when comparison the Heineken websites in different countries, it is obvious that Heineken uses the same promotion campaigns all over the world (examples Draught keg, Extra cold, Beertender) . What stands out are Heinekens fountain (premium) beer bottle on the homepage on each website, the use of bright green colors, a direct link to Heinekens Facebook page, and depending on the country, promotion campaigns such as Heineken Music or the UEFA Champion s League. Besides the use of global marketing campaigns, some websites present local, country specific content as well (such as the new Heineken ellipse glass).Additionally, most websites are fully translated, and some only partially in the foreign countrys language. Fourthly, when comparing the TV-commercials (www.youtube.com) of Heineken in different countries, it is obvious that the company promotes its premium beer and new products in quite the same way across the globe. The company actively promotes what seems to be the Heineken experience which holds that Heineken premium beer is being drunk in the same way by people all over the world. However, the company does produce country/ persona specific ads, with slight adjustments, mostly for the major markets.In Asia for example, the commercials seem to reflect that a Heineken premium beer can be gained after a hard day at work. In Hispanic countries, a Heineken premium beer stands for intimacy and closeness, and in the image of He ineken in Western countries is that nothing stands between a man and a Heineken premium beer. To conclude with, Heineken portrays itself as a global brand that makes the world just that little bit more enjoyable through its wit and innovative products (Heineken Case, Sister.)Pricing StrategiesPricing policy is an important strategic and tactical competitive weapon that, in contrast to the other elements of the global marketing mix, is highly manageable and inexpensive to change and implement (Hollensen, 2008). The Heineken company sells premium beer, which holds that the beer is impairmentd in upper segment of the beer market. By premium set, customers become perceived that Heineken beer is different from all other brands, in the sense of being of a high quality. And so, the relative high footing can be established simply because customers are willing to pay the higher price for the real and perceived quality. Moreover, by pricing the product relatively high, the product posit ion in de minds of customers becomes on the desired (high) level.Since Heineken premium beer is a standardized product, there are little additional costs concerning accommodation of the product to foreign markets. Therefore, Heineken can adjust its prices easily to the purchasing power in a foreign market and so maintain its brand image of being a premium beer, by range the price to the relative upper segment of a countrys local beer market. By conducting this policy, Heineken maintains a global image of being a premium beer.Moreover, in some foreign markets Heineken even has the advantage of the so called country-of-origin effect. Which holds that customers perceive a product made in a certain country of being of a desired quality. Apparently, the Netherlands have a high temper in the global beer market, since, for example, the customers in the United States are willing to pay significantly more for Heineken premium beer. On average, for every 100 liters of Heineken beer shippe d to the US, Heinekens profit is estimated on about 21 euros. In contrary, the average profit per 100 liters of Heineken beer in other countries is estimated on about 11.70 euros (Elsevier website).In short, Heineken is able to maintain its image of being a premium beer through both the general perception of being of a high/premium quality, and the corresponding price that has to be paid for Heinekens premium beer.Source Based on Keegan, 1995, pp. 489-94 and p498, carry over 13.11 http//www.annualreport.heineken.com/nl/Een_kort_overzicht/index.htmlfinancials 2 http//www.heinekeninternational.com/ownership_cg.aspx3 http//www.annualreport.heineken.com/Other-information/countries-and-Brands/index.html4 Svend Hollensen Essentials of global marketing5 http//www.alcoholpreventie.nl/bestand/2005MarketingphilosophyofHeineken.pdf 6 Peters and Van jam Dienen en verdienen (serve and earn) (2001) 7 Svend Hollensen Global Marketing (p. 280)