Tuesday, July 10, 2007

HEINEKEN N. V. Global Branding & Advertising

Case Background:

Managers at Heineken headquarters were concerned with the consistency of Heineken’s brand image across the globe so they commissioned two research projects; Project Comet and Project Mosa, in order to find out the best possible manner in which Heineken’s global identity could be established. They wanted to find out if it was possible to come up with some standardized communication across the board in order to have uniformity in Heineken’s brand image and advertising worldwide.

Project Comet:

The objective of Project Comet was to find out how to enhance Heineken's competitive advantage by more consistently projecting the brand as "the world's leading premium beer." The project team concluded that Heineken's desired brand image was "good taste".
Because of Heineken's flavor, its roots, commitment to and pride in brewing a high-quality lager. Because Heineken is a symbol of premiumness, taste, tradition around the world
The team believed that no other brand in the world could claim superior good taste with as much credibility as Heineken. The brand's good taste image would be built on five core brand values:

1. Tradition
2. Taste
3. Pemiumness
4. Winning spirit
5. Friendship

Taste and premiumness were regarded as the price of entry. Project team members thought that all five could be reflected in one way or another through the locations, situations, relationships, casting, lighting, style, and tone used in each commercial. According to Project Comet all advertising would have to have impact and therefore never safe. The advertising would have to be “leading edge and state of the art, taking calculated risks and initiatives to achieve the desired effects”.

Project Mosa
This project consisted of focus groups conducted in 8 countries to find out
(a) what male beer drinkers meant by taste and friendship in relation to premium beer drinking.
(b) Which expressions of taste and friendship could be used by the Heineken brand in advertising?

Heineken Background
The Heineken brewery was founded in Amsterdam in 1863 by Gerard Adriaan Heineken. Over the years it has done exceedingly well for itself. Heineken's position in the beer market is consolidated by its strong history, making it the number two beer brewer in the world, thus accounting for nearly 5% of the world’s production. With a major global presence, Heineken's main market is Europe, accounting for 47% of its sales.

Traditionally, brewing has been a highly fragmented industry comprising a large number of regional and national breweries that satisfied distinct local consumer tastes. Heineken has a pragmatic view taking a cautious approach to entering new markets. While it encourages organic growth, it has expanded by using a combination of direct export, licensing, joint venture, strategic alliance and acquisition. While it exports its premium Heineken brand from its plant in Amsterdam in the Netherlands, it is also involved in local regional production. A typical entry strategy has been to begin by exporting using intermediaries such as local distributors, and then to develop licensing production agreements through joint ventures with local brewers. Ultimately, the goal is to acquire full ownership and control of the local production wherever possible.

Heineken had a different image in different countries and was marketed differently. Although considered a mainstream brand, recently sales volume has been declining and the brand image is in need of some revitalization. At the end of 1993, the Heineken brand held a 24% volume share in Netherlands. As the market leader, it was marketed as a mainstream brand. Outside the Netherlands, however, Heineken had consistently been marketed as a premium brand. In some markets, such as the United States and Hong Kong, Heineken had successfully established a distinct image for the-brand. The image was sometimes narrowly drawn such that Heineken was seen as appropriate solely for special occasions when making a social statement was important rather than for daily consumption. In other markets, such as in Latin America, Heineken was viewed as just one among many European imported beers. But across all markets, the Heineken brand was acknowledged as a lighter beer of superior quality presented in attractive packaging. Heineken was not bottled in the large United States market, but was the number one imported beer. In Germany, the heaviest beer-consuming country in Europe (144 liters per capita), national brands still dominated the market and Heineken was available only through imports.

Q # 1: What would be the role of communication for Heineken brand? Would it differ in different markets?

Communication plays a very important role in the creation of brand equity - it’s the platform through which you reach your consumers and have the opportunity to position your brand howsoever you want to. Even if a firm has the best product ever made, it will still need advertising and promotion. One of the main objectives of communication is to develop awareness, perceived quality and brand associations which are ultimately responsible for the building of brand loyalty. Apart from the obvious benefits of creating a steady stream of future revenue from loyal customers there are other benefits which include the ability to withstand competitive attracts from new brands, the ability to survive short term interruptions in supply, and the ability to survive changes in government legislation..

Communication will play a pivotal role for Heineken for several reasons – at the moment the brand is finding itself with many different voices, the task is to integrate its global strategy with its local one. A major impact of globalization is on branding & marketing, companies increasingly compete with each other on a global scale and find themselves having to communicate their products to a global audience.

The challenge for Heineken is that being a global brand it has to have a communication strategy that retains its uniformity so as to make sure that a single message is conveyed yet it has to take into account the local culture and nuances of different markets. The goal as well as the challenge of communication for Heineken will be to define and convey the brand's core values yet tailor its message so as to appeal to its different markets, tapping into local trends and leveraging that knowledge to create a connection with the audience so that they build an emotional tie with Heineken and perceive it as an integral part of their lives. This is dependent on an acute awareness of such trends; it's all about leveraging knowledge through adequate communication and this is what Heineken has to do. Through communication one can leverage local events for e.g. like the Chinese New Year, Labour Day etc and build upon it. The execution of this communication lies in devising and consistently applying a specific style, tone, and image.

Although it’s the head office that communicates the fundamental brand values, it will be crucial for Heineken to remember and acknowledge local differences. The key is to find the right balance between central guidelines that the entire organization "lives" by and the content of the brand at a local level. It's only when they will understand and properly manage the relationship between the global brand and the local consumer that they will have a strong global brand. The communication thus has to be different while maintaining a central core that is uniform.

The role of Heineken’s local brand management will be to refine the communication of the brand's core values by adjusting their execution to communicate meaningfully with each local market. The communication will differ in all markets according to where they are in the market evolution cycle and what their objectives are for different markets

Heineken has its roots in Amsterdam in the Netherlands but continues to seek ways of expanding into new markets while moving towards increased market share domination in those it already occupies. The company has a global philosophy with internationally known brands, but shows an appreciation and commitment to local markets, production and brands. It seeks to differentiate its brands through market segmentation targeting international and national markets with the group brands.

All marketing strategy is built on STP, segmentation, Targeting and Positioning. A company discovers different needs and groups in the marketplace, targets those needs and groups in the marketplace that it can satisfy in a superior way and then positions its offerings so that the target market recognizes the company’s distinctive offering and image.

Marketing Objectives
In different markets Heineken has different objectives and thus its communication will differ in the role it plays. The stages of development and evolution may be the same but marketing objective is different
Building: In certain markets it has to build its image
Markets: Brazil, Argentina, Germany
Although in the sense of evolution Germany and South America are on different points of the curve the objective is the same and that is to build the brand image.
The German consumer remains fiercely loyal to local German breweries so posing a particular challenge to a newcomer introducing a global brand. The regional administrative control further hinders achievement of an efficient national distribution network.

Enrichment: In other markets it has to enrich its image
Markets: Hong Kong, Japan
The markets here are highly competitive as far as price is concerned and they are high volume market, the brand has to cut across the clutter

Confirmation: In others it has to confirm its brand promise
Markets: USA

This market is characterized by high brand as well as segment proliferation, product differentiation does exist so communication has to center around confirmation of the brands’ premium quality and its image of being better than standard. The market here is competitive and so communication has to be on the mark always. The consumers are aware and the product is in the declining stages so the strategy needs to reflect that and communication should probably focus on the core brand value of premium taste, friendship and the wnning spirit

Restoration: And in some it has to restore its image
Markets: Italy, Netherlands

In markets that are characterized by consumer sophistication, segmentation, price competitiveness and high volume focus the objective is restoration of the image - a reiteration so to speak. And thus communication will play a different strategic role in each case

Q #2: What are the key insights that international marketing team can leverage for the brand? Would the insights for different markets be different? Why? If yes, what are the market-wise insights?

A brand operates in an environment consisting of, on the one hand, the elements of the strategic planning cycle, and on the other hand, organizational conventions, competitive forces, market structures, cultural factors, consumer motivation and media attention: the lenses and filters through which consumers perceive and experience the brand. These factors combined constitute the brand environment which differs market to market.

Global brand management needs to understand how various markets compare on these issues in order to determine how best to manage the brand globally. Determining communalities and differences in business strategy, brand expression and marketing provides insight into the extent, to which the organization’s policies and activities regarding the brand diverge, as well as the causes and rationale for divergence. Doing the same for the situational factors, the brand perception and the brand recognition provides an understanding of the extent to which the brand is perceived differently across markets, and what causes these differences. A complete analysis offers brand management an appreciation of the core elements of the brand, as expressed and perceived around the world.

Heineken brand managers have to turn their insight into policies that will unlock the full potential of their brand in a particular market, and across multiple markets at the same time. This requires a common framework that can be used across markets in order to obtain equivalence of brand analysis. A framework ensures not only that global brand management talks the same brand language and follows the same procedures as local brand management, but also that it becomes clear which internal or external factors are uniquely influencing to particular societies or even segments of societies. In international markets, an important issue for the firm is the selection of insights to use in different countries, should they be the same thus leveraging brand strength across boundaries, or whether to maintain local brands responding to local customer preferences.

MARKET INSIGHTS
There are several insights to be gathered by a market survey namely as to where there is greater brand usage and market share and where the trial/awareness ratio is good and where it needs further push. The relationship between the product-trial rate and the customer awareness level will remain to be the deciding factor on reach, frequency & impact of the advertising campaign. These things help decide on the marketing communications mix that the company uses.

INSIGHTS through surveys!
  • Ireland and UK rank amongst the highest in beer consumption yet market share position is weak in UK.
  • The highest percentage of people naming Heineken as their first choice is highest in Greece and lowest in Italy and Spain with UK as the third lowest.
  • Market share position is weakest in Spain and UK so Heineken needs to build and infiltrate the market
  • Heineken needs to increase its SOV in UK and Spain
  • Greece is its best market
Changing patterns of consumption
Despite globalization there are substantial differences in beer consumptions, consumer preferences and behaviors as well as the mix of competitors. The evolutionary cycle that the market is in is different as well.

Europe accounts for around 40% of global beer production and is in the mature stage of the industry life cycle. Since 1990, changing patterns of consumption have been evident with declining volumes in high-consuming Germany, Belgium, Denmark and the UK set against rapid growth in southern Europe in traditionally lower-consuming Spain, Italy, Portugal and Greece, partly in response to tourism demand which is predicted to continue to grow. Rapid increases in the Central Eastern European (CEE) countries are also


Stage of Development/Market Evolution:
Stage of Development: Embryonic

Market:
Africa

Market Evolution:

  • Fragmented local brewers
  • High local consumer loyalty
Here where we are introducing existing products in a new market we have to develop the market. The local brewers are fragmented and there is high local consumer loyalty and these factors impact the communications the marketing strategy will be different.

Strategy

Market Development – the consumer has to be familiarized with the brand as the market is fragmented and there is high local loyalty Heineken will develop its IMC according to the insights from this particular market [given above]
Reach and frequency will both have t be higher as the aim is to get the people familairised with the vrand.

Stage of Development: Take-off

Markets: Eastern Europe,
Southeast Asia, South America, Greece/Portugal

Market Evolution:

  • Shifts in consumer taste [Eastern Europe]
  • Development of standard beer [Eastern Europe]
  • Quality Improvement
  • Introduction of premium segment
Market Objective
South America – Building

Strategy
Eastern Europe has high potential as beer is already accepted and enjoyed in these countries, despite shortages due to production and distribution problems. There has been a shift in beer consumption resulting in rapid increases in the Central Eastern European (CEE) countries. Here Heineken’s strategy is to develop local beer as well as push Heineken as the premium choice. This insight gives some indication to the tone of voice required – these markets are emerging and will have the characteristics of the emergence stage, there will be diffused-preference. The insights particular to this market suggest that the core brand values of friendship and the winning spirit will resonate far more. The market is moving on towards quality improvement and introduction of the premium segment. The objective here is to build as far as South America is concerned so there should be more emphasis on showing the quality and showing it with effective reach and frequency

Stage of Development: Growing

Market:
Italy, Spain, Japan
North & Central Europe, Australia

Market Objective:

South America – Building
Italy – Restoration
Japan - Enrichment

Market Evolution:

  • High Volume focus
  • Price Competition
  • Segmentation
  • Consumer Sophistication
Strategy
In high-growth, price-sensitive markets communication has to leverage the benefits of standardization and large market size. The insights even in markets in similar evolutionary cycle are different. The market here is in the process of growth and so it will be very competitive with a lot of players trying to get into the game – the emphasis here will be on frequency and increasing the share of voice. As seen from the above table it has t increase its advertising share of voice position
NOTE: The interesting point to note here is that even though some markets may be in the same evolutionary cycle the objectives that Heineken has different in one market it has to build and in another it has to enrich

Stage of Development: Mature

Markets: North Central Europe/Australia

Market Evolution:
  • Segmentation
  • Consumer Sophistication
Strategy
A market that has reached a state of equilibrium marked by the absence of significant growth or innovation is called a mature market and in such markets you have to. A mature market has to be revitalized – communication will play the role of rekindling interest and stressing on quality and premiumness with brand quality thrown in and what the brand stands for re-emphasized.

Stage of Development: Declining

Market: USA

Market Evolution:
  • Brand segment/proliferation
  • Product Differentiation
Strategy
In all these different stages communication will play a different role. Different stages have characteristic marking that evolution and each stage needs a different level of marketing muscle. Reach, frequency & impact of the advertising campaign will be dependant on how much awareness there is and what level of acceptance and trial there is present in the market.

KEY INSIGHTS FOR IMAGE
For Heineken the desired image was 'good taste’ and the key goal was to enhance Heineken’s competitive advantage by more consistently projecting the brand as ‘the world’s premier beer’. It had a strong legacy in terms of its flavour its roots and commitment and pride to brewing a high quality lager and as such was the symbol of premuimness, taste, and tradition around the world.

This good taste image was to be built on five core brand values of taste, premiumness, tradition, winning sprit & friendship.

According to Project Mosa which conducted focus groups in 8 countries to understand what male drinkers meant by taste and friendship in relation to premium beer drinking and which expressions of taste and friendship could be used by the Heineken brand in advertising. A few interesting observations and insights were discovered.

According to the focus group the word ‘premium’ brought certain ideas and images to the mind of the people, these were diametrically opposite to ‘standard'.

When you think of both the words different associations come to mind and so Heineken can leverage these associations to promote their premium quality.


When you think of standard these words come in mind [according to the study]


Standard - Company
  • Nuclear family
  • Large groups
  • Your wife
  • Colleagues

Premium - Company
  • Intimate friends
  • Smaller groups
  • Girlfriend
  • Boss

Standard - Occasions and Moments
  • After work
  • At meal
  • At home
  • Watching TV
  • Thirst-quenching (popular bars)
  • Beach
  • To party
  • Daytime
  • After sports
  • Sport events
Premium - Occasions and Moments
  • Meeting people
  • Fancy meals
  • Away from home
  • New encounters
  • Savoring
  • Traveling
  • Intimate moments & places
  • Elegant Parties
  • Nighttime
  • Entertaining
  • Disco/Nightclub
Standard - Role of Beer
  • Social participation
  • Thirst-quencher
  • Alcohol effect
  • Problem solver
Premium - Role of Beer
  • Ego enhancement/self-esteem
  • A treat
  • A Communication Tool
  • Signal Function
Q#3: Would the ‘reason to believe’ in the promise be same in each market? Why? If no, what would be the support for promise in each market?

The reasons to believe will be inline with the brand environment. The brand environment consists of the brand itself – expression, perception and recognition – surrounded by internal and external factors that have an influence on the brand. Only by taking these factors into consideration can management understand the entire brand proposition, and how it is affected in different markets. Some factors affect some brand elements more than others, some types of brands are more sensitive to particular factors, and the effect may vary according to markets and consumer segments.

Heineken has to find the right balance between global harmonization and local relevancy and this is the mix that will drive Heineken to growth. They want to project the brand as the ‘world’s leading’ premium beer’ and their desired brand image is that of ‘good taste’. Their promise of being the ‘world’s leading premium quality beer’ will stay the same but the reason to believe or the attributes that lead the consumer to believe that statement will be different.
A global brand has to ensure that their promise translates to each region.

An international marketing strategy provides a structure to leverage strong brands into other markets, assimilate acquired brands, and rationalize the firm's international branding strategy. This is achieved by leveraging key insights from different market so as to form a well-knit coherent brand structure.

Heineken is a global brand and as such is present in a lot of different markets but these markets differ as to their place in the evolutionary cycle and the marketing objectives differ according to the different markets. Just as products have their life cycles so do markets and as such Heineken will need to visualize the market’s evolutionary path as it is affected by new need, competitors, technology, channels and other developments.

Markets have different ideas about what they believe and what they respond to.
The reason to believe as far as taste is concerned stays relatively the same in most of the markets, whereas the expressions of friendship do change from country to country.

The ‘reason to believe’ as far as taste is concerned

Quality
  • Two years Amsterdam training
  • 24 quality checks
  • Bottles returned to Amsterdam.
These remain the same in all the markets

Brewing Skills
  • 100% malt
  • Smooth Taste
  • Pure Taste
  • Matured Longer
  • For Netherlands is concerned the ‘pure taste’ is the reason to believe as far as brewing skill is concerned.
  • For Germany it is 100% malt and smooth taste
  • For Italy it’s smooth and pure taste
  • For USA its al three 100% malt and smooth and pure taste
  • As far as the average of the 8 countries was concerned none of the factors figured in as important or a positive indicator of quality.
Tradition
  • Family since 1863
  • Original Recipe
  • Where Beer was born
  • - For Netherlands ‘Family since 1863’ was not an indicator or reason to believe but ‘Original Recipe’ and ‘Where the beer was born’ were reasons to believe in tradition
  • - For Germany all three were reasons to believe
  • - For Italy only ‘where the beer was born’ was a reason to belive in tradition
  • - For USA like Italy all three were reasons to believe in tradition
  • - As far as the average of the 8 countries is concerned ‘Original Recipe’ and ‘Where beer was born’, are a positive indicator of quality.

Availability
  • More bars/more countries
  • More bar/more countries was a reason to believe in Availability only in Netherland

Friendship:
When you show these elements in your advertisement different ones will be a reason to believe in different countries. For e.g.
  • Cat and dog
  • Rugby
  • True Friends
  • Always count on Heineken
  • Respect

  • - For Netherlands ‘Rugby’, True Friends and ‘Always count on Heineken were reasons to believe Recipe’ when you showed them to convey the core value of friendship.
  • - For Germany only ‘true friends’ and ‘Always count on Heineken’ were reasons to believe.
  • - For Italy cat and dog, Rugby, and Always count on Heineken were reasons to believe.
  • - For USA like Germany only ‘true friends’ and ‘Always count on Heineken’ were reasons to believe.
  • - As far as the average of the 8 countries is concerned only ‘true friends’ and ‘Always count on Heineken’ were reasons to believe.

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