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Heineken N.V.: Global Branding and Advertising -
INDEX 1. EXECUTIVE SUMMARY...................................................................................... 2 2.
SITUATION ANALYSIS ...................................................................................... 2 2.1 The
Company Profile 2.2 The Heineken Brand 3. SWOT
ANALYSIS................................................................................................ 7 3.1 Strengths 3.2 3.3
Opportunities Weaknesses 7 8 8 9 2 4
3.4 Threats 4. THE HEADQUARTER’S ROLE IN SHAPING THE GLOBAL BRAND...............
9 5. RECOMMENDED MARKETING STRATEGY ................................................... 11 6.
REFERENCES ................................................................................................... 12
Page | 1
1.
EXECUTIVE SUMMARY
The case study of Global Branding and Advertising at Heineken N.V. describes the findings and
recommendations of two research projects, which were commissioned by Heineken in the mid
1990ies in order to clarify brand identity. Project Comet found that the brand image was not
consistently being projected and therefore the Heineken brand was perceived differently across
various different nations. The project recommended to internationally aligning the brand’s
premium taste image using five core brand values: Taste, premiumness, tradition, winning spirit
and friendship. Project Mosa was designed to elicit consumer reactions in order to clarify the
consumers’ perception of the core values premium taste and friendship. The indicators of premium
beer taste differed among the different cultures, while there was substantial agreement across
national markets on the social occasions that would call for a premium beer over a standard beer.
The results of both research projects should guide Heineken’s advertising efforts in the future to
create a more consistent brand identity.
2. SITUATION ANALYSIS
More than two decades ago, Harvard Business School professor Theodore Levitt provocatively
declared in a 1983 HBR article, "The Globalization of Markets" that a global market for uniform
products and services had emerged. He argued that corporations should exploit the "economics of
simplicity" and grow by selling standardized products all over the world. To grasp how consumers
perceive global brands, companies should think about the issue in cultural terms. The forces that
Levitt described didn't produce a homogeneous world market; they produced a global culture. The
rise of a global culture doesn't mean that consumers share the same tastes or values. Rather, people
in different nations, often with conflicting viewpoints, participate in a shared conversation,
drawing upon shared symbols. One of the key symbols in that conversation is the global brand.
Like entertainment stars, sports celebrities, and politicians, global brands have become a lingua
franca for consumers all over the world. People may love or hate transnational companies but they
can't ignore them (Holt et al, 2004). Heineken is perceived differently in different markets. In the
Netherlands, Heineken is the market leader and therefore viewed as a mainstream brand. Outside
the Netherlands, however Heineken had consistently been marketed as a premium brand. In the
United States and Hong Kong Heineken was seen as appropriate for special occasions or when
making a social statement. In other markets, such as Latin America, Heineken was viewed as one
among many European imported beers.
2.1
THE COMPANY PROFILE
The Heineken story began more than 140 years ago in 1864 when Gerard Adriaan Heineken
acquired a small brewery in the heart of Amsterdam. After 13 years of prohibition, in 1933,
Heineken set foot on American soil and in 1937 the first Heineken beer was brewed outside the
Netherlands, in the Dutch East Indies. Over the ensuing 60 years, growth and acquisitions
substantially expanded the company. Four generations of the Heineken family have been
involved in the expansion of the Heineken brand and the Heineken company throughout the
world. By the 21st century, the small 19th century local Amsterdam brewer has grown into a
worldwide business with a global brand, employing more than 50,000 people (Heineken N.V.
Annual Report 2008). Heineken’s brand portfolio includes more than 170 international premium,
regional, local and specialty beers. The principal brands are Heineken® and Amstel®. The
Heineken brand is available in almost every country on the planet. Heineken owns more than 119
breweries in more than 65 countries brewing a Group beer volume of 13.92 billion liters.
(http://www.heinekeninternational.com/companystrategyprofile.aspx) Heineken has the widest
presence of all international brewers, thanks to its’ global network of distributors and breweries.
The acquisition of Brau Union in Austria in 2003 significantly extended the pre-eminence of
Heineken in Europe. In Europe, Heineken is the largest brewer and cider producer. It achieves
global coverage through a combination of wholly-owned companies, licence agreements, affiliates
and strategic partnerships and alliances (Heineken N.V. Annual Report 2008). VALUES AND
PRINCIPLES Heineken is committed to sustainable development and as such, to optimising its’
financial results with minimal impact to its’ business environment. To do this, Heineken abides by
a number of governing business principles and three core values - respect and enjoyment and
passion for quality - that reflect Heineken’s passion for beer and its’ respect for its’ employees,
business partners, customers, shareholders and all others who are connected to the company
(http://www.heinekeninternational.com/valuesandprinciples.aspx). Heineken has published
dedicated reports on sustainability and corporate responsibility since 2000. In an open dialogue
with a significant number of stakeholders, seven areas were defined on which Heineken believes it
should focus its’ energy in order to maximise benefits for society, its’ stakeholders and its’
company. These seven focus areas are: 1. Energy 2. Water 3. Safety 4. Agriculture 5. Supply chain
responsibility 6. Responsible beer consumption 7. Impact on developing markets
(http://www.heinekeninternational.com/7_focus_areas.aspx).
Source: Heineken N.V. Annual Report 2008
2.2 THE HEINEKEN BRAND
As both the Group and its most valuable brand carry the same name, reputation management is of
utmost importance. Heineken enjoys a positive corporate reputation and its operating companies
are well respected in their region. Constant management attention is directed towards enhancing
Heineken’s social, environmental and financial reputation. The Heineken brand is the company’s
most valuable asset and one of the key elements in Heineken’s growth strategy with a portfolio
that combines the power of local and international brands. Anything that adversely affects
consumer or stakeholder confidence in the Heineken brand or Company could have a negative
impact on the overall business (Heineken N.V. Annual Report 2008). TASTE In the Project Mosa,
quality and tradition were identified as the most suitable taste expressions for appealing to the
head of Heineken consumers, averaging consumer reactions from eight different countries. Gerard
Adriaan Heineken was reportedly committed to manufacturing a beer of the highest quality and
craftsmanship in brewing. Heineken pilsner has a mildly bitter taste, fresh, fruity
aroma, bright color and clarity. These taste characteristics are obtained using only the purest water,
hops and barley malt. Gravity: Original extracts 11-12% by weight Alcohol: 5% vol. Bitterness:
23 EBU Color: 7 EBC Heineken pilsner beer is brewed in the Netherlands, Vietnam, Thailand,
Tahiti, Singapore, the United Kingdom and in Sweden. Rigorous standards ensure that the high
quality of Heineken beer is the same all around the world
(http://www.heinekeninternational.com/products_brands_brands_heineken_fact_sheet.aspx).
PREMIUMNESS Heineken is positioned as a premium brand, except for its’ home market in the
Netherlands. Its’ appeal is growing in many markets. Heineken is the leading beer brand in Europe
(http://www.heinekeninternational.com/products_brands_brands.aspx) TRADITION The
Heineken the world drinks today is still brewed using the original, unrivalled recipe invented three
generations and over 140 years ago by the Heineken family. Since 1886, the same yeast strain, the
unique Heineken A-yeast has been used for fermentation and is considered a significant
contribution to the pure, premium taste of Heineken beer.
(http://www.heinekeninternational.com/products_brands_brands.aspx). WINNING SPIRIT In
2008, the Heineken brand was at the heart of the company’s growth, and confirmed its status as
the company’s flagship brand and key differentiator. With volume growth of 4.7 per cent, the
Heineken brand outperformed the international premium segment, growing in almost all of
Heineken’s European and African markets. The brand also showed double-digit growth in markets
like the UK, Canada, Chile, Argentina, Indonesia, Taiwan and South Korea. The UEFA
Champions league is the company’s main sponsorship platform. The Heineken brand has been
associated with this prestigious club tournament since 2005. With over 140 million TV viewers
watching live coverage of the UEFA Champions league in almost every country in the world, this
global sporting event has become synonymous with the Heineken brand and underlines
Heineken’s commitment to extending its leadership within the premium beer segment (Heineken
N.V. Annual Report 2008). FRIENDSHIP The Project Mosa identified “true friends” and “always
count on Heineken” as suitable friendship expressions for appealing to the heart of Heineken
consumers, averaging consumer reactions from eight different countries. As a premium beer brand
that embraces quality over quantity, Heineken seeks to promote a responsible drinking culture.
This became an even more visible component of its communications strategy in 2008, with the
launch of its
international interactive ‘know the Signs’ campaign. Heineken has also become known for its
creative use of film to enhance the profile of the Heineken brand among its target consumers.
(Heineken N.V. Annual Report 2008). It is putting fresh advertising impetus behind the brand in
its domestic market with a TV campaign that takes a tongue-in-cheek look at the different way
men and women view home improvements. TBWA\Amsterdam created the commercial, which
shows a wife showing her friends around her new home during a housewarming party. The women
scream with delight at her walk-in closet, which has been transformed into a showroom full of
designer clothes and shoes. But their screams are cut short by the sounds coming from the
neighboring room. It is their partners who have just discovered a closet converted into a walk-in
fridge full of Heineken beer. The agency said the aim of the campaign was to draw the brand and
its users closer together (Haymarket Business Publications Ltd, Campaign, 30 January 2009).
Source: http://theinspirationroom.com/daily/commercials/2009/1/heineken-walk-in-fridge.jpg
3.
SWOT ANALYSIS
Strength (Internal) Strong portfolio of brands Strong network of breweries
Opportunity (External) Acquisition of Scottish & Newcastle Innovations: Draught keg and
extra cold program
Weakness (Internal) Need for business integration of recent acquisitions Sluggish revenue
growth of Western Europe
Threat (External) Pressure on alcohol: Stringent advertising regulations in many countries
Attractiveness of beer category under pressure: Sluggish beer consumption in US and Western
Europe Volatility of input cost: Aggressive pricing policy Stability of Africa and the Middle
East Region Economic downturn from credit crunch
3.1 STRENGTHS
Heineken’s leading brand portfolio includes more than 170 international premium, regional, local
and specialty beers. The company’s principal brands are Heineken and Amstel. During 2006, the
company has undertaken various advertising and promotional initiatives, which would improve its
brand equity. For instance Heineken launched its new advertising campaign for the Heineken
brand and the UEFA Champions League partnership, which establishes the new theme “Enjoyed
together around the world. This brand campaign has
helped it to target sports lovers. Also in the same year Heineken’ brand association with the latest
James Bond film –Casino Royale – has given it the opportunity to extend this reputation and build
promotion and activation programs for those of legal drinking age and above in 55 markets around
the world. Strong brand portfolio helps the company to create a favorable image in the market and
ensures stable revenue. Heineken has a large network of breweries. At the end of fiscal 2006, the
company owned 115 breweries and distributors in over 65 countries across Western Europe;
Central and Eastern Europe; the Americas; Africa and the Middle East; and the Asia Pacific
region. These breweries confer several competitive advantages on the company. Since these
breweries are located close to their end markets, the company is in a position to serve fresh beer to
customers. A geographically widespread plant network reduces transportation costs as well. Strong
network of breweries helps the company boost customer satisfaction and reduce costs
(Datamonitor, Company Profile, 14 January 2008).
3.2
OPPORTUNITIES
Heineken’s acquisition of parts of Scottish & Newcastle includes businesses, licences and
investments in Belgium, Finland, India, Ireland, Portugal, the UK and the US, with core brands
including Foster’s, Kronenbourg 1664, John Smith’s, Newcastle Brown Ale, Sagres, Lapin Kulta,
Maes and Beamish (Heineken N.V. Annual Report 2008). Innovations contribute to the top-line
growth and to the strength of the Heineken brand in particular. In 2008, DraughtKeg, the unique 5-
litre ‘go-anywhere’ draught system, and Beertender, the ‘genuine home draught beer experience’,
accounted for part of the volume growth of the Heineken brand. Driving top-line growth by
winning customers at the point of purchase has been the key rationale behind the roll-out of
Heineken’s extra Cold program. Heineken Extra Cold is a different way to serve Heineken. It is
the original Heineken beer served extra cold and covers both draught and packaged beer. Since the
launch of the program in 2005, extra cold draught beer has been installed in 62,000 outlets
(Heineken N.V. Annual Report 2008).
3.3 WEAKNESSES
Beer markets in Western Europe faced a challenging year due to the combined impact of the
financial crisis, mixed weather, smoking bans in France, the UK, Finland and the Netherlands, and
unprecedented increases in excise duties in the UK. Beer consumption in Western Europe came
increasingly under pressure, particularly in the on-trade and consolidated beer volume declined 1.6
per cent organically (Heineken N.V. Annual Report 2008). Western Europe, Heineken's largest
geographical market, accounts for approximately 40% of the total revenues of the company.
Sluggish revenue growth of this market would affect the overall revenue growth of the company
(Datamonitor, Company Profile, 14 January 2008). In the pursuit of further expansion, Heineken
seeks to strike a balance between organic and acquired growth. In recent years, Heineken has been
very acquisitive, with smaller transactions in mostly emerging markets and the Scottish &
Newcastle acquisition. In any acquisition, Heineken is faced with different cultures, business
principles and political,
economic and social environments. This may affect corporate values, image and quality standards
(Heineken N.V. Annual Report 2008).
3.4 THREATS
An increasingly negative perception in society towards alcohol could prompt legislators to
restrictive measures. Limitations in advertising could lead to a decrease in sales and damage the
industry in general. Sales of Heineken products could materially decrease, in particular in Europe.
Heineken’s alcohol policy is based on the principle to brew, market, and sell beer in ways that
have a positive impact on society at large. With this policy, Heineken promotes awareness of the
advantages and disadvantages of alcohol, encouraging informed consumers to be accountable for
their own actions. Heineken has many operations in mature beer markets where the attractiveness
of the beer category is being challenged by other beverage categories. In these markets, especially,
the on-trade channel is under pressure, which makes adjustments to the cost base unavoidable.
Heineken is relatively highly geared to mature markets since their acquisition of S&N.
Management focus is on product innovation, portfolio management and cost-effectiveness in order
to secure market position and profitability. Input costs (including transportation and energy)
accelerated to unprecedented levels in 2008. The world economic climate and Heineken’s active
re-negotiation efforts has since meant that some commodities (such as barley, aluminium and
energy) have come off the peak levels reached in mid-2008, however the costs of some packaging
materials (glass bottles, steel cans/kegs and crown corks) continue to increase. In addition the
outlook is strongly regionalized and also affected by currency fluctuations. Pricing strategies are
top priority in all of Heineken’s markets. This includes assessments of customer, consumer and
competitor responses based on different pricing scenarios, which will have different outcomes
market by market. In principle, Heineken will pass on increased input costs. The effect on volume
developments is at present unclear (Heineken N.V. Annual Report 2008).
4.
THE HEADQUARTER’S ROLE IN SHAPING THE GLOBAL BRAND
Marketing is the management function responsible for making sure that every aspect of the
business is focused on delivering superior value to customers in the competitive marketplace. The
business is increasingly likely to be a network of strategic partnerships among technology
providers, manufacturers, distributors, and information specialists. The business will be defined by
its customers, not its products or factories or offices. This is a critical point: in network
organizations, it is the ongoing relationship with a set of customers that represents the most
important business asset. These skills may define the core competence of some organizations as
links between their vendors and customers in the value chain. In a world of strategic partnerships,
it is not uncommon for a partner to be simultaneously customer, competitor, and vendor, as well as
partner. Consequently, it is difficult to keep the traditional management functions distinct in
dealing with strategic partners. Distributors must be treated as strategic partners, linked to the
manufacturing firm with sophisticated telecommunications and data-processing systems that
afford seamless integration of marketing activities throughout the network. Consumer marketers
continue to shift resources toward the trade and
away from the consumer per se, and traditional selling functions for the field sales organization
are evolving toward a broader definition of responsibilities for relationship management, assisted
by interactive information management capability. The implementation of market-driven strategy
will require skills in designing, developing, managing, and controlling strategic alliances with
partners of all kinds, and keeping them all focused on the ever-changing customer in the global
marketplace. Its end-use markets and its knowledge base, as well as its technical competence, not
by its factories and its office buildings, will define the core firm. Customer focus, market
segmentation, targeting, and positioning, assisted by information technology, will be the flexible
bonds that hold the whole thing together (Webster, 1992). Heineken Headquarters insists on tight
control over how the Heineken brand is marketed by its distributors and partners. However, it is
also pursuing a strategy to gain more control over the marketing ambitions of its licensee,
distributor or partner brands by seeking majority equity stakes. Especially pricing is an important
issue and Heineken would like to see its positioning in the premium segment supported by a price
premium for the Heineken beer. From Heineken’s point of view the ideal national brewer partner
should also not have ambitions for their domestic brands. Hewett et al. in their study investigating
the conditions which are influencing headquarters and foreign subsidiary roles in marketing
activities view the relational context- the subsidiary's trust in the headquarters, such that it results
in conformity to the headquarters' practices, the perceived level of dependence of the subsidiary
on the headquarters, and the extent to which the subsidiary feels as if it is a part of the parent
organization - as key in determining the subsidiary's role in marketing activities vs that of the
headquarters. Cooperation between the subsidiary and parent organization will reduce the
uncertainty regarding the decisions being handed down, and will make adoption of practices from
headquarters more likely. Their study found that the headquarters were more successful in handing
down standardized marketing processes when the subsidiary perceives itself to be dependent on
the headquarters. Therefore Heineken’s strategy to gain more financial control is designed to
improve the headquarters influence on marketing decisions. Nevertheless it seems that Heineken
should rather adopt a strategy of "glocalization“. Global marketing strategies aim to maximize
standardization, homogenization and integration of marketing activities across markets throughout
the world. However, global marketers must address a number of issues in their marketing strategy
to ensure their brand will be successful worldwide. Examples of these include differences in
economic environments, political environments and cultures around the world. While the theory of
standardization of marketing activities works on a strategic level, it is often not suitable for the
richness of detail needed on operative and tactical levels. Most marketing activities will be more
successful when adapted to local conditions and circumstances in the marketplace. Marketers need
to understand how their brand is meeting the needs of the customers and how successful their
marketing efforts are in individual countries. A "glocal strategy“ standardizes certain core
elements and localizes other elements. It is a compromise between global and domestic marketing
strategies. In a glocal strategy the corporate level gives strategic direction while local units focus
on local consumer differences (Kotler et al. , Marketing Management).
Participation in goal setting benefits subsidiaries with greater roles, but too much participation
may become detrimental. Likewise, although less participation in goal setting is needed when
headquarters is attempting to hand down marketing strategies such that subsidiaries are taking on a
less significant role in marketing activities, too little participation may negatively affect
performance. The more conditions deviate from those faced by subsidiary marketers of successful
products who take on a particular role, the lower product performance tends to be. The ability of
global managers to determine the extent to which they should foster greater roles for particular
subsidiaries should also be enhanced in that these managers, unable to control market, industry,
and/or relational conditions, can better forecast success by determining whether greater or lesser
subsidiary roles are more aligned with these conditions. Performance assessment will also be
improved by recognizing the obstacles faced in situations where alignment may not be ideal, such
as when the headquarters is attempting to hand down processes under adverse industry conditions
(Hewlett et al. ,2003). Heineken’s headquarters should take a combined approach of centralization
and decentralization to leveraging global marketing. The headquarters should pass on the specific
guidelines that determine the face of the brand worldwide with fundamental. Local marketers
should be challenged to develop locally relevant translations of the program recognizing the
importance of inspiring marketing at a local level. The key is to find the right balance between
central guidelines and the content of the brand at a local level. This will allow for consistency in
Heineken’s international advertising, yet permits local input and a regional adaptation of the
promotion program. Heineken should also set up a best practices system and transfer knowledge
from one country to another.
5. RECOMMENDED MARKETING STRATEGY
A global brand is required to provide relevant meaning and experiences to people across multiple
societies. Increasingly, a company's global stature indicates whether it excels on quality. A study
conducted by Holt et al in 2004 measured for country-of-origin associations as a basis for
comparison and found that, while they are still important, they are only onethird as strong as the
perceptions driven by a brand's "globalness". Consumers look to global brands as symbols of
cultural ideals. They use brands to create an imagined global identity that they share with like-
minded people. Transnational companies therefore compete not only to offer the highest value
products but also to deliver cultural myths Global brands usually compete with other global
brands. To succeed, transnational companies must manage brands with both hands. They must
strive for superiority on basics like the brand's price, performance, features, and imagery; at the
same time, they must learn to manage brands' global characteristics, which often separate winners
from losers. Smart companies manage their brands as global symbols because that's what
consumers perceive them to be. Firms must learn to participate in that polarized conversation
about global brands and influence it. A major obstacle is the instability of global culture.
Consumer understandings of global brands are framed by the mass media and the rhizomelike
discussions that spread over the Internet. Companies must monitor those perceptions constantly
(Holt et al., 2004). Heineken’s brand strategy needs to monitor the brand's own capabilities and
competencies, the strategies of competing brands, and the outlook of consumers experience in
their respective societies. The challenge for an international brand is to inspire on a global level
but at the same time remain personally relevant, attached to the target group’s personal cultures
and origins. As consumer needs and tastes vary, Heineken must decide how much to adapt its
marketing strategy to local needs using a combination of standardized marketing mix and adapted
marketing mix, respecting the strong brand preferences and loyalties that exist among the beer
drinkers. Also, Heineken needs to prioritize between global integration vs. national
responsiveness. The effects of this discrepancy become evident in the decreasing sales in Western
Europe. The real test lies for Heineken to restore its market lead and reputation in Western Europe,
which by far is the largest contributor to its sales. Heineken beer is a globally well-known and
respected brand. It’s values and principles, its CSR program and program for responsible alcohol
consumption all provide an excellent global strategy to build local efforts on. Heineken’s
sponsorship strategy to build brand equity through relevant associations with high-impact, high-
profile sports and music events, films is no less excellent and should be adopted in other markets
for brand enrichment after brand building, e.g. in Asia. The Project Comet identified the core
values, taste, tradition, premiumness, friendship and winning spirit, which are transported by the
Heineken Brand as explained in 2.2. However, Project Mosa revealed that different values are
associated with different expressions in different cultures. These findings should be used to
establish locally driven campaigns. By connecting to local situations and preferences, consumers
will develop a greater emotional tie to the company. In Germany, where consumers are loyal to
domestic brands and consider the brewing process an important element of taste, Heineken should
incorporate the quality of the raw materials and brewing details into advertisement campaigns.
National advertising should play a prominent role in promoting the Heineken brand. In Latin
America, Heineken needs to communicate what makes Heineken beer distinctively different from
other imported European beer. The focus on taste and friendship and could be supported by
sponsoring sporting events in Brazil. In the United States, Heineken needs to move a away from
the image of a drink for special occasions and start promoting Heineken as the beer of choice at
college or spring break parties.
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Roth M, Roth K. Conditions influencing headquarters and foreign subsidiary roles in marketing
activities and their effects on performance. Journal of International Business Studies. November
2003;34(6):567-585
• Holt D.B., Quelch J.A., Taylor E.L., How Global Brands Compete, Harvard Business Review,
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