Heineken

Heineken N.V. (AS.HEIN) is the worlds most international brewing group, with operations in more than 170 countries. In 2000, Heineken produced 97.9 million hectoliters of beer, making it the worlds second largest brewer (behind Anheuser-Busch, NYSE.BUD). Founded in Amsterdam in 1864, the groups two leading global brands are Heineken and Amstel. According the company, Heineken is the worlds most international beer and also is the top seller in Europe (Heineken 2001). The beers brewed by Heineken are positioned in the premium, mainstream or in the specialties segment of the marketplace. The mainstream segment represents the largest and mid-priced section of the market. In addition to producing beer, Heineken also offers a limited selection of soft-drinks and other beverages (Heineken 2001). The firm The Value of Brands White Paper
July 31, 2002 2002 Tim Glowa -16-

recognizes the premium position that Heineken commands in the marketplace (Heineken 2001): The Heineken brand is strong and dynamic, and therefore is able to capture a position in a beer market based on its own strength. The strength of the brand is increased if Heineken is added to a portfolio containing local or regional brands. For this reason we participate in many countries in local companies which not only have good distribution networks and breweries with an efficient cost structure, but also have good market positions and strong local brands. Examples include Moretti in Italy and Cruzcampo in Spain. This section of the paper reviews an optimal branding strategy for Heineken based on a Harvard Business School case developed by Quelch (1995). The case is placed in January 1994. Heineken has just commissioned two market research studies, and senior managers are assessing whether or not the conclusions of the two studies are mutually consistent. They also wished to determine how far they should or could standardize Heinekens brand image and advertising worldwide.

Defining the components of the global brand

During the time period for this case, the brand was positioned as part of the think global, act local strategy, and consequently, the brand image was not consistent throughout the world. Local managers had the resources to develop their own commercials and justified their decisions on the basis of unique competitive conditions. A market research project was undertaken by the head office to recommend how to enhance Heinekens competitive advantage by more consistently projecting the brand as the worlds leading premium beer. The study identified five core brand values that should be portrayed in all marketing communication: Taste: The product should be shown in slow-pouring shots where its golden colour, sparkling texture and refreshing coolness to celebrate its taste. Actors should be portrayed as genuinely enjoying the product and not gulping it back. Premiumness: The production quality of every execution should be at the level of excellence expected from a premium brand. In some markets, this premiumness might be a unique reason for purchase and therefore constitute a brand promise. Tradition: The aura of the brand should be evident in the casting and tone of

voice with each commercial. Heineken should be the preferred brand for people who believed in true values and whose brand choices reflected their personal value set. The Value of Brands White Paper
July 31, 2002 2002 Tim Glowa -17-

Wining spirit: Tone of voice was thought to be very important in conveying this value, since winners are thought to be confident and relaxed, taking a quite pride in everything, and never shouting. Friendship: The Heineken group should be a few (even two) people who clearly enjoy their relationship, and therefore should not be portrayed as a mass gathering drink. The Heineken moment should show people as themselves, relaxed, content and confident. Interactions should be sincere, warm and balanced, displaying mutual respect and free from game playing. This study recognized that the first two components (taste and premiumness) are regarded as the price of entry; they needed to be communicated in all messages, but were not enough in themselves to differentiate Heineken from its competition. This report concluded that all marketing communication and advertising must be consistent with these guidelines, and that Heineken needs advertising with impact. This suggests that advertising should never be safe, but should be leading edge and take calculated risks when necessary.

International Focus Groups

The second piece of research commissioned were international focus groups conducted among male beer drinkers in the Netherlands, Italy, Germany, USA, Argentina, Brazil, Japan and Hong Kong. The objectives of this qualitative research were to find out what male beer drinkers meant by taste and friendship in relation to drinking premium beer and secondly what expressions of taste and friendship could be used by Heineken in its marketing communications. Vaughn (1980 and 1986) suggested that all products can be placed in a two dimensional matrix between high involvement / low involvement on one axis and thinking / feeling on the other. Premium imported beer is placed in the low involvement / feeling quadrant, suggesting the product is emotional, and requires little involvement but it involves those products that satisfy personal taste (for example, cigarettes, candy, beer or snack food). For comparison purposes, regular beer is also in the same quadrant, but has a lower involvement level than imported beer. The balance between taste (head) and friendship (heart) suggests therefore, that it is important to place special emphasis on the feeling component. The research indicated that the most relevant and consistent indications of taste across all markets were scale of the plant (related to manufacturing), taste experience, balanced taste, foam and drinkability related to the product and advertising and packaging related to marketing. Similarly, the taste expressions that were consistent across all countries were two years of training for employees, twenty four quality checks, bottles returned to Amsterdam, created with the original recipe and made where beer was born. The most relevant friendship expressions were true friends and always count on Heineken. Finally, the focus groups compared and contrasted respondent feelings The Value of Brands White Paper
July 31, 2002 2002 Tim Glowa -18-

towards how a regular beer and a premium beer might be incorporated into different usage situations. This is summarized in the table below: Standard beer Premium beer Company Nuclear family

Large groups Colleagues Intimate friends Smaller groups Boss Occasions and moments After work At meals At home Thirst-quenching Day time Sport events Meeting people Fancy meals Away from home Savoring Nighttime Disco / night club Role of beer Social participation Thirst quencher Ego enhancement / self esteem A treat

Beer market evolution and marketing objectives

In addition to the focus market research that was conducted, Heineken has access to two additional strategic pieces of information. The first examines the beer market evolution by selected countries and regions across the product life cycle, and is illustrated below. This illustration is important and differs slightly from the standard product life cycle since it recognizes that different segments occupy different spaces on the continuum rather than suggesting, as is usually more common, that the product category holds a specific position. The Value of Brands White Paper
July 31, 2002 2002 Tim Glowa -19-

This graph suggests that the markets to concentrate on are those that are growing, and include Southeast Asia, South America, Greece / Portugal, Italy, Spain, Japan, north and central Europe, Australia and the United States. Other markets, such as Africa, may be attractive, but are likely too young to invest significant marketing resources. The second examines the key marketing objectives for the brand across several key markets, and is illustrated below. This suggests that the target markets for Heineken are Germany, Argentina, Brazil, Japan, Hong Kong, the United States, Italy and the Netherlands. The strategy of introducing Heineken as a premium brand will be successful in most countries, but may require as slightly different approach in its home market of the Netherlands, where Heineken is viewed as being a mainstream brand.

Discussion
The question facing Heineken is whether an integrated global strategy is appropriate for all targeted markets. Will the positioning of Heineken as a premium beer apply equally in the USA as well as in Argentina? Before discussing this issue, the paper will identifying the optimal brand positioning. The research commissioned by Heineken suggests that the brand should be positioned

using the following components: Taste, premiumness (and quality): Heineken believes that taste and premiumness are the minimum standards needed to successfully position the brand globally. These two should be adapted to include quality. Friendship: Heineken should be positioned not as a regular beer that is consumed in mass quantities from paper cups at a sporting match, but rather as a premium The Value of Brands White Paper
July 31, 2002 2002 Tim Glowa -20-

beer that is enjoyed between close friends in smaller groups. Friendship, and the relationship between people, is an important antecedent of the brand personality. Occasions: The research suggests that premium beers are reserved for special occasions. This includes intimate encounters, elegant parties, fancy meals, fancy night clubs or discos and suggests that premium beers are intended to be savored and enjoyed. In many respects, this suggests positioning the brand to compete more with fine wines than with regular beers, a position that the brand may be uncomfortable fulfilling. The question to be answered now is whether the essential elements for the creation of a premium brand relevant in all markets. Quality, friendship and special occasions are relevant and appropriate the world over. Therefore, pursuing a global brand strategy is an important and relevant objective for Heineken. One of the challenges facing Heineken will be to move the brand from a special occasion beer to more of a mainstream beer selected by those seeking a premium brand, while still remaining true to the guiding principles of the brand and brand image.

Post Evaluation
This paper will now turn to a post evaluation examination of Heineken and its global branding strategy. As discussed earlier in the paper, it is important for a product to have a consistent brand image across different markets. This brand image is often communicated to the market through advertisements. Three Heineken television commercials (each from separate regions) will be explored in greater detail. Heineken TV spot (Lights Out) Appearing as part of a Asian television campaign, 2000: Agency: Bates Indochina, Singapore Please see the file Heineken_Lights_Out_Asia for a copy of this advertisement The spot is set in a bar where a couple is ordering their drinks. As they receive their drinks (Heineken for the man, wine for the lady), another young man sits next to the hero. Then there is a blackout. When the lights come back on, our hero's beer glass is empty. He suspects the gentlemen and gives him the evil eye. But it was his girlfriend that subtly drank the beer, revealed by the line of beer foam on her mouth. The tagline is It could only be Heineken. The Value of Brands White Paper
July 31, 2002 2002 Tim Glowa -21-

Heineken TV spot (Concert Mob) Appearing as part of a European television campaign, 1999: Agency: J. Walter Thomspon, Milan Please see the file Heineken_concert_mob_Italy for a copy of this advertisement The spot is set in the concourse of a major stadium during a concert. A young woman works her way through the beer line, and finally gets to the front to order her beer. The server begins to look frantically for beer, apparently running out of product. As he opens the fridge to reveal the last Heineken, he considers who among the thirsty drinkers in line should be given the beer. At the last minute, he decides to drink the beer himself, much to the chagrin of those waiting in the beer line. Rather than quietly accept the fact that the

stadium has run out of beer, the crowd turns into an angry mob, and begins chasing the server throughout the stadium. He finally seeks refuge in a cab outside the venue, and continues to drink his Heineken. The final scene shows the band taking the stage for the concert, only to reveal that the stadium is empty. The tag line is Heineken. Sounds Good. Heineken TV spot (Premature Poor) Appearing as part of a American television campaign, 2000: Agency: Lowe North America, New York Please see the file Heineken_premature_pour_North_America for a copy of this advertisement This 30 second commercial is set in a bar, a young guy spots a beautiful woman across a crowded bar. She gives him the eye while seductively pouring her beer. He tries to stay calm but pours too fast and spills beer all over the place. The tag line is Its all about the beer. The Value of Brands White Paper
July 31, 2002 2002 Tim Glowa -22-

Discussion
These three advertisements, from Asia, Europe and North America, clearly suggest that Heineken is unable (or unwilling) to communicate its brand in a single consistent fashion around the world. All three advertisements have different tag lines despite being produced in 1999 and 2000. Two of the advertisements (lights out and premature pour) appear consistent with the brand image strategy identified in the 1994 research report since they show fashionable people enjoying Heineken in comfortable, upscale surroundings. The Italian advertisement (concert mob), however, appears to be totally inconsistent with the core values of the brand. The beer is being consumed by the masses, the beverage is slurped and not savored, apparently becoming an essential part of social participation, rather than focusing on the self-esteem of the user. This is the positioning Heineken identified for standard beers.

Conclusion
This paper examined the importance of branding both to the consumer and to the firm. An added challenge for many producers is an understanding of the implications and strategy associated with global branding. After the basic concepts of branding were discussed, including elements of branding, brand strategy, branding commodities, the backlash against brands, and brand equity, this paper focused on a case produced by the Harvard Business School that examines the elements Heineken could use to develop a consistent global brand. The research available to Heineken suggests that there could be several advantages associated with creating a global brand, but a post case review of existing advertising from Heineken suggests creating a true consistent global brand may be more difficult than expected.