Heineken Case Study

The United States beer industry represents 233 million hectoliters of the worlds 1,501 million hectoliters and is a dynamic part of the United States national economy, contributing billions of dollars in wages and taxes. Within the U.S., the beer market accounts for nearly 50% of total volume of alcohol, with the import specialty and light beer segments driving growth. Heineken was established in the United States in 1863 and in a short time it became the worlds largest brewer with 116.8 million barrels of beer sold. Heinekens number one position depends on the number of markets they are present with their products. Local markets are important but the international markets will provide more opportunities to grow. Exporting beer continues to boost year after year. In 2006 the increase was over 18% compared to 2005. The United States exported approximately 34.4 million hectoliters of beer in 2006 compared to 29.9 million hectoliters in 2005. Heineken expands constantly and recently has purchased Hartin, 4th largest brewer in China, and invested $33M in convertible bond of Tsing Tao Brewery. Heinekens partnership with Budweiser in Italy allowed Budweiser to brew, market, and distribute Heineken and make use of Budweisers distribution network in Europe. Heineken has been the most successful beer company in Europe and the rest of the world due mostly to the quality of their product, their marketing/advertising and their sponsorship ability. They sponsor annually the biggest sporting event, which is the Champions League (a soccer tournament) in Europe. With games shown across the world every two weeks, Heineken has been their main sponsor for numerous years. The frequency and reach they achieve through the tournament is to die for and marketers dream since the tournament is played for nine months out of the year. Language and culture are problematic issues when it comes to international marketing. When a company enters the global markets it has to deal with many issues, which do not exist when it comes to the local market. Language is one of the problems and is always a challenge. Even though English is spoken around the world in most cases it cannot be used as a language for international campaign. Therefore the translation of the campaign into the foreign language is very important. Some English words do not have corresponding words in most foreign languages so there are issues with exact translation. It may take more words to present the same message in a different language. That might be problem especially for campaigns that use very few words in its original version because instead of one or two words there is a whole sentence that has to be used. Some words have different emotional meaning than the same words in the other language. An emotional message that the advertising campaign is based on might be lost in translation and get a different meaning or unwanted effect on the other market. Slang words that are used in American ads

might be very hard or impossible to translate into a foreign language because they do not mean the same thing or dont exist in different languages. For example, the very successful Whats up campaign used by Heinekens competitor Budweiser, most likely couldnt be used for global markets. Yet, another problem arises when a language has regional variations. A good example is the Chinese language that has several different variations with Mandarin, Wu, Min, and Cantonese being the most popular. A campaign has to be translated into all variations otherwise the advertising will not address all consumers of the target market. Generally, language and culture issues associated with global campaigns are very important and companies need to be very cautious when dealing with such matters. Incorrect translation might not only reduce the success of the entire campaign but also be a reason of embarrassment for the entire company. Finally the language choice can affect the names of products or services. Wrong translation might create hidden messages and humor that are not intended for a particular campaign. Market analysis, positioning and budget determination do not differ greatly from home market situations with the exceptions that market research is often difficult to gather and fluctuation exchange rates affect the amount of money available for buying media and influence the best timing for purchases. There is not a medium that is considered a real global media. Carrying commercial messages to international audiences may require dealing with numerous media outlets in different regions and this of course has an effect on the campaign budget depending on how many outlets the company decides to contract for business. Heineken mostly relies on the success of its sponsorship of the Champions League tournament for exposure overseas. They cannot depend on such a powerful outlet in North and South America because not many people in the region are paying attention to that sporting event. The company has to gear up for a new campaign for this part of the world, and thats when budgeting of the campaign and communication to the target audience become the main priority of the campaign. Selecting media in a foreign market is always challenging and dealing with inconsistent media is typical of international marketing. In some countries, government regulations may make some media inaccessible. Media audience figures are not always accurate and reliable sometimes on a foreign market and limited media means limited product coverage. All these are obstacles that have an effect on a foreign campaign and also on the campaign budget. Global distribution channels vary in general because everyone is trying to discover a way to make money without getting the flow of current distribution channels. Each channel is a very important chapter in the process of the global channel in order for the world to obtain some type of harmony within the distributing between the channels. Marketing across cultures can be done exploiting the "economics of simplicity" with standardized products, packaging, and communication. Global brands become symbols of cultural ideals; therefore, transnational companies have to offer high-value products that deliver the cultural myths consumers are looking for. The Global Brands Studies found consumers associate global brands with three characteristics (quality signal, global myth, and social responsibility), which are used to evaluate them when making purchase decisions. Global consumers are segmented into four categories: global citizens, global dreamers, anti-global, and global agnostics. "The Globalization of Markets," that a global market for uniform products and services had emerged. Branding, managers

interpreted ideas to mean that transnational companies should standardize products, packaging, and communication to achieve a least-common-denominator positioning that would be effective across cultures. From that common sense standpoint, global branding was only about saving costs and ensuring consistent customer communication. In 1991 managers at Heineken headquarters were concerned that Heinekens brand image was being consistently projected so they began advertising, but particular in the larger markets. In 1992 managers started an international advertising campaign commissioned eight countries to figure out what made the male beer drinker come alive when it came down to the taste of his beer. Both projects has good taste image based core brand vales which were quite similar in both project such as taste, preciousness, tradition, winning spirit and lastly friendship World of Heineken is a diverse world of customers and employees who span the globe and represent different cultures, customs, professions and interests. They have widely differing tastes and many different reasons for getting together to enjoy their Heineken beer. It's an attitude shared by our people. Heineken's employees and associates are as culturally diverse as our customers but they all share a common belief in the quality of our products. And they know that when the quality is good, then everyone Heineken people and Heineken customers alike will have positive attitudes toward the company and its products believe that fulfilling these values includes being a responsible company. Through advertising, marketing and all of our activities, we are dedicated to the quality and integrity of our products. To conclude, Heineken has a lot of opportunities to grow even more and become the most successful global brewery if they play their cards right. The key success why Heineken has done well in their global markets is because the company do their research to understand the culture and language of the country. Heineken should always use their created to gain strength in order to find and seize opportunities, but always with expertise, respect and patience or else these opportunities might lead to threats which will become bigger and bigger and finally can be called a weakness.