Heineken according to Data monitor (2009) is one of the leading beer brewers in the world with portfolios of beer brands and operates in almost all the continents of the world and with its headquarters in Amsterdam, Netherlands. However, this report tries to critically evaluate Heineken's brand value, image and effectiveness so as to determine its strength and weaknesses. The analysis of the product range and intended target market will be done as well and finally, a recommendation on how to improve on or sustain their competitive advantage over their competitors will be made also.
Heineken is one of the greatest beers in the world and it is also available in almost every part of the world. The brand name 'Heineken' is derived from the founding father (Adrian Gerard Heineken) and it is the most valuable international premium beer brand in the world. Heineken has over 200 beer brands and ciders around the world some of which are Amstel, Cruz campo, Tiger, star, Murphy, Birr amoretti, Ochota, Fosters, Newcastle brown Ale, Strongbow, Primus, Sagres, Zywiec, and Heineken beer, the principle beer or the master brand. (www.ft.com)
The history of Heineken is dated back to 1864 in Amsterdam when Adrian Gerard Heineken acquired a small brewery in Amsterdam, Holland. In 2009, the number Heineken staff totalled 56,208.
Heineken has 125 breweries situated in 70 countries of the world. The Group's international business is expanding through its master brand Heineken. However, according to www.ft.com Heineken on 29th August, 2008, acquired 96.54% of beverage division of Eichhof Holding AG in Switzerland. Moreover, in 7th December, 2009, Heineken had announced proposed acquisitions of Asian Pacific Breweries (Aurangabad) Pte Ltd and Asian Pacific Breweries-Pearl Ltd with a total transactional value of 37.46 million.
In the world of brew, according to www.brandchannel.com brand culture has shaped consumer loyalty. The most important brand strategy of Heineken which has differentiated it from the competitors is the internationalization and leveraging of the company's name, that is, using the name Heineken as both the company's corporate name and also its mainstream beer label. The branding strategic approach adopted by Heineken has been consistent in branding itself as a premium brand internationally.
The Heineken brand alone has a higher margin over its competitors in the same industry for example; Interbrew the makers of Stella Artois, Labatt blue and Hoegaarden. According to brandchannel.com, Vrijenhoak the spokeswoman for Heineken stated thus, 'in countries where we are striving for segment leadership the leading role is set aside wholly and completely for Heineken brand', However, Heineken has been a benchmark for other companies in the same industries to rate their performances. Heineken is well recognised better as a global brand in terms of mainstream product and company name but its competitors for instance Interbrew strongly believe in the power of brand portfolios because it has been demonstrated that a strong brand portfolio will beat single brands in a highly competitive marketplace globally.www.brandchannel.com.
It is worthy to note that out of the total beer brands imported in USA, Heineken is number two and has accounted for 25% and which is growing at a compound rate of 11% for the past three years, but then four of the ten top brands imported in USA belonged to Interbrew and it is growing at a compound rate of 17% per year.(Labatt blue number 3, Becks number 4,Tecate number 5,Bass number 8 and Rolling rock is the second largest domestic speciality) overall Heineken premium volume i8n hectolitres stands at 5.2 million while Interbrew brand portfolios premium volume in hectolitres is 6.5 million.
However, with the optimal combinations and delivering of the above functions, Heineken has created brand value in the beer industry not only in product but also in corporate branding as well. Though ranked 99th position in 2004 top 100 global brands organised by renowned branding consultancy firm Interbrand, Business week maintains that Heineken is still the leading international beer.(www.businessweek.com) and also Nick Bevan of Deutsche Bank Securities rated Heineken stock as a 'must buy stock'.
This means the distinctive position that a brand adopts in its competitive environment to ensure that individuals in its target market can tell the brand apart from others(competitors) and this involves the careful and optimum combinations of all the aspects of marketing mix. However, Keller (2006) explains competitive frame of reference as the associations that consumers use to evaluate points of parity and points of difference. Heineken's brand associations include but not limited to the following: sports, international, aggressive, innovation, quality, cool, competitions, winning, expensive, speciality beer. Basically, brands has many associations but about 3 to 5 according to Keller (2006), are the main drivers of the brand equity. However, the core associations for Heineken may include quality, innovations, sports, joy, maximum satisfaction, and international and if it is compared with competitor Interbrew, the points of parity may include quality, innovation, but the points of difference will be sports.
The Heineken risk management and control systems are aimed at a reasonable level of assurance, that the risks of the Company are identified and managed and that the operational and financial objectives are met, in compliance with applicable laws and regulations. A system of controls to ensure adequate financial reporting is included and by managing these risks Heineken strives to be a sustainable and performance-driven company. Heineken's internal control system is based on the COSO Internal Control Framework. www.heinekeninternetional.com
iv. the final stage according to Keller(2006) is the measurement of shareholder value which includes stock price, price earnings ratio and market capitalisation. "Our clear understanding of markets and consumers combined with strong brands and early investment in our business have helped us deliver another year of outstanding growth", Tom de Man (president of Heineken Africa and Middle East) www.heinekeninternational.com. The stock price of Heineken as today stands at 34.52 with a percentage change of +0.97 and this shows a good stock increase.
Net profit (beia) In millions of Euro.
On 31 December 2008, there were 489,974,594 shares of 1.60 nominal value in issue. At a year-end price of 21.90 on 31 December 2008, the market capitalisation of Heineken N.V. on the balance sheet date was 10.7 billion. Year-end price=21.90 31 December 2008High=44.03 4 January 2008Low=19.68 5 December 2008
Brand image has been variously defined as "the set of beliefs held about a particular brand" (Kotler, 1988) or "a set of associations, usually organized in some meaningful way" (Aaker, 1992). however the "brand" is often regarded as separate from the functional product, with the brand causing to grow together with advertising, in essence completing the transformational process from functional product to immortal brand. (Kim 1990) opines that "a product is a physical thing...a brand has no tangible, physical, or functional properties...Yet it is just as real as the product. Disembodied, abstract, ephemeral...it exists like a myth in the imagination of the consumer". An important statement of Cornelissen and Thorpe (2002) quoted in the book of Dolphin (2004) said that image is a firm's or products entire representation of past reputation established over a long period of time. It is worthy to note that the image Heineken enjoys now was built for over 140 years ago and has remained consistent. Heineken has not only built a brand identity but has created an image in the hearts and heads of the consumers. www.modernmind.com also described brand image as including colour, name, identity, symbol, logo, trademark, physical design element and visual associations which is arranged in a meaningful way and carries emotional link between the customers and the organisation. The chief executive of the board of Heineken, Jean-Francois Van Boxmeer however, said that "I believe that thecombination of our actions, our commitments and our people will ensure that Heineken will emerge as an even stronger and more competitive company."www.annualreport.heineken.com/report_of_the_executive_board/chief_executives_statement/index.html. Moreover, Lynn Raynault, of www.wate.com. He said that initiative and innovative spirit brought to Heineken by Alfred Heineken was what helped drive Heineken to its current status as the top three global beer brands.
The world of Heineken is a world of authenticity and quality, its traditional elaborations has produced an exceptional taste, aroma, colour and clarity for more than 135 years and this is an achievement reached through being true to their values www.festivals.doubleyou.com/2002/heineken/. Moreover, their interactive advertising campaign has captured this philosophy and their focus is as original as it is personal. In most of the African countries, Heineken as a premium beer remains in the consumers mind not just as a status brand showing a level of achievement, but also as a special occasion brand meant for special weddings and special formal celebrations. Heineken brand's organisation perspective had always focused on the associations of their values, programs, people and culture and at Heineken, leadership, innovation, customer focus and overall quality are all priorities. According to Aaker (1996), he opined that it is much easier to copy a product than to duplicate an organisation that has unique values, programs and people.
According to Aaker (1997), brand personality is simply the human characteristics associated with a brand. Also a brand is certain of maintaining a high, relationship with the customers, and in turn generates a higher Return on Investment (ROI) when customers can attach all the associations to the brand. Image according to Logan (2008) takes time to establish in the minds of the consumers, but they are very easy to destroy. The image of Heineken is associated with the following; quality, value maximisation, celebration of sports, international, and environmental compliance. Heineken has contradicted Martinez et al (2004) when he says that "brand extension dilutes brand image of a product". Meenaghan (1995) stated that advertising plays a major role brand image development, whether at corporate retail or product level. However, this strap line of advert campaign "...refreshes the parts other beers cannot reach" was a famous advert especially in UK and has helped in improving the brand image in the UK.www.brandrepublic.com, they also stated that the advertising account of Heineken globally was 70 million. Heineken's chief executive also stated that the Heineken's strategic goal was to defend and strengthen its leading global market position and preserve its independence at all times. (www.heinekeninternational.com)
Product range and intended market
The rapid increase of products has necessitated greater choice and selection by consumers, however, consumers now have a wide varieties of choices to make and this is the reason for branded products.(Doyle 1989). In his book also, he maintained that a successful brand is one which consumers want to buy and the retailers also would want to stock it. Heineken has varieties of beers readily available in the market, some of the products in France alone for example are Heineken, Adelscott, Amstel, Buckler, Desperados, Dorelei, "33" Export, Fisher tradition, Kriska, Murphy's Irish Stout, Pelforth, St. Ome. Heineken has different beer brand in different countries but Heineken is the main brand and is available in all the countries they operate. Heineken has maintained presence in over 170 countries of the world through its own breweries, export and licensing partners. www.heinekeninternational.com. Heineken's intended target market comprises of 18 to 26 year old young affluent male customers
Ford (2005) however maintained that the most effective way in creating brand success that meets customer needs is by specialisation and Heineken Europe's number 1 beer maker specialised in premium beer.www.brandchannel.com
Some of the products range of Heineken.
A quite number of models or metrics have been put up to measure the effectiveness of brand. However, Interbrand a renowned brand consulting firm based in UK outlined five approaches.
Boonghee Yoo and Naven Donthu (2000) also defined brand equity as the incremental value of a product due to the brand. Let us consider the brand equity model by David Aaker(2003) which are the following-:
Brand Awareness:-this is all about building awareness and the attraction of the consumers by the brand according to Aaker(2003). However, Chernatony and Macdonald(2002) opines that for a brand to be purchased it have a physical presence and people are psychologically aware of the existence of the product. Awareness and familiarisation are important elements for consumers to identify a brand in the product categories. Heineken has over the years embarked on intensive advertising and communication strategy that has helped in consolidating their brand awareness. Such strategy as sports sponsorship for example, EUFA champions league, African cup of nations, etc.
Brand Loyalty:- Aaker (2006) maintains that a loyalty customer base is a barrier to entry for competitors and possibly allowing the firm charge a premium price. A brand must enjoy loyalty from customers for it to be able to achieve a higher market share and profit. Due to the loyalty customers of Heineken, they could be able to maintain the no 1 beer producers in Europe and also no. 3 best beer in the world.www.mma.global.com. Heineken as a way of saying "thank you" to their loyal customers has put in place a lot of reward scheme for example, in 2008, Heineken distributed scratch cards to bar customers in which all of them have codes that needs to be sent through text messages and each code will participate in a draw to win prizes. However, whether the customer wins or not he receives a free WAP push instantly with the Heineken mobile agenda. The customer can browse champions league result offline or the customer can track it in Heineken's web page.
Perceived Quality:-here Aaker (2006) maintains that a brand perceived as quality product by consumers provides value to the firm by enhancing efficiency and effectiveness of their marketing programs, brand loyalty and charge price premium, and more importantly extend the brand and achieve competitive advantage. www.mediaweek.com, www.worldbeerreport.com have stated in their reports that Heineken has been in the forefront in providing quality beers to its customers.
Brand Associations:- this describes the feeling of the consumers towards a brand. Consumers feeling could be positive or negative. The ability of the consumer to make a re-purchase of the products depends on his feeling. However, a positive feeling towards a brand makes the consumer wanting to know more of the product, enhances the consumers chances of repurchase and increase the loyalty to the brand. In the world of brew, consumer loyalty is shaped by brand culture of which culture becomes increasingly a global trend and going global is key to growth.www.brandchannel.com. The Heineken's CEO and Chairman of the Executive board Karel Vuursteen said "Heineken is the leader in a specific beer market in virtually all segments with a portfolio of prominent brands. However, in specific markets where the approach is not feasible, Heineken aims towards segment leadership in which Heineken brand makes the leading brewery group in the premium segment. www.heinekeninternational.com
Even though Heineken has made a quite number of acquisitions and strategic alliances in so many parts of the world, it is a very good business strategy and I think Heineken should continue exploring the whole world in the same way until they have their presence in all the parts of the world.
The global alcoholic beverage industry is a multi-million dollar a year business, and like many other industries like car manufacturing industries, food manufacturing industries, non-alcoholic industries and so on, alcoholic beverage industries is seeing a growing and unprecedented shift away from mature markets for example, North America and Europe down to a newer developing regions like India, China, and Russia and Africa.
Www.businessweek.com. Heineken has seized this opportunity created in those emerging markets and has made a huge impact on consolidation. The latest of their several acquisitions in the emerging markets is the acquisitions of FEMSA breweries in Mexico which was announced on the 11th January 2010. The deal costing $7.7 billion according to www.bussinessweek.com will give Heineken one of only two beer makers in the Latin American region which is the world's fourth most profitable market and it will help in reducing Heineken's reliance in European market. Heineken has achieved its long standing image in the last 140 years of consistency and quality assurance. But as Urde, (2006) would put it, sustainable competitive advantage has become highly necessary, in order to achieve that, brands performance appraisal should always be carried out in relation to the brands loyalty, awareness, financial performance and leadership, image and position so as to ascertain the brands' effectiveness. This performance appraisal should not be a one-off activity. Keller and Richey (2006) stated that "what a company is and how it presents itself to the consumer are defined by its corporate brand personality". They explained corporate brand personality to mean a form of brand personality specific to a corporate brand. More so, in the journals of Omar and Williams (2005) corporate reputations in terms of past actions were defined as " a set of economic and non economic attributes ascribed to a firm and inferred from the firm's past behaviour". However corporate reputations which Heineken is enjoying have provided them with competitive advantages.
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