Heineken Market Research: Case Study

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Introduction

Heineken is among the leading brewing corporations within the global beer sector. The company supplies its products worldwide with the main brewery operating from Europe. It has networks distributed across the world, including the United States. The company recently introduced the Heineken Premium that has brought a new dimension within the beer industry on the U.S. market. Heineken employs a comprehensive marketing strategy in the United States. For example, the introduction of Heineken Premium has been followed by the re-position of the other beer products, such as Amstel Light, providing consumers with some level of comfort increasing the brand’s popularity in the global market. Heineken has operated in the United States for the last two decades using a subsidiary company. The company is located in New York City where is produces different types of beers, such as Heineken Light, Heineken Lager, Amstel Light, and Tecate Light. Heineken has entered the US markets and employed comprehensive marketing strategies to reach many consumers and expand its market share in the country.

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Target Customers

The highest percentage of beer consumers in the United States market includes the young and middle-aged groups since the aging population tends to shift their taste to drinking wine. Heineken has conducted extensive research about the US beer market and identified young adults and middle individuals as its target consumers (Fromm, 2015). Among other customers, there are young women who prefer mixed drinks. Heineken’s current strategies are to rebrand to reach every population segment, such as offering off-premise consumption that is appealing to the target population. Recently, the company has introduced several brands in the U.S. market, and many consumers consider Heineken products to be of high quality (McCarthy, 2017). Most of Heineken’s brands have started attracting new customers meaning that the firm should continue increasing its marketing investments and campaigns.

Currently, Heineken is one of the leading importers of beer in the country and is primed to continue growing. Reports by Gallop indicate that majority of Americans prefer drinking beer over strong drinks. Recent surveys suggest that approximately 64% of Americans drink beer, and their frequency of drinking beer has significantly increased over the last decade (McCarthy, 2017). Americans who drink beer, on average, consume 4.5 drinks per week, which is attributed to the fact that beer boosts an individual’s health. Reports from 2010 indicate that around 41% of Americans prefer beer, 33% wine, and 23% liquor, illustrating the significant rise in beer consumption in the United States (McCarthy, 2017). Drinking habits of the U.S. population differ depending on people’s income – 82% of high-income earners consume beer equated to 44% of low-income earners. Further studies indicate that most of the beer consumers in the country tend to shift preferences from beer to wine as they get older. According to McCarthy (2017), the majority of American adults consume alcohol at least occasionally. Heineken uses these statistics to understand the U.S. beer market.

The company utilizes entertainment sponsorships agreements, such as soccer, to reach millennials. Evans (2019) illustrates that Heineken, as a global beer brand, invests heavily in soccer in the United States. The author ranks Heineken as the second in the world, but its United States’ market is still limited with a market share of 3.5% (Evans, 2019). Heineken and its subsidiary brands are implementing a more targeted strategy for sports marketing. The company is partnering with the top United States soccer leagues and has also identified more individual teams as potential consumers. Currently, it has partnerships and sponsorship agreements with 12 MLS teams and is the foundational partner with sides, such as Inter Miami, LAFC, and Atlanta United (Evans, 2019). The company has developed a substantial market share and a high potential for expansion by having local team connections to communities. Heineken hopes to expand its U.S. market share as sports grow in the country.

Reasons for the Target Segment Within the United States

Heineken, as noted above, targets young adults and middle-aged consumers, as well as female consumers whose number of beer drinkers has been increasing over the last few years. The company marks individuals mostly living in town centers since it considers them as upgraded beer drinkers. In the United States, most urban-dwelling youths are heavy drinkers and are considered risk-takers. The company has identified theatre as a marketing strategy that targets young individuals that like live performance events. Young adults residing in urban areas are considered to be lavish and prefer luxurious products. Heineken has conducted comprehensive market research to identify the requirements and needs of its target customers. It operates in a highly competitive market and thus requires constant modification of both products and marketing strategies through virtual operations of outlined supply chains. The company has developed distribution channels that enable it to respond quickly and efficiently to fluctuating market demand and consumer needs with minimal losses. Hence, Heineken continues to adopt changes that match the trend’s consumers and market demands in a highly competitive business environment.

Heineken Beer Use Within Domestic Settings

The rate of beer consumption in the United States has declined by approximately 5 percent. Many alcohol consumers in the country are now more focused on health and wellness and have raised their concerns regarding the lack of quality beer, wine, and liquor with good tastes. The decline in beer consumption has resulted in the increased demand for pricey alcohol, whereas those still drinking beer are going for premium options. The company plans to introduce Heineken 0.0 that is a zero-alcohol product with many health benefits and flavors. Heineken hopes that this new drink will attract more American customers. The corporation designed the non-alcoholic product to appeal to people who love the taste of beer and drink it from time to time. Hence, the firm could attract more beer consumers and increase its market share among drinkers who are more health-conscious.

The United States beer market is becoming more competitive due to the high number of brewers in the country. There are many beer options for drinkers who can understandably select from many types of beers (Jacobsen, 2019). Heineken has made efforts in recognizing the evolution of beer drinkers in the country and developing products that meet its target market’s needs (Jacobsen, 2019). Heineken US is increasing its investments towards meeting these needs by producing healthy, non-alcoholic drinks that appeal to many Americans. Heineken faces a considerable challenge of bridging the gap between its beer products and those of competitors who sell beer, wines, and spirits. As the firm invests in strengthening its position in the United States beer market, it has embarked on campaigns targeting specific beer drinkers.

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Consumer Attitude Towards Heineken And Other Competing Brands

The beer industry is highly competitive and concentrated in the United States. According to Spáčil and Teichmannová (2016), businesses should be conscious of consumer experiences and attitudes that build trust and loyalty and maintain a sustainable competitive advantage. Heineken’s main competitors include AB InBev, United Breweries, Boston Beer, Carlsberg Group, and the Sierra Nevada. Heineken beer remains among the top demanded imported beers in the country and aims to increase its marketing strategies to strengthen the connections with consumers.

Promotional Platforms Which Could be Used to Launch the Beer in New Markets

Heineken could apply different promotional platforms to launch its beer in new markets across the United States. The firm should focus on marketing research, focus groups, and confirming brand recognition. The marketing strategy should be based on the quality of the product, as well as feedback from clients. The primary objective should be to reach as many potential customers as possible; therefore, it can use social media, sports events, and influencers (Evans, 2019). Digital marketing is one of the most effective marketing methods due to its capacity to cover a wider area. Heineken can use websites to search engine and social media marketing. Digital marketing tools have evolved rapidly facilitated by technological advances creating a cheap and wide-reach approach to marketing products, ideas, and services. The fundamental objective of using these methods is to communicate, compete, and convince consumers. Heineken can ensure they make good use of digital marketing strategies by providing information that is concise, accurate, useful, and truthful.

Heineken continues to utilize different campaigns to expand its market share across the United States. For example, in 2018, the company launched a new campaign for its flagship Heineken brand and replaced its iconic “Most Interesting Man” campaign. The firm launched a new promotion campaign in the U.S. for its Mexico-based Tecate brand. Its latest campaign efforts are intended to create emotional attitudes in the company and re-establish drinking beer on special occasions that are currently dominated by wine and liquor (Cardona, 2018). The new marketing strategies also involve sponsoring soccer due to the firm’s connection with the sport globally (Evans, 2019). Currently, there have been increased growth rates in penetration, engagement, and interest in sports in the United States, identifying sporting events as potential avenues for reaching potential customers (Cardona, 2018). The organization has a clear and long-term vision for soccer in the country and has made significant progress since 2018. Therefore, the company’s focus on using sports for marketing can potentially grow its overall market share across the United States.

Heineken Current Situation

Heineken has failed to establish a well-recognized brewery in the United States; instead, the company imports its beers to the country. The corporation should consider setting up a brewery in the United States, which can increase its sales. It should use Foreign Direct Investment (FDI) to penetrate the U.S. market to help American consumers to understand that there is no difference between local beers and those from the Netherlands. Implementation of the FDI strategy would be beneficial to the company. However, there are potential risks that can be addressed using positive marketing and pricing. The adoption of the FDI method would require the brand to switch its distribution channel that could potentially fail. Therefore, Heineken can apply reasonable pricing; for example, it can start by maintaining the imported beer then start producing it in small volumes in the U.S. brewery. The firm could price the imported beer higher than those locally manufactured, which will attract customers towards Heineken beers produced in the country.

Heineken has faced many setbacks in its efforts to penetrate the U.S. market mainly due to limited brand recognition by Americans. Therefore, it can create a positive perception among American drinkers by establishing a brewery in the country and using marketing strategies that change consumer attitudes. The company can apply common marketing strategies, such as blind tasting, to avoid creating any preconceived perceptions based on their knowledge about Heineken beers. The main goal, in this case, is to employ the right marketing approaches to reach and attract more consumers.

Conclusion

Heineken is a multinational beer company operating in many parts of the world. Over recent years, it has increased its efforts towards expanding its market share in the United States. It has introduced several brands such as Heineken Premium and Heineken Light, as it strives to dominate the U.S. market. Heineken faces intense rivalry from already established beer brands, wine, and liquor companies across the country. The company is investing in different marketing strategies, such as sponsoring sporting events to penetrate the U.S. market. Its market targets include young adults and middle-aged male and female customers. The company also targets young adults residing in urban areas, which constitute a high percentage of the total number of drinkers in the United States. Overall, Heineken only holds a small portion of the beer market in the country due to high competition by well-established companies.

Recommendation

Heineken has been struggling to establish a robust market share, customer trust, and loyalty in the United States. The company is well-established in other parts of the world, especially in Europe. The U.S. beer market remains one of the largest globally, and thus, the firm should increase its investments in marketing campaigns to attract more customers. It should increase its investment efforts through sponsoring entertainment events ranging from sports to live music concerts (Evans, 2019). In Europe, it has a strong sponsorship agreement with the UEFA Champions League that is viewed by millions of people worldwide. The company should also increase marketing efforts to concentrate on lighter, healthier alternatives, such as Heineken Light. The percentage of American beer drinkers has declined as more people become conscious of their health. Therefore, they are reducing the rates of beer consumption and switching to liquor and wine that they consider to be healthier. Heineken should target more customers using its Heineken Light and other nonalcoholic drinks that most Americans believe to be healthier.

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Most of the American beer drinkers are young adults and millennials. Therefore, the company should focus on young drinkers by creating a more youthful brand (Fromm, 2015). The firm should consider expanding to the wine market due to the decline in the beer industry in the United States. Many Americans are switching to drinking wine, especially as they get older; hence, Heineken could venture into new markets. Entering the wine sector would require the reuse of old Heineken tactics to capture small markets comprised of older adults in the wine industry. It should also employ a vast amount of capital at its disposal to venture into the wine market. Overall, it should adapt to survive in the highly competitive U.S. market by losing old ways and focusing on the trends and demand change in new markets.

References

Cardona, M. (2018). New campaigns, sports sponsorships on tap at Heineken. CMO.adobe.com. Web.

Evans, P. (2019). Heineken brands build U.S. sports strategy with focused increments. Front Office Sports. Web.

Fromm, J. (2015). Strategies that Heineken, Budweiser, and other beer brands are using to target millennial men. Bizjournals.com. Web.

Jacobsen, J. (2019). Heineken USA innovates beers for the what and how. Bevindustry.com. Web.

McCarthy, J. (2017). Beer remains the preferred alcoholic beverage in the U.S. Gallup.com. Web.

Spáčil, V., & Teichmannová, A. (2016). Intergenerational analysis of consumer behavior on the beer market. Procedia-Social and Behavioral Sciences, 220, 487-495. Web.

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