Introduction and brief history

Introduction Heineken International is a Dutch brewing company, founded in 1864 by Gerard Adriaan Heineken in Amsterdam. As of 2007, Heineken owns over 119 breweries in more than 65 countriesand employs approximately 54,004 people. It brews and sells more than 170 international premium, regional, local and specialty beers, including Cruzcampo, Tiger Beer, Żywiec, Starobrno, Zagorka, Birra Moretti, Ochota, Murphy’s, Star and of course Heineken Pilsener. Heineken claims that the original Heineken recipe has not changed since the beer was first produced nearly 150 years ago. With an annual beer production of 139.2 million hectoliters, Heineken ranks as the third largest brewery in the world after SABMiller and InBev, based on revenue. Heineken’s Dutch breweries are located in Zoeterwoude, ‘s-Hertogenbosch and Wijlre. The original brewery in Amsterdam, closed in 1988, is preserved as a museum called Heineken Experience. Brief history The Heineken company was founded in 1864 when the 22-year-old Gerard Adriaan Heineken bought a brewery known as De Hooiberg (the haystack) in Amsterdam. In 1873 the brewery’s name changed to Heineken’s Bierbrouwerij Maatschappij (HBM), and opened a second brewery in Rotterdam in 1874. In 1886 Dr. H. Elion, a pupil of the French chemist Louis Pasteur, developed the “Heineken A-yeast” in the Heineken laboratory. This yeast is still the key ingredient of Heineken beer. In 1887 Heineken switched to the use of bottom-fermenting yeast. The founder’s son, Henry Pierre Heineken, managed the company from 1917 to 1940, and continued involvement with the company until 1951. During his tenure, Heineken developed techniques to maintain consistent beer quality during large-scale production. Henry Pierre’s son, Alfred Henry “Freddy” Heineken, started working at the company in 1940, and 1971 was appointed Chairman of the Executive Board. He was a powerful force behind Heineken’s continued global expansion, and while he retired from the Executive Board in 1989, he maintained involvement with the company until his death in 2002. After World War I, the company focused more and more on export. Three days after Prohibition ended in the United States, the first Heineken shipment landed as the first legal shipment of beer. From that day on, Heineken has remained one of the most successful imported beer brands in the United States. During this period, Heineken tried to increase its stock price by purchasing competing breweries and closing them down. After World War II, many small breweries were bought or closed. In 1968 Heineken merged with its biggest competitor, Amstel, and in 1975 opened a new brewery in Zoeterwoude. The Amstel brewery was closed in 1980, and its production moved to Zoeterwoude and Den Bosch.In 2003, Heineken Cold Filtered & Heineken Export was replaced by Heineken. Price There are three different approaches to set a price in a new region: Rigid cost-plus pricing: mostly used in countries where the company has no connections and experience. The price is just calculated by adding up the margins to the original price from when it left the production facility. Flexible cost-plus pricing: Mostly used in the same situation as the rigid cost-plus pricing. Difference: The flexible cost-plus method has the ability to cope with price variations, e.g. quantity discounts. Dynamic incremental pricing (also: penetration pricing or skimming pricing): The penetration pricing is about launching the product on a very low price to gain market share. The skimming pricing is the other way around. It is about starting with a very high price for the product to only get to the so-called early adopters at the high end of the market. These people want to have all new product and have the money for them. By using this method most of the development cost will be returned to investment very fast. This method is useful when the factory cannot product huge amounts of products and if you want to make people aware of the high product value. When looking at the prices for a six-pack of Heineken in the Netherlands and the USA, it is getting obvious that Heineken used the Skimming method in the United States. While the Dutch customers pay between €3,49 and €3,89 for a six-pack, US-American customers pay between $7,49 and $7,99 for the same amount. Since Heineken became very popular in the United States, Heineken never really lowered the price. In the annual report of Heineken from 2007 the market share of Heineken in the imported beer segment is stated with 39%. At the beginning, Heineken has identified itself as high-ranking beer line. It wanted to gain the first place for goods quality norms. Therefore, this required the researcher to set high prices for goods to compensate for the production expenses to achieve high quality and do expensive, money-consuming researches, designs and trials. And that is why researchers of Laser beer or Miller beer – Heineken’s competitive opponents used their knowledge about price and variety of goods of Heineken as a starting point for their price formation. Their goods along the lines of premium beer like Heineken so they were forced to set their prices on a level with Heineken’s one. In the world market in general and Vietnam market in particular , customers that Heineken targeted are those with income higher than the surface of the society . They are business people who are wealthy , successful and have glittering career . Most of them are in urban areas, almost in cities. Since the first day, Heineken has pricing strategies aimed at successful groups, but benefit of brands have changed to suit the movement in the needs of beer drinker. Then, the need of drinking beer in successful group had a shift from business relationships to enjoying life . So the basis for Heineken to successfully convince the whole market is the world's No. 1 beer And there are other parts also use mainly Heineken such as bars and discos . However, most of these parts are not regular customers and not much loyal to this brand. In Vietnam market nowadays, the price of a Heineken bottle is 15000 dong. Many people believe that the price of Heineken is so expensive, but there are ideas that such price is reasonable. On the regular price of Heineken in the Vietnamese market, experts have studied and offered prices depending on the target markets that Heineken producers wants to target, that are consumers with high income, so such price is in line with the target consumers. In other words, Heineken used high price to affirm the premier quality itself. So you can see, The quantity of Heineken sold fell 1.5 % per year , but revenue rose 3.7 % to a 14.3 trillion Euro (equivalent to 19.4 trillion dollars ; £ 12.6 trillion ). This can be explained that it has been turned into increase in production expenses which customershave to pay. According to Boxmeer, “cutting costs” , " setting high price " , and " branding power " are main motivations for enterprises to create competitive boost. Place ‘Place’ element of the marketing mix is the one being concerned with a range of methods of transferring and storing goods, and then making them accessible to the consumers. Delivering the right product to the proper place at the right time requires creation of a distribution system. Heineken was aware of the important significant of distribution channel so it invest approximately a fifth of the product’s cost goes for this system and multimedia. Heineken’s distribution system is covered all over the world. It consists of 2 types. The traditional one is off-premise: in restaurants, bars, clubs,… At bars and clubs, Heineken had the most second high profit in all beer lager after 9 months of the first release on the market. The modern one is on-premise: in shops, supermarket,…Heineken has a wide distribution channel: From big agencies to smaller ones. And it is one of the first brand using supermarkets to distribute its products. Moreover, Heineken is the pioneer in exportation in the 19 century. It became the earliest worldwide beer brand. Heineken applies the following global brand strategy: Our brand stradegy is to build a strong portfolio that combines the power of local and international brands and which has Heineken at its center. So, Heineken always promotes to cooperate with local firms. As a result, Heineken is a group which owns a worldwide portfolio of over 170 beer brand, mainly pale lager, thought some other beer styles are produced. In 2007, Heineken owns over 119 breweries in more than 65 countries and employs approximately 54004 people. With the distribution channel management, Heineken owns the safest wholesalers by traning course about stock control and products’s quality, all products are carefully preserved following standards before being transporting to retaling places. With retailers, Heineken needs diversly displaying in all types of product lines. In addition, staffs have to be professional, ready to help customers choose the best Heineken they want. Once again, the choice of convenient distribution methods depends greatly on present circumstances. When referring to ‘place’ marketer has to make decision on distribution channels and centers, transportation, warehousing, order processing, etc. Understanding of this particular element of the marketing mix can be obtained if giving answers to such questions as: Where do buyers search for your product or service? In what kind of stored do they look for the product? How can you contact the appropriate distribution channels? What do you competitors do, and how can you benefit from that? And this tool have made the most successful growth drivers for the Heineken brand across the business. Promotion Before getting a closer look into Heineken’ promotion, we must understand about promotion in Marketing Mix 4P in general. Promotion informs consumers about the rest of the marketing mix. Without it, consumers do not know about the product, the price, or the place. Promotion is more than just advertising, and it includes several activities. Promotion includes : - Advertising - Sales promotion - Personal selling - Public Relation Heineken is regconized worldwide for our amazing promotion activites. The most successful aspect to the public are Advertising and Puclic relation. On the field of advertising, with the history of 150 years, we have been building a culture of creativity. When Heineken began a truly effective global marketing strategy, we started with the first ever beer comercial in 1968. Then, “Refresh the parts other beers cannot reach” avertising campaign established in 1974 opened a golden age of Heineken advertisement. Our advertisments was always welcomed because of their simplicity and humorous yet still left a strong impression on costumers. For examples, some of the most well-known commercials ion we have to mention such as Oops!, Jenifer Aniston and especially Walk in fridge. The advertisment was first aired on 2009. The video reached over 13 millions view on Youtube for its amazing walk in fridge filled with beer which’s every man’s dream. With the unstopable growth of Internet, Heineken’re now quickly breaking away of traditinal beer advertising and bring it to where the consumer are: online. We launched the first video series in the “Open Your World” campaign, “The Entrance,” online, three months before the global rollout of the TV version and successfully reached 4 millions view. The recent videos like Departure Roulette, The Decison, or The Candidate have increased the interaction between consumers and the brand more than ever. They are made as the concept of a reality show which allow consumers to have interesting experience and win valuable prize like a free trip or a working position for Heineken. As in advertising, we always meet the trend of consumer in public relation. Heineken has been a sponsor for many sports events such as Heineken Cup, US Open, UEFA Champions League. Not just being a normal sponsor, we give consumer chances to take part in the event. Through competion on Youtube and Instagram, we have been giving away free tickets to these world-class events. At Heineken, we always want to bring joy to people. So that along with sports, we also sponsor many free music festival for the public. These concerts have attracted hundreds thousand of audience of all ages. In order to meet what the consumers want, we are always willing to hear from them through various ways such as Facebook, Twitter, Instagram. It’s the reason why we keep good relation with public over the years. Conclusion and recommedation Now, bring me to the end of our presentation. To sum up, our presentation has mentioned you four main points. They are: product, price, place and promotion of Heineken marketing strategy. In Conclusion,since its foundation in 1873 until now,Heineken brand has always been considered being synonymous with quality, not only in taste but in the business relationships, at work and in the progressive ideas . One of the other important values expressed by the desire to learn new experiences, confidence, competence and stylish. This is the most important factor contributing to locate and distinguish Heineken brand in the market. - A number of recommendations for the Heineken beer marketing strategy We can say that heineken marketing was successful in all aspects and hopefully it will continue to make great advertising and getting the audience's favorite * For marketing ideas : Continue to promote the idea of marketing is very unique , very creative in a unique style of " Heineken " . * In advertising images : • Investment in brand image. Pictures of the Heineken ad are appreciated . Therefore, Heineken should pay attention to promote these strengths. • To intensify the international marketing Heineken have sponsored for a lot of entertainments activities in the world. This strategy would bring the biggest strengths for Heineken brand name. I recommend Heineken should continue to pursue this strategy. • Continue to invite the world-famous actor in advertisements for Heineken ( 2 famous actors played for Heineken ad are actress Jennifer Aniston and Hollywood actor Brad Pitt ) due to the presence of his idols in the ad ,it will attract more fans watching their ads to increase the awareness of the public to received information . According to a research , there are many buyers because their idol is using that product, so this way can increase the company's sales * About advertising on television : • Should put more air time on television advertising , probably before a broadcast live football match , because the moment the audience watching television is mainly targets customers of Heineken . • More attention to the issue of religious and cultural traditions of each country where advertising because the intention of Heineken ads are usually made on an international aspect , therefore , this ad can be evaluated very good in one country but can be offensive to viewer in other countries. Reference http://www.slideshare.net/kevinam/hit-or-myth-the-real-story-behind-heinekens-famous- refreshes-the-parts-ad-campaign http://www.thedrum.com/news/2013/09/02/raised-world-heineken-brand- profile#HhpwR04RIowpAgGi.99 http://www.forbes.com/sites/marketshare/2011/06/22/heineken-breaks-from-traditional- advertising-makes-digital-core-of-new-campaign/