University of Chicago
Type of paper: Thesis/Dissertation Chapter
It’s true that Heineken, the brand that bear with it the name of its mother company, is the most popular beer today-upholding supremacy for a period spinning over a century now. In 1964, Gerard Adrian Heineken bought a brewing company called De Hooiberg thereby changing its name to Heineken, after his own name. In addition to Heineken, which account for 20% of the total sales, Heineken has 170 beer brands including Star, Ochota, Murphy, Moretti, Zywiec, Cruzcampo, Tiger, and Amstel.
In the advent of civilization and industrial revolution in the world, Heineken Company experienced expansive growth in terms of products, beer brands as well as venturing into other community development activities such as sponsoring sporting events. Meanwhile, the company expanded to become global brewer with tentacles extending to every corner of the world with such branches in Western Europe, Asia Pacific, Middle East, and Africa. Their key market areas today include, but not limited to, Germany, Spain, France and Italy.
Whilst the size and modus operandi of Heineken Company apparently demonstrate some kind of a monopolistic structure in the market, it is very clear that its market structure is perfect competition. Situational analysis of how Heineken has come to grow immensely over time clearly shows that Heineken Company has strictly prevailed through the waves of perfect competition only to emerge as a winner in the long run. In the present world of extreme competitive environment, Heineken Company has been denied a chance of enjoying monopolistic competition.
It is a common understanding that in monopolistic competition, there is only one supplier of a particular product in the available market thereby establishing its own stringent market rules with the consumers on the receiving end. The gains and pains of such a market structure culminate into a scenario where the seller grows to a greater extent at the expense of the suffering consumers. The major weakness of Heineken was the stiff competition that they faced among other national brands in the same market.
Whereas Heineken established licensing agreements with the local brewing companies which allowed them to maintain some influence in the market, such an influence remained to be very insignificant. Other breweries controlled their marketing efforts and prices thereby resulting in a real problem for Heineken in marketing its brands. Heineken’s marketing ambitions to global levels has specifically been restricted by increased globalization because other breweries have taken advantage of time and established their market bases leaving little or rather no room for any other competitor no matter how big they are.
Even in some markets Heineken’s brands are only seen as drinks appropriate for classified occasions and not common drinks for daily consumption by every Tom, Harry and Dick. Consequently, their marketing objectives to become a universal beer supplier have met significant barriers thereby causing them to rely on perpetual review of marketing policies and strategies. A number of marketing strategies are clearly manifested in the way Heineken Company achieved their enormous expansion since its foundation in the nineteenth century.
To start with, the extent to which innovation is applied in all the aspects of their product including packaging leaves successful marketing as the only option for the already gigantic seller. Also, they understand their consumers’ needs at various occasions, their taste, and their dislike. The marketing strategies which are carved on basis of innovation ideas generated from the understanding they have of their consumers, allows them to spread highly fine-tuned policies across the entire supply chain of their brands- right from the raw materials to the end product.
Whereas economic extremists may term this as brand narcissism, its cause and effects are justified without a query to the marketing team, vividly manifested by the fact that they have sustained themselves in the market for a long duration of time. The best example is shown by the fact that Heineken has used unique yeast for a long time in their fermentation thus giving every other of their brand a special taste to the consumer. Their quality is excellent and there is no debate about that.
There was a gain on the mutual fund portfolio of Heineken Company over the period of approximately one year from April, 2009 to April, 2010. In addition, whilst there was a decrease in consumption of their local beer between 2008 and 2009, there was significant increase in imported brands in the same time period. Their average decrease in beer consumption was 7 percent in that time period.
It is rational to assert that Heineken has enjoyed success in beer market over a tremendously long time period. In the meantime, they have had to strengthen their marketing efforts through applying such strategies as ensuring unique taste and quality of the product, price control as well as increasing their coverage (Heineken International, 2005). However the current stiff competition in the market has kept them at an extreme edge leading to a situation where they have to look for better strategies to maintain themselves in the market.