UNIVERSITY OF PORTSMOUTH

MARKETING & SALES SUBJECT GROUP

Digital MarketingStrategies

U22033, U22597

Heineken Envy Report

Unit Handbook2013/14

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Dr. Shalini RamlallDue Date: 10/01/2014

Table of Contents

1. Introduction.....................................32. Heineken Overview................................43. External Analysis................................4

3.1. PESTEL Analysis........................................43.2. Porter’s Five Forces.....................................4

4. Internal Analysis................................44.1. Segmentation, Targeting and Positioning.....................54.2. Marketing Mix........................................6

5. Description of digital marketing activities......75.1. Integration with the release of new James Bond film ‘Skyfall’........75.2. Targeting adventure-seeking men...........................75.3. Inpartnership with Google and Facebook on social sites...........85.4. In partnership with Weve to promote on mobile.................8

6. Evaluation.......................................87. Conclusion.......................................9Appendices.........................................10

Appendix A: PESTEL analysis.................................10

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Appendix B: Porter’s Five Forces..............................11

References.........................................12

Executive Summary

The report of Heineken Holding N.Vin terms of digitalmarketing activities comprises the six main sections.

Section 1: Briefs concerns related digital marketing andthe aim of the report.

Section 2: Introduces the overall operations of the brandand states reasons for Heineken selection.

Section 3: Analyses the external environment thatinfluences the brand performance in two types of modelPESTEL and Porter’s the Five Forces.

Section 4: Identify the internal environment that thebusiness operates. Segmentation, targeting andpositioning defines the orientation and objectives of thebrand while the 4P’s indicates virtual practices.

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Section 5: Describes Heineken digital marketingactivities with examples from its campaigns andstrategies with partners.

Section 6: Evaluates its digital marketing activities.

1.Introduction

Digital marketing is emerging in the light of advancetechnology and gradually has proved its role in modernmarketing communications thanks to the explosion ofbroadband accessibility. In a mix of platforms(television, mobile, web, game, etc.) and social channels(social network, blogging, user-generated video and soon) the business is challenging to select the mostcompelling mix that can executive marketing goals and

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fits with targeted audiences to achieve its objectives.The purpose of this report is to looking at Heineken asthe player in digital marketing in an attempt to providecommentary and assessment on its performance.

2.Heineken Overview

Heineken Holding N.V heads the Heineken group withoperations in over 70 countries. Heineken owns theworld’s most outstanding portfolios of beer brands and isthe world’s third-largest brewer by volume, followingAnheuser-Busch InBev and SABMille. The Dutchoperates inregional-based involving Western Europe, Central andEastern Europe, Africa and the Middle East, the Americasand Asia Pacific (Heineken NV).The reason for choosing Heineken as the objective of thereport firstly is that Heineken is the most dynamic andfast-moving brewer in its industry with a number of beercampaigns throughout the recent years and operating inmany markets. Secondly, their marketing activities isexposed in multiple media platforms, overwhelmingaudiences in many approaches. Thirdly, as the vibrantbrand, Heineken is reviewed in many different aspects byspecialists in the market, which can enhance deeperassessment and evaluation on its activities, benefitingfurther analysis on the brand.

3.External Analysis

3.1. PESTEL Analysis

PESTEL analysis consists of Political, Economic, Social,and Technological, Environmental and Legal analysis. Itis a part of the external analysis that gives a certainoverview of the different macro-environmental factorsthat the company has to take into consideration whenconducting a strategic analysis or doing market research.In Heineken’s management strategies, PESTEL analysis notonly defines what Heineken should do, but also accounts

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for organization’s goals and the strategies stringed tothem. (PESTEL analysis in Appendix A)

3.2. Porter’s Five Forces

Porter’s Five Forces tool was developed by Michael E. Porter in 1979 that analysis multiple aspects of the industry’s competitive structure and economic environment, including the bargaining power of buyers, the bargaining power of suppliers, the threat of new entrants, and thethreat of substituteproduct (MichaelPorter, 1979). Thistool is a simple butstrong tool forunderstanding wherepower lies in abusiness situation thathelps Heineken canidentify its ownstrengths andweaknesses in relation to its industry. (Porter’s Five Forces in Appendix B)

4.Internal Analysis

4.1. Segmentation, Targeting and Positioning

SegmentationDemographic segmentation allows the brewer to separatethe market into groups based on variables such as age,gender, income, lifestyles, etc (Kotler& Keller, 2012).Through focusing on the characteristics, needs andexpectations of variable groups Heineken is able to drawtheir attention and offerscompelling incentivestoengaging people with the brand.

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A practice for demographical segmentation in age istargeting older shoppers. The brewer has traditionallytargeted young drinkers (Heineken NV), nonetheless, asthe birth of a new category has not made an appeal inEurope market, it needs to marketing its brand to non-traditional audience.

TargetingHeineken predicts that the UK fastest increasing consumergroup is 60+ drinkers. As the group with inferioreconomic power, 60+ consumers prefer a premium experiencehence, Heineken has to look for insights to develop ideasand deliver relevant brands meeting their needs.

The strategy is supported by the release of the brand’s60+ Generation challenge with a documentary created tocelebrating the older generation by the usage ofcrowdsourcing platform the first time (Joseph, 2013).

PositioningWith absolute advantage of global and local beers andciders in all regions, Heineken has outperformed theglobal approach through marketing effectively and wellbrand management. The brewer is striking to upgrade itsglobal scale and continuously rolling out its globalpositioning in multiple markets in response to demand forpremium beer brands (Heineken NV).

Through ‘Open Your World’campaign Heineken aims toappeal consumers witheffective global marketingplatforms as well asexpanding its market sharein new markets. Thecampaign has developed aseries film ‘The Entrance’2010, ‘The Date’ 2011 and‘The Switch’ 2012 andbeing aired in more than30 countries. Aninteractive social media

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programfollowing ‘The Date’ was for creating personal‘Serenade’ to their date running on Facebook and YouTubeon Valentine’s Day attracting more than 1.7 millionconsumers (Joseph, 2012).

The brewer also focuses on sports and music in appealingyoung consumers. Besides that, design is to bepositioning as the third pillar of its strategy and playsthe role as the linkage between the brand and audience’sdigital conversations in the media and on blogs throughencouraging consumers across the globe to take part inHeineken Open Design Explorations, making the brewerstand out from other brewers.

4.2. Marketing Mix

ProductSummer 2012, Heineken kicked-off a new strategy toglobalize its premium world beer brands. The campaignstarted with Italian BirraMoretti beer after the brandsaw sales growing by 37% previous year in the UK andwould ran along with Tequila and Desperados. The brandwas ambitious to take market share away from wines andspirits. (Joseph, 2012).Facebook activity, UK music, sports festivals,sponsorship tie-ups and sales promotions would be runthroughout the campaign. The brewer was also look at global brands for local andregional beers including Forster’s,Sagres, Star inNigeria and Tiger in Asia in key markets (Wentz, 2013).

PriceThe Amsterdam-based brewer stated they would make somecutting on costs, debts and bolster prices of its majorbrands in the markets where suffered deterioratingmargins and high inflation but increasing its bottomline’s price. The brand expected to recovery profit andboost its sales after effects of global economicrecession. However, they did not provide in detail itscost-savings goals (Tartwijk, 2009).

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In terms of supply costs, Heineken rolled out a strategicinitiative to diminish commodity volatility caused byprice fluctuations in raw materials, fuels, gas andaluminum in an attempt to controlling commodity riskexposure. The brewer chose Triple Point’s SPP as itsprocurement solution that provides required functionalityto decrease overall commodity expenditure (Marketwired,2013)

PlacesThe Dutch brewer was in progressing the strategy toemulate the in-store experiences which makes emphasis onidentifying the most susceptible consumer group to in-store marketing, outlines things they could do to appealshoppers and eliminates obstacles slower lane those whomore likely tend to dwell at a venue. Heineken also looks to run its own store as a showcase inpurpose to deliver such things and immerse people in thebrand. The Star Retailing program has been rolled out onits websitesince 2012 to support independent retailersmerchandising alcohol products in-store (Joseph, 2012).

PromotionThe brand has employed a number of promotional tools suchas advertising, public relations, sponsorship, directmarketing and brand experiences to communicate with itscaptured audiences. The details of application of thesetools into Heineken marketing activities will be analyzedin the section five below.

5.Description ofdigitalmarketingactivities

5.1. Integration with therelease of new James Bondfilm ‘Skyfall’.

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The strategy is set in conjunction with its sponsorshiprenewal of the movie franchise simultaneouslyhighlighting the brand’s 15-year partnership with thefranchise. The movie trailer is attached with a socialmedia link to visit a Facebook app game ‘Crack the Case’.Heineken Spysight, a part of the campaign, is a mobileapp game which integrates mobile, gamification and GPSenables users join competitions on premise locations towin rewards including movie tickets and engaging withambassadors at the end of the contest.

Bondalso appears in a minute-long ad which is launchedglobally.His images are also printed on the Heinekenpackaging which is available on 12, 18 and 24 packs. Eachboxes includes a unique code that enables consumers enterfor a “1 in 007” chance to win a “Skyfall” movie ticket(Schultz, 2012).

5.2. Targeting adventure-seeking men

The new commercial from the brewer, calling ‘Dropped’ isa series of episodic adventures that captures adventurous21+ men to take part in a legendary travel experience tounknown locations with only basis supplies anddirections. Those who prefer to join in are required tosubmit a brief video making on everyday journey andupload it with #DROPPED on Twitter.

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The Heineken Dropped YouTube will enable viewers followeach voyage, access documentary–style content and givetheir own travel experiences. Heineken marketerssimultaneously present the trailer for the first episodeon its Facebook page with behind the scenes content.Broadcast, digital and mobile are integrated to deliverconsumers an immersive experience. Consumers who purchase Heineken limited packs launchedalong with the commercial can download the Heineken starapp. When the consumer scans any new star bottle they canunveil content and have a chance to win Heineken journeysacross the world (Irwin , 2013).

5.3. Inpartnership with Google and Facebook on social sites.

The co-operation worth multimillion euros is the firstdeal between Google and a major brand on digitaladvertising which operates on YouTube videos and mobileads, running in more than 20 markets across the globe.Through the implementation, Heineken will be accessibleto special consultancy, data and discounts from Googleand in return spending a minimum amount of adverting onGoogle’s site (Bradshaw, 2011). In partnership with Facebook, the brewer’s ambition is toenhance its communication strategy through sparkingdigital conversations and keeping a close connection withconsumers (Parsons, 2011).

5.4. In partnership with Weve to promoteon mobile.

Heineken and Weve(the mobile jointventure of EE, O2and Vodafone) arein the deal that

focus on promoting Bulmers, Strongbow and Foster viamobile. Weather and location targeted activity will beundertaken in on-trade locations to support for Forster’s

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while activities in sporting arenas will take place tosupport for Strongbow. Through the collaboration, the brewer makes emphasis onincreasing mobile investment in its marketing mix. Twopartners will conduct a research to assess mobile values,simultaneously tracking the effectiveness of channel onsales data (Smith, 2013).

6. Evaluation

Matt Lloyd, a business director at SMG, said: "The ability to message customers direct to their handset, andserve them bespoke communications based on precise location, time of day, and what they are doing, resonateswith the SMG philosophy of designing relevant, meaningfulhuman experiences.

7. Conclusion

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Appendices

Appendix A: PESTEL analysis

PoliticalIntroduced in 2008, the alcoholic duty escalator wasimposed at 2% above the rate of inflation. Furthermore,the UK already has some of the highest excise duty ratesin EU. The execution has triggered a surge in the priceof alcoholic drinks since 2009 (Wisson, 2013).In March 2013, (Seely, 2013) the Chancellor of Budget theLabour Government informed the escalator would apply toother alcoholic drinks but removes on beer alone that ledto a slight recovery in terms of on-trade beer and helpedHeineken and other brewers escape from falling volumesales.According to Mintel the Beer report 2013, the brewingindustry in recent years witnesses the development oflower alcohol drinks to take advantage of lower tax bandon beers. Heineken could expand their portfolios towardsadaptable with the new trend.

EconomicThe UK economy is considered to remain below pre-recession levels, consumers still likely stick with acautious discretionary spending along with growing costof alcoholic drinks that has exacerbated the influence ofprice on beers. As tax occupies two-thirds of a pint’s cost, buyers areputting off from pubs and tend to purchase more fromsupermarkets. A study by the Campaign for Real Ale(Camra) unveiled the number of pub visitors at least oncea week dropped by 22% in the past seven years with morethan 8000 pubs closed across the UK (BBC, 2012).These are challenges for Heineken to keep prices remainstable under taxes pressure as well as supporting forBritish local pubs as the brewer stated on itscommitment.

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SocialDemographic changes have happened rapidly in many regionsacross the world with the population is getting older.The number of 55+ people is forecasted occupying morethan half of the consumer spending growth in developedcountries, according to Boston Consulting Group (Joseph,2013). This might be a great opportunity for the brewerto capture them and boost its future sales.Issues related health is recently another concern, suchas abuse of alcohol and restricted age drinking. Eventhough consumers all are well aware of the point, theystill act as desired but would appreciate the warningsfrom the others. In response, the brand ran its firstglobal responsible drinking campaign and made emphasis onbuilding a long term sustainable business but not onexcessive consumption. The campaign is supported with thetrial of Easy Star bottle in smaller and lighter beer(Parsons, 2011).

TechnologicalLong lead-time is used to be the frequent problem inHeineken due to time-consumed forecasting anddistribution throughout the world. A new Internet basedsystem called Heineken Operational Planning System (HOPS)had been launched to connecting their partners to thecentral database, doing real-time forecasting,replenishment and ordering interaction with itsdistributors. The system has enables the brewer reduceorder cycle times from three months to four weeks. Beercan be produced closer to the delivering time andtherefore staying fresher when it reaches the consumers,simultaneously lowering inventory levels (Kim & Price,2006). In terms of marketing communications, Heineken has takenadvantage of the advance technology in launching theircampaigns with the support of multi media platforms suchas films, video, games, web site, mobile app and socialnetworks to engage with targeted audiences.

Environment

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As the consumer likely becomes more responsible forenvironment concerns, they tend to expect the businessacting in the same way. The brewer has employed Brewing aBetter Future approach to commit reducing total carbonfootprint (Heineken NV).In dealing with waste, the brewer works with its partnersto renew any products from its production process to anew supply chain. Take used grains from brewing forexample, they would be processed into cattle feed whileother forms are used as biofuel for electricity (HeinekenNV). It suggests that environment issues provide a bigopportunity for the brand promoting themselves as theworld greenest brewer.

LegalAfter the legislation for minimum alcohol pricing of 50pper unit has been passed by the Scottish Parliament inthe 2012 summer, the UK drinking operators have highlyconcerned with the similar proposal introduced in Englandand Wales. This has sparking the controversy with brewersclaiming for cost increases nearly three quarters of allalcohol products while healthorganisations warmlywelcoming.An announcement in July 2013 by the Government statedthat the proposal was in progress due to a lack ofevidence for reducing harmful drinking and affectingresponsible drinkers (Wisson, 2013). If the proposal ispassed, it might cause negative impacts on the Heinekenproduction, cost management and sales volume.

Appendix B: Porter’s Five Forces

The bargaining power of Suppliers:The three main purchasing costs for a brewer are rawmaterials, packaging and energy. The ingredientscomposited by water, barley, malt, hops and yeast aresupplied by farmers. As the number of raw materialssuppliers are many thus their power is low, however,agricultural products from the biofuels industry havecertain impacts on their input costs. Suppliers of glass

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bottles and energy that is limited in a few as the natureof goods can hold higher power in trade.

The bargaining power of Buyers:Large supermarkets with absolute advantage of sizeachieve economies of scale that lowers the average costper unit through increased quantity of purchase. They arepowerful buyers and could cause pressure on the Dutchbrewer as their ability of changing brands in stock.

The threat of new entrants:Not many alternative uses for breweries. The merges andacquisitions that happened over the past decades haveconsolidated the Heineken stabilizing operation as wellas other big brewing companies. Furthermore, long-timeestablished brands and consumers’ loyalty particularly inEurope regional are height barriers for new entrants. Itcan be suggested that the threat of new entrants is low.

The threat of substitute products:Wine, fruit-flavoured, exotic beers and other soft andenergy drinks with various tastes and alcoholic amountslikely become substitute drinks. Wine, considered to havea strong tie with upper class, could be more favourablewhen it comes to choices in occasion.

The rivalry among established competitors:The competitive rivalry in the industry is high asproduct differentiation is low, leading to highadvertising costs. The diversity of rivals is high with amassive number of breweries in which Anheuser-BuschInBev, SABMiller and Carlsberg (Economicsonline.co.uk,2011)

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References

1. Antony Seely. (July 17, 2013) Beer taxation and the pub trade- Commons Library Standard Note. Retrieved from the Parliament website: http://www.parliament.uk/business/publications/research/briefing-papers/SN01373/beer-taxation-and-the-pub-trade

2. Brewing. (2011). Retrieved from the Economics Online website: http://www.economicsonline.co.uk/Business_economics/Brewing.html

3. Chloe Smith. (July 9, 2013). Heineken to Partner with Weve in £500k Deal. Retrieved from the Campaign website: http://www.campaignlive.co.uk/news/1190013/Heineken-partner-Weve-500k-deal/?DCMP=ILC-SEARCH

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4. Craig S. Breitenbach, Doris C. Van Doren, (1998). Value-added marketing in the digital domain: enhancing the utility of the Internet.Journal of Consumer Marketing. Vol. 15 Iss: 6, pp.558 – 575

5. E.J. Schultz. (March 30, 2012). Brewed, Not Stirred: Heineken Plans Major Integration With Bond Flick. Retrieved from the Advertising Age website: http://adage.com/article/news/heineken-plans-major-integration-bond-flick/233840/

6. Growth the Heineken Brand. (2012). Retrieved from the Heineken website: http://www.annualreport.heineken.com/report-of-the-executive-board/operational-review/grow-the-heineken-brand.html

7. Kim, G., & Price, J. (2006). Heineken USA: Reengineering Distribution with HOPS. In M. Khosrow-Pour (Ed.). Cases on InformationTechnology and Business Process Reengineering (pp. 241-250). Hershey, PA: Idea Group Publishing.

8. Heineken, Bond Launch Spysight Mobile App. (Oct 26, 2012). Retrieved from the Progressive Grocer website: http://www.progressivegrocer.com/top-stories/headlines/regional-supermarket-chains/id36562/heineken-bond-launch-spysight-mobile-app/

9. Maarten, V. T. (Aug 27, 1009). Heineken to Raise Prices, Trim Costs. Retrieved from the Wall Street Journal website: http://online.wsj.com/news/articles/SB125127148108159895

10. Marketwired. (Apr 15, 2013). Heineken Selects Triple Point Strategic Planning and Procurement Solution to Manage Commodity Price Volatility. Retrieved from the Yahoo Finance website: http://finance.yahoo.com/news/heineken-selects-triple-point-strategic-070000288.html

11. Laurel Wentz. (June 21, 2013). Heineken CEO Looks at Future Global Brands Like Sol and Tiger. Retrieved from Advertising Age website: http://adage.com/article/special-report-cannes-2013/heineken-ceo-ahead-global-brands-sol-tiger/242773/

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12. Porter, M.E. (March, 1979). How Competitive Forces Shape Strategy. Harvard Business Review.

13. Russell Parsons. (Dec 8, 2011). Heineken Partners with Facebook ‘to Ignite Digital Converstaion’. Retrieved from the Marketing Week website: http://www.marketingweek.co.uk/heineken-partners-with-facebook-to-ignite-digital-conversation/3032594.article

14. Russell Parsons. (Dec 12, 2011). Heineken Bids to Make Responsible Drinking “Aspirational”. Retrieved from The Marketing Week website: http://www.marketingweek.co.uk/heineken-bids-to-make-responsible-drinking-aspirational/3032632.article

15. Sebastian Joseph. (23 Dec, 2011). Heineken Connects Global Creative Talent to Design Anniversary Bottle. Retrieved from the Marketing Week website: http://www.marketingweek.co.uk/heineken-connects-global-creative-talent-to-design-anniversary-bottle/3032955.article

16. Sebastian Joseph. (Feb 1, 2012). Heineken Readies Facebook Valentine’s Push. Retrieved from the Marketing Week website: http://www.marketingweek.co.uk/heineken-readies-facebook-valentines-push/3033708.article

18. Sebastian Joseph. (Feb 8, 2012). Heineken to Use James Bond to Stir the Digital Conversation. Retrieved from the MarketingWeek website: http://www.marketingweek.co.uk/heineken-to-use-james-bond-to-stir-the-digital-conversation/3033880.article

19. Sebastian Joseph. (Feb 26, 2012). Heineken Eyes Older Shoppers to Grow Brands. Retrieved from the Marketing Week website: http://www.marketingweek.co.uk/news/heineken-eyes-older-shoppers-to-grow-brands/4005829.article

20. Sebastian Joseph. (Jun 26, 2012). Heineken Eyes Global Premium Beer Growth. Retrieved from the Marketing Week

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website: http://www.marketingweek.co.uk/news/heineken-eyes-global-premium-beer-growth/4002400.article

21. Sebastian Joseph. (Jun 29, 2012). Heineken to Redefine in-store Experience. Retrieved from the Marketing Week website: http://www.marketingweek.co.uk/news/heineken-to-redefine-in-store-experience/4002473.article

22. Sebastian Joseph. (Aug 23, 2013). Heineken Steps up Efforts to Woo Older Drinkers. Retrieved from the Marketing Week website: http://www.marketingweek.co.uk/news/heineken-steps-up-efforts-to-woo-older-drinkers/4007717.article

23. Tanya Irwin. (Jun 3, 2013). Heineken Targets Adventure-Seeking Men. Retrieved from the Media Post website: http://www.mediapost.com/publications/article/201491/heineken-targets-adventure-seeking-men.html

24. Tim Bradshaw. (June 30, 2011). Google and Heineken Seal ad Partnership. Retrieved from the Financial Times website: http://www.ft.com/cms/s/0/55f81cd8-a297-11e0-83fc-00144feabdc0.html#axzz2px82lzlo

25. Wisson, C. (2013). Beer – UK – December 2013. Retrieved from http://academic.mintel.com/display/688539/26. Young people 'not visiting pubs' say beer campaign group. (Aug 7, 2012). Retrieved from the BBC website: http://www.bbc.co.uk/newsbeat/19160041

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