Heineken Sales and Account Management Report
Project Sales & Account Management
This is a sales proposal written for Heineken on how they should enter the South-African.
What we researched is: How can Heineken enhance its sales by expanding its market share to new consumer markets in South-Africa? During reading this sales proposal, you can find the current situation of Heineken, an internal analysis, external analysis, a SWOT analysis, information about how Heineken should enter new markets, and as last the sales proposal itself.
Within these chapters you will see that Heineken offers a good product of high quality for a reasonable price. At some point in the sales proposal you will find out that Heineken has still a lot markets where it can grow in. Although their market position is worldwide very strong, there are some weak consumer markets. Those weak consumer markets are not specific entire countries, but merely results from external factors. Many of the external factors are the outcome from the economical crisis which has a great impact on the life of beer consuming people.
Because of the importance of this factor, it will be widely conducted in our report. Next to all this, we will go into further detail about all the cultural factors which you will come through when you have to enter a new market. Drinking beer is not a worldwide common aspect in people their life, so when Heineken enters a new market, Heineken has to take the cultural aspects of a country in mind very well. Introduction In this report, you can find a sales proposal which is written for Heineken, a company which finds it roots in our very own country, The Kingdom of the Netherlands.
Heineken is a company which became famous for its beer, and who is selling nowadays many more products besides of its beer. Heineken is operating worldwide, and can be seen as the most successful beer brand in the world, something where the Dutch people can be proud of.
However, there are still some markets where Heineken can improve its sales. How can Heineken enhance its sales by expanding its market share to new consumer markets in South-Africa?
Heineken is a Dutch beer which is brewed by Heineken International. It is popular in the United States, Argentina, Brazil, Australia, Hong Kong, New Zealand, Vietnam, Europe, Singapore, the Middle Eastern countries and India. Heineken beer is brewed by 40 breweries in 39 countries around the world. With approximately 54,000 people employed.
Heineken’s original factory in Amsterdam was closed in 1988 and is now open for The Heineken Experience. The Heineken Experience is a museum about Heineken pilsner and the Heineken brewery, based in the original brewery in Amsterdam.
The building was built in 1867. In 1991, when part of the establishment was torn down, the Heineken Treat and Information Centre were opened in the remaining building. In 2001 the name was changed to Heineken Experience. The museum features “rides”, interactive exhibits, and two bars.
It also gives an insight into the company’s history and brewing processes through the years. Visitors receive one small tasting glass and two full-sized glasses of Heineken beer to drink at the end of the tour, both paid for by the 16 euro entry fee. Where did it start?
The Heineken story began almost 150 years ago in 1864 when Gerard Adriaan Heineken acquired a small brewery in the heart of Amsterdam. Since 1886, the unique Heineken A-yeast has guaranteed the pure, premium taste of Heineken beer. In 1933 Heineken first started with their brand in America and in 1937 they started brewing outside of the Netherlands, this was in the Dutch East Indies. Over the following years Heineken started growing and growing substantially and expanded the company.
First in the West-European countries and Africa, followed by Russia, Central-Europe, and Eastern Europe.
In 2010, Heineken continued to create new platforms for future growth by acquiring the beer operations of Fomento Economico Mexicano, S. A. B. de C. V.
in Mexico (including its US and other export business) and Brazil, an acquisition that strengthened the Company’s leading international portfolio with the addition of the Dos Equis, Tecate and Sol brands. The past years Heineken expanded their brand with the female bear called Jillz. Until now, four generations of the Heineken family have been passionately involved in the expansion of the Heineken brand, and the Heineken Company throughout the world.
Heineken year report in short Heineken has had an explicit 2010 compared to 2009, the growth percentages are superb and numbers does not lie. Heineken is one of the world’s great brewers and is available in almost every country over the world. Heineken their aim is to be market leader in the markets in which they are active.
Next to this, they also want to have the greatest portfolio of outstanding brands of which, of course, the prime brand is Heineken. However, they have a portfolio of over 200 brands of beer and cider of which the most important will be Amstel on the beer market and Strongbow on the cider market.
Heineken’s main objectives are excellent quality and innovation, which are essential for Heineken’s growth strategy. Heineken states that: “In everything we do, it is consumers and their changing needs that are at the heart of our efforts. ” Another important factor for Heineken is sustainability and social responsibility.
Heineken believes that, by being the largest brewer, taking the responsibility of sustainability and social responsibility they can make a difference comparing to other beer brewers. Results of the years 2009 and 2010.
The reported net profit was 1,436 million euro. The Heineken premium brand volume grew with 3. 4% What can we conclude from the year report? We can conclude that Heineken had a good year in 2010 even though there was an economic recovery going on.
They expanded to other countries and expanded their brand portfolio.
Furthermore, the net profit Beia, which is, according to analysts the most important figure for profitability came out higher than expected, which was a very good sign since it meant that Heineken was still profitable. Organizational structure Heineken The organizational structure gives us an insight in the workings of Heineken. Because of the size of Heineken, the organizational structure is very important. In the figure below you can see a clear overview of the organizational structure.
L’arche green N. V. has the largest issues of shares which is why they are on top.
Then comes Heineken holding N. V.
who produces the board of directors. Heineken holding N. V. has the power over Heineken N. V.
, who in their turn, have the power over the supervisory board. The supervisory board has the power over the executive board and the executive board has the power over, regional management and the group departments. Lastly with the least power come the operating companies. As you can see, Heineken uses a vertical structure, which is best in the case of a large company. Market position Heineken Heineken is trying to be the most influential beer brewer since its existence.
As we speak, Heineken is the number one beer brand in Europe, and is the second imported beer in the United States next to Corona. Besides, the number two position there is not much more what Heineken can achieve. However, there is one thing you need to do if you want to remain the number one brand in Europe. You need to expand your products, come up with new marketing ideas, extend or decline your brand or product line, and so on. Heineken came up with new brands, took over new brands and started the sustainable products line. Jillz A new product of Heineken is Jillz, which is launched in April 2008.
The story behind Jillz is that 63% of the women think that the taste of beer is too bitter. As stated, Jillz is now almost 4 years old, but it did not turn out to be the success as Heineken hoped for. There were some complains about the marketing strategy of Jillz or example. Jillz commercials landed in teen magazines, while women are the top priority and main target group of Jillz. And still, the main idea of Jillz is to let women drink a ‘beer’. Taking over small brewers.
Heineken took over a vast number of small brewers, but most of them still sell under their own name. These brands are for example; Amstel, Brand, Tecate, and Dos Equis.
Not all are sold worldwide, but they have all somewhere a good market share. By taking over small brewers, Heineken reaches more people profit from the market share, the brands already had. With this, Heineken performs very well, since their marketing system is reaching high expectations.
Switching to other countries and ethnic minorities. Research showed that there is an increase in amount of Hispanic people drinking Heineken. Heineken noticed this, and started more promoting in the southern part of the U. S. and in Mexico. Not only the switch to the Hispanic people but also the switch to Asia is Heineken’s goal.
If Heineken manages to obtain a high market share in countries such as India, Russia and China, their market share will increase enormously. In my own experience Heineken is doing a good job in increasing their market share in Asia. More and more people are coming to the Heineken Experience these days and not just the normal Brazilians and Italians. Chinese, Japanese, Indian and Russian people are coming to Holland just to see where that famous beer with the green logo comes from and to see how it is and was made. By doing this Heineken has a win-win situation.
They sell their beer in Asia and they sell their service here in the Netherlands.
Competitive advantages of Heineken The largest competitive advantage Heineken has is that people within Heineken keep looking for other competitive advantages. This makes them better than the rest, and therefore Heineken will remain the leader of the beer market. As well as that this will most likely not change in the short run, since it takes years to train your employees like this. After this little introduction, we are going to do something intriguing. Ask yourself a question. Let us have a little brainstorming session right now!
I say ‘Heineken’, now what do you think of? The smiling ‘e’? The red star maybe? The green logo? Maybe you are a little nationalistic and you think about Holland and all the good things it does for Holland, like boosting the economy? The taste of the beer? Heineken Extra Cold? The commercials? You can see, and think, about a lot of things Heineken has to offer, and let’s face it, they are all positive.
As already mentioned, Heineken is the market leader in Europe.
In the Netherlands however, it is a mainstream brand. When you turn 16 in the Netherlands, you are allowed to drink alcoholic beverages which contain at its max 14. % alcohol. For all the boys this means that they will drink beer.
Heineken has done so successfully that 99 of the 100 boys will drink when available, Heineken beer instead of other brands. This is one of the best and many competitive advantages that Heineken has to offer. One of the Competitive advantages Heineken has is the PET draught keg, which is showed above. The quality the keg has is better than the kegs of the competitors. This huge success in the Netherlands made that Heineken now also introduced the kegs in Brazil, Italy and Spain (one of the countries with most Heineken fans).
The Heineken David Green Special their on-trade draught equipment, which reduces the energy significantly gives Heineken a new competitive advantage in the keg business. Heineken has one last system for better quality. The Orion system, this helps to keep the beer’s quality while being stored and has created double digits in beer outlets in Spain, Czech Republic and Slovakia. Another one, the smiling ‘e’ for example. The ‘e’ was tilted a little backwards because the normal ‘e’ or the capital ‘e’ looks to formal.
It looks like it is smiling at you, and you love it when someone or something is smiling it you.
With this, Heineken wants to reach, that every time you drink a Heineken, you will get a happy feeling. Do not you just love it when someone or something is smiling at you? Another thing about the smiling ‘e’ is that Heineken is the only company in the whole world who is allowed to use this smiling ‘e’. And they use it in every time when an ‘e’ occurs. Marketing Mix Heineken Product: Beer is the product segment of the marketing mix for Heineken. The taste of beer has its psychological, symbolic, and physical effect on people.
This is because of the label, package, and taste of Heineken.
It does not matter where you are, Heineken will always taste the same. This attribute of Heineken gives you the feeling that you have something familiar when you are not at home. The packaging of Heineken has its own and familiar design with the ‘smiling ‘e”, creating an own style of packaging and marketing of Heineken. New package types creates a psychological effect by people to consume more, it shows that Heineken is well trained in its marketing and innovation aspects.
Price: Heineken sets its price extremely high in foreign countries. In the Netherlands you pay €2,50. for a glass or bottle of Heineken in a regular bar, in the supermarket however it is around €0,45. -. A bottle of Heineken in the USA for example is $5,-, and in Vietnam it is 15. 000 dong.
The signal Heineken wants to give, is that Heineken is a beer for elite and not for simple people. Consider it yourself; if something is expensive you think that it possesses good quality. Promotion: Promotion has always been the most important thing for beer companies. Beer is being associated with relaxation, recreation, going out, having fun, and sports.
Therefore, Heineken sponsors sport events (UEFA Champions League) and movie productions (James Bond).
This message is now so strong, that people always want a beer when they are watching sports or a movie, and to make the whole feeling complete, they do not want a beer, they want Heineken. Place: It is not just the bars that sell Heineken. As we already mentioned earlier, Heineken sells at supermarkets, retail shops, brand-stores, museums and restaurants. Heineken goes hand in hand with a lot of festivals and expensive resorts just to make sure that everybody can get a Heineken whenever they want a Heineken.
Let us just say, that the marketing mix suits Heineken perfectly. Heineken sales techniques * Heineken sells beer as an emotion and a passion; this means putting the brand where people are exited, like sporting events and concerts.
In the Netherlands for example, Heineken is one of the main sponsors of music events. * Heineken had his first internal table football competition in 2008. This to engage all their employees to improve sales around the world. There were around 40. 000 attending employees and 23 head participants. * Heineken has currently its own school system.
Each employee can attend this Internal Graduate Program for 18 months where he or she will learn everything about sales. * Heineken has several commercials each year, mainly on television and the internet. * Heineken also use social media and mobile technologies like Facebook, Linkedin, and Twitter to provide more customers, clients, and partners.
* If you enter the Heineken website, you must fill in your birthday. As reason Heineken want you to know if you are over 18. However, here is the clue: If Heineken tracks down the age of every person entering the website; it knows what age their target group is.
With this information, Heineken can do further research on their customers. Therefore it is easier to them to add sales techniques that match the interests of this target group. As well as they act the same way and speak the same language as their target group.
* Heineken is focusing on the benefits while using the product during selling. When most people buy Heineken, they do not think of the product itself mainly, but of ‘Friday night with friends’ for example. * Heineken is acting like they know us, in the way like we know them. * Heineken has, as already mentioned before, its own museum, the Heineken Experience. An important selling technique is their fast delivery to the buyers.
‘Getting it out quick. ‘ Heineken is almost never ‘sold out’. * When Heineken was just founded, their competitors were mainly foreign pilsners. However, pilsner was more expensive and meant for the higher classes. To compete, Heineken putted Pilsner in their logo like ‘Heineken: the cheaper Pilsner’.
For this, Heineken won a prize in France, which has remained in their logo till this day. * Heineken’s employees are also testing its bear on taste every day before selling, to maintain customer satisfaction.
So Heineken is selling trust as well to customers. * Heineken has its own research and development department and brewery to come up with new recipes and products to attract and maintain customers. * At the end of the redemption in 1933, when President Roosevelt was saying ‘Now it’s time for a good beer.
‘ Heineken was the first and the fastest that delivered the beer by shipping it from the Netherlands, and became famous. * Heineken changed once the color of the bottle in green, as it stands for a recognizable color of beer. And as already mentioned, it changed on the bottle also the letter ‘e’. Because there were more demands for Heineken beer than it could offer until 1975, Freddy Heineken joined the Royal Dutch family to finance the gigantic factories that are still used today. Financial overview.
Balance sheet. Income statement, see appendix 3 for the consolidated income statement. Since our sales proposal is going to be: How can Heineken enhance its sales by expanding its market share to new consumer markets within the short term, we have to find out if they have the financial capacities to expand its products to new markets.
As showed in the income statement, you can see that Heineken achieved a net profit of 1430 million Euro in 2011. We believe that Heineken is able to enter new markets, when we look to their financial possibilities. Value Chain Analysis General administration.
Heineken is already for many years the main brand of beer. It is the most selling imported beer all over the world. Part of their strategy to be the most selling beer is to buy other local breweries to enlarge their imperium. Next to this, they also enter markets with more specific products like light beer or women beers. Human resource management.
Heineken created a new variant of managening their business. In this variant, management positions have to take care of five different operating systems and nine different functional areas. In this new way, it is necessary to take more risk which make employees more connected with their employer. Technological development. With its very own technology centre, Heineken has a very large advantage on other beer breweries/companies.
In this centre, Heineken is able to develop the newest technology in creating new ways to produce beers, new shipping ways and so on. Porter’s Five Forces
The following part of the report includes Porter’s Five Forces Affecting Industry Competition. In “Porter’s five” you are able to take a look at the competitive forces that exist in Heineken’s milieu and indicate some ways Heinekens know-how is touching each area. These forces help decide Heineken’s place, concerning competitors in the business atmosphere. Threat of substitute products; * There is not that much technical variation possible in the beer industry.
* Beer is often seen as a more “barbaric, not done” drink, in addition to wine which is therefore winning market share from the beer industry. Since it is cheaper than most other alcoholic drinks, people are buying in better economic times more other drinks. Potential new entrants; * It costs over two-hundred million euro to establish a four million barrel brewery, so you need a lot of cash to enter the beer market. * It is very precarious to entry the beer market given that there are not that many different uses for breweries. * There is actually a top three of beer sellers in the world and the rest follows with a huge distance. Those three will just do anything what is in their power to let you fail.
Bargaining power of buyers; Most people do not have loyalty to one exact brand, their beer is not everywhere for sale. * People buy often the beer which is sold with a discount. Bargaining power of suppliers; * Every year you see less and less brewers and larger plants. * There have been many horizontal mergers in the last century. * The increasing costs of important possessions as grain, glass and aluminum.
Rivalry among competitors; * In the last 50 years, the top 5 tripled their market share in the world. * The beer industry is very competitive; many players leave the market with a huge loss. Advertising costs are incredible high, you always have to find the newest ways to attract customers.
In our PESTEL analysis we are evaluating the macro environment of the Netherlands. This PESTEL analysis is useful for Heineken because the PESTEL factors are factors that cannot be controlled nor influenced by a company. They are however, of vital importance for a company to decide the next step.
Heineken needs to hold all the mentioned factors in account when introducing their product to a new country, or to bring a new product on the market in a country where they already have a market share.
Political. Political factors include political stability, tax policies and government attitude. The most important factor for Heineken to hold in account is the tax policies. The Dutch government is stable and does not include itself in fights between different companies.
The government only watches if companies follow the legislation and laws, if so, there is absolutely no problem. When a company does not follow the rules, they can expect trouble. However, Heineken has never been in trouble with the Dutch government which makes tax policies the only thing to actually worry about.
There is no account of Heineken not paying taxes. Economic. Heineken does not need to worry about the general economic situation, their profit grows each year and they keep producing and buying more brands.
In addition to that comes that Heineken has a great image in the market which means that even though there is a financial crisis, people will still buy beer or brands from Heineken because of good positioning and beer is something that the average human being will not save on. Heineken does have competition of Grolsch and Bavaria.
It differs per region in the Netherlands who has the highest market share. However, Grolsch and Bavaria can be seen as a threat on the Dutch market for Heineken. Social. In the Netherlands, a lot of people buy what they know and what they are raised with.
This is also the reason why the market share differs per region of the Netherlands. In the south Bavaria and Grolsch are more popular while in the Randstad, Heineken and Heineken’s brand: Amstel, are very popular. In addition to this comes that a lot of young people drink what their parents or friends drink (group pressure).
This can be used by Heineken to focus on a younger generation and by doing this, let youngsters influence friends to drink the same brand. By this Heineken enlarges its market share and profits. To conclude, market share is influenced by region and peer pressure.
If Heineken responds to peer pressure in the right way, it can make more young people drink Heineken, so the social factor can be seen as an opportunity. Technological. Heineken does not have to do much with the technological factor, they should keep an eye out on better ways to produce their brands and use social media to get known by a broader audience.
If they want to bring out a new product they should bear in mind the timing and the target audience. When Heineken introduced 0,0% alcohol beer, they had to bear in mind that it had to taste identical to beer and that the target audience would receive in the right way, timing and marketing are essential in this process. When the timing is off, the whole product can fail.
Legal. Heineken has had some trouble in the past because of European legislation on prices. Heineken, Bavaria and Grolsch were blamed on taking part in illegal price agreements for the catering sector and the customer sector (supermarkets etc. . Heineken got a fine of 219. 280.
However, Heineken did not agree, so they went on appeal. After appeal, the fine that was left was 198. 000. 000 Euro. Furthermore, there are not any troubles for Heineken.
Although we have to take into account as well: Labor law and consumer law. Since consumer law is not applicable, we will go into further detail about labor law. Labor laws protect employees with certain rights like minimum wages, bonuses, ill days and holiday money. Heineken has however never been in problems with those kinds of things, so it is not really an issue at the moment for them.
In 2002 Heineken set up a pilot to develop sustainable agricultural methods. In 2006 another 50 companies were added. Based on this project, Heineken developed guidelines for sustainable production of Apples, barley and hop, the three most important ingredients of beer. In addition to this, Heineken has the goal to buy 60% of the needed ingredients locally by 2020 and to reduce water consumption to 3,7 liters of water per liter of beer. Thereby comes that Heineken also has the so called sustainable 6 namely: Green brewerUse energy and water in an effective way.
Green commerce Reduce carbon footprint throughout the value chain and work alongside suppliers. Engaging employeesEmpowerment of employees and safe working environment. Heineken caresBuy as much sources as possible locally and in a sustainable way. Responsible consumptionEnjoy Heineken, responsibly, promotion of responsible drinking. Partnerships for progress.
Work together with other parties to ensure responsible drinking. Heineken sees it as their job to produce and act sustainable and green.
They score higher than general in their sector according to the website: www. uurzaamaandeel. nl. The environmental part can be seen as an opportunity for Heineken since they perform better than their competitors.
Conclusion. Heineken should consider the social and environmental factors as an opportunity whereas the economic factor holds a threat for Heineken. The legal, political and technological factors are not of high importance, but should be taken in consideration. Heineken Competitors Heineken is one of the world’s brewing giants; it sells its namesake beer in its signature green bottle in just about every country on the planet.
Heineken operates more than 125 breweries in 70-plus countries.
Because of this, it is the number one imported beer in Europe. Second of all it is the number two most imported beers in the United States. Their premium brands are Heineken and Amstel. To be noticed as well is that the beer industry is projected to grow steadily. However, Heineken might have a great market share in the beer industry; there are of course a lot of competitors.
Hence, the main competitor of Heineken is Interbrew, which includes for example; Hoegaarden, Stella Artois and Labbat Blue.
Interbrew markets itself as the World’s Local Brewer, while Heineken claims to be the most international brewery group in the world. The difference in approach is perhaps why most consumers have never heard of Interbrew, and instead are more familiar with the company’s labels such as Stella Artois, Hoegaarden, and Labatt Blue. At the same time, Heineken is the name of both the company and its mainstream beer label, along with Amstel and Murphy’s, allowing for a much more integrated marketing strategy directly related to the company name.
Interbrew has four mayor strategies to build their business. The first is to build a strong local operating platform and then leverage it over time to drive profitable growth through the right brands and distribution structure to supply a local national market.
The second is to broaden the portfolio to include international brands to give access to the 10% not supported by the local brands and to leverage global insights to help optimize both the local brands and global brands. The third one calls for a balanced portfolio of ountries between mature and growing markets, whereby the mature markets such as North America and Europe provide the funds to invest in markets such as Korea and Russia that have lower GDP and higher potential for growth. Lastly, market consolidation will help secure positions and create shareholder value. Interbrew strives to be the number one or two brewers in each market, and has achieved this position in 16 out of its 20 operational markets. Heineken has “a two-track policy.
This means they want to have a broad leadership, in which they strive to be the leader in a specific beer market in virtually all segments with a portfolio of prominent brands.
In specific markets this is not attainable. The Heineken brand has a higher margin over Interbrew. In countries where Heineken is striving for segment leadership the leading role is set aside completely for the Heineken brand. Heineken’s overall strategy is “to have a mainstream beer that can be a local beer such as Amstel. Heineken also has four mayor strategies to grow the business in a sustainable and consistent manner.
The first is to speed up sustainable top-line growth.
The second is to speed up efficiency and cost reduction. The third is to accelerate implementation: we commit to faster decision making and execution. And last but not least; to focus in those markets they believe in. Interbrew and Heineken, as leaders in their own right have taken very different approaches to growth but both clearly understand the need to go global. Consolidation and globalization are trends taking place across most industries, and brewing is no exception.
At the same time, brewers need a sober approach to maintaining consumer loyalty with their local brands while building new loyalty with the global consumer through a more aligned approach of branding.
Nothing quenches such a challenge more than a powerful portfolio. Customer analysis Beer is consumed all over the world. For example; 37% of US adults are beer drinkers. Of course, beer is broadly enjoyed across all key demographic segments in the world; it is the most widely purchased alcohol containing beverage. The beer industry is projected to grow steadily.
Most beer shoppers are male, which is 70% while only 30 % is female.
So there is a great market for beer in the world. However, Heineken is one of the biggest companies. Who buys Heineken? In terms of distribution, Heineken seeks to achieve optimum availability of its products in each market through alliances with independent distributors and via Heineken’s own beverage wholesalers. Heineken has a strong network of owned wholesalers throughout Europe, which in addition to beer also supplies soft drinks, wines, coffee, and so on. Heineken sells all over the world.
They have customers in the US, Europe, Asia and even in Africa.
In every continent Heineken tries not only to focus to customers who are 25+, recently they started to create a younger target group as well. How do they buy? How does consumers buy their Heineken and in which quantity? This is a difficult question to answer. In bars there are people who go out for a night and try to drink a lot. This is especially in the younger generation.
Their choice is not specifically for Heineken, but they just like to drink beer. In restaurants, when people choose for a beer, the brand name Heineken is important. And in the supermarkets it is also a preference of the customer.
Heineken has a very strong brand, supermarkets customers are loyal customers, who buy Heineken more often. When and where do they buy? When and where they buy is a result of how do they buy. We already told you Heineken is sold all over the world and it needs a different marketing per continent.
Most Heineken products are sold in bars, restaurants and hotels. People there, do not choose for Heineken, but they choose for beer in general. The reason why Heineken cooperates on a high level with bars is, because they are their prime target group. When people buy beer in the supermarket, it is their own preference.
There are more beer brands, and people can choose.
Nevertheless, there are still a lot of people who choose for Heineken, for the reason that their brand has a very strong position. Why do consumers buy Heineken? What we mentioned before is, that Heineken has a very strong brand name. Next to this, Heineken tries to have availability in every market. They have a strategy to make the name Heineken as popular as they can. Their methods include making use of commercials, but also signs with Heineken in bars, restaurants and hotels are widely conducted.
And not to forget, people grow up with Heineken.
You will buy a beer which you know much more likely than a beer which you do not know. Cultural aspects Heineken is an international company spread worldwide and still growing. Because of Heineken’s international profile they should also know how to do business in other countries. Every continent and the countries within those continents have their own way of doing business.
Whether this is with talking, touching or long pauses in conversations, every country has their own business manners. Since Heineken is well orientated on the international market, they have to have a lot of knowledge of each countries culture.
For example in the United States, business is getting to the point with presentations and enthusiasm while in Brazil; it takes a while before the meeting starts. You begin with formal small talk before properly starting the meeting. If you would take the same hands on approach as used in the United States you seem impatient and overly pushy, which you do not want to appear. Also the marketing techniques should bear in mind that some signs that are positive in the Netherlands can be negative in other countries, which is why before launching e.
g. new commercial research should be done whether the commercial is not offensive and just as effective in other countries as in the country for which it was originally aimed. Another point to consider is that it is very hard to have a worldwide marketing campaign that is successful everywhere since every country has its own cultural aspects to hold in account such as believes and traditions. To conclude, the key to successful business over the world is to remember that every culture has its own negotiating style, style of business and style of meetings which can be seen as obstacles but also as opportunities.
To overcome those differences, Heineken has to remember that everyone is programmed to do business in a certain way and that it is almost impossible to forget the way people are programmed so the only thing that can be done, is adjust to a new situation and research well before taking the next step.
SWOT-analysis The purpose of this SWOT analysis is to connect Heineken’s strengths to interesting opportunities in the environment, while eliminating or overcoming the weaknesses and minimizing threats. Heineken Sales proposal Heineken still become larger and larger.
We can see this as the result of many acquisitions, joint ventures and partnerships. They are a leading brand all over the world, not only because of their strong brand, but also by joining other companies. As result, Heineken is active in many markets.
Since they were founded, Heineken tried to enter as many markets as possible and almost all the in goings were successful. However, Heineken continued to explore opportunities to introduce the Heineken brand in new markets, in response to a growing consumer demand for high quality, and premium beer brands around the world. What we have researched is, how Heineken can grow more in South-Africa.
At the moment, Heineken is trying to expand its market share in South-Africa. Yet, they do not have the highest market share. In 2011, Heineken decided to expand in South Africa by buying 75% of the shares from a brand called Brandhouse, while the other 25% is owned by Diageo.
Most beer that people drink in South-Africa is Lager, as the hot climate favor cold drinks. Ales are very rare and are only made by small breweries or imported. South Africans are enthusiastic beer drinkers, with per capita consumption expected to reach 60 liters in 2012. Some years ago, those numbers were much less, so the demand for beer is growing.
In South Africa, there is a large beer brewery called South African Breweries (SAB). It controls the vast majority of the South African beer market.
SAB owns and produces all the major brands in the country. It is also world’s second largest brewery. So we have to take this into account by finding new sales opportunities in South-Africa. Besides from this, there are a lot of different cultures, which we should consider. Although we can see those different cultures also as an opportunity. Those different cultures come from everywhere, South-Africa is the melting pot of Africa.
Europeans, Asians, Africans, you can find them all.
To come to the point, how will we make it happen? South-Africans are already a bit familiar with Heineken, thus we have to find out a good strategy to enter the South-African market and conquer it. The problem that we are facing right now is that the beer demand for Heineken is not as high as it should be according to Heineken’s ideal. What should be the problem right now, is that the culture of South-Africa has its own manners that can delay a business meeting or business deal. According to Hofstede’s research of South-Africa, the South-African people tend to take it slow according to business deals.
This might be a problem when you want to sell your beer to local bartenders and/or restaurants. However, with our proposal, it will be just a matter of time until Heineken will be sold on a regular basis in South-Africa. Sticking to Hofstede’s research and dimensions, the uncertainty avoidance of South-Africa scores a 49, making it a country which is slow in adapting something new. Consequently, this makes it very hard for Heineken to act in their own role as being innovative and adapting to changes. Now we can start with the main part of our whole research.
How can we make it happen that the South-African people adapt Heineken, and drink it more.
What we think that the best idea would be for Heineken is to associate Heineken with hot weather, and that the beverage they serve is really good to acclimate and to cool down from the hot weather. This technique is commonly used in different countries and has shown to be very effective. In other words, whenever it is a very warm day, the people in South-Africa will immediately think about Heineken and about relaxation. When you are able to achieve this, you can use that ‘feeling’ as a base to add other ‘feelings’ to this.
After a while, after the ‘feeling’ we described in the previous paragraph, you can add other feelings to the cooling down. Maybe it seems to be all gibberish what we are telling you now, nevertheless it is pretty logic.
The next feeling you can add is relaxation, when achieved, you can add party or having a good time with friends, and so on. Every time you are on an event which corresponds with one of the feelings that Heineken is representing you, you will think about Heineken and that will be the first step to achieve higher sales to increase your turnover and profit.
On the other hand, this technique is almost equivalent to ‘automatic decision-making’. You can see this as that Heineken is using this technique in almost every country. An extra aspect in South-Africa according to Hofstede’s research is that the individualism is very high.
It means that people in South-Africa will least likely belong to a group and rather do things individual or with 1 or 2 extra persons. The ‘feeling-technique’ that Heineken will then use will be useless for 50%. So let us introduce now the greatest hero South-Africa ever known: Nelson Mandela.
Heineken should take the opportunity of the fact that he is still alive. With all due respect, he is now 93 years old and will not be very long on our devoted planet anymore. Everything that Mister Mandela touches will turn into gold.
That brings as to another aspect of the culture of South-Africa, and that is that they look up to someone who is in a higher hierarchical position then the common South-African. Nelson Mandela will be this higher hierarchical person. The South-Africans will accept everything what he says or does, even when he is ‘saying’ to drink Heineken and is being associated to Heineken.
In other words, the best opportunity for Heineken is to use Nelson Mandela to improve their sales. What are the problems we could come across? Since Heineken is an international brand, leading all over the world, it needs to hold in account the different cultures, which play a significant role in South-Africa.
Because Heineken comes from a country that is very straightforward, namely the Netherlands, while selling their product or brand, it differs from the culture of most South-Africans. Directness, is in their eyes very rude.
This is why Heineken should investigate South-Africa or even the regions where they want to sell in order to find out what is accepted as a sale or negotiation technique. Negotiation techniques differ in every country whereas they may look alike in some countries, the biggest mistake any company can make is to generalize a group of countries. So, South-Africa has as well its own values and believes which result in different ways of doing business.
To hold this in account and to make the negotiations work a company should have investigated in the manner of doing business of the other party.
This is very important to remember if a company wants to have success in South-Africa. Some problems that Heineken could come across are for example, a language barrier. It is important to be fluent in the major languages to prevent miscommunication. In addition to this it also looks more professional if the negotiator of your party is fluent in the language that the negotiations are being held in. In most cases for Heineken International in South-Africa, this will be Afrikaans, Zulu, and English.
Another pitfall could be cultural differences.
When negotiating with Afrikaner or Zulu companies, thus employees, it is considered respectful to look someone directly in the eye while when you are negotiating with one of the Asian minorities, this will be seen as impolite. Another very important point to consider is that in the Netherlands, you do not brag about yourself or your company, though this is considered normal in South-Africa. You do not come far when you are being modest. This is something that needs to be researched since it is very important in negotiating in a country where it is highly essential to “oversell” your company.
To conclude, there are some pitfalls to be considered namely: – Language barriers, which can result in miscommunication. – Every different group in South-Africa has its own negotiating style, this should be kept in mind. – Some things that are considered normal in the Netherlands is considered rude in South-Africa – Do not undersell Heineken in South-Africa while you are supposed to oversell your company there. How will we budget the entering of the South-African market? There are in South-Africa around 50 million people and 70% of them is 15 year or older.
So you can say that there is a market for around 35 million people.
Those 35 million people drink at the moment 60 liters per capita so South-Africans drink more than 2 billion liter of beer per year. Compared to many countries, this is a huge amount. Next to this, you have to take in mind that the economy of South-Africa is booming, consequently more and more money is available to buy products besides of South-Africans daily groceries. Now, of course, it will cost some money to hire the almighty Nelson Mandela, but considering that there is a market of 2 billion liter, it is worth every euro.
Then you have the costs of building factories, shipping 2 billion liters a year would be too expensive, so factories are necessary. However, those companies give also an impulse to the economy, and in those companies you can also brew beer to export to the surrounding countries which saves costs, since now all the beer in Southern Africa comes from other continents.
Besides from those costs, there are numerous of other costs, so let’s say that the investments will cost around 2 billion euro. Two billion euro is a lot, it will take a while before you earn this amount of money back.
You will not have from the very first moment a 100% share in the 2 billion liters. Though, if you win with the campaign with Nelson Mandela in it, 100 million liter, it is worth considering. As seen in many other countries, when one person starts with it, others will follow.
People will spread their experiences, and maybe within a year you win another 100 million liter. At that moment, the snowball will start to run, and it will not stop. Heineken is not just a beer brand; it is a way of life. Conclusion Heineken is by far the most influential company the Netherlands has to offer to the business world.
They achieved this by having a great organization and a great marketing team. However, some little mistakes are being made by applying a programmed-decision-making style.
An example for this was the implementation of Jillz apple cider drink. The target group here was different than the original Heineken beer target group. Maybe you can say that Heineken acquired too much self-esteem during their decades of operating in the beer branch. Nevertheless, Heineken always knows how to upgrade their sales figures and how to remain the market leader.