Topic: Beer

Specific Offer: Heineken Zero Non-Alcoholic Lager

Introduction

This business report aims to use segmentation, targeting and positioning, to identify the target market for Heineken Zero and how it should be positioned within the Australian market.

Heineken N.V. is a Dutch brewery in Amsterdam, founded by Gerard Heineken in 1864 (Heineken, 2018). It is the leading brewer in Europe and second in the world, operating in over 70 markets worldwide, with a team of 80,000 employees. Heineken has an annual beer production of 188.3 million hectolitres and revenue of EUR 20,511 million (Heineken, 2018).

Heineken launched its newest beer, Heineken 0.0, in Australia on 9 October 2018, making the product available in 38 countries. Heineken 0.0 is an alcohol-free lager, twice brewed from scratch, with a balance of soft malty body and fruity notes. It contains only 69 calories per 330ml bottle and is sold in BWS and Dan Murphy (B&T Magazine, 2018; House, 2018; Hogan, 2018).

Targeting Strategy

Heineken adopts a differentiated targeting strategy. A multi-segmented marketing strategy refers to a company targeting different market segments and designing various offers for each segment (Kotler, Burton, Deans, Brown, Armstrong, 2012; Forsyth, 2009). 

Heineken Australia designs beers with unique attributes that are valued by customers. For instance, Heineken distributes the Iconic Lager, Heineken 3 (for drinkers who want mid-strength alcohol and lower carbohydrate and calories), Heineken 0.0 (for health-conscious drinkers who abstain from alcohol), Heineken Draught (thicker foam head for a more aromatic experience), Extra Cold (for party drinkers who want longer lasting refreshment) and Heineken Club Bottle (smart, sophisticated bottle designs for clubs) (Heineken, 2018). From selecting various types of natural ingredients, to re-designing the bottle for specific occasions, Heineken creates separate offers to appeal to the distinctive needs of each customer segment for various occasions. Thus, this strengthens customer’s overall identification of Heineken and builds brand loyalty resulting in more repeat purchase.

Three Customer Profiles

Profiling of beer is segmented into four segmentation variables; demographic, geographic, psychographic and behavioural. Market segmentation is the process of companies dividing the market into smaller groups to effectively and efficiently innovate products to meet the needs, wants and demands of its customers (Kotler et al, 2012; Wu, 2001). Companies engage in market segmentation to search for new product opportunities and areas which may be receptive to current product repositioning (Beane & Ennis, 1987).

The first profile of potential customers are the health-conscious drinkers. IBIS World (2018) reported that health-consciousness in Australia has grown over the last 5 years and is anticipated to increase in the next 5 years.

The second profile will be social drinkers, who drink moderately during social occasions. Drinking is an enormous part of the Australian culture (Gerrans, 2018) and alcohol is often used as a social lubricant for people to relax and unwind with their friends and relatives (Reid, 2013).

The third profile are heavy drinkers, who drink more than 9 bottles of beer per week (The Foundation for Alcohol Research and Education, n.d.). 5.7 million Australians drink alcohol wanting to be drunk (The Foundation for Alcohol Research and Education, n.d.).

When you pick each profile, briefly explain why you pick each group, if you use economical, you can compare in terms of price, therefore they target economical buyer. Product-what the product is to support benefit sought, price- use indicate income or benefit in terms of price or price sensitivity, place and promotion-promotion from  website such as why the product is unique to support the benefit sought.

Example: For Garmin Approach S60 Golf Watch

Customer Profile 1: Retired Golfers

Demographics: Look at factors such as age, income levels, family sizes, relationship status – Discuss these factors using supporting academic references i.e. textbook, journals

Psychographics: Look at factors such as personality, values or lifestyle (i.e. golfing on the weekends for a hobby with friends, or someone who plays competitively).

Usage rates: moderate users i.e. once a week or heavy users 2+ times per week. Purchase occasions, purchasing the product for a tournament or as a gift or for your hobby.

Geographics: Living in the suburbs, close to a Golf Course or in a city/town where there is a golf course?

Target Market Decision and Justification

• Specifically state the (one) chosen target market based on your analysis of the customer profiles in the previous section.
• Fully justify your selected target market based on your research, by linking the discussion to your specific offer. i.e. describe how the characteristics or benefits associated with the specific offer satisfies the needs or characteristics of the target market.
• You must include in-text citations to support your arguments

Based on the customer profiles, Heineken should target customers of profile 1. Sales of non-alcoholic beverages have increased 57% in the past 5 years (Carlton & United breweries, 2018) and 20% of Australians have refrained from alcohol in 2017, up from 11% in 2011 (DrinkWise, 2017). In addition, the percentage of Australians drinking weekly has dropped from 47% in 2007 to 37% in 2017 (DrinkWise, 2017). The drinking culture is maturing and there is an increasing preference for lower-alcohol alternative (Jackson, 2017) by health and weight conscious consumers who seek to enjoy the taste, but prefer to not get drunk. According to Heineken’s brewmaster Willem van Waesberghe, Heineken 0.0, is a mix of 2 brews of various qualities, to retain the original taste (B&T Magazine, 2017). Containing half the calories of a full-strength beer, Heineken 0.0 successfully taps on and satisfies the dual-yet-opposite needs of consumers, who are looking to balance psychological and social desires to consume alcohol and simultaneously keep healthy, and provides a wider window of moments for them to indulge responsibly.

Competitor Analysis (100 words):

• Identify 3 major competing brands (companies) and major offers that compete with your selected offer.
• Use evidence to justify why these are considered as major competing brands and offers.
• You must include in-text citations to support your arguments

Competitor analysis is crucial to Heineken’s success as it prepares Heineken with the ability to identify industry trends and adapt to competitor’s strategies. Prior to the launch of Heineken 0.0, 3 major competing brands, Carlton, Coopers and Hanh have entered the no and low alcohol market, which is expected to exceed US$25 billion by 2024 (Global Market Insights, 2018).

In August 2018, Carlton launched its first non-alcoholic beer, Carlton Zero, after consolidating feedbacks from its customers who want to enjoy alcohol responsibly and at the same time still be able to have the taste of Carlton (Carlton & United Brewery, 2018). Being the only other zero alcohol beer in Australia, Carlton is a major competitor of Heineken as customers can choose to purchase from either company.

Coopers Birell Ultra-Light has an alcohol content of 0.5% and is made using finest Australian malted barley, hops and yeast, with no added sugar (Coopers, 2018). Containing only 74 calories (Coopers, 2018) it is a strong competitor of Heineken in terms of offering customers low calorie beer.

Lastly, Hanh premium light contains 2.4% alcohol and is 99.9% sugar-free and preservative free (Hanh, 2018). It is a major competitor as it contains only 9.6g of carbohydrates (Hanh, 2018), which is favourable to Australians who are preferring lower carbs beer in recent years.  

Perceptual (Positioning) Map (300 words):

• State the two evaluative criteria chosen to draw the perceptual map, (the use of the price and quality combination is not permitted.)
• Justify why you selected the two criteria.
• Draw the perceptual map. (Plot your product and the 3 competing products identified in the competitor analysis section.
• Justify why you placed the products in their respective locations.
• You must include in-text citations to support your arguments

Firms use perceptual maps to develop a market positioning strategy. As the maps show where existing products are positioned in the market, firms can decide on where they would like to position their products so that it fills a gap in the market (Sinclair & Stalling, 1990).

The two evaluative criteria are the strength of the beer and the level of carbohydrates. The strength of beer is chosen as various customers want different alcohol content for different occasions. In this case, Heineken 0.0 is the perfect choice for customers who want to avoid becoming drunk, and allows certain individuals who do not consume alcohol previously to be able to experience the taste of alcohol now. The level of carbohydrates is a determining factor for many Australian drinkers who are looking to consume low carb beers.