Beer Consumers Decision-Making - Case Study Example

Overview on Beer Consumer's Decision-Making Decision-making process for purchasing an alcoholic drink in a pub or a bar depends on drive to a broad cultural shift to more diverse taste palates. Aggressive marketing efforts by spirits companies going back a decade also have played a huge role in influencing consumers in guzzling their beer brands. With more than 2.8 billion cases, beer can certainly be categorized as a mature product category. The most consumed adult beverage - ahead of wine and spirits - beer sales tend to be less volatile than those of less established consumer products. Price hikes, inclement weather, economic malaise and geopolitical unrest have not been able to stop the beer engine in 2002. Consumption climbed for the seventh straight year and shows no immediate signs of declining (Adams Beer Handbook, 2003). In selling beer, marketers have constantly searched for new and innovative ways to reach the consumer at the optimum moment: when they're relaxed, considering brand choices or more directly at the moment of purchase. There have been some efforts to reach consumers in bars. Dog-eared posters, soggy beer mats and brave experiments in toilet-based advertising have all been established marketing forms for many years. But the advancements in interactive and dynamic marketing forms seem to have passed the pubs by. The pub is a place where people are making direct retail decisions. In an article by Ashley Reese (2004), it was reported that the most obvious area in which marketers should think about new ways of reaching consumers is the drinks industry to consider promotions in pubs and bars. Drinks promotions are all very well, but unless you're driving interest in these promotions in new and innovative ways, many will simply pass the consumer by. Whatever mechanism you choose to reach the pub audience, the rules are the same. The message and the medium must be differentiated, but they must also be sympathetic. The report also deemed that the pub is the new church, and people don't want advertising rammed down their throats while they're praying. To be sure, beer is the dominant alcoholic drink among liquors. But despite a growing population of legal-age drinkers, spirits sales grew by 3% in 2003 while beer sales slipped by nearly 1%, according to Impact Databank (2004). With this concern, this is doubly difficult for beer companies because getting in front of consumers when they're young can shape habits for a lifetime. And out-on-the-town young adults drink more than older consumers who've slowed down. Bigger bar banners and broadcast TV buys aren't enough to reverse this trend. The new drinkers' media consumption is more fragmented than that of their forebears, and they're tougher to reach. Also, marketers must be careful not to use media or imagery that could skew towards under 21 age group. For instance, Coors Brewing Co. drew criticism for a tie-in with PG-13 rated "Scary Movie 3." Coors had expected the film to be rated R, like its two predecessors Marketers are trying to be more creative with on-premise promotions and choosing which media to use for ads. A classic example is Sidney Frank Importing Co.'s "Jager Girls" who show up at bars and press shots of Jagermeister liquuor on patrons (Arndofer, 2004). The key to building a brand is to understand what consumers need from it, then to encourage those specific thoughts among them. The methods of doing this are diverse. There are specific target audience, preferences, and of course the price. Recently, consumers have also been concerned about calories they get in beer. Thus, beer brands have come up with light versions to answer the health-conscious consumers' call. Group and Individual Preferences American consumers like choice. And, when it comes to beer, they get it. The American beer drinker is in the enviable position of being able to pick and choose from the world's finest beers, and having to travel no farther than the corner store to get them. Few societies can avail their consumers with this range of selection. Continued growth in both the light and import sectors drove the upswing in beer consumption. Introduced in the mid-1970s, light beers have become part of the American lifestyle. Consumers' appeal for reduced calorie beverage options is expected to endure--in part due to ever-growing concern about waistlines--and beer marketers want a piece of the action. Not only are the big domestic guys focusing on their light offerings but micros and imports are getting into the act too. Americans' aspiration to move up in the world is evident in the increased popularity of premium offerings among many consumer product categories - imported brew's have been riding the trading tip wave (Adams Beer Handbook, 2003). Top Brands Dollar Unit Sales Volume 1. Bud Light $1.35 bil. 82.4 mil. 2. Budweiser 857.7 mil. 52.5 mil. 3. Miller Lite 699.4 mil. 44.1 mil. 4. Coors Light 492.8 mil. 31.1 mil. 5. Corona Extra 417.7 mil. 15.9 mil. 6. Natural Light 289.4 mil. 24.1 mil. 7. Heineken 259.9 mil. 9.9 mil. 8. Michelob Ultra Light 256.1 mil. 12.9 mil. 9. Busch Light 197.7 mil. 15.8 mil. 10. Miller Genuine Draft 197.4 mil. 12.3 mil. Table 1. Total of supermarkets, drug stores and discount stores excluding Wal-Mart Stores Inc. Source: Information Resources Inc. However, it is surprising that consumers in the 35 to 44 year age group are the largest consumers of beer (24.8%). Followed closely by (24.0%) beer drinkers aged 25-to-34. This is slightly different from a few years ago when the 25 to 34 demographic was the larger of the two demographics (Arndofer, 2004). It is also important to note that concerns about driving while intoxicated have led to less drinking in public places. This has resulted in decreased beer consumption overall, but increased consumption at home. The beverage of choice more often these days is a premium brew (Karolefski, 1992). Group and individual preferences vary slightly in choosing beer, but breweries aim to market mostly to 18 to 30 year old markets because they will be patronizing their brand for a longer time. For instance, S&P Co.'s Pabst Brewing Co. has been building its brand with promotions aimed at "twentysomethings" who embrace the brew for its ironic downscale chic. This effort followed the discovery that pockets of hipsters had already snagged the brand. Also, SABMiller's Miller Brewing Co. has made wooing 21-to-24-year-olds part of the "Good Call" theme that positions its Lite and Genuine Draft brands as better-tasting alternatives. One way Miller is doing this is by conducting "taste challenges" at bars that pit its brands against Anheuser-Busch rivals. The promotions are designed to "reach the audience where they are," says a Miller spokeswoman (Arndofer, 2004). However, advertising remains crucial, and brewers are spending more effort figuring out the best places to put ads to reach this target. As long as consumers keep gravitating toward premium unique offerings, the beer industry will continue to prosper. With increased marketing due to the pressure from the premium craft segment, competition among craft brews and imports will surge. In another report by Cioletti (2003), he emulated that freedom of choice has become the buzz phrase around the beer fountain, as consumers don't want to feel limited when filling their cups. Dave Rollins, senior vice president and general manager for Dr Pepper/Seven Up's fountain business explained that there has to be the right lineup and you've got to merchandise that lineup. It's a back-to-basics approach of promos because consumers tend to be fairly brand conscious, says Rollins. Also, many will opt to have no beverage at all if a restaurant or convenience store who doesn't offer the brand mix they prefer. "Companies are trying to make fountains more of a destination to get a beverage," observes Peter Norris, business development manager for the beverage division of ITT Industries/FloJet, which supplies fountain pumps. "It's becoming more about adding fun choices." Research suggest that consumers may be getting somewhat more adventurous, but even where imports are readily available, most consumers in most countries continue to buy local brands produced by local brewers and sold through local stores, pubs, and restaurants at prices that vary widely in localities around the globe. As a result, the beer industry is a collection of tiny players. The top four command just a 20 percent share of the world market, and the largest - the US brewer Anheuser-Busch - makes more than 85 percent of its sales in its home market. Consumer choice is converging across countries. Industries cross another milestone of globalization when consumers around the world, prompted by advertising to sample new products, begin to demand similar features from the products they buy regularly. In beer, consumer preferences in flavor and packaging are slowly becoming more homogeneous across borders. Every market in the world is moving not only from ales to lagers but also from bottles to cans; in Latin America, where canning facilities were until recently scarce, brewers had to import empty cans from the United States. Thus, beer brand and the variety of choices spell a lot in determining the influence of a beer brand to draw in consumers. Activities Influencing Consumer Behavior As most companies resort to TV advertising to cop a bigger market share, Heineken's decision to axe UK television advertising in favour of press and poster ads and an increased focus on its Champions League sponsorship has raised a few eyebrows in the marketing industry. As a result, their sales plunged to an all time low. But Heineken UK managing director Rob Marijnen says next year the company will plough its 6.5 million TV budget into alternative forms of marketing, and the overall marketing budget will be boosted. They deem that the enormously cluttered TV environment makes it difficult to make ads that stand out. It is also very expensive and its effectiveness is questionable (Marketing Week, November, 2005). That's why many beer companies have resorted to sponsoring various activities to promote their brands. For instance, three major beer labels, Coors Light, Duane Reade and Henkel, have signed on as new sponsors of the ING New York City Marathon, boosting sponsorship revenue 10% over 2004. In a report by Amy Johannes (November 2004), beer companies have been running health as a positive message that [more] corporations want to get behind. Having sponsorships like the marathon logo in their promotions and activating them...is a great example of synergy and a great way to let more and more people know the marathon is coming. Coors Light have rolled out 480,000 ING New York City Marathon-branded commemorative, 16-ounce cans beer to more than 400 bars and retail outlets in the New York City area. Participating bars and retail shops gave out marathon and gear Coors Light giveaways before the race. "Running is such an elite event," says Steve Medina, field marketing director, East region, Coors Brewing Co. "[We wanted] to make some of our packaging reflect the fun and energy of the ING New York City Marathon. It's a good fit for us." Also, beer companies have tried to sponsor beer game. Anheuser-Busch recently has introduced the Bud Pong. The Bud Pong drinking game involves teams trying to throw ping-pong balls into liquid-filled cups. If the ball goes into the cup, the opposing team has to drink the liquid. In Bud Pong promotional materials, the recommended liquid was water. But under real-world conditions, by all reports, competitors often chose beer (Modern Brewery Age, October 2005). In Australia, Bacardi has launched a new marketing strategy in an effort to reach 18-to-24-year-old male consumers. The liquor brand has sponsored several music events, including the Australian Record Industry Association awards after-party and the "Good Vibrations" music festival. The move comprises the second phase of Bacardi's brand re-launch, which aims to take a more masculine direction with an edgier Cuban image. However, the music sponsorship market in Australia is already crowded, with Bacardi competitors Jim Beam and Jack Daniels having a strong market share (Swinburn, 2005). Over the next decade, as the market for beer slowly evolves, players will prepare for the era of global dominance by adopting one of three strategies: geographic integration, specialization, or "dress up for sale." The beer industry is changing and companies that act now to position themselves appropriately will win handsome profits in the near term, as well as a role seeing the significance of the role of marketing their products. With some limitations drawn by television advertising, they have been usually criticized of not aptly reaching target consumers. That's why "dressing up for sale" seems to be the most feasible thing. That's why beer companies have sought to be visible in various national activities where they could market their products to appropriate customers. A Room for Bacardi Breezer With the beer guzzling people's inclination to variety, products like Bacardi Breezer could have a considerable share in the market. In the UK, Bacardi Breezer is available in 8 different flavours; Watermelon, Cranberry, Orange, Lime, Pineapple, Lemon, Ruby Grapefruit and our latest edition Diet Lemon. Available in 275ml glass bottles in the on and off trade, and it is available in 330 ml plastic bottles for out door Bacardi Breezer sponsored events such as music festivals. Recently launched in the UK, the Bacardi Breezer Minis, which are 200ml bottles available in 8 packs in Orange, Cranberry and Lime (Bacardi Breezer FAQ). Also, the core of 18- to 25-year-old female demographic is the main target of Bacardi Breezer but equally impressive is potential to break down the prejudices that tend to leave men sneering at 'fruit-based drinks for the ladies'. There was just enough of a laddish edge about the first Tomcat ad to land the right side of the fine line between amusing blokes and embarrassing yourself in front of them. Of course, McCann and Bacardi Breezer have been getting far more than their pound of flesh out of the idea. The cross-media and PR offensive around 'Tomcat' has been overwhelming. The damn animal has been literally inescapable in the past year or so what with a column in Loaded, an appearance at Maxim's women of the year awards and an ambient campaign that at one point seemed to include every rickshaw in central London. Their sales have since seen marked results (Cowen, 2002). With good advertising, Bacardi Breezer could take hold of the youth and female market that other usual beer brands could not reach. Also, they could take initiative of participating and sponsoring in various sports activities where male consumers thrive. Works Cited Adams Beverage Group. Adams Beer Handbook. New York: Adams, August 2004. Anheuser quashes Bud Pong. Modern Brewery Age, 24 Oct 2005 vol. 56, no. 43, p. 1 Arndofer, James B. New drinkers don't belly up to the beer bar, Advertising Age, 21 June 2004, vol. 75, no. 25 Bacardi Breezer FAQ. Bacardi Breezer Company Website. Available online last November 209, 2005 at http://www.bacardibreezer.co.uk/uk/eng/static/faq Cioletti, Jeff. The Free Flow. Beverage World, 15 June 2003, vol. 122, no. 6 Cowen, A. Cowen on ... Bacardi Breezer. Campaign, 26 July 2002, p. 20. Heineken turns away from TV advertising. Marketing Week, 27 October 2005, p. 7. Johannes, Amy. Race to the Finish. Promo, 1 November 2005, vol. 12, no. 18. Karolefski, John. New attitudes are of import to Guinness: consumers want better quality beer. Supermarket News, 17 August1992 vol. 42, no. 33, p. 22. Modern Brewery Age, Consumer choice: imported beers add diversity to the marketplace. 13 July 1992, vol. 43, no. 28 p. 4. Rees, Ashley. Are pubs the perfect place to serve ads New Media Age, 16 September 2004, p. 17 Swinburn, Amanda. Bacardi dances to a different tune. Australasian Business Intelligence, 24 October 2005. Read More