Management Strategy of Budweiser - Term Paper Example

? BUDWEISER Term Project Person Budweiser is one among the three large beer brands by AB InBev Company. For a long time, AB InBev Company’s performance is good as this company focused on meeting the consumer needs. In addition, the company concentrates in ensuring that there is sustainable and secure environment through, and the company can attain this through recycling of waste and treating the wastes that is released to the environment. The company has brands that are traded locally, internationally, and three that have global recognition (Holt & Cameron 2010). Introduction Anheuser -Busch is a brewing company in America that was started in 19th century. The present company name was adopted in 2004 after a successful merger of the company with Ambev. One of the beer brands that have giant global recognition is Budweiser (Parker & Parker 2006). The revenues earned from main brands are found to be growing at a rate of 7.8% in each hectoliter. The company produces other 200 brands that are sold locally, internationally and worldwide. It is one among the largest companies in beer industry globally; also Budweiser is popular in United States and other parts in the world (Wells 2004). In 20th century, alcohol products were prohibited in America, and this was one challenge that this company faced. This made the founder of this brewing company embark on alcoholic drinks up to 1933 when the prohibition ended. World war contributed to the reduction in performance of the beer firm as it led to economic recession. In strategizing to get back market for Budweiser beer brand, the company argued the customers to dare take this beer for five days. In testing the quality of the brand, the customers were promised that if their test did not shift from the other beers, then they can disregard Budweiser as the best beer. The company management team focuses to ensure the brands meet the consumers’ interests and expectations. The company initiated procedures used in getting customers for company’s brands. In 1936, this brand started being packaged in metallic cans, which made many consumers prefer this beer to others. While most of the brewing companies were collapsing due to competition, this brand was able to bear the situation. Although the sales reduced significantly, Budweiser Company remained to be a leading company in the beer industry, and it brand has for years maintained lead in the markets although there was competition. Industry Structure and Global Market AB InBev Company gets a lot of competition in the industry from other competing firms that are coming up. Because of rich history of its operation, the well known company’s brands enjoys monopoly although partially. Beer industry is open despite huge costs of operations especially advertising that constrain new investors. This means only the company that are competitive can survive the market conditions, because beer industry has risen by 41% in the world as compared to other sectors. This can be attributed to people’s change of tests in which today people need high quality beer and not just alcohol, because alcohol drinks stock sales are rising at 4.8% rate annually. In this industry, most of the brewing companies are merging with others to form a stronger footprint to get larger market command. Budweiser is one of main alcohol brands with recognition all over the world (Bamforth & Bamforth 2011). In international market arena, the company has 25% of total world market portion, while in United States, AB InBev company accounts for 48% of the total market in brewing sector. Apart from Budweiser brand, Anheuser –Busch inBev has other 200 types of brews. AB InBev Company is main brewery in United States but it possesses outlets across the world. The company has outlets open in more than twenty countries across the world, thus company can employ over 100, 000 people for different job positions. Three company’s brands get market recognition in various regions of the world globally. Most company’s raw materials are acquired locally; therefore company imports less of its inputs for beer manufacturing. Economics The economic trends affect consumer spending largely since the buying is depended is depended on the customers’ financial capacity. Some of the people consider alcohol to be luxury drink that is substituted or avoided all together. In most countries, citizens are concerned about the government performance in creating jobs and regulating incomes (Beer & Schils 2009). When there is job insecurity and consumers sense a case where government may cut on their salaries, they tend to be sensitive in their spending and 2011, sales of beer stock reduced by 5% as a result of this scenario. The government, in regulating beer consumption, raised tax on beer products (Swinnen 2011). Inflation causes beer sales volume to decrease, while increase in taxation and custom duties can cause inflation. Government triggers this in the effort to generate revenues and control beer consumption by her citizens; in additionally there can be inflation when there is fall in their currency value. Currency value responds to recession within a country or to instability of world’s economy which controls currency value. During economic boom, the company’s revenue rises since many people are able to buy drinks. During low economic performance, the company’s makes least in terms of revenues. This is because; customers’ buying ability is limited by lack of enough individual’s income. Since the company has market base across the world, mostly it is not adversely affected recession in one country because of the risk transfer. However, when the world economy is not good, the company suffers enormously. The above graph shows the employment situation in United States Corporate Philosophy and Organizational Structure The company is focuses to become the best beer company in the world. Additionally, in the company’s mission, it will ensure shareholders benefit from their investment. In stating its vision, the company is committed to giving the customers and its stakeholders a precise guideline to enable; they understand the company future expectations (O'Brien 2006). This was the reason as to why the company always maintained its name even after merging with other companies. This company has a long history and strongly committed to service which is symbolized by the mark and golden color. The company was rejuvenated in late 19th century by Adolphus Busch. In order to promote the now leading brand- Budweiser, Anheuser Busch focused in sponsoring sports and shows. This made Budweiser brand get popularity that in 1980s, it become the best known beer in America. Brito, who is trained mechanical engineer, currently heads the company; he joined this company at the position of a sales manager. Early in 21st century, Brito was appointed CEO of this company. The company where Brito was initially serving in the sales department had merged with another one to AmBev. Before he became the CEO of the new big company, the company had also merged to the present day InBev. Between 2004 and 2007, the company’s income rose from 24.7 to 34.6 percent while under the new management. Brito visualized that the company was to become the world’s best brewer. In order to attain company’s goals, Brito laid off over 1,000 employees, and property valued billions of dollars was sold giving the company new looks through acquisition of new property. The management under leadership of Brito ensured that the production cost was minimized. It was realized that a lot of money was saved on production inputs (Parker 2006). Thin glasses were used for packaging and small labels were used. The company, under the new leadership, proposed the use of broken rice instead of wholegrain rice that was being used in the former Anheuser- Busch. Today, AB InBev Company’s president is Luiz Fernando Edmond, and the company has other subsidiaries that do not concentrate in brewing. Some of the companies are agricultural in nature; others specialize in recycling while others are for property (Hovland, Wolburg, & Haley 2007). Technology / Innovation In this brewing sector, technological trends affect the success of the company brand. In the near past, technology has contributed to efficiency in distribution of brew and supply of the brewing raw materials. Additionally, the advancement in technology has led to increase production, with efficient use of materials. This causes consistent supply of beer items in market. Methods of information sharing within and outside the company have also been advanced following rapid change in information technology. Today, this company issues company statement to its fans via internet media like face book, and with technology trends, people’s conduct behavior has changed much. To the company’s operations, it implies that some of the operations need to be changed to the new human behavior. For instance, while in the past, the company successes in product promotions through sponsoring events and sports, today other promotion strategies need to be employed. Most people prefer getting information from technological devices like internet to other channels. Therefore, advertisement should cater for those that spend most of their time browsing. People are today attracted to live entertainment events that mainly occur at night and involve famous celebrities. Again this is an opportunity to promote the beer today through organizing such event (Wenner & Jackson 2009). Companies that grow very fast are making use of media intensively. Chris Burggraeve, in charge of marketing explains how the company uses now uses social media to advertise and interact with customers on the online forums. Face book and twitter, has enabled the brand to get global recognition especially among the youth. Many people get to know and understand the company in details through viewing the company profiles provided and engaging in informing discussions with the company team. He further states that the place of drinking should not be replaced by online conversations, and people should recall that real live interactions are still essential today. Drinking joints provide such platforms where people meet to socialize as they drink (Films on Demand., & Films Media Group 2009). In enhancing the real interactions, the company’s face book pages operators, bother to ask fans where they will be spending their night outs. In response to technology trends, the company should invest in retraining of its personnel to ensure they are competent to use modern technology in their work. This training will also enable them know the effects of technology in people’s lifestyle and how they can respond to those changes to maintain the company reputation (Potter, Michael, & Hindy, Steve. 2005). Marketing Plan and Analysis During the early years of the company, Anheuser Bush, being in charge of marketing, concentrated in sponsoring events and sports. Through this, Budweiser brand got popularity very fast at the early age of the company. However, over the years, the brand has experienced competition from other brewing companies. Today, despite different strategies to return the company brand to its former position, it is not an easy task. When determining and planning for advertisement, the marketing team has to understand the targeted customers’ behavior and tests (Riggs & Cullen 2013). The company, while choosing and planning the way of advertisement, it considered quality of advertisement, the targeted audience and place where they are located. Back in 1995, the marketers for this brand introduced three puppet frogs that looked as though they were alive in the advert. This was one of the most popular adverts fro Budweiser during that time. This advert in a big way influenced the consumers buying behavior. The advertiser made sure that the consumers were fully convinced about the brand that they bought no other Budweiser. Simchi-Levi, Kaminsky& Simchi-Levi (2009), argue that, advertisement and other promotion practices have effects in human spending behavior. From a study that was conducted to analyze the effect of advertising on student, it was noted that students drunk more during promotions. The company drinks are made targeting the low-income earners not excluding the high-income class, and specific drinks are produced for special class of customers. In most countries, this company’s brands are top drinks. Promoting beer is highly influenced by statutory law issues. Law defines the targeted market for all alcoholic drinks (Evy, Karst, & Winkler 2000). Only people aged 21 years and above should be targeted by brewing companies. In labeling of the beer containers, it should clearly show the minimum age from which one can consume alcoholic products. That would therefore mean that any people below the defined age should be penalized accordingly when caught drinking, in additionally advertisements must be in adherence to law. There are countries in which do not allow for advertisement of alcohol (Ogle 2006; Henry & David, 2000). Recently, this company’s management team has decided to use functional marketing procedures. Firstly, develop promotions to target the former brand drinkers whose tests have shifted to other alcoholic drinks. To achieve this, it was researched and established that most of the people targeted drink at night in the various occasions. The company marketing personnel decided to invest largely in night function like concerts that hosted celebrities. These night functions attract a lot of people and gradually the image of the company was restored (Brian & Daniel December 07, 2005). At least people could choose Budweiser brand to other brands from other companies. Secondly, the company decided to invest in craft where the liquor content mixing content was altered, and the alcohol content was raised by a fifth. This will make the consumer perceive the Budweiser to be totally new product in the market. While these strategies can have positive effects in the success of the company, it may be costly in the implementation process. Brito argued that there may be fall in sales at the being as most of the people may not be able to identify and realize that the brand is still the same only a little alterations have been made. Therefore, with a little patience, the company will be able to get positive results from the implementation of the strategies (Bamforth Charles 2003). In distribution of this brand, brewer marketing team had to think of packaging the liquor. Environmentally friendly packaging material is used which can be recycled easily, in additionally package material is made unique for consumers to be able to identify the brand easily. The brewer, in an effort to maintain good image in eyes of the public, it has developed waste recycling mechanism (Ries & Trout 2006). Bottles used to carry beer and cans for packaging are all friendly to environment, thus these materials can be collected and recycled to another usable form. This not only reduces the operation costs, but also enhances the company’s images as it ensures safe environment. From the above discussion, this company is going to remain best in alcohol industry worldwide. Despite the performance challenges faced, this is still the case; AB InBev Company focuses on consumers’ interests and addresses environmental concerns. Social responsibility is a very important role to enhance company image and win the consumer interests. On the other hand, this company possesses strong distribution chains enabling it to be effective in world market (Rialp & Rialp 2007). AB InBev Company gets opportunities and faces threats in the wide economy. Major external strength of AB InBev Company is established customer base. AB InBev company has inputs essential for production include competent employees. Weakness of this company at present is competition from other beer companies. Secondly, people’s tests have shifted to other brands. However, there is a niche for the company to improve the company reputation to get for customers for its brands. A major threat this company faces is competition from other beer companies, and government regulations of beer consumption. Finance and Marketing Budget Budweiser beer has been the leading and most favored brand of AB InBev Company. However, in recent years, it analysts recorded this company’s inability maintain its top position world market. In 2011, Budweiser brand had 8.4 % of total share in the market, and in 2010, it had a t share of over 25% in market, thus this company is not exempted from other companies’ competition in beer industry. However, the competition is not much, since AB InBev has a global recognition as opposed to its competitors that are only established in a few countries. For example, SABMiller is only strongly founded in Africa with no market base in western countries. Heineken N.V. is another competitor of AB InBev, however, AB InBev is about 8 times larger than it (Henry& David, J. B. January 01, 2006). AB InBev Company was capable of banking up to $ 250 million when it merged, the company’s revenues are expected following that move. In the event of recession, the company’s sales may not reduce because it has invested heavily in product promotion of the brands that are already popular. Conclusion and Recommendations It is evident that since Budweiser is an already established brand, it will continue to gain popularity across the globe especially among the young generations. From above chart, it is clear that product’s stock sales are rising, but this is not the situation in other countries. In some of the countries, there growth has matured such that there may be no raise in beer consumption. Although AB InBev Company has customer base across the world, its competing companies are still growing. Therefore, the company management team should not relax; instant it should focus in strategic planning to ensure it remains top always. New marketing strategies need to be formulated and implemented (Mintzberg, Ahlstrand, & Lampel 2005). References Bamforth, C. W., & Bamforth, C. W. (2011). What is a good beer?. Upper Saddle River, N.J: FTPress Delivers. Bamforth, Charles (Anheuser-Busch Endowed of Malting and Brewing Sciences. (2003). Beer: Tap Into the Art and Science of Brewing. Oxford University Press, USA. Beer, P. ., & Schils, T. (2009). The labour market triangle: Employment protection, unemployment compensation, and activation in Europe. Cheltenham, UK: Edward Elgar. Brian, D. T., & Daniel, W. B. (December 07, 2005). RECALL AND PERSUASION: Does Creative Advertising Matter?. Journal of Advertising, 34, 3, 47-57. Evy, L. W., Karst, K. L., & Winkler, A. (2000). Encyclopedia of the American Constitution. New York: Macmillan Reference USA. Films on Demand., & Films Media Group. 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Sport, beer, and gender: Promotional culture and contemporary social life. New York: Peter Lang. Read More