The Marketing Of Budweiser Beer Essay
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Although I am no longer a beer drinker, I have chosen to report on the marketing of Budweiser beer, brewed and distributed by the Anheuser-Busch Corporation, with home offices in St. Louis, Missouri. It is my interest in their marketing strategy, especially television ads, that led me to report on this particular product. I will start by looking at the company’s major screening criteria for it’s name of product and marketing possibilities. Founded in 1860, in St. Louis, Adolphus Busch purchased controlling interest in a local brewery.
His goal was to create a “national beer”, one that would be acceptable to all Americans. No one is certain where the name Budweiser came from, but it was introduced to the market in 1876. Because of it’s early beginnings, I could not locate any data on the other screening criteria, such as quantitative (ROI), qualitative (Nature of Business), and other major constraints, except that to create a “national beer” logistics in distribution was the first hurdle.
The analysis of market environment for Budweiser has gone through many phases over the years. Anheuser-Busch may have floundered early but with the company’s use of technology with the launch of the first fleet of refrigerated rail cars and the use of pasteurization to ensure freshness, Anheuser-Busch has positioned itself to become the leading brewery in the world and Budweiser outselling all other beers combined. Most of Anheuser-Busch’s political and legal marketing issues can be directly linked to the cultural and social climate in the market at a particular time.
For example, during prohibition, Anheuser-Busch diversified in areas of corn products, baker’s yeast, ice cream, soft drinks, and refrigeration units. Today most of these issues are still closely related, for instance the political and legal problems dealing with underage drinking and driving under the influence related deaths and costs. Anheuser-Busch has combated these issues with such campaigns as “Know When to Say When”, diversifying it’s holdings with their entrance into the “non-alcohol” market, the aluminum can industry and even into the family theme park market with Busch Gardens.
In the area of customer analysis, Anheuser-Busch has done an excellent job of marketing segmentation and meeting the customer’s needs. Because Budweiser should be classified as a convenience product, although some may argue that it is a staple, branding and customer loyalty are the keys to it’s success. Almost all brands of beer will meet the consumer’s need for a habitual, low effort, low involvement, frequently purchased alcoholic beverage and Budweiser has been able to maintain and build customer loyalty through pricing, placement, promotion and product branding, knowing it’s customer’s needs and placing itself globally as the beer leader world wide.
Most of Anheuser-Busch’s competition strife has become specialized, simply because of Anheuser-Busch’s market dominance in the United States. Most of their competition today is in the global market, but Anheuser-Busch is quickly positioning itself by partnering with foreign competitors, such as Mexico’s Corona Brewery and the overall growth of popularity of U.S. beers overseas. Anheuser-Busch has also diversified it’s position by producing seven other major brands in the specialty beer market. At the present time the only market barriers are those of the distribution type, whereas local breweries try to block distributorships of Anheuser-Busch brands in their locales.
A Company Analysis of Anheuser-Busch reveals that of their vision statement, that states “Through all our products, services, and relationships, we will add to life’s enjoyment”. Their mission is to be the world’s beer company, enrich and entertain a global audience and deliver superior returns to their shareholders. Anheuser-Busch’s resources to fulfill their vision and mission statements are great. They are the largest beer manufacturer, distributor and marketer in the world today. A SWOT analysis of Anheuser-Busch reveals the before mentioned strengths, few weaknesses and mostly global opportunities for growth. The only threat to Anheuser-Busch is that of a social and cultural nature, but I feel it take years for them to feel the effects of this threat and by that time Anheuser-Busch will be so diversified it won’t matter.
In the area of marketing information, Anheuser-Busch should only have to be aware of the speed at which consumers’ attention span and tastes’ change. Their ability to read and deliver promotional “gimmicks” to the consumer almost eliminates the need for statistical data usually derived from models. Because of Anheuser-Busch’s global position, research data for new overseas and foreign markets is the most critical aspect.
Budweiser falls into the consumer convenience product class and has been at the maturity phase for over a hundred years. Anheuser-Busch’s ability to continually improve Budweiser, introduce and market product variations, and insure quality and consistency, may allow this product to remain at a mature state in the product life cycle for many years to come. One theme Budweiser uses, which may be classified either as promotional or as a warranty is that of what Anheuser-Busch calls “Born On Dating”. Production dates are stamped on bottles to show freshness. New or improved Budweiser is sometimes distributed to limited markets for consumer response before distributed nationally.
In the area of branding, most of Anheuser-Busch’s competition comes from sister products, such as Bud Light or Bud Ice. In the area of packaging, Budweiser can be purchased in almost any form feasible, from single servings in bars, in cans or bottles, in six, twelve, eighteen packs. They are also available in cases of twenty four or even in kegs. For Budweiser, the promotional package is best because of their loyalty based consumer profile. Any gimmick to entice the consumer to buy more. Anheuser-Busch was an innovator in the aluminum can recycling craze that showed their environmental and cultural sensitivity. Anheuser-Busch primary business is breweries and Budweiser fits into the company’s product line because it was almost the first product produced.
Anheuser-Busch’s innovative distribution in their early years, placed Budweiser in position to dominate the market. In order to become America’s national beer of choice, Budweiser had to available to all consumers quickly and at the lowest cost of distribution. Anheuser-Busch accomplished this by using refrigerated rail cars and at first local, independent distribution centers. Today, Budweiser is distributed throughout the world, using the latest transportation techniques, from regional breweries, through both company and local dealers. Anheuser-Busch requires all distribution channels to produce, place, track and report all transactions electronically and refuses to handle a paper trail. This ensures the quickest, shortest and least handle and stored inventory of the product line as possible.
Now let’s look at the one area where Budweiser pulls itself from the midst of bland competition and rises to the top. The area that I am referring to is promotion.
Adolphus Busch stated that his objective was to produce a “national beer”. Starting in the 1800’s, Anheuser-Busch’s logo was the first promotional tool used to promote it’s product. The large capital “A” with the American Eagle entwined. This logo has only changed once in over 140 years. In today’s marketing frenzy, that longevity is almost unheard of and it’s recognition power is outstanding. At the turn of the century, Anheuser-Busch first introduced what most people would consider to be the company’s trademark. In those days, beer was distributed in most cities with wagons pulled by horses, mostly drafts , such as morgans. In St. Louis, Anheuser-Busch purchased a match set of Clydesdales as a promotion to pull a new red, white and blue beer wagon. The wagon was suppose to be the eye catcher, but it turned out to be the Clydesdales.
Those Clydesdales are now one of the world’s most recognized trademarks in advertising and are still used today. In the area of television promotion, Budweiser constantly changes it’s current commercials, with some running longer than others. Other than the Clydesdales, remember the frogs and “Bud” “Wise” “er”, the frogs hitchhiking on the Budweiser truck, Louie the Lizard, the Ferret, the “Whazzup?” guys and currently the “Whatchyadoing?” routines? The current promotional blend of Budweiser includes all aspects of today’s media, radio, television, internet, MLB, NFL, NBA, Nascar, boxing and almost every other sporting venue and it is still “The King Of Beers”. Anheuser-Busch has been successful in using a mixture of push/pull style in promotion, with coupons, contests and reward/rebate programs to encourage sales. Most of the labor involved in promotion is handled by the distributors responsible for getting the product to the consumers.
The price structure for Budweiser should be classified as highly competitive. The consumer has many choices or substitutes for like products and only chooses Budweiser because of brand loyalty and price equivalency. Budweiser’s price must remain within a percent or two of it’s closest competitor to maintain sales. Let me put it this way, the supplies, production and distribution cost of beer making is almost equal in like products, so marketing has one of the highest departmental budgets in all aspects of Anheuser-Busch’s business. There is little fluctuation in price, although Anheuser-Busch allows the distributors to set the end consumer price within reason.
Since Budweiser is a long term existing product, the only implementation requirements for it revolve around product improvements or spin-offs. Research and development and marketing costs would bear the most cost, since distribution channels are already in place.
The future of Budweiser is now only limited to Anheuser-Busch’s ability to become one of the beer industry’s leaders in global marketing. Mr. D. Ramachandran, of McKinsey & Co. a major marketing firm in Toronto, Canada, says something to the effect of “Anheuser-Busch is likely to become a the first global player in the beer industry just like Nike and Coca Cola in their respective fields”.1 With sales of Budweiser up 2.7 % in the U.S. and surpassing the overall industry output of 0.8% and 17 % in foreign markets last year, the future for Budweiser and it’s parent company, Anheuser-Busch, looks great.
Anheuser-Busch’s U.S. market share now stands at 48% and the nearest competitor at 19%. U.S. demographics show strong growth in the 21-27 age group and in the Latino population overall. Extensive modernization of the twelve U.S. breweries has increased capacity and efficiency, resulting in lower costs. Their popular advertising, extensive retail sales force, wide range of sponsorships and responsibility programs and messages contribute to a positive image for their brands. With showing the consumers ability to move up to the premium and above brands, their growth potential is almost unlimited. Also, in the overseas market, their purchase and holdings in other foreign brands increases the global outlook of Anheuser-Busch.. In 1999, Anheuser-Busch started an incentive program to reward wholesalers who handle only Anheuser-Busch products. This program has been very successful in sales and has outpaced all other brands.
Here is partial report Bucknell University on a beer manufacturer keys to success: (In order of importance) 2 1.) “Clever Advertising” – Brand Awareness is a critical component in establishing and maintaining a brand within the beer industry. Advertising helps create brand awareness, which helps create customer loyalty, market share growth, and greater price positioning. (35%) 2.) “Low Cost Production Efficiency” – Price is a critical factor within the beer industry. A company’s ability to minimize production costs, realize economies of scale and enhance efficiency is important in determining overall success. (25%) 3.)
“Ability to Respond Quickly to Shifting Market Conditions” – Changing conditions within the market may dictate a need to quickly change product lines and pricing structure. (changes in consumer preferences to lighter beers/craft beers, price competition, changes in disposable income) (25%) “Attractive Styling/Packaging” – Directly related to “Clever Advertising”, brand image plays an important role within the beer industry. (15%) In conclusion, the marketing strategy of Anheuser-Busch for Budweiser beer has been developed into a streamlined package of product, place, promotion and price, that is unmatched by their competitors in the domestic or global marketplace. This strategy has placed Anheuser-Busch at the top in all endeavors, including `breweries, non-alcoholic beverages, aluminum can manufacturing and recycling, malt and barley production, distribution and warehousing, and family theme parks.