Budweiser (Anheuser-Busch)

April 24, 2012

Group Members:

Mark Feil

Andrew Jordan

Matt Hill

Mark Vangness

EXECUTIVE SUMMARY

We chose to analyze the marketing principles used by Budweiser. The manufacturer that produces this beer is Anheuser-Busch, Inc., which is located in St. Louis, Missouri. Throughout this paper we analyzed Budweiser’s positioning, social responsibility efforts, their internal, and external opportunities and threats, along with their strengths and weaknesses.

Key Findings: Budweiser has invested almost one billions dollars in the prevention or

awareness of drunk driving through their Our Roads, Our Responsibility campaign.

The company has just launched an app for smartphones that measures the temperature across Ireland. If the temperature in a given location exceeds 20°C, consumers in that area will receive a free drink from any 2,500 participating pubs.

Budweiser has dropped from a high of 26% market share in 1988 to less than 10% today.

Budweiser has recycles more than 99% of the solid waste that they have created, and are one of the largest recyclers of aluminum beverage containers in the world by recycling 27 billion containers each year.

Key Recommendations: Work to expand internationally as beer is growing in popularity in

countries other than the United States. For example China is by far the world’s largest and fastest growing beer market and during the past five years has accounted for 45 percent of the growth in global beer volume. Over the past 10 years, industry volume growth has averaged 7 percent annually. Anheuser-Busch is well positioned to take part in the substantial long-term growth opportunities in this country.

Women in today’s society are just as heavily into sports and having a quality beer, so this is a place they could look to expand their positioning in the market.

In order to combat with losing market share, Budweiser should release seasonal flavors that are only available for a limited time. Similar to Sam Adam’s Summer Ale or McDonalds McRib, Budweiser could increase sales in the short-run and hopefully entice customers with this type of promotion.

Budweiser needs to continue to connect emotionally with its customers and their lifestyles. The marketing of having a good time, living a healthy lifestyle, and keeping up with the times is crucial for the future success of this company.

Introduction

Anheuser-Busch Inc. is a strong and dominating company that is a leader in the

beer market. They are a company that is rooted in values, ethics and sheer determination.

Now lead by August A. Busch IV, CEO and president, Anheuser-Busch is continuing

their reputation as one of the best in the business. What started out as a small brewery

acquired by a German immigrant is now the company known as Anheuser-Busch that

continues to produce the two best-selling beers in the world.

The mission statement in which they go by is “Be the world’s beer company.”

This is an effective mission statement and shows that they want to be a leading force in

the worldwide beer industry as well as domestically. However, the Budweiser market

share has been in steady decline over the last two decades and Coors Light recently

passed them in January and gained the second spot as it relates to market share while

Budweiser fell to 8.4% at the end of 2011. Their top competitors in the U.S. are

MillerCoors Brewing Company and Molson Coors Brewing Company. Budweiser has a

very specific target market. One of the things Budweiser prides itself on is advertising

through sports. They do this very well by sponsoring events or putting up signs in

stadiums as it is clearly portrayed in Busch Stadium, the home for the St. Louis

Cardinals.

Brand Positioning

Budweiser had solidified themselves in the market as the “King of Beers” and

continue to portray this image with their red cans and labels, and also with the brand

mark of the royal crown. Today, Budweiser is shifting from authenticity to sociability in

its first ad campaign since the merger between Anheuser-Busch and InBev last year. The

campaign introduces the strapline, ‘Good Times ... They're Out There', and is set to be the

brand's biggest press and outdoor push to date. This goes parallel to Bud Lights “Here

We Go” campaign as an attempt to regain customers from their brand’s cannibalization.

Target Market

A target market is a defined group that managers feel is most likely to buy a

firm’s product. Because Budweiser is heavily marketed throughout sporting events, their

main target market is a male between the ages of 21-34 years of age.

According to the information provided by the Media Mark data Budweiser’s

specifically targets those who work construction and maintenance jobs or elsewhere

employed with varying income levels, most of who are not married or engaged. Those of

them who are married have children that are under the age of 2. These targeted

individuals have been living at the same address for less than 4 years, in homes that are

valued at less than $50,000. As far as entertainment, Budweiser targets those who

typically watch programs and events on CBS Sports Network, Adult Swim, ESPN, Fox

Soccer Channel, FX, FSN, G4, LOGO, MLB, MTV, NFL Network, Outdoor Channel,

and Spike TV. It is obvious that Budweiser is targeting younger aged men, who are

interested in sports.

Anheuser-Busch President, Dave Peacock, stated that Budweiser wins all the taste

tests. Therefore, today’s beer drinkers clearly are not rejecting Budweiser’s taste. Instead,

they’re rejecting Budweiser’s image. Otherwise, Budweiser would not have dropped

from a high of 26% market share in 1988 to less than 10% today (Arnold). In order to

regain their status as the “King of Beers,” they must assume the position of a brand

leader. Having said that, I think the slogan “Grab Some Buds” is a step in the right

direction. This advertising campaign reassumes their position as an assertive and

confident leader in the industry. It reflects a modern version of the “King of Beers.” I

think this advertising stands a chance of making a difference.

While, nobody’s going to actually admit they drink Budweiser in order to

promote their aspiring image of themselves, or their desire for others to respect them. In

fact, most beer drinkers tend to buy the image of the beer, not the ingredients. So, above

all, Budweiser must connect with consumers emotionally. Guys buy the beer whose label

they want to sit behind at a bar because it stands for the kinds of things they do, or wish

they did. Therefore, Budweiser must give them a reason to “Grab some Buds” rather than

the countless other draft beers.

Budweiser has a wide variety of products outside of alcohol beverages to aid in

promoting the “Budweiser” lifestyle. Not only does Budweiser have several types of

beer, but they also have a product line from apparel, sport paraphernalia, ring tones for

cell phones, and wallpapers for computers. Budweiser stays consistent with the marketing

mix. Their apparel and other products are based not only around their alcohol beverages,

but also around the sports they sponsor and teams who are involved with Budweiser.

Their marketing mix revolves around primarily sports and to the sport fans thus all of the

aspects of the marketing mix are consistent with one another and revolve around the same

advertising aspect of sports.

Product

Budweiser is a top quality, non-bitter beer, which is why they have become a

successful company. They are constantly changing their look as well as their image

through advertising, as well as products. For example, Budweiser has just recently

changed the bottle look to an aluminum bottle. This compliments the image and style of

Budweiser drinkers according to Andy Goeler, senior director of Budweiser Marketing

Anheuser – Busch Inc. (2005, p. 1) Budweiser also will package a product to the image

of whom they sponsor. For example, NASCAR is one of the biggest sports Budweiser

sponsors. Dale Earnhardt Jr, the driver of the number eight Budweiser Chevrolet stock

car is one of Budweiser's most popular sports icons. Budweiser sponsor's his car as well

as builds his packaging of special promotion bottles of beer around him. The company

has been very successful in being able to separate its product from the competitor’s

products. People are very aware of its unique taste and quality. People are also aware of

its notorious red and white colors, along with the royal crown to symbolize the 130 years

of history that goes along with drinking a Budweiser beer.

Promotion

Commercials are a huge part of Budweiser’s marketing strategy and they usually

use famous athletes to catch the attention of the average sports viewer. It is estimated that

Anheuseur-Busch spent $378 million in the U.S. on sports marketing in 2008. This is far

more than its competing brewers. Throughout their marketing history Budweiser is

famous for showing off their Clydesdale Horses, who are featured in all of their Super

Bowl to date. The Clydesdale Horses also tour the country. There are six "hitches" or

teams of horses, five that travel around the United States and one that remains in their

official home at the company headquarters at the Anheuser-Busch brewery complex in

St. Louis, Missouri, where they are housed in a historic brick and stained-glass stable

built in 1885.

Recently, the company has just launched an app for smartphones that measures

the temperature across Ireland. If the temperature in a given location exceeds 20°C,

consumers in that area will receive a free drink from any 2,500 participating pubs.

Budweiser certainly does have enough channels in which to market. Budweiser

has one of the top marketing mixes there is in a brand. They expand their marketing from

showing off on a race cars to being scene at a sports function. They also can be found in

any store you walk into as well as having their own network called Bud TV. In addition,

Budweiser picked up four awards at the 49th Annual International Advertising Festival

for their ads they marketing through commercials. Budweiser’s marketing through sports

includes plastering their logo among racecars, in stadiums, arenas, concert stages, and

many more places. (NYAMA, 2005, p. 2) They not only market at such places, but they

also sponsor many of the functions and hold their promotions. For example, Budweiser

markets their product in stadiums. Budweiser has picked up sponsoring in over 32 NFL

teams. Budweiser will have promotions such as special "Party Zone" seating areas, utility

vehicles with a football theme painted on them, and a tailgate party with the Budweiser

theme. (All Business, 1999-2007, p. 1)

Place

Budweiser beer is labeled as a convenience good and can be purchased in any

grocery store, convenient store, liquor store, sport events, concerts, or any other alcohol

based store or function. Any place that holds a liquor license will sell Budweiser. As

stated earlier, Budweiser promotes their beer at stadiums, arenas, and concert halls. Each

of these places you can purchase Budweiser products. In order to increase Budweiser’s

depleting market share, they should expand the target audience in which they market their

product to. Today, many women are just as much into sports as men are as well as into

having a beer. According to Jean Grillo, Budweiser is adding more networks so that they

may be able to reach the target audience of woman as well as the older age group of

seniors. (2001, p. 2) By reaching out to the various age groups and gender for their

product, Budweiser has come out with non-alcoholic products such as Michelob and

O'Douls. (Grillo, 2001, p. 2)

Price

The price of beer in general is rather elastic, which means that the price increaser,

decreases demand for the beer. This is due to the fact that customers can always find

other alcoholic beverages that might substitute for the beer such as hard lemonades, wine,

etc. Recent high prices resulted from increase of average barley prices by 17% since the

beginning of the year to the highest in 11 years.

That being said, Budweiser's pricing is in line with their competitor's. Although,

geographical factors do play a role in the pricing of their product, in some states you can

purchase a twelve pack of Budweiser for $7.99, in other areas a twelve pack may run

$9.99. As you can see however, the prices are not far from each other. Not only does

Budweiser keep their beer prices along the same path as their competitors, but their other

product lines such as apparel are fairly priced as well. Depending on which place you

chose to purchase such items can depend on the price as well.

Here we compared Budweiser’s price to their competitors and as you can see,

their price goes along perfectly with their other market share leaders, and is even lower

than Sam Adams.

Beer Price (12 Pack)

Budweiser $8.99

Miller $8.99

Coors $8.99

Sam Adams $13.49

Heineken $13.99

www.wineaccess.com

Social Responsibility

Although Budweiser’s main focus as a company is to provide great tasting beer to

millions of people around the world, they also have another important focus: socially

responsible marketing. The primary responsibility for Budweiser is to ensure their

consumer’s drink responsibly. Anheuser Busch and Budweiser have many programs

designated to ensure safe drinking and give back to the community. One program that

they have started is the Our Roads Our Responsibility program. This program is designed

to combat the number of drunk drivers, ensure everyone gets home safely, and educate

people on the dangers of trying to drive under the influence. Anheuser Busch has

invested over 930 million dollars into preventing drunk driving, alcohol abuse, underage

consumption, and educating minors on some of the dangers of drinking (Budweiser).

They are committed to this program because they believe the beer industry should play a

role in promoting alcohol responsibility because “no company benefits from the misuse

of its products.” At the end of every Budweiser commercial, the ad is ended with the

phrase “Please drink responsibly.” While they want to get the message across that

viewers should buy their products, they also want consumers to stay safe. Before entering

Budweiser’s website, one must be 21 years of age or older; if you are under 21, the

person will be sent to a site with alcohol statistics like drunk driving and alcohol related

deaths. All throughout the site, they stress the importance of driving sober or having a

designated driver and drinking at the right age. However, despite their dedication to the

Our Roads Our Responsibility program, they also persevere to be active in the

community and environment.

Budweiser not only wants to reduce the amount of drunk drivers, but make the

community and environment a better place to live. They created the slogan Our World

Our Responsibility that promotes giving back to the community and protecting the

environment. Their mission statement for this campaign is to “connect our efforts to a

collective responsibility we share with our employees, consumers, wholesalers, retailers,

law enforcement, elected officials, educators, and other partners.” They want to everyone

to pitch in and help make difference in the community. When disasters strike, Anheuser-

Busch and the Anheuser-Busch Foundation are ready to be part of the recovery by

providing a helping hand to those in time of need. In the past year, they donated more

than 2 million cans of water in more than 15 US states to support disaster relief related to

tornadoes and storms, wildfires and floods affecting 48 communities (Budweiser). They

also played a big role when Hurricane Katrina hit by donating more than nine million

cans of drinking water to relief services. By being involved in the community and making

a difference, it sheds positive feedback on the company. People will positively look at

this company as a whole because of their involvement in the community; ultimately, their

hopes are to gain a positive reputation from the public and boost sales because of it.

Anheuser-Busch and Budweiser also team up to make the improve environment

by recycling and having eco-friendly technology. They recycle more than 99% of the

solid waste they create and are one of the largest recyclers of aluminum beverage

containers in the world by recycling 27 billion containers each year (Budweiser). One

way they cut down on use of materials and promote recycling was the creation of their

plastic bottles. While the majority of their bottles are still glass, the uses of plastic

bottles are on the rise due to recyclability. They also strive to conserve energy by

looking for ways to reduce the amount used in their facilities while maintaining quality

standards. In the past five years, US brewery water usage has declined more than 19

percent, saving 12.8 billion liters of water.

Macro-Environment

Right now, Anheuser has a big opportunity to increase globally. The

international market is four times the size of the U.S. market. This allows them many

chances to expand their market. With a bigger market it will also give Anheuser a chance

to experiment with different product lines that may appeal to different market segments.

The size of the international market may also be more likely to produce higher growth

rates. With less restriction on trade barriers it gives a company a better chance to import

products into a country. It is a lot easier for a company who has the resources to enter

new markets. However, their biggest focus is in creating new alliances with other large

beer distributors such as inBev’s and Hansen Natural Corp.

Budweiser faces two types of threats, international and local ones. The first one is

that even with Anheuser’s size Budweiser will still have threats when entering new

markets. They will have to compete against the existing companies that have already

established themselves in the market. They could drive Anheuser out before they even get

a chance to fight. Competing in another country can be very expensive. Keeping costs

down will be a problem that arises. They will have extra costs involved with oversees

distribution or production. The costs will be absorbed in the price of the product. Lower

priced alternatives would be able to compete and slow down their market growth. Foreign

exchange rates will also have a big impact on operations in the international market. They

could cause a big loss in profits due to a shift in the rates. Increased barriers or

government regulations could also prevent market penetration. Another possible source

of threats could be the regulation of their ability to advertise and market their products

the way they currently do.

The second threat for Budweiser is domestic, as two of Anheuser-Busch’s

significant U.S. competitors have combined into MillerCoors in 2007. It is projected that

MillerCoors will achieve $500 million a year in cost savings, which will flow straight to

the bottom lines of the two parent companies (STLTODAY). MillerCoors will have the

closest market share any rival has been to the St. Louis colossus in 20 years. These cost

reductions will eventually reduce Coors and Miller prices, expand their distribution

channels and allow them to compete in more even conditions against Budweiser.

Anheuser-Bush has been the largest growing company within the beer industry. It

sells its product not only in America but also all over the world with long-term goal of

targeting other large potential markets. Information gathered above has been rather

impressive however, after closer analysis we believe that every company should have

some room for improvement. With a focus of tapping in to international markets,

targeting towards women, leading sales promotions for seasonal beers, and most

importantly continuing to adapt to the constantly changing customer’s needs we believe

that Budweiser will remain one of the most admirable and successful brands within the

beer market.

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