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Brand decisions...

The beer industry is very competitive. In order to win in this industry, companies follow a mantra of efficiency in operations, optimization in the supply chain, and innovations in process and products. However, investment in Marketing is critical, as mentioned by Michael Foley (Heineken’s president in 1994) “There’s no mystery about brewing beer. Everyone can do it. . . . Beer is all marketing. People don’t drink beer; they drink marketing.”

Corona and Heineken started a “fight” for the number one imported beer in the United States in the ’90s.

Corona was the leader in the Mexican beer market and faced difficult decisions to enter and compete in the US market.

Some of the assertive decisions Corona has done in the US market are related to brand decisions:

1.      Keep the Mexican heritage being authentic (maintaining production in Mexico; exporting with minimal changes from formula to packaging; long neck; clear-glass)

2.      Maintaining Corona’s image and colors (white, yellow, and blue engraved on a clear bottle)

3.      Defining and sticking with clear brand theme communication: “Fun, Sun, Beach”

4.      Researches to identify and understand consumer’s needs in specific targets (e.g., Corona was focusing on “drinkability” versus “sophistication” defended by Heineken)

5.      Premium price strategy (aspirational product – lifestyle drivers)

6.      Consistent advertising and marketing campaigns

 Corona and Heineken compete in the same industry and segment (imported premium beer), brand communication is different between the brands in terms of target and brand positioning.

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What consumers really want...

“The success of the BLACK+DECKER brand over the years can be traced back to a consistent focus on consumer needs. BLACK+DECKER products are kitchen and household mainstays: coffee makers, irons, blenders, and toaster ovens. They are also products that provide home comfort and convenience: portable air conditioners and mini-fridges in various sizes suited to different consumer needs and living spaces. Consumers rely on BLACK + DECKER products to perform the day-to-day tasks that keep things running smoothly, and brand recognition takes on even greater importance as a result. BLACK+DECKER products stand out in the marketplace by taking consumer needs into consideration when it comes time to turn out new features and enhanced design” (https://www.equitybrands.com/black-decker).

By reading the statement above, it is clear how recognized Black & Decker brand is.

In the ’90s, the Black & Decker’s brand ranked #7 in the United States and #19 in Europe (Landor Associates Survey).  In this period, the company was present in three segments in the power tolls business: 1. Industrial; 2. Tradesmen; and 3. Consumer.

Black & Decker was dominant in the Industrial and Consumer; however, the company had only 9% of the market share in the Tradesmen segment, having Makita as the primary competitor with 50% of the market share. The Tradesmen segment was targeted essentially for electricians, plumbers, carpenters, framers, roofers, and general remodelers, people who made their living with these tools.

The perception of the Tradesmen target was that Black & Decker products had lower quality compared to competitors (Makita and Milwaukee), and the products were made “for home” and not for “hark work.” However, some researches showed that the majority of Black & Decker products had high quality (positioned in the leadership position compared to competitors).

In this sense, the big issue was the perception that Black & Decker products were made only to home-use, and they were not as good for workers. Another interesting aspect was that Black & Decker products had the same colors (for all the segments: Industrial, Tradesmen, and Consumer). It is a small detail, but for the specific target – Tradesmen – the colors of Black & Decker products were associated with home products, which led to another association (undeveloped). The target (Tradesmen) wanted to “show” their tools with vibrant colors such as teal (Makita) and red (Milwaukee).

In this sense, the case highlighted how important it is to understand the latent consumer’s needs, using assortment planning for specific channels of distribution. Strategically speaking, Black & Decker has such a strong brand in Home segment (Consumer) simply because the company knew what the consumers wanted. In the Tradesmen segment, the company should be aware of the different effects of the overall brand in different segments. Going back to the first paragraph, the company knows how to leverage the brand for a specific target, perhaps the most difficult is to assume that some business must be “killed” or wholly redefined.