Efforts on advertising, careful pricing and market research: key players in branding
The Corona case confirms that every brand is vulnerable at any time, even the strongest ones. Heineken was a leader brand and a market sales leader for many years in the US and underestimated the danger of a Mexican player, most likely with less technology and sophistication but who did a remarkable job in identifying the needs of its target customer and allocated all efforts on it. The momentum to enter the US market was also well calculated by Grupo Modelo and demonstrates how much it was following the demographics, needs and acquisition power of the initial customer, the Hispanic population.
A huge success for Grupo Modelo was to find local champions in foreign countries, and to relocate talent in order to maintain the key aspects of the Mexican culture and of the company itself that influenced the success in those countries. On one hand, it maintained a good level of control and consistency on marketing and operations in those foreign locations, and on the other hand, it created a connection of the brand with Mexican and LatinAmerican nationals living abroad. The case made me reflect about other brands that are also premium abroad but very affordable in their countries of origin, like Zara the clothing store, that creates a sense of pride for those Spaniards living abroad naturally converting into the first promoters of the brand despite finding a premium price.
The case also evidenced how difficult is to re-brand a product, or to recover from a brand damage. For Heineken it took several years, different marketing directors and significant investment to have a competitive brand again, in a market that was moving very fast and did not allow for that time.
Finally, the effect of not increasing pricing while other competitors did, and to increase advertising at the same time clearly influenced the success of the Grupo Modelo brands in the US. It created attachment to the brand for a certain period, making people less willing to switch to other beers when prices would rise again.
