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Monday, October 07, 2013

Will Heineken reach drinkers that other beers can’t reach? Unlikely.



In August this year, Heineken announced that it intended using crowdsourcing to generate products and marketing ideas targeted at older drinkers.

The company’s rationale was that the beer industry has historically been focused on the youth sector and so there should be opportunities for products aimed at the older drinkers. This is an especially important group since it is a large, growing and relatively wealthy.

This activity is part of Heineken’s corporate strategy to harness innovation to drive revenue growth in the face of falling beer sales.

The Ideas Brewery innovation platform was the mechanism used to generate these insights into the preferences and motivations of older people. The winning entries came from Finland, Australia and the USA. All of these are fast ageing countries.

Heineken hoped the exercise would refine its marketing strategies ensuring older drinkers order Amstel. Birra Moretti and whatever new ‘oldie products’ are launched rather than Carlsberg and Peroni.

Full marks to Heineken for conducting this crowdsourcing exercise. Clearly the company understands the implications of the changing demographics and wealth profile of its customers and isn’t frightened to be seen targeting older people as well as its traditional youth customers.

To be honest, it really is a no-brainer that companies should be modifying their marketing strategies to reflect the growing importance of older people. Surprisingly, much of the fmcg industry is still stuck at the starting gate pondering what to do as the composition of their customers continues skewing older.

So what has resulted from Heineken’s look and listen exercise to its older customers?

The company has identified three ideas that it wants to investigate further. A range of beers, brewed differently with a unique customer proposition, modification to the bottle shape and a collection of wine-inspired beers.

Understandably, there are few details about these ideas. Apparently the new beer, called Fahrenheit +60° is part of new product range that would contain products fermented at different temperatures (e.g. 60,65, 70 and 75). These numbers signifying the target age group. Another age related factor is the level of iron in the product that is thought to be beneficial for older bodies.

The new bottle, called the Easy Star bottle is intended to be smaller and lighter and more distinctive on the shelf.

The innovation program manager at Heineken was quoted as saying that the company wanted to understand the “needs and lifestyles” of older drinkers without “explicitly telling them that they are old”.

No doubt this is very early days in Heineken’s thinking about what it needs to do to capture more of older consumer’s spend. We have our doubts if any of these ideas are likely to be winners.
Bloomberg recently published an article that we suggest the marketing team at Heineken make mandatory reading – it might save them a lot of time and money.

The Bloomberg journalists investigated what products had resulted from the six year collaboration between University of Cincinnati and its corporate partners. These include P&G, Boeing Co and Mondelez International. This joint corporate and academic initiative was established to identify new products concepts for the older consumer.

The journalists were surprised (we were not) that here had been no product ideas targeted at the 60+ that had transferred from the ideas lab to the supermarket shelf. Of the 37 projects none had been commercialised.

What the guys from Bloomberg had discovered was the ageing consumer paradox.
The company that does such a great job of making products for seniors takes great pains not to make products for seniors.

So what does this mean for companies like Heineken?
Should they be focusing their attention on the older demographic – a resounding yes.
Should they be trying to invent special products for oldies – a resounding no.
Should they be evaluating their mainstream marketing – everything from product formulation, advertising through to channel design – a resounding yes.

We know it might be hard for some marketers to understand but reaching the age of 60 or 70, even 80, does not mean you want to stop consuming mainstream products. However, if everything about the product and its promotion shouts that it not intended for you then don’t be surprised if the older shopper will look elsewhere.

If the team at Heineken need some help solving the paradox we would be delighted to give, sorry should have said charge, help them. Dick Stroud

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