Reference no: EM132305756

MANAGEMENT DECISION CASE

From Clydesdales to Talking Frogs: Budweiser’s Strategic Adaptability Keeps It a Winner

In the rapidly changing world of today’s marketing manager, for a brand to survive and thrive over the long run, its marketing strategy must stay ahead of the curve. It must continually evolve—responding to the changing needs and preferences of customers and taking advantage of the many new tools for connecting with its target markets. Over the course of its 150 years,57 the Budweiser brand has not only survived but thrived, thanks to strong marketing management focused on providing value and effectively communicating that value to its customers.

In 1864, Adolphus Busch partnered with his father-in-law, Eberhard Anheuser, to begin brewing beer in St. Louis. Anheuser was a marketing pioneer in those early years, using a strong mix of the most cutting-edge promotional tools of the day: print and outdoor advertising, point-of-sale material in saloons, an inventory of giveaway items, and a large cadre of traveling salesmen (yes, they were all men back then).58 Fast forward to 1908: anticipating Prohibition, Busch used newspaper ads to remind readers (and regulators) that the beer industry employed 750,000 people who touch 4 million women and children family members, and that 400,000 more people were employed on farms that produced crops needed to make beer. In a patriotic theme to be revisited in future years, Busch and Anheuser proclaimed to everyone that beer industry employees “love their homes,” and “are good, honest citizens, temperate, patriotic, and true.”

Despite their best efforts to thwart it, Prohibition arrived in 1920, and the minds behind Budweiser responded with a major modification to the product component of the marketing mix: the introduction of nonalcoholic beer and soft drinks.60 When Prohibition ended in 1933, the knee-jerk marketing approach of most beer brands was to simply announce they were back in business with ads in the key newspapers of the day (The New York Times, for example). Budweiser took a bit bolder marketing approach. In an early example of event marketing, Budweiser celebrated the return of legal booze with six Clydesdale horses pulling a red, white, and gold beer wagon up New York’s Fifth Avenue to the Empire State Building.61 These majestic horses were a very early “brand character,” and of course they would go on to appear many times in Budweiser promotions in the coming years.

After the Great Depression, Budweiser made a major product packaging innovation—beer in cans—that dramatically boosted product sales. The 1940s brought the now-famous slogan, or tagline, the “King of Beers,” which is still in use today. In the 1980s, faced with more health-conscious consumers, Budweiser responded with one of its biggest product innovations: Bud Light. Although Budweiser grew to be the number 1 American beer brand in 1988, by 2001 the Bud Light brand line extension overtook its big brother for first place in U.S. beer sales. Also in the 1980s, Budweiser took the bold marketing strategy step of focusing almost exclusively on sports-watching males. So it was only natural that Budweiser would decide to dominate the premier sporting event—the Super Bowl, of course. While requiring a huge promotional expenditure, the annual event gave them instant access to a massive audience of these targeted sports-watching males, and it was also a great platform for some very memorable and creative advertising (search for “Budweiser Frogs commercial” or “Budweiser Whassup commercial” to see a couple of famous classics).62 Budweiser was indeed the King of Beers—and the King of Marketers!

But alas, market preferences shifted in the 1990s toward wine and cocktails, causing a marked decline in beer sales and heightening the role of marketing management even more for Budweiser. Ultimately, the emerging microbrewery craze set Page 20in; in 2008, Anheuser-Busch was sold to the Belgian company InBev (the new corporate name is AB Inbev).63 Although no longer an “American-owned” beer, Budweiser continues to push its strong association with Americana through cutting-edge Super Bowl commercials and the return of the beloved Clydesdales. Budweiser’s 2017 Super Bowl ad reached even further back into its American history, telling the story of Adolphus Busch’s immigration to the United States.

Budweiser continues to innovate with products focused on females and millennials. In 2012, it launched a blend of beer and cocktail called Lime-A-Rita, with additional flavors recently released.65 In 2014, 200,000 millennials were invited to vie for 1,000 spots at Whatever, USA, a Budweiser-led event in Crested Butte, Colorado, where guests partied with celebrities, made many new friends, and, of course, drank Bud Light. The strategy was executed largely through digital and social media.

Over all these years, Budweiser’s longevity and continued success is a testament to the power of strong, adaptive marketing management—always staying fresh in the market, relevant to new groups of customers, and effective in using the day’s most effective promotional tools to communicate the brand’s value and differentiation.

QUESTION:

Over the course of its history, Budweiser’s marketing responded to major regulatory and cultural changes, such as Prohibition and the changing role of women in society. What other changes are either happening now or are on the horizon to which today’s marketing managers at Budweiser should respond? What should that response be?