Friday, September 24, 2010

Bud Made Its Own Bed

Good news, Budweiser is going to buy your next beer.

In an effort to jump start lagging sales and lure new loyalists, Budweiser is giving away free beer (21 and over of course) during its National Happy Hour next week.

While free beer is quite a gesture, I have my doubts about the effectiveness of the move. The recent sales slide (18 percent in two years) is more a result of an unfocused long term marketing strategy at Anheuser-Busch.

In 1981, Anheuser-Busch started extending the Budweiser brand with its launch of Bud Light, to compete already established light beers by Miller, Coors and Schlitz.

But Bud Light didn't just compete, they took over the light beer category. Now it's the number one selling beer and has the highest market share with 28 percent.

However, Bud Light didn't become the success that it was by only stealing business from Miller Light and Coors Light. Of course, the core brand Budweiser would also be affected.

Sure enough, in 1989, Budweiser saw the first sign of decline; a trend that has continued for 20 years. In 1988 Budweiser sold over 50 million barrels. By 2008, they only sold 23 million barrels.

The problem with brand extensions is that their success isn't just at the expense of the competition, but the core brand as well. Yet, many marketers cannot see this fact; even though they often justify extension by reasoning that they're capitalizing on the brand's equity and awareness.

If that's the case, it's logical that the extension will disproportionally affect the core brand compared to competing brands because of the high equity in the name.

Unfortunately, that has not stopped brands like Budweiser. In the past decade, Budweiser has introduced even more new extensions, Bud Select, Bud Light Lime and Bud Light Golden Wheat.

Suddenly, it's very understandable how Budweiser is a shell of its former self and has to give away the brew for free.

1 comment:

Alexander said...

What do you think about the timing of this move? Do you think this tactic would have been more or less successful if it was done 1-2 years earlier, in the days when executives were working for a dollar?

Does this now feel like too much of a marketing ploy and not a gesture of goodwill?

What do you guys think? Respond below.