Corona Beer Harvard Case Solution & Analysis

Introduction

                Modelo is a Mexico based brewery that sells Corona beer in the United States of America as well as Mexico. In 1996, it had sold 28.9 million cases of Corona Extra in the United States and became No 2 imported beer brand in the United States of America. The Compound annual growth of the company had been nearly 11% compared to the leading brand which had achieved only 0.25% over the same period. The objective of the company is to become the leading imported beer brand throughout the world. However, it has to capture the world’s beer leading market that is the United States of America. 

Considering all the data in the case, what amount do you recommend that Corona should spend in 1997 if it desires to become the #1 import brand by the end of the year? Justify the recommendation.

I would recommend that the company should spend $20 million on the brands which are exported to the United States of America in 1997. Currently, Corona Extra is the second most successful brand in after Heineken’s brand.  The strong brand image of this brand should be emphasized. The Barton Beers and Gambrinus Co should start a nation-wide campaign in their states to promote the company’s brands. Network Television advertising consists of 53% of the total expenditure followed by outdoor advertising which consist of 7.2% of the total expenditure.

Therefore, the effective utilization of this medium would increase the awareness of the brand. Approximately half of the advertising campaign may be allocated to this nation-wide campaign. The focus of this marketing efforts would be younger educated people because this segment consumes over 68% of imported beer.

Currently, the Hispanic population is rising at a faster rate than other ethnic groups.The population of Hispanic is expected to reach 88 million in 2050. As the buying power of this group is lower than the rest of the country, the company should reduce their brand’s prices other than Corona Extra to exploit the advantage of this group’s growing population.

The US government has doubled the Federal exercise duty (FET) from $0.65 to $1.30 per 24 bottle case. As the company has decided that this tax will not be passed on consumers, this costs will be absorbed by the company. Some of this budget will be utilized for this costs. In return, the reduced prices will provide competitive advantage to the company and assist it to become the No1 import brand by the end of the year.

Determine the most promising sales for Corona to allocate additional promotional resources, including but not limited to the BDI/CDI computations performed above. Consider any other data in the case that would affect your assessment of market attractiveness. Justify your selections.

Corona Beer Case Solution

The regional segmentation of beer consumption shows that 18.4% amounting to 476.39 million of 2.25 gallon cases take place in South Atlantic States. These include Florida, Georgia, North Carolina, Virginia, Maryland and others. In these states, Virginia is on the top with 60.87 million of 2.25 gallon cases. Other states that follow are New Jersey and Wisconsin. The population of America has grown by 17.1% between 1980 and 1996. The North East and Mid-West grew by 4.9% and 6% respectively while the South and the West has grown by 23.3% and 35.3%.

Most of the sales of the company are derived from the Western States. However, it has also achieved success in the Southern California, other states such as New Jersey, Virginia and Wisconsin have potential for the growth of Corona’s beer sales. Regional offices are opened by Heineken to promote its brand.  Therefore, Modelo will have move as early as possible and devote their resources towards Virginia, New Jersey and Wisconsin at priority basis. Although, it will face Heineken there, but these markets are important to become the most popular brand in the country. Other areas for potential shown by CDI index includes New England, New York and California which has the highest CDI indices of imported beer category. As far as the total beer category is concerned, Texas takes the lead. As far as BDI Indices are concerned, most of the sales of Corona are concentrated on Florida, Texas and California. However, more resources should be invested in areas such as New England, New York, California, Virginia, New Jersey and Wisconsin................

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