Beer Goggles

It’s difficult to taste the difference between Bud Light, Coors Light and Miller Lite. Not to mention the other slight variations on those beers. So, right off the bat, the mainstream beer market has several big players with almost no product variation. The only product variation in the mainstream beer market is the bottle and can. Barring the introduction of a new type of beer, the scarce informational beer advertisement is usually about a new bottle. The rest is persuasive.

U.S. alcohol consumption per capita. Source: International Journal of Advertising

U.S. alcohol consumption per capita. Source: International Journal of Advertising

The goal of beer advertising is not to add more drinkers to the market. The number of people who drink beer in total tends not to be ad elastic, and in fact doesn’t change much at all; so the big firms fight to redistribute shares of the market.

For example: the Miller Lite vortex glass bottle, which was advertised as creating an easier pour. Miller Lite, Coors Light and Bud Light all advertised its aluminum bottles with screw tops. Bud Light recently designed different can artwork for every NFL team.

The reason, again, is product similarity. When the product is the same (maybe a few calories more or less), advertising, including packaging, becomes a serious part of the interactions between beer giants. According to market research firm Statista, Anheuser-Busch InBev spent $539 million on ads in 2014. MillerCoors spent the second-most, at $417 million.

The ads are almost exclusively persuasive. They focus on groups of people socializing, often out of the house. The marketers want consumers to associate being part of a group with drinking their light beer.

Beer is a low-risk purchase, meaning the consumer knows more or less what they will get when they open the bottle or can. Until you get to the craft beer segment, which I will ignore for this post, drinkers of mainstream beers will not investigate the qualities of light beers – for example, Coors Light versus Miller Lite. Consumers rely more heavily on the attitude surrounding a beer brand instead of the beer itself because the taste is almost indistinguishable. That’s why humor and fun are used more than information.

So, we should take a look at some examples:

bud light-up for whatever

Bud Light advertises the night life. Going out with friends, not knowing what awesome thing you might do together, and knowing you’re safe with Bud Light. It’s all about comfort with the product. Beer drinkers already know what Bud Light tastes like. But when they plan to be with a group of people, Anheuser-Busch marketers want beer drinkers to think, no matter what, Bud Light is a safe and familiar choice.

cl-cold

Coors Light might trick the occasional viewer into thinking its advertisements are informative; but I struggle to believe “coldness” is an informational quality of the beer. Coors will set a lot of its advertisements at bars and in cold places. During football season, Coors joins Miller and Bud in deploying NFL-related advertisements. The prisoner’s dilemma comes in here: If only one firm advertises to the football crowd (men who are group-oriented and generally more susceptible to the fear of missing out), the other firms lose significant market share. If they all advertise to this market segment, Anheuser-Busch and MillerCoors split a small gain in total profit.

Miller Lite - hops

Miller Lite gets closest to informational advertising with a focus on triple hop brewing. It advertises a light beer with few calories, and emphasizes the actual product in its ads, especially in print. On television, you see a mixture of product-focused ads and “Miller Time” ads, which play on the same theme as Bud and Coors – young men socializing with a group of friends.

10 thoughts on “Beer Goggles

  1. At one point Miller Light ran a segment that worked to convince consumers they were responsible for significant developments in the beer market as they invented the “Light Beer” that your parents drank. They really did not hint at any differences today between that light beer and other brands, so it was another persuasive attempt to get in to the mind of the consumers. A lot of businesses work to add-value to their firms and products, rather than undercut each other. However the beer industry provides a challenging market to add-value, as products have been refined through years of developing a favorable taste and caloric balance. It is unfortunate but the nature of the beer industry creates an omnipresent prisoner’s dilemma in regards to advertising expenditure.

    • This “Light Beer” your parents drank commercial, plays into a couple of different advertising lines. The first is that it shows the viewers that this beer and company has been around for a long time thus aiming to prove that it has a tradition of success. The other avenue it plays into is the fact that teens and young adults look up to their parents. One study I found said that 67.7% of teens said parents are the most influential role models in their lives. This would lead them to want to be like their parents. So if a young adult doesn’t have a beer of choice and this Miller ad convinces them that this is what their parents drank, then it might be able to pick up market share from these new drinkers.

  2. Check out Budweiser’s newest advertisement that aired during the Super Bowl. It’s aim is to portray craft beer as uppity and uncool, whereas Budweiser beer is “Brewed the hard way.”

  3. So … if Hotelling is the model and products are indistinguishable, is the marketing likewise indistinguishable? – similar themes and ambience, similar target audiences, even if slogans and visuals vary? Or is there product differentiation in the branding that leads to systematic patterns of who drinks which (by some demographic or social metric)?

    • I would argue, that with few exceptions, advertising is likewise indistinguishable. Remembering that all of these ads are persuasive ad not informative, we return to the idea that persuasive advertising is used simply to preserve or grow market share, not market size. This goal implies that whatever persuasive branding is used be as broad as possible. If you market yourself as the “farmers beer” you might lose some of the white collar market, and vice versa. Therefore, it seems to me that persuasive advertising encourages as broad a message as possible, particularly with a product like beer.

  4. This is an interesting post, especially because most people couldn’t tell a difference between these beers if they had a blind taste test. I know football is mentioned here, but it would also be interesting to look if Miller, Coors, or Bud Light are looking to other professional sports to try to capture that market share.

    • It is clear that Bud Light utilizes their partnership with the NFL to advertise most heavily. As the official beer of the NFL, Bud Light is positioning themselves as a football lovers beer, even more so than Coors or Miller. However, Bud Light markets themselves to more than just football fans, as evident by their alliance with Major League Baseball. Not only is Bud Light the official beer of the MLB, they are also moving into the basketball segment. Currently, Miller Genuine Draft holds the title of the official beer of the NBA, but Bud Light through a series of marketing campaigns is pushing their brand across the entire professional sports industry in the US.

  5. I am not refuting advertising’s powerful effects on many consumers, but I believe our generation in particular has become desensitized to many of these commercials and other forms of advertisements. I have no evidence to support this claim, but I believe that products such as beer, which we have noted carries little to no product differentiation, relies heavily on which company can advertise more frequently and make their product more available to consumers. In doing so, the beer industry has fallen back to spending astronomical amounts of money in differentiating themselves through advertising frenzies. Personally, it seems to be a waste of money, but it is also an environment that these large beer manufacturers have created and must continue to uphold in order to avoid losing brand recognition and market share.

    • I agree with you here. I think the exorbitant costs that beer manufacturers are investing into advertising has a detrimental effect on both the industry as well as the consumer. As you mentioned, it has created an industry where the only differentiator is the advertising, not the product itself. But further than that, these high advertising expenses are being transferred to the consumer, driving the price up for products that are seemingly indistinguishable from their competitors. It is difficult to imagine this trend ending anytime soon, so we as consumer may be in store for further price hikes with very little product evolution.

      • In other words, we have a classic prisoners dilemma: ads add costs but otherwise do little … unless you are aiming at this mass market and don’t advertise at all. Brand loyalty may keep sales up there, but on the margin will you pick up new consumers? and if you go to the store, and see a “cheap” beer you’ve not seen advertised recently, will your reaction be “I wonder what happened to them …” and you pick another brand?

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