Corona Case Study

Situation Analysis

Currently, Modelo finds itself in a market position that falls short of its stated goal – to overtake Heineken to become the number one beer importer. Exceeding Heineken's shipments brings significant economic value to Modelo and, given the volume of beer consumption in the U.S., positions it as a leader in the global market. To achieve success in the U.S., Corona needs to create value for its customers by building on its strengths and finding ways to mitigate threats from competitors. Corona's strengths include strong brand awareness and loyalty in Mexico. With the Hispanic population growing at 28%, Americans of Mexican descent are Corona's crown jewels, advocating for Corona and recommending the beer to others. Corona also has the benefit of doing business in the U.S. over the past 15 years. This has allowed them to build a loyal base of adults who grew up drinking Corona and continue to do so without desire to switch to a competitor. As well, young adults turning 21 provide a continuous pipeline of potential customers.

Threats from competitors include pricing promotions and marketing campaigns. Regular competitor broadcast media campaigns continually strengthen broad brand awareness of other beers (domestic and imports) and have a negative impact on Corona sales in the U.S. To achieve its desired growth, Corona will need to mitigate this threat. While proportionally increasing its marketing budget is a real option for Corona, it will also need to increase efficiency in its promotions. Identifying key customer groups and focusing on marketing messages that best create value with those groups will be necessary.

Market Analysis

In analyzing current market positions and future strategies, it is important to define the industry as strategically as possible. From a specific perspective, it is easy to see that Corona competes within the imported beer market in the U.S. However, broadening the definition to include the beer market (or even the alcoholic beverage market) allows Corona to see its unserved customers. The beer industry includes domestic premium and sub-premium producers, as well as importers and non-alcoholic beer makers. In fact, Corona has a large opportunity to seize consumers drinking domestic beer. A focus on the broader beer market also allows Corona to recognize and combat current and future competitive threats .

At present, the U.S. beer industry is a mature, perfectly competitive market. Competition in this industry is fragmented, with the top 15 competitors maintaining 70% of the market share. The remaining market share is spread across smaller regional beer producers and increasingly popular microbreweries. Recent trends in the beer industry have produced both positive and negative outlooks for future beer sales. Beer consumption in the U.S. declined by 14.5%