EDABM Marketing Strategy

1. EDABM Marketing Strategy Question 4 Cultural Factors affecting Bass Brewery’s Operations in the Czech Republic

2. Briefing History in Czech Republic Cultural Factors affecting Bass Brewery's Operations in the Czech Republic

3. Background of Bass in Czech Cultural Factors affecting Bass Brewery's Operations in the Czech Republic

4. Cultural Factors Management & Marketing Strategy Nationalism Social Culture Ideology that creates and sustains a nation as a concept of a common identity for groups of humans. Cultural Factors affecting Bass Brewery's Operations in the Czech Republic

5. Social Cultural factors What do Czechs believe? • "Beer makes beautiful bodies" • "Drinking beer makes you live longer, because it reduces the aluminum in the body, saving it from the effects of aging and Alzheimer's disease“ • “Drink beer every day for healthy sex life” Czech Doctor said. Cultural Factors affecting Bass Brewery's Operations in the Czech Republic

6. Social Cultural factors (Cont) What are the habits of Czechs? • Man, woman and child take beer everyday • Beer drinking was one of the few legal leisure-time activities • Czechs prefer to do their beer-drinking in pubs rather than at home • Czech meal is often accompanied by beer • Czech have a recipe for beer soup Cultural Factors affecting Bass Brewery's Operations in the Czech Republic

7. Social Cultural factors (Cont) High consumption of beer… • In 1995, 161 litres of beer is drunk per person. That was a bottle of beer for every man, woman, and child. Existence of STRONG MARKET and HIGH REVENUE of consumption for beer in Czech Republic poses an OPPORTUNITY for Bass investment. However, whether it is a REAL OPPORTUNITY? We shall look into a greater depth in LOYALTY TO LOCAL BRANDS OF BEER. Cultural Factors affecting Bass Brewery's Operations in the Czech Republic

8. Nationalism What are the national impacts to Czech? • The Czech reputation as the thirstiest throats in the World attracted many foreign breweries after 1989 • After the collapse of Soviet Union in 1989, the mentality of Czech Republic is changing from “Communism” to “Capitalism” Cultural Factors affecting Bass Brewery's Operations in the Czech Republic

9. Comparison between the Under- and Post-Communism Beer Market in Czech Republic Cultural Factors affecting Bass Brewery's Operations in the Czech Republic

10. Nationalism (Cont) LOYALTY TO LOCAL BRANDS OF BEER… • RESISTANCE TO TRY foreign brands of beer or imported beer • combined with the economic factor of higher price of foreign branded or imported beer • existence of wide range of local beers available • Foreign importers are left to scrap over less than 1 percent of the total national consumption. • Foreign brewers have had more success entering the Czech market through the acquisition of Czech breweries. • When British brewer Bass PLC bought a 1/3 share in Prague Breweries a few years ago, public hackles were raised and the newspapers cried corruption. Cultural Factors affecting Bass Brewery's Operations in the Czech Republic

11. Nationalism (Cont) IMPACT ON CONSUMER BEHAVIOUR… • Consumers are get used to low priced products IMPACT ON EMPLOYEES AT WORK… • Employees focused on production and products, customer focused is difficult concept to adopt • Salaries are in similar range– no initiative to take more responsibility and to make decision • People are in equal social status– why treating people with respect? Also difficult to be customer focused Cultural Factors affecting Bass Brewery's Operations in the Czech Republic

12. Management & Marketing Strategies No. of important considerations … In Management view: • To work with local managers in Czech • To spend more time to change the management and human ideology In Marketing view: • To focus on a strategy of creating branded goods and premium brands • To help them to accept new or foreign beer products Cultural Factors affecting Bass Brewery's Operations in the Czech Republic

13. Management & Marketing Strategies Frank Cook, marketing director for Bass in the Czech Republic, says: "When companies enter this market they think they can apply western values. In reality they have to throw away the rule book and go back to basics. You do things here that haven't been done in the UK for years. It needs real originality and lateral thinking." (Marketing.London: Sep12, 1996.pg.30,2pgs) Cultural Factors affecting Bass Brewery's Operations in the Czech Republic

14. Management & Marketing Strategies(Cont) Bass Strategies adopted in Czech … In Management view: • Enhance the understanding of Corporate ideology through comprehensive internal Communication • Introduced a fast electronic news service (FENS). • to keep employees informed on a range of topics of value to them in their work and their careers - including company news, updates on business performance and plans, functional information, industry and competitor profiles, and job vacancies. Cultural Factors affecting Bass Brewery's Operations in the Czech Republic

15. Management & Marketing Strategies(Cont) Bass Strategies adopted in Czech … In Management view: • Promote work more, gain more scheme • base salary, allocated according to market rate • annual divisional bonus for all staff depending on grade and profit performance • sales-staff incentives for teaching individual and team profit and volume targets • bonus payments for directors and managers, determined by performance against personal business objectives. Cultural Factors affecting Bass Brewery's Operations in the Czech Republic

16. Management & Marketing Strategies(Cont) Bass Strategies adopted in Czech … In Marketing view: • Building Premium Brands • New Production Development –“Velvet” • Premium, innovative and democratic • Invest more on bottle labelling, promotion and sponsorship • Post-revolution/Youngster are more receptive to new ideas • Target High Income Consumers • To build Brand Personality Cultural Factors affecting Bass Brewery's Operations in the Czech Republic

17. … Q & A Session

18. Conclusion (1) Did Bass succeeded in Czech finally? • Annual Performance of Prazske Pivovary in Czech • 1996 (Kc 152m) => (USD 6.6m) • 1997 (Kc 255m) => (USD 11.03m) • 1998 (Kc 766m) => (USD 32.87m) • ~(Kc 370m) => (USD 16.00m) • (1USD =~ 23.12 Kc on 1 Feb 2005) Miroslav Nosal, from Merrill Lynch in London, said "They have been there for four years, and they've kept on showing losses. Although they have kept their position on the market, their corporate governance and financial management has been terrible." (Prague Business Journal May 29, 2000) Cultural Factors affecting Bass Brewery's Operations in the Czech Republic

19. Conclusion (2) Bass PLC Divisional Results First Half 99/00 Operating Profit (£m) Bass Hotels & Resorts 146 Up 20.7% Bass Leisure Retail 173 Up 31.1% Bass Brewers 73 Up 2.8% Britvic Soft Drinks 9 Up 12.5% * 28 weeks ended 15 April 2000, (Sir Ian Prosser, Bass PLC Interim Results Presentation to Investors 2000) In 2000, Bass has agreed to sell its brewing operations to Interbrew of Belgium for £2.3bn, and the proceeds will be invested in its pubs, hotels and restaurants. Bass's chairman, Sir Ian Prosser, said "There is a high degree of sadness about this, but our responsibility has to be with shareholders." (http://www.guardian.co.uk/print/0%2C3858%2C4029588-103676%2C00.html) Cultural Factors affecting Bass Brewery's Operations in the Czech Republic