Wednesday, March 13, 2013

Tecate Implements Market Segmentation Strategy via Sponsorship

Tecate has carved out a market in the highly competitive beer category by targeting Hispanics almost exclusively. The shift in demographic characteristics of the American population has given Tecate a steadily growing target market, and long-term demographic projections suggest targeting Hispanics will be a very viable strategy for years to come. Despite the seemingly good fit between Tecate and the demographics of the U.S. market, it would be a mistake for the brand to view Hispanics as a single market segment. The characteristics of the Hispanic demographic can be broken down further into first generation and later generation segments. While Tecate's brand and messaging resonated well for Hispanics newer to the U.S., reaching second- and third-generation Hispanics who are considered more bi-cultural represented an opportunity that Tecate could pursue.

Sports sponsorship has become an important marketing vehicle for Tecate to expand its relevance among Hispanic Americans. One property that Tecate has used successfully to reach its target audience in the Grand Prix of Long Beach. The event, a three-day "festival of speed" scheduled for April 19-21, was one of the most successful events for the Champ Car Series and was woven into the IndyCar Series schedule when the two leagues merged in 2008. The Grand Prix of Long Beach offers more than racing; it includes concerts, a lifestyle expo, and family fun zone. Tecate has been associated with the event as "Official Malt Beverage Sponsor" for twelve years. But, an association via sponsorship is only the beginning of the story for Tecate.

The demographic characteristics of Grand Prix of Long Beach attendees are a favorable match with Tecate's targeting strategy of expanding its appeal among later generation Hispanic Americans. It is estimated that thirty percent of the event's 150,000 attendees are Hispanic, and Tecate has prominent exposure throughout the weekend. Tecate is bringing its sponsorship to life through several different activation tactics. It is title sponsor of concerts on Friday and Saturday nights. The brand is also sponsor of the Miss Tecate Light Toyota Grand Prix of Long Beach competition. Another on-site activation is an experiential exhibit in which fans can get their picture made in Victory Lane celebration scene with Tecate Light brand ambassadors. Tecate has complemented its event marketing plans on race weekend with a retail sweepstakes in California and Nevada with prizes including a VIP racing experience.

Tecate's sponsorship of the Grand Prix of Long Beach is an excellent example of how sponsorship should connect with a brand's overall marketing strategy. The marketing objective for Tecate is to expand the market for its products to a different segment of the Hispanic population. Sponsorship is being used as a vehicle to implement the market segmentation strategy. Too often, sponsorships are under taken without a clear connection to marketing and business strategy. Those decisions are destined for failure most of the time. In contrast, Tecate has a clear expectation of what its association with the Grand Prix of Long Beach should accomplish and how it will help solidify the brand's competitive position in the beer category.

Marketing Daily - "Tecate Goes Younger, Bicultural for U.S."

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