Mountain Man Brewing Company - Bringing the Brand to Light Case Analysis

Mountain Man Brewing Company- Bringing the Brand to light

Marketing Management II Case Analysis

Section A

Chetan Hariprasad Kabra

2009016

2

T

urn around Management is not a very simple thing to do. It needs different Intellect,

powerful Strategies, Great insights, and above these Successful Implementation of all the decisions & strategy. American Beer Industry itself is a symbol of oligopoly where few brand with their different variants trying to capture new market as well as on the same time retaining the older ones.

Mountain Man Brewing Company (MMBC) also known as "West Virginia's Beer, a symbolof

toughness, Authenticity, quality and uniqueness. First time ever in the history, Company is facing drop in sell which makes the management sweat a bit. The reason is the changing taste and preferences of the American customers.

This Industry is going for Lager to light demand shift as strong beer consumers are vanishing with time whereas young generation segment is increasing and their choice is Light. The case is very interesting where company is finding itself in a junction from where they have to take a decision which is very critical for the survival in this rapid changing hypercompetitive marketing.

Companies like Mountain Man Lager which has a strong association with blue collar, Middle to Lower Income men over age 35. These are the core drinker for MMBC which are very much loyal over the long period. They are loyal for such a strong drink due to many reasons like taste, toughness and availability. Now company is worried about Brand Equity if they will go for a growing beer sector which is Light.

These dilemma points are to be covered under these brief headings:

Market changes:



Changes in beer drinkers preferences



Declining sales of Mountain Man due to reduction in population above 35 by 4% every

year in-spite of being a good brand



Economies of scale of large national brewers



Key consumer segment was younger drinkers (13%) who preferred light beer and

accounted for 27% consumption.

Chris considerations:

 Ways to cater to declining sales revenue of Mountain Man.

 Introducing a new product line to cater to younger generation.

Launching of Mountain Man light.

 Under utilization of plant capacity

Costs for launching new product, its sustainability w.r.t. competitors.

 Positioning of Mountain man light to avoid cannibalization with existing product.

Creating brand awareness of Mountain Man Light.

Analyze the competition.

 Advertising and promotion expenses of the new product.

To analyze the target market share so as to break-even in two years.

Distinguishing factors of MMBC against competitors:

1) Family owned product

2) Packed in brown bottle according to the positioned image to match identity

3) Known for last 40 years for non dilution of brand

4) Stand on perception of quality to cater brand loyal blue collared customers

5) Independent identity

Reasons for decline:

State had recently repealed arcane laws.

Aging demographic and shrinking premium segment of the beer market.

Light beer category - 50.4% of sales volume in 2005, - 29.8% of sales volume in 2001.

Younger beer drinkers perceived the beer as strong and a working man's beer .

 Never made any changes in the product line.

Break even and feasibility analysis:



No. of barrels = COGS/66.93 = 5,20,000



SP = Revenue/520000 = $97



Cost of light beer = 66.93 + 4.69 = $71.62



CM(%) of light beer = (97- 71.62)/(97) = 26.16%



Break even sales = 25,50,000/.2616 = $ 97,47,707 in two years



Break even quantity = $ 97,47,707/97 = 100,492 in two years



Break even quantity to be attained in a year= 100492/2= 50246



Expected gain in market share in a year: 50246/19494075.12 = 0.257%

The delimma:

a)Whether to go or not for Light segment beer where growth is at a very fast pace?

b)If yes then with the same name Mountain Man (Umbrella Branding)/New Name (Private

labeling, New Product with new communication)?

a)YES- I think change is the only thing that is permanent. Everything moves from

manufacturer to Consumer end. So it's important that only those things will be produced which are needed by the consumer. We are not saying to just close down the production of its current operations and go for a new light version. We are saying company needs a

gradual change from lager to Light over the period of time. Because its need of the hour.