...MMBC Case Analysis Mountain Man Brewing Company Case Analysis Mountain Man Brewing Company (MMBC) is a beer brewer and has so far sold just one brand under its brand called the Mountain Man Lager. The management is deciding to extend its product brand and introduce a Light Beer called Mountain Man Light. In the do-nothing scenario, MMBC projections are: Sale Projections 2005 MMBC Lager Profit Margin 6.2% 5.9% 5.6% 5.3% 5.0% 4.7% 2006 2007 2008 2009 2010 $50,440,000 $49,431,200 $48,442,576 $47,473,724 $46,524,250 $45,593,765 Chris is considering launching a Light Beer product to extend the MMBC product portfolio. However, in order to be successful, a lot of factors need to align with his strategy: Cannibalized sales must make up for profits lost and incidental expenses incurred to launch the new beer product The Lager brand must be preserved as a separate brand from the Light beer in order to keep milking the brand Marketing communications for the two products should be distinct and not overlapping Capacity of the current plant should be enough to meet potential splurge in demand, in case the product is successful Relationships will need to be established with a new distribution channel (on-premise) Budgets must be able to support the advertising plan of action Management buy-in is a must to ensure commitment to this product launch and is vital for its sustenance The goal of Chris’ plan should be to: a. In the short term, transition the...
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...Overview Mountain Man Beer Company (MMBC) is experiencing the first decline in sales since its establishment in 1925. Suggestions such as remaining status quo, promoting Mountain Man Lager, and introducing a light beer, may be considered to help MMBC in its future survival. Analysis of Alternatives To analyse the potential impact of these solutions, we have used MMBC’s SWOT analysis (Appendix 1) and STP analysis (Appendix 2). Sales of premium beer have been declining by 4% each year since 2000.With increase in excise tax and competition from other companies, lager beer consumption is expected to decrease over the next few years. By remaining status quo, it is foreseeable that MMBC will continue to lose sales in their one and only product, Lager, due to the decrease in demand. Thus, there is a need for them to take action. Greater marketing efforts may be injected to boost the sales of Lager. However, as the beer market is diminishing, it is likely that this will prove futile. Furthermore, MMBC has limited financial resources to fight for higher market share from the current major producers such as Anheuser Busch and Miller Brewing Company. Despite his father’s opposition, Chris should still go into light beer, as it is hard to ignore the fact that it is a growing market, while premium beer is a declining market. The company’s ultimate aim is survival and profit maximisation, and stubbornly refusing to adapt to market trends may compromise that aim. Profitability...
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...Consumer choice of beer is driven by seven main attributes. These attributes are taste, price, the occasion being celebrated, perceived quality, brand image, tradition, and local authenticity. The functional reasons to choose a beer are taste, price, and perceived quality. The emotional reasons to choose a beer are the occasion being celebrated, brand image, tradition, and local authenticity. Some of the self-expressive reasons to choose a beer are tradition and brand image. The importance of these reasons will differ for each brand. There are some beer brands consumed because of the price, regardless of the other attributes and there are others drank because of tradition, regardless of other attributes. The attributes that contribute the most to Mountain Man Lager are taste, perceived quality, brand image, and tradition. One focus group participant expressed this by saying, “My dad drank Mountain Man just like my granddad did. They both felt it was as good a beer as you could get anywhere” (3). This quote encompasses not only the perceived quality associated with Mountain Man beer, but also the importance of tradition and the taste of the beer to Mountain Man consumers. These brand attributes are linked so firmly to the meaning of Mountain Man beer that it is my opinion that it will not transfer well to a light beer. For younger drinkers, the main consumer of light beers, the main attribute that affects what beer they purchase is price. They can’t afford higher priced, better...
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...drinkers. Present Position in the Market: Product – Mountain Man Lager, Bitter flavoured beer with slightly higher than average alcohol content and darker color. To accentuate its dark color, the beer was packed in a brown bottle, with its original 1925 design of crew of coal miners printed in the front. Mountain Man’s main differentiation from its competitors is its product. Price – Mountain Man Lager was priced similar to its competitors. Its price is $2.25 for a 12 ounce serving draft beer in a bar and $4.49 for a six-pack in a local convenience stores. Place – Their primary market was in East Central Beer Region – Illinois, Indiana, Michigan, Ohio and West Virginia. MMBC’s beer is mainly sold in liquor stores and super markets. Promotion – MMBC did not spend more on its promotion. They relied on grassroots marketing with their customers spreading the message by word of mouth. Customer – Blue-collar, middle to lower income men mostly of age group belonging to 45 -54 years of age. Competition – US beer industry is characterized by high competition and is capital intensive. The competition in US beer market fell into four categories Major...
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...The Entrepreneurs at Twitter: Building a Brand, a Social Tool or a Tech Powerhouse? MID-TERM ASSIGNMENT A Paper Presented in Partial Fulfillment of the Requirements of the Robert Kennedy College MBA Course Nr. 57582 - Entrepreneurship Prof. Francois Therin October 27, 2010 1 Declaration of originality of work I affirm that the attached work is entirely my own, except where the words or ideas of other writers are specifically acknowledged according to accepted citation conventions. This assignment has not been submitted for any other course at Robert Kennedy College or any other institution. I have revised, edited and proof-read this paper. th Signed the student, October 27 2010 Certification of authorship I certify that I am the author of this paper and that any assistance I received in its preparation is fully acknowledged and fully disclosed in this assignment/paper/examination. I have also cited any sources (footnotes or endnotes) from which I used data, ideas, theories, or words, whether quoteds directly or paraphrased. I further acknowledge that this written work has been prepared by myself specifically for this course. Signed the student, October 27th 2010 Word count: 1952 without title pages, index of contents, executive summary and bibliography 2 “If you don’t know where you’re going, any road will get you there.” The Cheshire Cat in “Alice’s Adventures in Wonderland” by Lewis Carroll 3 Index of contents Executive Summary ...........................
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...Company’s (“MMBC”) goal is to increase Net Income to over $4.5 million annually by capturing an 8.3% share of the 2010 projected age 21 to 27 East Central light beer segment and retaining a 6.7% share of the 2010 projected East Central premium beer market (Exhibits 3 and 5). MMBC’s obstacle is marketing its new light beer without tarnishing its existing Mountain Man brand and cannibalizing its current customers. To achieve this, MMBC should use a horizontal product extension strategy by introducing a new light beer called Mount Light. The new product’s name will be noticeably different than the existing Mountain Man beer, thus reducing the likelihood that it will tarnish its existing brand equity. Mount Light will target the young “first time drinker demographic”, which is a market segment that is significantly different than the current typical Mountain Man consumer. To gain a competitive advantage relative to the large domestic brewers, MMBC should position the new product as an “anti-big-business” beer, making it attractive to younger consumers, and execute a grass-roots marketing campaign. Problem Analysis The status quo strategy for MMBC is not viable: • MMBC revenue is declining (2% annually) and is likely to accelerate due to increasing competition and changing consumer preferences • Light beer is growing rapidly (4% annually) but MMBC is not participating in this market • Mountain Man competes in the Premium beer segment which is declining by 4% annually If MMBC were...
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...Mountain Man Brewing Company Mountain Man Brewing Company (MMBC) also known as “West Virginia’s Beer”. MMBC developed its brand equity as a symbol of toughness, authenticity, quality and uniqueness this with several other factors made MMBC successful. This legacy was started by Guntar Prangel in 1925 when he reformulated an old family recipe with quality ingredients. Brand Equity is defined as the $$$$ value contained in a specific brand. High alcohol content that appealed to the blue collar market along with these specific factors added to MMBC brand. It caters to regional tastes (dark, bitter). MMBC also has class cachet (it’s a miner’s beer) it’s family-owned, it’s perceived as being high-quality and it’s a legacy product. People seem to drink Mountain Man as a way to connect with past generations of their family. Brand played a critical role in beer purchasing decision. The promotion of MMBC was done by accentuating its dark color by packaging it in a brown bottle, with its original 1925 design of a crew of coal miners printed on the front. Mountain Man Lager was priced similarly to premium domestic brands such as Miller and Budweiser but below specialty brands such as Sam Adams. MMBC used its own sales force to focus on off-premise locations (liquor stores or supermarkets) with much success. Blue collar males purchased 60% of the beer they drank at these off-premise locations. The decline in MMBC was due to changes in beer drinkers preferences. This decline was happening...
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...Company Case Report Company Overview Mountain Man Beer Company (MMBC) is a family-owned brewing company that is the maker of Mountain Man Lager, or “West Virginia’s beer.” Mountain Man Lager is known for its reputation as a quality beer and is targeted throughout the east central region of the United States. Mountain Man Beer Company is in the second-tier beer industry, and known for its distinctively bitter flavor and slightly high alcohol content. MMBC’s competitive advantage is its brand equity, and value placed on its product. With brand playing a crucial role in the beer-purchasing decision, MMBC has had great success with its brand standing out as a traditional beer with a loyal customer segment, of middle to lower income men over the age 45. Primary Problem The primary problem for Mountain Man Beer Company is if they launch the new product, Mountain Man Lager Light, will they lose their main customer base. Changes in beer drinkers’ preferences have left the company with declining sales for the first time in the company’s history. A strategic plan in response to the declining sales is to launch a new light beer in hope of attracting younger drinkers to the brand. Light beers are growing at an annual rate of 4%, while traditional premium beers have been declining annually. With younger beer drinkers, 21-27 years of age being the main target for light beer, and making up over 27% of total beer consumption, MMBC is considering launching a light beer hoping to attract this demographic...
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...ACCOUNTANCY UNIVERSITY OF ILLINOIS MEMORANDUM TO: Mr. Chris Prangel FROM: Merik Ducker - Section AE1 - Group 8 DATE: September 22, 2015 SUBJECT: Product Launch: Mountain Man Light INTRODUCTION The memorandum will analyze the proposed new product launch of Mountain Man Light (MMLight) for Mr. Chris Prangel, the future owner of the Mountain Man Beer Company (MMBC). More specifically, the memorandum will consider the advantages and disadvantages of launching MMLight, as well as a cost-volume-profit analysis of the proposed new product launch. The memorandum will conclude with recommendations for Mr. Prangel’s consideration. MMBC’S GOALS AND BRAND IMAGE MMBC has retained leadership among premium lagers in West Virginia for nearly 50 years by serving brand loyal, middle-aged, blue-collar males at off-premise locations (such as liquor stores and supermarkets). Though respected for its independence and superior quality, MMBC now faces an aging demographic, a shrinking market segment, and changing consumer preferences. Without alienating existing customers, eroding core brand equity, or succumbing to industry titans, MMBC must find a way to remain competitive and restore falling revenues. ADVANANTAGES OF LAUNCHING MMLIGHT Changing Market Segments The launch of MMLight represents an opportunity to capture shifts in market segments and improve MMBC's recent 2% decline in revenues. Light beer consumption is growing at a 6-year compound annual growth rate (CAGR) of 4% and accounts...
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...reflected in Exhibit 6A, where in 2006 MMBC is not projected that market share and is showing a projected loss, but by 2007, MMBC should have 0.50% of the market and meet the above breakeven unit calculation. The loss of sales of premium beer to the new light beer market is estimated between 5 and 20%. The analysis shown in Exhibit 6B shows possible cannibalization in a best (5%) and worst (20%) case scenario. In both scenarios, the Mountain Man Light product proves to be a favorable addition to MMBC’s declining income statement. With MMBC selling 70% of its product to off premise locations, there is a certain risk that these suppliers would buy the same volume from MMBC, just distributed differently, leading to self-cannibalization. It is also possible that cannibalization could be minimal because often this type of product line expansion helps secure additional shelf-space. The cannibalization rate is dependent on the execution of the light beer positioning and campaign execution. If a 5% cannibalization rate was realized, MMBC might not have to obtain the 60% brand awareness with the initial advertising campaign necessary to realize a net profit in two years. Although there are many factors to consider if marketing expenditures were decreased, such as effects on initial market share and subsequent growth of market share, MMBC could decrease advertising expenditures for the launch of Light. As the realized cannibalization rate increases, MMBC would have to achieve a higher brand...
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...Case: Mountain Man Brewing Company 1. What has made the Mountain Man Brewing Company successful? What is distinctive about MMBC’s product, customers and brand equity? Reasons why MMBC has been successful: * MMBC used their history and status as an independent family owned brewery to enhance the feeling of authenticity of their brand, which resonates with its core drinkers – blue collar, middle to low income men over the age of 45. * MMBC has very high brand awareness – in a recent study, MMBC Lager was rarted as the best known regional beer, unaided response rate of 67% from the state’s (WV) adult population * There is also a high perception of quality with MMBC Lager * MMBC has won multiple awards: * In 2005, won “Best Beer in West Virginia” for the 8th year in a row * In 2005, won “America’s Championship Lager” at the American Beer Championship What is distinctive about MMBC’s: * Product * Smoothness and drinkability * Distinctive bitter flavor * Slight higher than average alcohol content * Bottle also enhance overall image of product * Original 1925 design with coal miners authenticity and history * Brown bottle accentuating the beer’s dark color taste, ‘strong’ * Customers * In stark contrast to other domestic beers, drinkers of Mountain Man Lager skews heavily towards male, 81% compared to 58% for domestic light beers and 68% for domestic premium beers * Drinkers...
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...What has made MMBC successful? The company has stayed true to its core customer base. Its product focuses on quality. Brand Loyalty Older working class, blue collar Effective marketing Sales team - "Grass roots" marketing 70% consumed at home higher alcohol % Since 1925, this traditional and regional family owned brewery has cultivated its brand loyalty by sticking to its core customer base, offering to them an attractive product and offering them a brand building product with great price, tradition, local authenticity, quality, and a unique taste. MMBC is different from its competitors because of its history, its status as an independent, non-corporate and family owned regional based brewery giving it the originality desired by its core consumers. 2. What is distinctive about MMBC's products? Mountain Man Lager is produced by an independent family owned brewery producing a lager with a distinct bitter flavor. Its lager has a higher alcohol content than its competitors. It is a regional favorite. 3. What is distinctive about MMBC's customers? Mountain Man Brewing Company has a main customer base that consists of blue-collar working class males ages 45-54. The consumer of the lager are brand loyal. 4. How is MMBC's promotion different and effective? Traditional advertising was not used to promote its products instead the company focused on grass roots marketing as a means of advertising the brand. By using this method the brand focused on local...
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...Table of Contents What is the current situation? 2 What has made MMBC successful & distinguishes it? 2 What enabled MMBC to create such a strong brand? 3 What has caused MMBC’s decline in spite of its strong brand? 3 Should MMBC introduce a light beer? 4 Is MM Light financially feasible for MMBC? 5 Break-Even Point (BEP) Analysis 6 MM Lager Cannibalization 6 MM Light Marketing Strategies 7 Exhibit 1 – SWOT Analysis 9 Exhibit 2 – Financial Data and Assumptions 10 Exhibit 3 – Break-Even Point (BEP) Analysis Calculations 11 Exhibit 4 – MM Lager Cannibalization Calculations 12 Exhibit 5 – MM Light Marketing Strategy 15 What is the current situation? Mountain Man Brewing Company (MMBC) is a family business founded in West Virginia in 1925 by Guntar Prangel. The company is now operated by Guntar’s grandson, Oscar. Oscar’s son, Chris, is slated to inherit the business in five years when his father retires. Mountain Man (MM) Lager is the flagship product and the only beer currently produced by the company. The recipe for the lager was based on a refined family recipe and is known for its flavorful, bitter taste. By the 1960s, the lager had established itself as a legacy beer with a rich history, and the company continues to maintain its independent, family-owned status which appeals to its core drinkers. By 2005, the popularity of MM Lager in the East Central region of the U.S. had grown to generate revenues of just over $50 million, and the beer held the...
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...increasing changes in the demographics of the drinkers’ alcohol consumption. The young drinkers who are between the ages of 21 – 27 years are spending twice as much on alcohol that those aged over 35 years. The company’s profitability in the next five years may increase. This is because the young consumers are the working class division and they are the target consumers for the beer. So by 2010, the drink may have regained its status in the market share and hence an increase in the profits. MMBC has used its brand supremacy to influence consumer buying traits. Their brand has played the most significant part in the decisions they make while purchasing beer. Some of the deliberations that customers make when selecting their preferred beer are based upon; the beer’s taste, the pricing strategy that is being used, the event that is being celebrated, recognition of the brands quality, and the supremacy of the brand. The pricing used by MMBC is not so high and is thus affordable comparing to its quality. MMBC is dependent on its past glory and status of being viewed as an independent family brewery company to...
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...everyone. Customers * The core consumers are Blue-collar, middle to lower income men over the age of 45 in the East Central Region. * They have high brand awareness and 60% of them purchase their beer in off-promises locations. * They are in strong aging demographic tendency and spend less on alcohol than younger drinkers, between 21 -27 years of age Competition - The mature beer industry in the US falls into four categories and is highly competitive. 1. Major Domestic Producers (74% in Region): Few companies who compete in economies of scale in production and advertising. 2. Second-tier domestic producers (12.5% in Region): Mid-size companies that distribute nationally and smaller companies that distribute regionally like MMBC. Compete on product...
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