Mountain Man Brewing Company (MMBC)

1. What is mountain humanity Brewing Companys positioning relative to its competitors? Mountain objet dart Brewing Company (MMBC) is a 2nd tier domestic beer manufacturer based out of West Virginia. MMBC is positioned as a loss leader among local anaesthetic brewers in the East Central region, being one of the four regional breweries still operating(a) in West Virginia. MMBC brews only one type of beer the Mountain public L extremityr, a dark barbed tasting beer. Target commercialise for the increase is middle aged men from the blue coll atomic number 18d workings class. bell ringering includes an image of coal miners on the bottle suggesting a strong taste and reinforcing butt end market components to a niche.The beer sells mainly in off-premise locations. There is no variant of Mountain Man Lager avail adequate to(p). Although MMBC is a local brewer it really competes against home(a) blades such as Anheuser Busch and Coors. Priced at the same direct as national swords, MMBCs product is a legacy brew and enjoys mettlesome brand awareness in the regions it sells the beer. The brand overly enjoys high brand loyalty in its target market segment against national brands. MMBC has been able to achieve this brand equity without significant consumption on conventional advertising but or else pursuing on grass-roots advertising.The caller however is losing market packet and revenues in line with the lager market. Since MMBC does non manufacture a take down variant of its lager product the company has not been able to swear its profits over the past few years. All its competitors are invested in the light beer segment given up this scenario. MMBC has also seen shifting market segments due to an aging initial target market segment. The company is also at the risk of losing distributer loyalty thanks to increasing pressure on distributor margins.Summing it up, MMBC is losing market share due to changes in market dynamics while still seeing significant brand loyalty and awareness in its home turf. 2. What factors have contributed to making MMBC a strong brand? Factors bring to MMBCs strong brand image are as follows a. Brand awareness and loyalty Mountain Man lager has a high level of awareness among consumers in its target segments. Being positioned as a strong, bitter tasting beer it resonates with the values of hard working blue collar workers. The brand has seen high consumer loyalty over several years. b. Pin point target marketMMBC has been able to target the Mountain Man Lager brand towards specific market segments and been successful at it. Targeted towards middle aged, low to medium income working men, the brand has been able to deliver value to its consumers. c. Grass-roots marketing MMBC has been able to achieve the brand awareness without spending less than 3% of its revenues on advertising. The sales team has been able to create grass root level awareness by positioning the beer as an off-premises brand a nd by word of mouth advertising as opposed to traditional advertising. This has enabled MMBC to reap greater brand commitment from its consumers. . What factors have contributed to the radioactive decay of MMBC? Although successful, MMBC has seen a decline in sales in the recent years. The main factors contributing to this decline in sales are a. Shifting market segment Mountain Man Lagers market segment has started to age and refreshed market segments are beginning to form, especially a jr. market segment. This has allowed other brands to target the new young population with light variants of beers which MMBC has not. Mountain Man Lager does not resonate with the younger populations tastes as it is a strong, dark beer. . Emerging product segmentation The lager segment has been on the decline for a few years, mostly losing to the light beer segment. Given the rapid growth of the light segment of beer the lager market has been steadily losing market share. The light beer segment h as grown 4% every year at the cost of the lager markets share. MMBC has not been able to capitalize on this rationalize as it does not currently offer a light beer. c. Ineffective advertising Given the younger market segments preference to consume beer on-premises, MMBC has been unable to promote its products effectively.National beer brands have been able to dispose on advertising and use lifestyle based advertising apart from on-premises advertising to attract new customers. Given MMBCs small advertising budget it is an uphill task to promote their brand to newer consumer segments. 4. presume the company introduces Mountain Man light. Conduct a 1 year and 2 year compact for the Mountain Man out of work brand? Calculation of Break Even Volumes Required First course Breakeven course of study 1 Current Revenues of MM Beer 50,440,000. 00 project Revenues of MM Beer Next Year 49,431,200. 00Projected role from MM Beer 15,323,672. 00 Projected neediness of gross sales from Introduction of MM Light 2,471,560. 00 Projected Loss of piece from Launch of MM Light 766,183. 60 position of MM Light infallible to recover Loss of Contribution 30,188. 48 follow of Advertising MM Light 750,000. 00 additive SG&A cost 900,000. 00 put of MM Light call for to recover new Advertising Costs + SG&A 65,011. 82 Barrels of MM Light Needed to Break-Even in First Year 95,200. 30 Compared to forecast sales in the first year of 48,735. 19 Calculation of Year 2 Volumes (Needed to Calculate the 2-year Breakeven Year 2 Projected Revenues of MM Beer Next Year 48,442,576. 00 Projected Contribution from MM Beer 15,017,198. 56 Projected Loss of Sales from Introduction of MM Light 2,422,128. 80 Projected Loss of Contribution from Launch of MM Light 750,859. 93 Barrels of MM Light Needed to recover Loss of Contribution 29,584. 71 Cost of Advertising MM Light 0. 00 Incremental SG&A cost 900,000. 00 Barrels of MM Light Needed to recover new Advertising Costs + SG& A 35,460. 99 Forecast Sales in Year 2 101,369. 19 Calculation of Break Even Volumes Required Two Year Breakeven Two eld of Lost Contribution 1,517,043. 53 Initial Advertising Costs (One Time only) 750,000. 00 Two Years of Incremental SG&A 1,800,000. 00 Contribution per Barrel of MM Light 25. 38 Barrels of MM Light Needed to Break-Even in Two Years 160,246. 00 Compared to forecast sales over the first two years of 150,104. 38 5. Should MMBC introduce Mountain Man Light? Options Grid Option 1 Option 2 verbal description of Option Launch Mountain Man Light Do not launch Mountain Man Light Benefits of Option a.Tap into a growing market b. Introduce brand to new market segments c. conceal current distribution network a. Maintain brand image of Mountain Man Lager b. gamble losing market share further c. Lose out on shelf space in distributor network Strategic Fit a. Better long term strategic fit b. Ability to subprogram things around for the brand c. Will help brand p osition itself among younger consumer segments d. May induce reject brand alienation in the short term a. No changes to current fit b. Slowing revenues from product segment c.High brand loyalty Financial Attractive ness a. Break even in sightly over 2 years b. High contribution margins (51%) over the long term compared to main brand c. Exposure to new product segments will ensure continues revenues a. Falling market share (falling by 2% per annum) b. Long term losses imminent c. Long term advertising budget has to be increase drastically Noteworthy Risks a. Revenues fall at 2% per annum for the Mountain Man Lager brand b. No significant changes in market dynamics b. Cannibalization is at 5% c. Growth in market share is at 0. 25% for light brand a. Fall in market share not high than 4% per annum b. Investment in advertising not increased beyond current levels Final summary MMBC has to introduce Mountain Man Light to capture market share in the light segment. Without doing that the company runs the risk of losing market share almost in a guaranteed manner over a period of time if not in an accelerated fashion. MMBC has to capture market share by using traditional advertising although it will lose money over 2 years. However since the contribution margins are large for the Light brand the losses can be made up from year 3.