Introduction
In 1873, German immigrants Adolph Coors and Jacob Schueler established a small brewery in Golden, Colorado. Lately, Coors Inc. had become the third-largest brewer in the United States. Coors invested $2,000 in the operation, and Schueler invested $18,000. In 1880, Coors bought out his partner and became sole owner of the brewery. Coors’ operating philosophy is “hard work, saving money, devotion to the quality of the product, caring about the environment, and giving people something to believe in.” Coors Inc. operation is consistent with this philosophy. Coors beer was a regional product and its marketing area was confined to the American west. In 1959, Coors became the first American brewer to use an all-aluminium two-piece beverage can. The company abandoned pasteurization and began to use sterile filtration to stabilize its beer in that year. Coors currently operates the largest aluminium can producing plant in the world, known as the Rocky Mountain Metal Container (RMMC) in Golden, Colorado. In the 1970s, Coors invented the pollution-free push tab can. However, Coors Light was introduced in 1978. Larry was aware of Coors’ popularity with many consumers in adjacent states. Coors beer was perceived by most beer consumers to be a high quality, standard beer, having a light, zesty taste and similar to standard beers from Budweiser on Miller.
Problem Statement
The Coors brand name is a well-known the high quality of brand. There are current retailers that have shown interest in carrying the product, which represents a demand for the product. Larry Brownlow has interesting to applying for the distributorship that needs to decide whether or not to apply for the Coors brand distributorship in southern Delaware. Two issues are present in the case. Larry Brownlow faces two main problems was giving direction to Manson and Associates regarding his potential application for a Coors beer distributorship, which is to be located in a two county area of southern Delaware.. This issue is evident, throughout the case. The other issue is decision on whether and not the distributorship is feasible or in other words that a go or no-go decision by Brownlow regarding his application. . He has some time that must be strategic about this time between now and the deadline to apply for distributorship is used or spent. This is largely implicit in the case. 1.What types of research, if any, should be conducted by the research suppliers of Manson and Associates to determine the feasibility of such a venture? 2.Based on the research findings are the distributorship feasible and should Larry submit an application to Coors, Inc.?
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Situation Analysis
a.Environmental
i. The Limited funds are available for research purposes that Larry has $15,000 available for research purposes and $500,000 available for investment. The environment for Coors influence in Delaware was it an untouched state for brewery and the success of Coors in Delaware would largely depend to the wholesalers Coors was looking to bring the organization. . ii. Coors has a high quality product with a strong brand name that is very well known to the public .The technology used brew Coors is closely monitored and the recycling of the can exclusive form of packaging was mandatory. Meanwhile, this protects the integrity of the product need it makes for additional expenses. For important to determine of through research, the population of the area that consumes beer products. Coors is one of the nation’s leaders in the beer industry. They use extensive brewing and refrigeration processes in order to maintain an uncompromised quality. iii. Another element to consider is the perception amongst consumers for Coors brand. iv. Summary of environmental is another element to consider in the consumer perception Coors brands. There may be some legal issues of racial discrimination lawsuits in the field of employment, especially in minority Coors is regarded by the public specific problems in the field of employment. The rest is selling alcohol to minors drinks lead to legal problems such as retailer’s area.
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b. Strategic Marketing Issues
i.The product is an older product and may be seen as uncool and less attractive which may clouded affect sales. We should innovate in great quantities, make products to increase vitality and can improve the sales, to achieve a certain number of sales. ii.The price may affected by the strict control and extensive brewing and packaging process only and the special refrigeration process. The price setting for the form of commodities in a special process to improve the product. iii. The advertising or promotional tendencies slant of the product may be successful as Coors was the first amongst all breweries to implement a mandatory recycling program in all breweries. The Powerful interests advertising sales, advertising effectiveness. iv.Identifying the target markets could be easy as the product is development established and popular in adjacent states. v.Larry plans on having four route salespeople, a secretary, a warehouse manager, as well as himself as the distributorship owner.
c.Estimating
i.It is possible to estimate industry demand in two manners. The first involves results of Studies A and B and could be termed a “per capita” approach. ii.The second manner of estimating involves study E data and could be termed a “taxes paid” approach. iii.Financial Condition is a research estimate of beer sales in the South Delaware area is needed in order to determine if the business will be profitable.
SWOT Analysis
Strength
1.South Delaware Coors brand is a well-established brand because the product is high quality, standard beer and high price that capture a particular taste preference. 2.Coors is socially responsible and “Green” organization that installs and uses aluminium can recycling equipment. 3.Product is profitable due to only two distributions in the state, which lead to more market share and demand for the beer. 4.Larry Brownlow (Manager) working on his MBA has a personality that suits this type of business to analyse the market potential.
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Weakness
1.Time constraint to make pressure on decision because research regarding by Manson and Associates should be completed by February 20 and the estimation of feasibility study by Larry should be done before March 5 application deadlines. 2.Problem of limited capital that is $500,000 was held in trust that will be made available to make investment and $15,000 for feasibility research.
Opportunities
1.The company promotes environmental issues that customers are more interested to recycling products because they want to take care of the environment. Coors is really relevant because Coors was one of the first breweries in the industry to recycle its cans. 2.Increases in the number of Liquor and Beers Licenses are being issued every year to the retailers. 3.Coors beer obtains a high quality, standard beer and having a light, zesty taste. Customers are willing to pay more for products like this, so with its premium positioning, so they are seeking added-value when they buy a Coors beer product that commitments in the environment-friendly concern.
Threats
1.Competition from substitute products that produce lower price points and product with the various taste differentiation. 2.Negative attitude of some consumers to Coors’ corporate management who support the union and minority issues. 3.Perception of consumer toward Coors beer product across different country because customer taste may vary from beer to other alcoholic beverages.
Recommended Solutions
There is a must that Larry Brownlow should decide whether a distributorship opportunity with Coors is a worth to invest in or not. To help Larry in making his decision, we have suggested him 3 options in the previous Alternatives part. Thus, with his limited research budget of $15000, careful selection of reports was very important to Larry for obtaining both the essential data to project profitability in terms of revenues and cost of sales; and also to provide a qualitative, consumer-focused perspective that would give these quantitative projections a solid base. We suggest that Larry invest in this Coors business opportunity as we believe he can recover his initial investment and earn a salary that exceeds his current annual income $40000 per year.
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Therefore, with Larry’s $15000 budget, we suggest him to take our recommended Option2, that’s to conduct some research essential for studies A and B by himself. There are reasons why we have these suggestions. For Study A, we believe that the purchase of Study E can give the needed information
that would be provided by the gained results of Study A. For Study B, we also trust that Larry can get some comparable or similar information from the Census Bureau. On the other hand, he should purchase the other studies C, D, E, F, G and H, except study I, provided from Manson and Associates Research Proposal. There are definitely some strong reasons too for our suggestions. For Study C, the estimated Coors market share for the two-county market area for each year in 2000 to 2005 based on total gallons consumed help Larry to immediately discover and clearly know about the potential consumer base for Larry’s distributorship. For Study D, the number of expected licenses issued helps Larry to estimate the number of restaurants and bars he can distribute to. Study E will help Larry to estimate his average sales and taxes in coming years besides helping him to perform Study A on his own. Furthermore, Study F helps Larry to estimate profit margin on the alcohol that he would distribute, which are based on the assumption that Cost of Sales for a beer-only distributor would reflect the industry composite averages.
Gross Profit would be able to be determined then. These estimations gained in Study F can definitely help Larry to find out whether his budgets are close and what he can expect for coming years. Apart from above chosen studies, Study G will help Larry to study the acceptance rate of his products in certain area. While only 300 customers were surveyed, we assume that this sample sufficiently represents the preferences of the greater population in the two-county market area. And also calculations relied upon customers’ “Attitude Toward Coors” because we felt this measure was more indicative of regular purchasing frequency than simply an “Intention to Buy Coors”. Study H will help Larry to understand the difficulties he will face in soliciting and negotiating with the retailers to sell his products, as he will find out the retailers’ past beer sales and experience and intention to stock and sell Coors. The selection of reports for Study C to H costs Larry $14049.50. Hence, for Study I, we suggest that if Larry has additional budget, he can choose to get the report as well. This is because Coors has demonstrated unwillingness to compromise on the high-quality of its product throughout its history, so we think that in some time doing the business, Larry can find out the reasonable market price to be devised.
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Alternatives
Larry is faced with the challenging decision of whether or not to invest in a Coors beer distributorship in southern Delaware. Firstly, he must have a thorough understanding of the preferences of potential buyer of Coors beer in southern Delaware in order to assess the potential profitability of a distributorship in this market. Larry has several different alternatives to choose from with respect to research studies that provided by Manson and Associates firm. Larry has choosing the more relevant research from the proposal because he could not afford to pay for the entire nine research proposal. He can request that any combination of studies completed by Manson and Associates as long as he stays at or under his $15,000 budget. Larry was presented with nine different research studies that may be of assistance to him in deciding whether or not this truly is a ‘golden’ opportunity to apply for the distributorship. Larry should purchase Manson and Associates performance Studies D, E, F, G, H, and I. These studies will best describe the preferences of the southern Delaware beer-consuming population. These studies also indicate the feasibility of a Coors beer distributorship in southern Delaware. The total cost for these studies will be cost $14,049.50. Therefore, these studies will be helpful in order to get a well decision for Larry that under his budget.
Stage One Research, Based on Secondary Data and Manson Computer Models: Research that should not be purchase by Larry is:
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Larry should not purchase study A which is National and Delaware Per Capita Beer Consumption for 1998 to 2002. The description of this study is about per capita annual consumption of beer for the total population and population age 21 and over in gallons is provided. The source is from various publications, Mason computer model. The cost of this study is $1,000. The reason that Larry do not need to buy study A because of purchase study E will give all the necessary information that study A would provide. Moreover, this study can be getting from census bureau no necessary from the Manson and Associates research proposal which have to pay certain amount. Larry also should not purchase study B which is Population Estimates for 1996 to 2006 for Two Delaware Counties in Market Area. The description of this study is about annual estimates of total population and population age 21 and over is provided for the period 1996 to 2006. The source of this study can be getting from U.S. Bureau of Census, Sales Management Annual Survey of Buying Power, Manson computer model. This study cost $1,500. Larry should not purchase study B because we think that Larry could find comparable information for study B from the U.S. Bureau of Census without any payment.
Research that should be purchase by Larry is:
Study C is the Coors Market Share Estimate for 2000 to 2005. The description is about Coors market share for the two-country market area based on total gallons consumed is estimated for each year in the period 2000 to 2005. This data will be projected from Coors’ nationwide experience. The source of this study is from various publications, Manson computer model. It cost about $2,000. The reason that Larry should purchase because we believe this information can be attained within a reasonable amount of time by Larry. Larry has to use longer time to collect this data if not buying this study. He also can know the consumption of gallons by two-country market area. Furthermore, study D is the Estimates Liquor and Beer Licenses for the Market Area, 2000 to 2005. The description of this study is about projects of the number of on-premise sale operations and off-premise sale operations are provided. The source of this study can be getting from Delaware department of revenue, Masion computer model. It cost about $1,000. We think that Larry should purchase this study because he can know the amount of expected permits issued helps factor the number of restaurants and bars that Larry can distribute to. He also can know the type of license such as all beverages, retail beer and wine, off-premise beer only, veterans’ beer and liquor, fraternal, resort beer and liquor so that he can estimates for the market area. Larry also should purchase study E which is Beer Taxes Paid by Delaware Wholesalers for 1997 and 1998 in Market Area. The description of this study is the beer taxes paid by each of the six presently operating competing beer wholesalers are provided. This can be converted to gallons sold by applying the state gallonage tax rate ($.06 per gallon).
The source provided by Delaware department of revenue. The study cost $200. Larry purchase study E because this study will not only help Larry to complete study A on his own but also help Larry estimate what his average sales and taxes may be for future years.
Research that should purchase by Larry is:
Study F is the study that Financial Statement Summary of Wine, Liquor, and Beer Wholesaler for 1999. This study describe about composite balance sheet, income statement and relevant measures of performance provided for 510 similar wholesaling operation in the United State. This study is source from Robert Morris Associates Annual Statement Studies, 2000ed, while the cost for this study is $ 49.50. We think Larry should purchase this study because this study would allow him to identify whether his projected budget are close and what to expect for the future years. This study can works as the guideline for Larry since this study can significantly affect composite calculation.
Stage Two Researches, Based on Primary Data.
Study G is the Consumer Study which involves focus group interviews and a mail questionnaire to determine consumer’s past experience, acceptance and intention to buy Coors’ beer. Three focus group interviews would be conducted in the two counties in the market area and from these data, a questionnaire would be develop and sent to 300 adult residents in the market area, utilize direct questions and a semantic differential scale to measure attitude towards Coors’ beer competing beer and an ideal beer. This research is fully done by Manson and Associate and will cost Larry for $6,000. This study is important to determine how well the beer is accepted in that particular area. Through this study, Larry could clearly define the attitude of consumers and also the preference of consumer between two counties. Study H is the Retailer Study which describe about the group interviews would be conducted with six potential retailer of Coors’ beer in one county in the market to determine their past beer sales and experience and their intention to stock and sell Coors’. From this data, a personal interview questionnaire would be develop and executed at all appropriate retailers in the market area to determine similar data. This primary data also implement by Manson and Associate and will cost Larry $4,000. This study allow Larry understand how difficult it will be when he solicit retailer to carry his products. Through this study would provide Coors’ about their own, the competing beers and also the idea to develop an ideal beer. Study I is the Survey of Retail an Wholesaler Beer Prices. In this study, they would describe about in-store interviews with a representative sample of 50 retailers in the market area to estimate retail and wholesale prices for
Budweiser, Miller Lite, Miller, Busch, Bud Light, Old Milwaukee and Michelob. This study cost $2,000 and is from Manson and Associate. This study will allow Larry to determine whether his price points are in line among his competitive products. After knowing the price trend, then Larry can come out the decision in order to compete either his competitors.
Conclusion
Larry will spend $14049.50 for the selection of our suggested reports. However, in fact, he will need to have the information from all reports choices provided by Manson and Associates. Just that Larry has no choice to purchase all as he doesn’t have enough budgets. So, as our suggestion that’s moving forward on the Option 2, Larry should anyhow conduct some of the research studies by himself in order to have sufficient information to aid him in making his decision whether to go or no go on buying a Coors distributorship. In conclusion, based on the analysis of available research, we recommend that Larry should move forward with the “go” decision to purchase a Coors’ distributorship. This is because this business opportunity will not only enable Larry to get the “opportunities and rewards” of running a small, self-owned business as he wished but also help him to generate significant income over time even if faced with market and economic challenges in future.
