Mountain Man Brewing Company (MMBC) has enjoyed being in top position in premium beer segment for the past fifty years and are now facing a 2% decline in revenue whilst a change in leadership infuses new energy to bring a change in their product line. Chris Prangel, son of the retired president and owner of MMBC faces the challenge of successfully implementing a marketing strategy to introduce a ‘light’ beer; in a growing beer segment, as maintaining status-quo would no more be an option to sustain their existing position in marketplace in the next five years.
Mountain Man Brewing Company was known as the “Best Beer in West Virginia” because of its flavor and distinctive bitter taste; additionally, it was selected as “America’s Championship Lager” at the American Beer Championship in 2005. Also, it had held the top market position in the lager market in West Virginia for almost 50 years. As a result, Mountain Man succeeded at the beer market by earning over $50 million and selling over 520,000 barrels of Mountain Man lager beer within the West Central region.
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Mountain Man had high brand awareness, and it was especially recognizable among working-class males in the East Central region because of its product quality, positioning, and brand equity. In order to keep favorable relationship with its customers, Mountain Man had many branding activities. Hence, Mountain Man Brewing Company remained strongly in the beer market due to its strong brand loyalty as they capitalised on the ‘local’ factor.
Mountain Man Brewing Company produced only one product, Mountain Man Lager, and distributed to only the West Central region with limited distributions. Moreover, Mountain Man targeted on only one segment, the blue-collar men who are mid-age and above. Although its core consumers love Mountain Man Lager, the market product preference had changed to light beer instead of traditional beer; therefore, Mountain Man Lager was rated very low as a purchasing preference. Unlike many other major beer producers, Mountain Man did not have any advertisement; in fact, it relied only on word of mouth. Mountain Man might not have enough money to launch Mountain Man Light that follows the modern trend.
Mountain Man can consider three possible opportunities, which increases potential consumers and gain revenues. Firstly, number of younger beer drinkers has been consistently increased and expected to positively influence the growth of the profits. Secondly, If Mountain Man launches light beer category, it may reach younger drinkers who both show positive attitudes towards light beer and brand awareness of Mountain Man itself. The likability of younger drinkers toward the light beer will optimistically affect the MMBC’s revenue ( Exhibit 1).
Lastly, by expending product lines, product and distributors may build stronger beneficial relationship with brewers.
One of the threats Mountain Man Brewing Company faced was the declining overall beer consumption per capita by 2.3% since 2001 in United States of America. According to the case, the declining consumption is attributed to the competition from wine and spirit-based drinks, an increase in federal excise tax, initiatives encouraging moderation and personal responsibility, and increasing health concerns. Furthermore, categorising Distributors might also be a threat to this company because they became more cautious as they could refuse to work with small brands that have low margins and turnover. The increasing number of large breweries is also a challenge the company in the market to remain profitable; smaller companies are put on pressure to stay in the beer market.
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1. Introducing Mountain Man ‘Light’:
If Chris goes ahead and launches a beer less strong than the premium lager beer using Mountain Man’s brand name as ‘Mountain Man Light’, it would result in increase in revenues as they would be entering into a growing light beer market segment and the existing brand image might help them reduce advertising costs. However, this move will make them lose their existing customer’s loyalty, along with product cannibalization, brand erosion and might not be perceived well by the existing customers as well their target customers. 2. Introducing Light Beer by some other name:
Choosing a new brand name for the light beer has a slight edge over choosing Mountain Man Light. As discussed in the case, there is a chance of the company losing its identity when they are in midst of other light beers such as Coors Light. Creating a brand identity would be difficult as customers might not find it easy to recognize yet another beer which ends with ‘Light’. In addition to the benefits in the first alternative, creating a new brand name for the light beer would make sure there is no brand dilution or cannibalization. However there could be additional advertising costs and they cannot leverage the existing strong brand name.
I would recommend to go ahead with the second alternative of not naming the light beer as Mountain Man Light and to give a different name as it targets a younger population who look for healthier beer drinking by consuming fewer calories while maintaining the same level of alcohol intake.
Creating a brand identity for a new product would be challenging. However, a growing market segment would always be on the lookout of new products and this might work in favor to MMBC. To distinguish the light beer from other competitors they will have to come up with a creative tag line for their beer.
... and a lower contribution margin. THE BRAND NAME OF A LIGHT BEERIf the light beer were introduced, the name Mountain Man Light is not the best option ... negative thoughts about Mountain Man developed, but the blue-collar customers account for a huge percentage of sales. The brand loyalty rate for Mountain Man Lager is ...
Based on the given statistics it appears that customers of the age group between 21 and 27 are the highest percentage of people who would favor light beer. They should amend their marketing campaigns to suit this new target market.
MMBC should concentrate on making their promotion campaigns more effective. They must promote light beer in pubs, discos and night clubs. The light beer segment is in growth stage of the product life cycle which indicates soaring sales, increasing revenues, and growing consumers. To make full use of it an effective marketing campaign spanning across different media must be undertaken.