Mountain Man Brewing Company Case Study r1n5x

1. What are the critical success factors for MMBC? What are its competitive advantages? A: Some of the critical success factors for MMBC are as follows:  High Brand awareness i.e. an unaided response rate of 67% from West Virginia population  People's perception of the brand being a local and authentic product  Legacy factor with generations of a population consuming the product, the brand had survived for more than 50 years  Strong customer base among the blue-collar working class  Perception of distinct quality with respect to flavour and taste  Priced at par with the domestic brands, hence reasonable pricing is also a crucial factor Competitive advantages with respect to MMBC are as follows:  A small but competent sales force responsible for increasing distribution in offpremise locations as 60% of customers purchasing beer did so at off-premise locations  Grass-root marketing tactics and word of mouth marketing that emphasised on quality aspects while being most cost-effective  A better regional distribution network coupled with a large customer base

2. Elaborate on the factors influencing brand equity of MMBC. A:  Firmly established brand for 8 decades which commands a large loyal customer base with a legacy factor  Attributes like distinctively bitter taste, slightly higher than average content of alcohol that were unique to the Mountain Man Lager brand.  Packaging of beer that was in line with the product positioning for the blue-collared working class (logo with the design of coal miners)  Sticking to the core product of Lager rather than swaying to new emerging markets, i.e. maintaining core product competency  Known as the “West Virginia’s Beer”, with authenticity, quality and “toughness” as the core attributes which the target customer base could relate with  Judged “Best Beer in West Virginia” for the Eighth year straight year, affirming customer faith with respect to product quality and brand name  Increasing product availability in off-premise location through an abled sales force team

3. In spite of strong brand equity why did MMBC faced decline? A:  Demographic shift to young drinkers who ed for 13% of adult population but consumed 27% of total beer consumption, who increasingly preferred light beer  Declining of the core customer base of MMBC (age:45+)

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Due to increase in customer base of light beer from 29.8% in 2001 to 50.4% in 2005 ,a portion of customer of MMBC getting cannibalized Due to recently repealed arcane laws, retail stores are selling beer at deep discount Augmenting competition from wine and spirited based drinks Increase in federal excise tax There have been initiatives encouraging moderation and personal responsibilities towards drinking behaviour Unable to spend heavily to maintain the sales level in the segment as compared to large domestic brewers The increasing preference of distributors to larger brands contributing higher margins Due to economies of scale in transportation and marketing, large national brewers were able to pressurize regional brewers Due to health consciousness, consumption of strong beer is also declining No new introduction and innovation in the product line a/c to the changing scenario

4. Is launching light beer a feasible proposition? A: Considering the best case scenario (i.e. with a 5% cannibalization) breakeven sales can be achieved in two years i.e. by 2007 thus limiting the plan's feasibility to the extent of cannibalization that the Mountain Man Lager may have to face. In the average and worst case scenarios with respect to the extent of cannibalization (i.e. at 12.5% and 20% resp. ), it is not possible to achieve breakeven sales in a time span of two years. See the attached excel sheet for the related calculations. 5. Do you feel MMBC should introduce light beer? A: With respect to launching a light beer brand, two options can be considered: Option 1: Introducing Light Beer with the Mountain Man Brand name Advantage:  Increase in revenue  Comparatively lower advertising costs  Cater to a market growing at a CAGR 4% Disadvantage:  Possible cannibalization  Probability of brand erosion in case the new product isn’t successful Option 2: Introduce Light beer with another brand name Advantage:  Increase in revenue  Cater to a market growing at a CAGR of 4%  No cannibalization or possibility of brand dilution Disadvantages:  Higher advertising costs will be incurred in creating brand awareness for a new brand No possibility of leveraging Mountain Man’s existing strong brand name

Considering the available data and assuming that the rate of cannibalization for Mountain Man Lager remains under 5%, it will be feasible to introduce the Light Beer under the Mountain Man brand.