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: $75 billion industry Industry trends: y Over the previous six years, light beer sales in the United States had been growing at a compound annual rate of 4%, while traditional premium beer sales had declined annually by the same percentage. y U.S. per capita beer consumption had declined by 2.3%, largely due to competition from wine and spirits-based drinks, an increase in the federal excise tax, initiatives encouraging moderation and personal responsibility, and increasing health concerns. y Economies of scale of large national brewers. y Key consumer segment was younger drinkers (13%) who preferred light beer and accounted for 27% consumption. SWOT analysis Strengths Evidence Implications Market leader and established It had held the top market Strong brand awareness brand name. position among lagers in West motivates consumers to Virginia for almost 50 years. purchase Lager. Ability to leverage awards as ³American Champion Lager´.
Strong brand equity Mountain Man Lager¶s distinctively bitter flavour and slightly higher thanaverage alcohol content that uniquely contributed to the company¶s brand equity Estimated cost of $10 million to $20 million in TV advertising. Mountain Man is able to leverage its brand equity and reputation to new products
Weaknesses New brand extension will spread already thin resources of the company.
Company does not have the budget to compete in the light beer advertising market.
Company will face financial problems if the new product fails to take off. Important to come out with a good marketing campaign that effectively utilise all the resources. Light beer would help MMBC gain share in on premise locations: restaurants and bars.
Funds needed for advertising campaign, staff costs and ongoing marketing expenditure
Opportunities Opportunity to reach younger demographic and increase lifetime customer value
Light beer was a newer, fastgrowing product category and the only beer category demonstrating consistent growth Fear that retailers would not grant Mountain Man incremental shelf space Mountain Man Light would alienate the core customer base
Threats Risk of canalization of core brand
Alienation of core customer through new brand that might not be in line with their aspirations of MMBC
Substitute the light product for the lager product. Eventually erode and dilute the Mountain Man brand equity
directly attracting affluent light beer drinkers can broaden the brand identity of Mountain Man Beer Company as a quality brewer within their region. The bottle should use a lighter shade such as light green to differentiate from the dark brown bottles of Mountain Man lager. It is important to price Mountain light brew not too low in order to break even quickly and not to price it too high for fear of low sales. Place Research showed that Product line extensions actually helped brewers obtain greater shelf space for products and created greater product focus among distributors and retailers There is a need to increase distribution among bars which is only 30% of current sales. Mountain Man light.25%.Capitalize on the already brand extension established brand name of Mountain Man -Reduces the risk of failure given the established awareness and trust -Reinforce the consumers perception of the parent brand name Con¶s -Risk of product cannibalisation -Erode sales of Mountain Man lager -Limited budget and resources to compete with large breweries Recommendation: Launch the new product via the 4 Ps. but banking on the withering demand for a single product is not going to guarantee profitability for the Mountain Man Beer Company. Need to target locations that are frequent by the young adults. The light green used also indicated a lower alcohol content of a new brand extension. and a stepping stone to introduce them to Mountain Man Lager. Label should portray a fresh and young image since the target segment is young adults. Bold and vibrant colours could be use to attract attention and higher recall rate. . Where the product association with Mountain Man Lager may be too strong in terms of flavour. The Light beer market is the gateway necessary to attract new consumers. Justification: There are certainly risks involve in launching a new product.Problems & Solution Evaluation Core problem: Deciding whether or not to launch the new product. Strategies Elaboration Product Brand name of Mountain light brew will stand out as compared to competitors in the light beer market. Price Need to observe competitors pricing strategy and carry out market research to determine the optimal pricing. Supporting evidence: Financial projections showed regional revenue growth of the light beer product at 4% annually and Mountain Man steadily growing its share of the regional light beer market by a quarter of a percent each year off of a 2006 base market share of 0. Evaluation of possible solutions: Solution Pro¶s Launch Mountain Man light via . Promotion Bar mats to be distributed to bars and retail outlets carrying light brew and Mountain Man lager.