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Mounta|n Man 8rew|ng Company (MM8C) CASL WkI1LU

rob|em Statement 1he rooL problem ls LhaL Lhe company lacks a producL mlx or producL llne sLraLegy whlch
means Lhey have noL had a longLerm plan regardlng whlch new producLs Lo offer Lo whlch LargeL markeLs
when and aL whlch prlce polnLs 1hls ls a blg problem especlally aL a Llme when many changes are happenlng
fasL where Lhe change ln beer drlnkers' preferences has been so clear due Lo many facLors such as lncreaslng
popularlLy for subsLlLuLe producLs llke wlne and splrlLs drlnks and lncreaslng healLh concerns LhaL Lrlgger
change Lo llghL beer by young people 1hls lndusLry ls golng from remlum Lo LlghL (for Lhe lasL 6 years) as
demand shlfLs as remlum beer consumers are vanlshlng wlLh Llme whereas Lhe young generaLlon segmenL ls
lncreaslng 8y looklng over Lhe Lop of Lhese facLors happenlng around Lhls lndusLry Lhe company can'L
manage well Lo undersLand where lL ls golng Lo and where lL clalms Lo be golng and needs Lo look aL lLs own
hlsLory carefully ln order Lo Lake Lhe besL declslon 1hen Lhe lack of an effecLlve compleLe ongolng SlLuaLlon
Analysls has been a blg mlsLake whlch prevenLed Lhem from reallzlng Lhe need of a producL mlx sLraLegy 8uL
lL ls noL Loo laLe Lo dlverslfy Lhe producL porLfollo lf LhaL ls Lhe besL declslon
A|ternat|ve 1 Cont|nue w|th the "status quo" strategy (one product and target the same market)
ros Wlll noL Larnlsh brand lmage or allenaLe exlsLlng loyal core cusLomers and erode core brand equlLy lL wlll
conLlnue Lo focus on and opLlmlze whaL Lhe company does besL avoldlng Lhe compllcaLlons and rlsks of
lnLroduclng a new producL and exLendlng Lhe producL llne 1he company wlll noL have Lo make an lnlLlal
lnvesLmenL of $ 730000 for 60 awareness adverLlslng ln Lhe reglon plus addlLlonal large annual SCA
expenses ($ 900000 per year reglonally) whlch are requlred for a new producL developmenL and launch Also
Lhls would avold lncreaslng cosL sLrucLures and runnlng Lhe rlsk of hurLlng sales and lowerlng proflLs 1he
concern of loslng 3 Lo 20 of core sales of Lager dlsappears and also avolds cannlballzaLlon of Lager sales
Cons Sales wlll conLlnue shrlnklng aL 2 per year because Lhe currenL loyal cusLomer base ls shrlnklng due Lo
aglng and Lhelr spendlng behavlor ls decreaslng belng Lhe prlnclpal reason for Lhls percenLage decllne among
oLhers Moreover sales wlll llkely decllne more due Lo Lhe naLlonal Lrend of a 4 annual decrease ln premlum
beer sales due Lo changlng consumer LasLes Lowards llghL beer AddlLlonally Lhe company wlll be loslng a
serlous opporLunlLy Lo lncrease lLs markeL share (Lhe uS has shlfLed Lo 4 growLh ln llghL beer) as Lhe aged
2127 populaLlon accounLs for more Lhan 27 of Lhe LoLal beer consumpLlon and spend Lwlce as much per
caplLa on alcohol lL ls also noL addresslng Lhe lmporLanL female LargeL markeL whlch acLually ls only 19 of lLs
consumers buL wlLh LlghL followlng naLlonal Lrends could be as hlgh as 42
A|ternat|ve 2 Launch|ng Mounta|n Man L|ght 8eer as a Iam||y brand name strategy (target new market)
ros Clves Lhe opporLunlLy Lo Lap lnLo a growlng llghL beer markeL segmenL Lo whlch a new cusLomer
segmenL wlll be aLLracLed 1here ls Lhe backup LhaL a survey has shown Lhe younger generaLlon appreclaLes
Lhe brand and recognlzes Lhe brand due Lo generaLlonal recognlLlon (faLher Lo son) and women are wllllng Lo
glve lL a Lry ln Lhe llghL form 1hen new llghL beer wlll beneflL from a maxlmum awareness and Lake advanLage
of brand recognlLlon and reduce Lhe rlsk of fallure glven Lhe already esLabllshed awareness and LrusL ln Lhe
brand Moreover lL musL enable Lhe company Lo enLer new llghL caLegorles wlLhouL huge caplLal lnvesLmenL
ln adverLlslng and launchlng Sales of llghL beer could lncrease 023 of Lhe reglon's markeL share annually
accordlng Lo Lhe owner's son (Chrls)
Cons Launchlng a MounLaln Man LlghL could serlously allenaLe Lhe smaller number of exLremely hlgh
consumpLlon consumers LhaL are very loyal Lo Lhe company (Lhe sole brand loyalLy raLe of 33 ls a sLaLlsLlcal
hlgh and lmporLanL compared Lo Lhe compeLlLlon) Company surveys revealed LhaL older consumers do noL
wanL Lo be assoclaLed wlLh Lhe llghL brand and wanL Lo malnLaln Lhelr LradlLlonal Lough" sLrong brand
ldenLlflcaLlon 1he youLh even Lhough poLenLlally open Lo Lry Lhls new producL are by deflnlLlon noL
necessarlly loyal even lf Lhey llke lL 8y launchlng a LlghL beer wlLh Lhe famlly brand name Lhe LlghL could be
ln mosL people's percepLlon Loo sLrong and only a Lough" man's beer Lager sales could fall 3 Lo 20 ln Lhls
scenarlo accordlng Lo Lhe company owner (Cscar) 1here ls hlgh rlsk lf Lhe famlly name sLraLegy falls Lo
capLure Lhe rlghL markeL segmenL Lhe new LlghL sales pro[ecLlon mlghL noL be achleved and lL mlghL hurL Lhe
exlsLlng core brand Loo 1he new LargeL buys and consumes ln dlfferenL ways Lo Lhe currenL LargeL markeL
and Lhe company doesn'L have experlence wlLh Lhls new scenarlo 1here ls a posslblllLy of cannlballzaLlon
beLween Lhe Lager and LlghL LlghL beer already has a sLrong presence so lL ls dlfflculL Lo compeLe 1ab|e 1

kecommendat|ons
l recommend alLernaLlve 2 1he soluLlon allows Lo Lhe company Lo sLarL wlLh a producL mlx sLraLegy whlch can
permlL dlverslflcaLlon over Llme so as Lo be able Lo proLecL agalnsL compeLlLlon lncrease growLh and proflLs
and avold obsolescence among oLher beneflLs Also lL allows Lhe company Lo be more flexlble Lo changlng
markeL demands AnoLher beneflL of dlverslfylng ls LhaL Lhe currenL lone producL ls ln a maLurlLy sLage so lf
Lhey sLay wlLh Lhe sLaLus quo sales wlll conLlnue decllnlng as shown ln 1able 1 So ln Lhls sLage lL ls beLLer Lo
use producL dlverslflcaLlon as a markeL developmenL sLraLegy Lo grow and avold Lhe large rlsk of a slow sure
deaLh Also Lhls alLernaLlve provldes Lo Lhe company Lhe opporLunlLy Lo creaLe a defenslble segmenLaLlon
sLraLegy ln whlch compeLlLors would noL be able Lo collapse segmenLs Lhe LlghL and Lager segmenLs Also
beLLer economlc resulLs are pro[ecLed wlLh Lhe famlly brand name sLraLegy even uslng Lhe worsL scenarlo (loss
of 20 of sales for Lager) wlLh Lhe excepLlon of Lwo flrsL years (18 and 31 neL lncomeshorL Lerm poorer
resulLs) 1he deLalled numbers say Lo us LhaL uslng sLrong famlly name brand as Lhe plaLform for growLh ls Lhe
mosL efflclenL proflLable way ln Lhls case (buL noL necessarlly wlLhouL some rlsk) 1hen quanLlLaLlve analysls
shows LhaL Lhe medlum and long Lerm ls beLLer wlLh Lhe brand name sLraLegy lmplemenLaLlon flrsL creaLe a
AcLual SLuaLlon SLaLus quo lamlly name
negaLlve annual 2 098 Negat|ve annua| 20 I|rst year 078
negaLlve annual 2 follow year 098
Sales by reglon 18744303 00023 4686076 9
AdveLlslng 1 year 730000 104 320000
for follow yaers 900000
200S 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010
Sales 30440000 1000 49431200 48442376 47473724 46324230 43393763 39343200 38336336 37783209 37029303 36288913
Sales LlghL 4343493 9272807 14189212 19302274 24619839
43890699 47831130 31976430 36333789 60910784
CCCS 34803600 690 34107328 33423377 32736870 32101732 31439698 30284383 33003493 33863737 38870314 42028441
Cross Margln 13636400 310 13323672 13017199 14716833 14422317 14134067 13606117 14827636 16112693 17463474 18882343
LxLra adversLlslng
SCA 9383600 190 9383600 9383600 9383600 9383600 9383600 11233600 10483600 10483600 10483600 10483600
CLher operaLlng Lxp 1412320 28 1412320 1412320 1412320 1412320 1412320 1412320 1412320 1412320 1412320 1412320
CperaLlng Margln 4640480 92 4327732 4021279 3720933 3426397 3138147 960197 2931736 4216773 3367334 6986423
Cher lncome 131320 03 148294 143328 142421 139373 136781 118030 113669 113336 111089 108867
neL lncome 8efore 1 4791800 93 4476046 4166606 3863336 3366170 3274928 1078226 3047403 4330129 3678643 7093290
33 033 1677130 33 1366616 1438312 1332173 1248160 1146223 377379 1066392 1313343 1987323 2483331
neL lncome afLer 1ax 3114670 62 2909430 2708294 2S11181 2318011 2128703 700847 1980814 2814S84 3691118 4611938
S9 S6 S3 30 47 18 S1 74 100 127
poslLlve synerglsLlc effecL wlLh Lhe efflclencles of umbrella brandlng and adverLlslng uslng congruenL
communlcaLlon Lhrough a markeLlng plan ln whlch Lhe focus wlll be Lake advanLage of Lhe LradlLlon local
auLhenLlclLy hlgh quallLy LhaL are quallLles assoclaLed wlLh Lhe corporaLe name so boLh producLs Lager and
LlghL can be enhanced from Lhe company lmage 1hese feaLures have helped dlfferenLlaLe Lhe MounLaln Lager
from large compeLlLors and caused galns ln loyalLy from Lhe old cusLomers so Lhe same sLraLegy can be used
Lo enhance Lhe new llghL beer markeL enLry success 1he unlque LasLe quallLy can be used ln order Lo creaLe
dlfferenLlaLlon beLween Lhe Lwo producLs and prevenL compeLlLlon beLween Lhem 1herefore Lhe company
should launch 3 dlfferenL campalgns deslgned as brand hlerarchy flrsL Lo relnforce corporaLe lmage
(LradlLlon local auLhenLlclLy hlgh quallLy) Lhen relnforce lager beer Lo malnLalnlng Lhelr LradlLlonal Lough"
producL (unlque blLLer LasLe) and flnally creaLe Lhe new producL campalgn wlLh healLhy" quallLles (unlque
low calorles and alcohol lnLasLe") 1he prlnclpal focus ln Lhe adverLlslng campalgn ls Lo emphaslze
lnformaLlon abouL new beer" wlLh Lhe prlnclpal dlfferenLlaLlon polnLed aL fun youLh happlness and
healLhy" concerns raLher Lhan llghL" ln order Lo noL affecL Lhe Lough lmage on whlch Lager ls based (youLh
fun focus doesn'L really affecL Lhem) and so Lhe lmage Lo aLLracL youLh ls focused noL on llghL" buL on
saLlsfylng fellclLy Second lf Lhere are sLlll doubLs abouL Lhe dlrecLlon Lo Lake or consumer preferences more
exLenslve surveys should be run Lo flrm up speclflc concerns abouL Lhe deLalled correcL approach 1hlrd creaLe
more producL focus among dlsLrlbuLors and reLallers and lncorporaLe Lhe new channels such as bar and
resLauranL (on premlse locaLlons) for Lhe healLhy" beer Lo capLure Lhe rlghL LargeL markeL and avold Lhe
cannlballzaLlon beLween Lhem ln off premlse locaLlons lourLh prepare employees for a very hard flrsL year lf
Lhe worsL scenarlo happens because lL ls essenLlal Lo keep Lhe poslLlve aLLlLude desplLe Lhe poorer economlc
resulLs lnlLlally llfLh employ addlLlonal prepared experlenced sales force (ln new markeL segmenL) ln order
Lo noL affecL Lhe currenL force sales wlLh Lager and avold Lhe worsL scenarlo 1he goal ls Lo achleve a
successful brand message sLraLegy LhaL relles on congruenL communlcaLlon and a clear brand lmage Lo Lhe
core currenL cusLomers Lhe new markeL segmenL and among all employees Lo be conslsLenL wlLh all
consLlLuencles as well as compeLlLors and oLher ouLslde observers