After reading the Case and assessing the "situation" facing Mountain Man Brewing. You have been brought into the Corporation as an "outside Consultant" with the charge of assessing the issues facing Mountain Man Brewing and making specific technical recommendations, as to what you and your firm would do to assist the Management Group to introduce a specific plan to address the findings of your assessment. To that end The Management Group at Mountain Man Brewing would like you to answer or respond to the following:

What is the process that you would follow when working with us? We would like to understand your consulting process from entry to recommendations and or implementation.

How do you define a successful Engagement?

The Challenges Ahead at Mountain Man. Chris Prangel pondered the findings of the study. To him it was clear that product preferences in the beer market were changing, and that a light beer product was strategically important to MMBCs future. First, light beer was a newer, fast-growing product category and the only beer category demonstrating consistent growth. Moreover, a light beer would help MMBC gain share in on- premise locations: restaurants and bars. Light beers appealed to younger drinkers overall, and to women, both groups that frequented these locations. Market research indicated that Mountain Mans core customers did not state a brand preference in restaurants and bars. Chris believed Mountain Mans brand recognition could translate into a meaningful share of the local light beer market and hoped that in turn, Mountain Man Lights popularity could boost the sales of Mountain Man Lager.

Others on the MMBC management team did not share Chriss enthusiasm for launching Mountain Man Light. Stretching the brand to target younger drinkers who consumed light beer had dramatic branding implications, not to mention competitive ones. Younger drinkers mirrored the target market for the large national and regional brands. In addition, Oscar Prangel was concerned that launching Mountain Man Light would alienate the core customer base and ultimately erode and dilute the Mountain Man brand equity. He was also worried that Mountain Man Light might cannibalize the sales of Mountain Man Lager because of a fear that retailers would not grant Mountain Man incremental shelf space and therefore would substitute cases of light product for the lager product.

In his last lecture, Oscar had said, Chris, value is achieved by focusing on what you do best, not by attaching your brand to every conceivable version of a product. Another product line will just add to our cost structuremore inventory, more packaging, more SG&A. We wont sell more barrels; well just reduce our profit. Then theres the real risk that Mountain Man Light might just end up hurting the sales of Mountain Man Lager; I reckon we could count on at least 5% but it might be 20% or higher. Look at how many light beers there are, with millions of dollars invested by their brands. Have they increased the total sales of beer? To address his fathers concerns, sales of Mountain Man Light would have to compensate for this potential loss of lager product revenue. However, while Chris understood his fathers concerns, he believed that there was a chance that the launch of Mountain Man Light might just give Mountain Man Lager a lift. He had replied to his father, This is our chance to play in the light beer sandbox but stay true to the Mountain Man brand by playing on the strengths of our core product.

Chris also wondered if MMBC could afford to launch Mountain Man Light. Although the launch of Mountain Man Light would not require capital expenditures in plant and equipment in the short term due to existing excess capacity in Mountain Mans facility, launching a new product was an expensive endeavor for a lean company not used to making these kinds of investments. While this was not the launch of a new national beer brand, which Chris knew cost between $10 million and $20 million in TV advertising alone, it wasnt cheap to launch a new product on a regional basis either. The advertising agency estimated that creating a brand awareness level of 60% for Mountain Man Light in the East Central region would cost at least $750,000 in an intensive six-month advertising campaign. This would be on top of the $900,000 in annual, incremental SG&A costs that Chris projected the new product would require, based on the need for a Mountain Man Light product manager, an addition to the sales staff, and ongoing marketing expenditures. Although MMBCs variable cost per barrel of its lager beer was $66.93, it would cost $4.69 more per barrel to produce Mountain Man Light. Because Mountain Man would receive the same price per barrel for both products, the contribution margin for Mountain Man Light would be lower than the contribution margin of Mountain Man Lager. Chris knew that, given Mountain Mans CFOs conservative stance regarding investment, he would have to convince the senior management team that the Mountain Man Light product would generate a profit within two years, selling enough barrels to cover both the associated launch marketing and incremental SG&A expenses and make up for the negative impact on overall profitability resulting from potential lost Mountain Man Lager sales. His estimates regarding barrel sales would need to make sense in terms of market share in the very competitive light beer segment. Chris recalled the risks expressed by John Fader, the vice president of sales:

Mountain Man Light will never achieve the volume of larger light beer brands like Miller Lite or Coors Light; those brewers sustain distribution and support advertising in ways we cant. Whats more, the big companies are constantly throwing new products bearing the established brand name

into the marketplace. Mountain Man Light would get lost in that sea of new-product introductions. Youd be doing well if you grabbed a quarter point of market share. We wont get our retailers to give us more facings,5 so Mountain Man Light would just replace facings we have earned for Mountain Man Lager. The light beer would only draw time, resources, and attention away from our lagerour bread and butter. Boosting sales of our core brand even slightly means more than what we will get in the light beer segment. Its a pipedream, Chris.

Chriss Decision. Chris looked at some revenue and net profit projections he had developed to 2010 assuming that Mountain Man Lager lost 2% of its revenue base annually. He felt a knot in his stomach as he pondered the status quo strategy. He then examined the financial projections he had done a few weeks prior for the Mountain Man Light launch, which 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 0.25%.6

However, before presenting a formal plan to launch Mountain Man Light to his father, Chris needed to think further, strategically and tactically, about marketing and distribution to a new customer segment. How would he address his fathers concern that targeting this segment would alienate existing Mountain Man customers and erode core brand equity? What about his fathers belief that the Mountain Man brand would never capture the same loyalty among younger beer drinkers that it had from blue-collar workers? Since MMBC did not have the resources to match the marketing efforts of the large, national, light beer brewers, Chris wondered how he would argue that Mountain Man could compete against deep-pocketed competitors for the segment. Was he overly optimistic in his projections of the percentage of the light beer market that Mountain Man Light could capture?

Chris thought back on what his father had recently said to him, Chris, I try to keep in mind all the other regional breweries that have vanished over the past 30 or 40 yearsNeuweiler, Horlacher, dozens and dozens of themall gone. Ive watched the giants in this business taken down by fatal decisions made at the top that irreversibly damaged the brand. In the 50s, Schlitz sold more barrels than any other brewer. You cant buy a Schlitz beer today. Mountain Man is still standing because we manufacture an exceptional beer with a great brand name, weve never lost sight of our core customer, and weve never been seduced by the other guys market. Chris valued his fathers words and he did not want to be the one to lead Mountain Man down the path to oblivion; however, Mountain Mans revenues were down, and Chris needed to help his father secure the companys future. He wondered if he was missing something or maybe if there were other options he needed to consider. The knot in his stomach tightened again. This was West Virginias beer. It was the Prangel family beer. It was Chriss legacy staring him in the face.