Instruction:

Based on the background information provided below on Mountain Man Brewing Company (MMBC), please address the below questions:

1. identify what you perceive to be the biggest problem facing the company. You must summarize in specific terms your proposed action (recommendation) and the benefits such action will bring to the organization.(Please note that the main problem is not that MMBC has one type of beer!)
2. Provide rationale behind Recommendations; in this section, you will provide more specifics about your recommendations; including any pertinent background information that caused you to draw the conclusions that you did.
3. Action Plan; How will you achieve your goals? How will you bring these recommendations to fruition? This section must include specifics about product strategy, distribution, pricing strategy, advertising, and promotion tactics. In addition, you must discuss the potential drawbacks to your action plan. Also, you could list any other tactics that specifically address the problem in the company.

Background Information:

1.What is Chris considering doing and what factors will he have to align to be successful?

Chris is considering introducinga"light beer" version of the "Mountain Man Lager"to address thesales declineconcernsand to capture the light beermarket share.

1.Marketing Strategy to ensure thebrandwould not get dilutedwith"Light Beer"

2.Developing amarketingcampaign aimed at light beer consumers while retaining the existing customers

3.Retain Brand Equity, Customer Loyalty and Quality-thebrand'ssuccess factors

4.EnsureLight Beer don't cannibalize the"LagerBeer"salesanditwould provideNetProfitsIncreaseby capturing thegrowingmarket shareof 4% over last 6 years

5.Provide a clear vision, entry and exit criteriato convince the senior managementon profitability ofthe introduction of the light beer=

What goal should MMBC (Chris) have?

Position thebrand toright customer group with the right marketing tactics with the goal of enhancing the brand value while keeping it relevant to the changing market needsand customer tastes/healthy habits.

There is a strong brand value that has been created over the years and this combined with the uniqueproductblendis the primary reason why MMBC is long standing regional beer.The goal should be keeping this brand value while focusing ondiversifying the market,increasing the revenue and curb the losses.

What has made MMBC successful?

MMBC has remainedastraditional and regional family-owned brewery cultivating brand loyalty by adhering to its core customer base, offering an appealing product at a great price, and with local authenticitydesignating itas "West Virginia's Beer".

What distinguishes it from competitors? (includingits marketing mix)

BrandEquity :Independent, non-corporate, and family-owned brewery

Unique Taste-% of alcohol contentand bitter flavour

Appealing packaging,

Customer Loyalty - Small % ofBlue CollarCustomers contributing largest sales of MMBC

Local Authenticity&Regional Focus

Competitive Price

What about these factors enabled MMBC to create such a strong brand?

As the articles suggests, theBrand played a critical role in the beer purchasing decision.MMBC'sProductQuality, Unique Taste playedcriticalrole in winningCustomerLoyalty& Strong brand value.

What has caused MMBC's declinein spite ofits strong brand?

Changingcustomer preferencesopting for more healthier choices, competition from wine and spirit-based drinksandan increase in the federal excise taxandinitiatives encouraging moderation and personal responsibility

The majority of MMBC's market was made up of an aging demographic in the beer market's shrinking premium segment.

Describe the market and current and future competition.

Exhibit-5Ademonstrates that there is a decline of the premium and popular beers at 4 and 5 % rate(MMBSsegment) respectivelywhileLightBeer, Imported and Super Premiumbeer segments are at 4%, 6% and 9%growthrespectively.

Unless, MMBS has a different strategy, the competition is expected to grow in the form light beers.

To meet beer drinkers'changingpreferencesbrewers will introduce newer styles of beerspecifically lighter beers.

Should MMBC introduce a light beer?

Yes

Market trends predicted by industry observers,company'scurrent trend of 2% loss of annual revenue

Anincrease of light beer sales over the past 6 years at an annual compound rate of 4%

What are the pros and cons for doing so?

Pros:

Access to theuntapped customer base -youngerand femalewho are large consumersof light beers(twice as many as those aged 35 and up).

If done right, theBrand extension will help the core brand by gaining more shelf space with distributors and retailers, resulting in increased sales.

Leverage well established brandto influence consumer brand preferences

Cons:

There will be some cannibalism between Mountain Man Lager and Light beers

oDistributors may sacrifice some of the old lager when purchasing the lighter version

oThe same existing customers of MMBC might split between thetwo products

If brand extension is notright, there is a risk of destroying the brand image andthebrand becoming diluted, resulting in the loss of corecustomers,and eventually shutting down the company

Should MMBC launchMountain Man Light?

Yes.

Marketresearch suggests4%increase in light beer sales over the past 6 years. According to Chris' financial projections, the Light beer share market will generate a profit of $107000 in two years. (Appendix1's excel sheet6a.).It isonly requiredto sell enough Mountain Man Light barrels (50000 approximately) in two years to cover both the associated launch marketing ($750000) and incremental SG&A ($900000/year) expensesto break even.

What other strategic options for growth does Chris have ifMountain Man Lightis not launched or is unsuccessful?

There is a good chance that MMBC, using their current brand image of old family brew recipe, will move into Super-premium yield, which holds 1.5% of the East Central Region and has grown at a rate of 9% in the last 6 years.

MMBC should try marketing to the same core customers but at a nationalandgloballevel.

Expand theiroperations to themarkets likebrewpubs. They could also capitalize on the "retro-cool" trendin order toreach new customer segments described by the young woman in the case's text. They could also choose to use co-branding, licensing, and franchising to capitalize on their brand equity.Consider investing in marketing efforts to expand the brand name to the rest of the country to scale from regional to nationalbreweries!!